Opinion: Caring sister’s budget

No effort has been made to increase the share of the province in its revenue pool .

Dr Pervez Tahir June 13, 2015

The presentation of the provincial budget by the newly-appointed finance minister, Dr Ayesha Ghaus, may hopefully mark a transition in the role of the province from that of a big brother to a caring big sister. The announcement of a special package for Balochistan and a possible initiative for Khyber-Pakhtoonkhwa are indicators of this transition.

Dr Ghaus is the first economist to have taken up the office of the finance minister of the province under a democratic government. With her expertise in public finance, one should expect that Dr Ghaus would ensure effective delivery of public services through devolution of resources to the local level. Additionally, an economist does not have to be convinced about the benefits of direct taxation. She should know better the utility of a tax on agricultural income compared to general sales tax on services.

Her budget speech started on an emphatic note affirming education and health sectors as the two top priorities. However, the figures she announced for the sectors did not seem to reconcile with budgeted amounts.

With Rs69.4 billion allocations, the priority sector in the annual development programme was road construction and rehabilitation. The Rs56 billion allocations for transport and urban development also fell in the same category. Infrastructure development as a whole received Rs161.5 billion compared to Rs119.2 billion for the social sector.

Yet again, there was no initiative in the budget to increase the dismally low share of the province in its revenue pool. Tax collection has increased in the province from 0.4 per cent of the gross domestic product in 2010-11 to 0.7 per cent in 2013-14. However, this increment is largely owed to GST on services. Compared to the federal government, the provincial government is still reluctant to expand its tax base.

The provincial budget balances revenues with expenditures, though the federal government had [in its budget] predicted a large surplus in the Punjab to finance the overall fiscal deficit.

The annual ritual of announcing a raise in the minimum wage was followed this year too.

However, the new finance minister should be the first to admit that the province has yet to devise a mechanism to ensure its implementation.

One should welcome the allocation of funds for construction of roads in rural areas and on the energy sector. Though, the project portfolio in the latter case does not seem to be well-conceived. One wonders why the finance minister did not say anything about the upcoming local elections. There was no mention in the speech of the role of local governments in planning and development decisions.

Dr Ghaus seems to have carried herself well in the face of a deafening opposition. The speech was better delivered than by her three predecessors. Yet, it wasn’t hard to tell that it had been written yet again by the Finance Department bureaucracy. Perhaps she did not get enough time to draft her speech considering she took the oath of her office only two weeks ago. One would eagerly await the next speech for some freshness of thought.

Published in The Express Tribune, June 13th, 2015.


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