Balochistan Budget

Finance Minister Syed Ehsan Shah has unveiled in Balochistan Assembly a Rs 59.700 billion provincial budget for FY 2006-07, showing a staggering deficit of Rs 10.963 billion. The budget session was marked by a rumpus, with some opposition parliamentarians throwing away the budget documents on the assembly floor before staging a walkout against what they called an "anti-people" budget.
The budget includes PSDP of Rs 10.820 billion that contains foreign project assistance (FPA) of Rs 760 billion, while the non-development expenditure is estimated at Rs 37.4526 billion. The budget presents an unflattering picture of the province's financial health. It also depicts gross fiscal mismanagement. The total revenue receipts from the federation are estimated at Rs 33.8 billion while the province's own receipts are estimated at only Rs 2.502 billion.
The vast difference mirrors a laid-back approach to revenue generation at the provincial level. The income from provincial receipts is estimated at only Rs 0.88 billion in taxes and Rs 1.618 billion from other sources. The income to be generated from federal receipts is put at Rs 7.9 billion (direct transfers), Rs 12.2 billion (subventions/grants) and Rs 13.7 billion as share in the federal pool of taxes.
According to the provincial finance minister, the total resources of the province come to Rs 48.733 billion as against total expenditure of Rs 59.696 billion, with an aggregate deficit of Rs 10.963 billion. Analyzed closely, the budget epitomises all that is wrong with the country's poorest, but most resource-rich, province.
In a way, the Balochistan Budget shows a marked "dependency syndrome." As usual, there is too much dependence on the Centre, with the federal revenue receipts accounting for Rs 33.8 billion - almost 14 times more than what the province expects to generate from its own resources. With its projected tax receipts standing at only Rs 880 million, the province's ability to raise its own revenue falls far short of what it ought to have been.
Analysts believe that the Rs 37.45 billion allocated for non-development expenditure is much larger an amount than Rs 10.82 billion set aside for development expenditure. This shows the lopsided priorities of the ruling coalition, particularly against the background of the abysmally low development level in the province, despite the "mega packages" unveiled by the federal government from time to time.
Even 59 years after independence, Balochistan remains the country's poorest and least developed province, with a per capita income of only Rs 9,144 which is less than a quarter of the national average. The financial stakes are so heavily loaded against the province that there seems to be no hope of its ever attaining self-sufficiency.
Balochistan is currently caught in a debt trap of Rs 62 billion, including approximately 17 billion it owes to the State Bank. How can the country's poorest province be saved from going further downhill? One way out is for the federal government to take over Rs 17 billion that the province owes to the State Bank.
Secondly, the federal government should implement the Mushahid Hussain Committee's proposal that calls for a raise in gas royalty from the current level of Rs 6.32 billion to Rs 7.80 billion, including the gas development surcharge (GDS).
Further, the accumulated backlog of gas and other royalties should be cleared to relieve the financial burden on the province. However, the province too should make every effort to enhance its revenue generation capacity, and practise greater fiscal discipline. Ultimately it will have to practise self-reliance by pruning all types of non-development expenditure.