The K-P budget: Different but unrealistic
The target of achieving a growth rate of 7% in the gross provincial product in three years is an unrealisable dream.
pervez.tahir@tribune.com.pk
While the budgets of Punjab and Sindh by two mature political parties reflect more of the same, the Khyber-Pakhtunkhwa (K-P) budget departs from the routine in some important areas. It makes an unequivocal statement against political, economic and social exploitation. In keeping with the PTI manifesto, a bold statement has been made that the war on terror will be fought by waging a war on illiteracy. An education emergency has been declared with a hefty allocation of Rs66.7 billion. In addition to the usual development schemes, many new initiatives have been announced to make education accessible to the poor, women and backward districts. This is reinforced by schemes to link education with skills, with a view to improving the employability of youth. A commission with adequate funding has been proposed to make recommendations on a uniform system of education. Health gets the third-largest allocation with a focus on preventive measures and the reduction of maternal and child mortality rates, but the budget stops short of declaring an emergency. Instead, the rich hydro potential of the province has motivated an energy emergency. The measures announced are elements of a much more comprehensive energy strategy than contained in the federal and other provincial budgets. A good blend of public sector initiatives, public-private partnership and incentives for the private sector has been presented. It is also planned to initiate the feasibility study of a 200MW gas-based thermal plant, besides a number of proposals for alternative and renewable energy.
To show its seriousness about taking development decisions down to the grassroots level, an allocation of one billion rupees has been made to hold local bodies elections within three months. The law will also be amended to add the lowest tier of village councils. Reform of the thana katcheri culture and the patwari system is also on the cards. Transparent land records will help rid the province of the benami transactions. In fiscal terms, there is a balance between expenditure and revenues — something of a rarity in our financial history. There is, however, a failure to tax the untaxed agricultural incomes and the under-taxed property owners. Setting up of the K-P Revenue Authority is a step in the direction of eventually collecting GST on services. The proposed levy on transit is octroi by another name. Even the impressive austerity regime outlined in the budget will yield a pittance. The large number of new initiatives would require more resources than has been envisaged and the budgeted zero deficit may not materialise.
It seems the revenue has not been forecast realistically. Similarly, the target of achieving a growth rate of seven per cent in the gross provincial product in a matter of three years is an unrealisable dream, as also is the reduction of poverty by 50 per cent. In the past two decades, the province experienced an annual growth rate of 4.5 per cent. The annual increase in income per capita during the same period was only 1.5 per cent. Given the precarious law and order situation in the province and the deteriorating state of the national economy, the maintenance of the past average growth will be a major achievement. If the provincial government can improve its institutional framework for effective service delivery, reduce corruption and promote transparency, it will have laid the foundation for higher and equitable growth towards the end of its term. The future lies in attracting private investment in industry by providing cheaper energy, trade with Central Asia, tourism and forestry.
Published in The Express Tribune, June 21st, 2013.
To show its seriousness about taking development decisions down to the grassroots level, an allocation of one billion rupees has been made to hold local bodies elections within three months. The law will also be amended to add the lowest tier of village councils. Reform of the thana katcheri culture and the patwari system is also on the cards. Transparent land records will help rid the province of the benami transactions. In fiscal terms, there is a balance between expenditure and revenues — something of a rarity in our financial history. There is, however, a failure to tax the untaxed agricultural incomes and the under-taxed property owners. Setting up of the K-P Revenue Authority is a step in the direction of eventually collecting GST on services. The proposed levy on transit is octroi by another name. Even the impressive austerity regime outlined in the budget will yield a pittance. The large number of new initiatives would require more resources than has been envisaged and the budgeted zero deficit may not materialise.
It seems the revenue has not been forecast realistically. Similarly, the target of achieving a growth rate of seven per cent in the gross provincial product in a matter of three years is an unrealisable dream, as also is the reduction of poverty by 50 per cent. In the past two decades, the province experienced an annual growth rate of 4.5 per cent. The annual increase in income per capita during the same period was only 1.5 per cent. Given the precarious law and order situation in the province and the deteriorating state of the national economy, the maintenance of the past average growth will be a major achievement. If the provincial government can improve its institutional framework for effective service delivery, reduce corruption and promote transparency, it will have laid the foundation for higher and equitable growth towards the end of its term. The future lies in attracting private investment in industry by providing cheaper energy, trade with Central Asia, tourism and forestry.
Published in The Express Tribune, June 21st, 2013.