The second budget of Balochistan's coalition government led by Dr Abdul Malik Baloch was presented in a complex socio-economic situation. The province has been facing multidimensional challenges such as low level of human development, lack of physical infrastructure, high incidence of poverty and social security. Simultaneously, Balochistan's resource rich geography opens up a vista of possibilities for socio-economic transformation that can be capitalised through better budgeting practices and addressing institutional challenges.
A look into budgetary magnitudes indicates that the one year old provincial government was motivated to revamp provincial economy via investment in development schemes. For instance, in 2013-14 Balochistan government announced a surplus budget of Rs 8.5 billion, which is now turned into a deficit budget of Rs 1.8 billion in 2014-15. One of the plausible explanations of this reversal is higher growth in both current and development outlays compared to the growth in revenues. However, growth in development outlay is marginally higher than current expenditure.
The size of PSDP announced this year is Rs 50.7 billion which is 16% higher than budget estimate of 2013-14 with its main focus, like previous years, on economic affairs and education affairs and services. The only anomaly in development expenditure is the drastic change in priority in environment protection from 5th to 3rd and general public service has been downgraded from 3rd to 7th priority. Once again, more than 40% of development expenditure is allocated to economic affairs.
Within economic sector sub sector, agricultural research and extension has been given immense importance with a 20 percent increase in expenditure from revised to budget estimate of 2014-15 and 25 percent increase from budget estimate of 2013-14 to budget estimate of 2014-15. Similarly, from revised estimate to budget estimates 2014-15, transport, energy department, rural development, and irrigation expenditure allocation have grown significantly by 20 percent, 18 percent, 14 percent and 7 percent respectively.
This social transformation is once again reflected in priorities in aggregate (lumping both current and development) expenditure. Economic affairs and education are the top priorities of Balochistan government in budget 2014-15 to change the direction of public investment towards socio-economic development. The combined share of two social sector expenditures, ie, education and health, however, surpassed economic sector. This clearly reflects the Balochistan government's attempt to realise the transition to social development and ameliorate its figure for human development index.
While education is among the top priorities of Balochistan government, there is an anomaly within education's current revenue budget. For instance, primary and secondary education showed a massive deviation from 32.5 percent to 52.7 percent respectively between budget and revised estimate of 2013-14. However, Balochistan government pitched a lower figure for both primary and secondary education in budget 2014-15 which showed a decrease of 14 percent and 17 percent compared to revised estimate of 2013-14. It is difficult to understand why primary and secondary education massively increased in one year and drastically cut down in second year budget. Whether, this cut is an intentional effort to divert resources from education to other sector or simply an accounting error.
With respect to share of primary, secondary, tertiary education and others category, primary education has been allocated a lower share (24.8%) as compared to secondary education (37%). With Millennium Development Goals (MDGs) of achieving universal primary education, lower share in primary education in comparison to secondary education, seems extremely confounding and perplexing. According to UN, more than one in four children in developing regions entering primary school is likely to drop out; hence the question arises that has Balochistan successfully controlled its dropout rate or using its own derived logical policy for allocating less on primary education.
Likewise current revenue expenditure, education affairs and services under development expenditure has similar priorities. This means irrespective of budget estimate 2013-14, revised estimate 2013-14 and budget estimate 2014-15, Balochistan government placed secondary education on the top, tertiary education being second and then primary education and others. As per budget estimate of 2014-15, share of primary, secondary, tertiary education and others is 23%, 33%, 26% and 18% respectively.
Within health sector, five functional heads in order of priority as per this budget include general hospital and clinics, administration, general hospital services, other health facilities and prevention and drug control. It is important to distinguish between general hospital and clinics and general hospital services as such classification is not present in any other provincial budget. General hospital and clinics mainly refer to primary care and secondary care while general hospital services include specialised and tertiary care. General hospital and clinics have been paid immense importance in terms of 47% growth from revised to budget estimate of 2014-15 and almost 50% share in this budget.
The other most striking part in health expenditure is a 30% allocation of health outlay on administration in budget 2013-14 and 2014-15. Despite this huge provision in 2013-14 budget, government has allocated only 12% as per the revised estimate of 2013-14. This lag is mainly present in director general health services in which less is spent on administration staff and simply nothing on plant and machinery and medical equipment.
One of the clear downsides of Balochistan's budget is its over-reliance on federal transfers, which may create uncertainties if federal government missed its tax targets. Going over provincial tax receipts, it is quite clear that government has failed to achieve its target in both categories: direct and indirect taxes. There is a lag of 33 percent in collection of direct taxes and 47 percent in indirect taxes of 2013-14. Given these unsatisfactory figures of direct and indirect taxes as per the revised estimates, government has projected to compensate by increasing direct taxes by 57%. However, a significant decrease in indirect taxes in 2013-14 has not been compensated equally ie there is minimal increase of 5 percent in indirect taxes as per the budget estimates of 2014-15.
Although the provincial government has clearly struggled to increase development expenditure in the budget 2014-15 in order to bring about social development and improve human development index, no such endeavour can be seen in resource mobilisation to support this transformation. With prevalent socio-economic challenges in the province, shifting focus to social sector requires painstaking effort on part of the provincial government and cooperation by the federal government. On the face of it, it is easy to claim the budget ostensibly pro-poor and self-reliant; hence, exigent practical steps are certainly required to transform Balochistan into a prosperous province via capitalising the expenditure allocation set in the new budget.
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BALOCHISTAN GOVERNMENT'S OVERALL BUDGETARY POSITION
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In billion of Rupees
2013-14 2014-15 Growth
Budget Revised Budget RE-BE BE-RE
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RESOURCES
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General Revenue Receipts : 161.4 160.7 176.8 -0.4% 10.0%
ederal Transfers 150.4 152.7 167.8 1.5% 9.9%
Provincial Own Receipts 10.9 8.0 9.0 -26.9% 11.8%
Development Grants 1.7 11.0 1.9 555.7% -82.3%
Net Capital and Public Accounts Receipts 6.6 13.1 5.3 96.8% -59.3%
Total Resources 169.7 184.8 184.0 8.9% -0.4%
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EXPENDITURES
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Current Revenue Expenditures 117.3 119.3 135.1 1.6% 13.2%
Development Expenditure 43.9 51.8 50.7 17.9% -2.0%
Total Expenditures 161.3 171.0 185.8 6.1% 8.6%
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Fiscal Balance 8.5 13.8 -1.8 62.8% -112.7%
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