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Sindh’s fiscal failure

The budget documents show the Sindh government’s failure in resource mobilisation, controlling revenue expenditure, effectively utilising development funds and proper development planning

Sindh’s fiscal failure
House in disorder. — Photo by Sabir Mazhar

Budgets over the years have lost their luster for public and have been reduced into an official outpouring of lifeless digits. A public finance document of paramount importance that has profound impact on everyday life of citizens has been degenerated into an annual ritual.

A combination of parochial political whims and bureaucratic chicaneries, the exercise is no longer reflective of public aspirations and development priorities. After 18th Amendment and 7th NFC Award, provinces were handed over newly-devolved subjects, allocated relatively more finances and equipped with new opportunities of mobilising resources through sales tax on services and foreign loans. However, federal transfers are still a major source of provincial consolidated fund.

Disbursement to provinces through divisible pool is contingent upon receipts of federal government which mainly relies on the FBR’s tax collection. Sindh still has 80 per cent dependency on federal receipts. Out of total estimated receipts of Rs600 billion in the next financial year, the province shows an internal target of only Rs125 billion. The government of Sindh attributed lower releases for development projects to a purported sizeable cut in the NFC share by the federal government. The amount was projected to be 60 to 80 billion rupees.

However, according to budget documents, Sindh received Rs388.6 billion against an estimate Rs409 billion i.e. 20.4 billion rupees less which amounts to five per cent. A fact that has been cloaked is that the provincial government actually failed to meet a target of its own provincial non-tax receipts. Out of an estimated 28.8 billion, the provincial tax machinery could barely mobilise Rs10.8 billion which marked a deficit of more than 62 per cent. This indicates poor performance on part of the province. On top of that, an ambitious target of Rs18 billion has been fixed for the next financial year.

What is more perplexing is that the Sindh government remained completely cavalier of the lurking deficit and did not rein in its current revenue expenditure which swelled from an estimated Rs356 billion to Rs368.4 billion. In the wake of less than estimated receipts, a prudent strategy should have been of tightening the belt but the provincial government went on a reckless spending spree.

While the Sindh government was callously profligate in draining tax payers’ money, it was astoundingly stingy in development spending. Its perennial howling of non-availability of resources for development is exposed by its own data which reveals that the revised estimate reduced it to only Rs115 billion out of promised Rs185 billion. The actual spending is probably less than Rs100 billion.

In a meeting of Sindh Cabinet held in the last week of February, the development expenditure was reported at hardly Rs50 billion, which implies that another 40 to 50 billion rupees were spouted during last four months of the year. Much of such a torrential spending is bound to find its ways into private coffers.

Annual budget statement provides a revealing picture of misplaced priorities of the government of Sindh. The document provides ample evidences that provincial resources are poorly managed and in some cases whimsically funneled. Extravaganza under the head of Broadcasting and Publishing is a pertinent example in this context. The budget head was allocated 953.9 million rupees but the revised estimate was inflated to Rs3,707 million, which is 326 per cent higher than the actual allocation. This amount was evaporated for party and government publicity at the expenses of public exchequer.

The party has remained obsessed with full page coloured advertisements and paid-time promos on tv channels to launch its budding leadership. Rather than repenting this gulping of tax payer money, the government has allocated even higher amount of Rs4,348 million for the next year. Such plunder of paltry development resources for the sake of an ostentatious party promotion shows how much the provincial government is responsible to its subjects.

A province where half of the population breathes below poverty line, spending billions on party promotion is an act of apathy, least to say. Another glaring example of misplaced priority is spending in the Irrigation Department. The shabby canal irrigation system was allocated Rs1,948 million but the actual spending was only Rs186.9 million. In the same department, administrative expenses remained Rs9,099 million against the allocated Rs7,000 million.

Vandalised by frequent floods in recent years, the canal system needed more judicious spending rather than increasing administrative expenditure which reeks of corruption of all kinds. Similarly, releases of development budget for environment department remained only Rs1,693 against the budgeted Rs2,402 million. The province faces a plethora of environmental issues but the newly-devolved and a fund-starved department was not able to utilise the available meager budget.

Education is another area of high priority where development deficit is often mourned by the provincial government. The department was allocated an amount of Rs13.7 billion for development works but revised estimates were less than half i.e. Rs5.8 billion. It is worth mentioning that in the province 21 per cent schools are shelterless, 13 per cent schools buildings are dangerous, 45 per cent schools are without boundary walls, 53 per cent schools do not have water facility, 46 per cent schools are without toilet blocks, and 62 per cent schools are without electricity. More than 6 million children are out of school mainly because of not having enough schooling facilities.

Spending only 40 per cent of development budget corroborates a sheer apathy of the government towards education. Similarly, the recurring revenue expenditure for education was originally allocated Rs121 billion rupees but the revised estimate reduced it to only Rs108 billion. The much trumpeted education reforms received only Rs7.4 billion against an allocation of Rs14.3 billion.

Similarly, Information Technology is believed to be a lynchpin of development in the era of knowledge-based societies. The provincial government allocated a meager amount of Rs8.9 billion whereas the downward revision was only Rs2.3 billion.

Health is a key social sector ingredient where most of the targets of millennium development goals are off track in the province. Lack of hospitals, facilities, equipment and human resources results in thousands of preventable deaths every year. Outbreak of measles and other diseases have been taking human lives in the province.

Last year, the government faced an ignominious situation in Thar where dozens of children lost their lives for not having adequate health facilities. The development budget of Health Department was Rs17 billion but the revised amount was only Rs11.8 billion. General hospital services were allocated Rs12.2 billion but the amount was subsequently revised to only Rs6.8 billion. This sufficiently indicates the level of commitment of provincial government to improve health of people in the province.

Agriculture sector is the backbone of provincial economy, especially in rural areas. The sector is a major contributor of rural employment and a source of staple diet for millions. The department was allocated a paltry amount of Rs8.5 billion for development schemes which was further curtailed to Rs4.3 billion in revised estimates.

While the provincial government could hardly utilise Rs100 billion under Provincial Annual Development Plan (ADP) in the outgoing year, the next year allocation has been fixed at Rs168 billion. A deeper look at the budget documents reveal that the actual provincial ADP is Rs143 billion and the remaining is federal grants, foreign assistance etc.

The provincial government has invented innovative ways of controlling large sums of ADP allocation by introducing incognito packages without assigning any details. This year a hefty amount of Rs38 billion has been shrouded in such mysterious allocations. The ADP document has bundled this amount under the emblems of special packages, mega projects/flagship schemes, new development initiatives, special initiatives and block allocation for energy initiatives. The experience suggests that such amounts are often abused to meet political designs of the super masters of ruling parties.

The ADP’s configuration raises several questions. The document shows that there are 1658 ongoing schemes in the province with a staggering throw forward of over Rs500 billion. These schemes have been allocated only Rs90 billion. With this trend of allocation these schemes will take another seven years to get completed at the current price. However, spiraling cost escalation can stretch them over several years.

The ADP shows 1279 new schemes with allocation of only Rs52 billion that may lead to an estimated new throw forward of Rs200 billion. This is a glaring example of poor planning and politically motivated development paradigm. This trend of allocation will add several billion rupees in an already unsustainable throw forward of Sindh government.

The government, in a bid to appease its members and cronies, keeps adding new schemes with meager allocations without realising its long term consequences. The ADP allocations are heavily skewed in favour of six departments namely Irrigation, Health, Works & Services, Education, Local Governments and Agriculture. These six departments have been allocated Rs62.6 billion. After deducting block allocations, the remaining 37 departments have been allocated only Rs41 billion. This trend of allocation will create developmental imbalance across various sectors.

The budget documents amply testify the lackluster performance of Sindh government on four accounts viz. resource mobilisation, controlling revenue expenditure, effectively utilising development funds and proper development planning for the next year.

Naseer Memon

naseer memon
Naseer Memon is a human rights activist and civil society professional. He may be reached at [email protected]

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