EDITORIAL: The annual budgets of Pakistan Tehreek-e-Insaf’s (PTI’s) governments in Punjab and at Centre were enough to confirm Imran Khan-led party’s fiscally expansionist mindset for the next fiscal year, even at the risk of upsetting the International Monetary Fund (IMF) and derailing the bailout programme, so it’s no surprise that the budget of Khyber Pakhtunkhwa (KP), another PTI-ruled province, too, is along the same lines. The KP Finance Minister looked pretty pleased with himself and his party as he presented a Rs 1.118 trillion budget with a record development outlay of Rs 371 billion. This is just the shot in the arm the government believes that the provincial economy needs to ‘mitigate the impact of Covid-19’ and to bounce back strongly from last year’s contraction now that the going is getting better; hence the overall shift from survival to growth and development.
It’s more than a small relief that proceedings went ahead without any disruption and the country was spared yet another repeat of the spectacles created in Islamabad and Quetta. In the capital first the sight of treasury members hounding the opposition leader during his budget speech and then the way both sides of the aisle descended into ugly verbal and near-physical exchanges was a national embarrassment that will not soon be forgotten. And then, to crown it all, there were even worse scenes in Quetta before the Balochistan budget was unveiled even after the leaders of the government and opposition met and decided to be more civil and respectful of the House, and of each other, in future. So it’s good to see good sense prevail at long last and, as things stand, it’s best if the opposition lets those in power prove their cases on the ground.
A breakdown of revenue estimates shows that the province would receive Rs 559 billion from the federal divisible pool, Rs 74.5 billion net hydel profit for hydroelectricity produced in KP and Rs 75 billion own revenue. The minister also revealed that the centre would provide Rs 187.7 billion in lieu of federal grants for merged districts with a transfer of Rs 34.6 billion from the divisible pool. Foreign assistance for development projects has been quoted at Rs 89.2 billion. While the province, or any province for that matter, would welcome all sorts of injections, especially when it is setting the stage for a much larger, coordinated economic takeoff, this budget does give the feeling that the feel-good factor owes primarily to the revenue base provided by the federal divisible pool.
Yet for this year’s budget to truly make way for long-term adjustment towards sustainable growth, the provinces would have to become a lot more self-sufficient when it comes to raising their own revenue. Because for all the good things that came with the devolution of power, provinces have yet to display the ability to handle some of their most important matters; and generating adequate revenue is at the top of that list. This thinking is also in line with PTI’s original vision of cutting the financial umbilical cord that continues to bind the provinces to the centre. So this is as good a time as any to get the ball moving on that front as well.
That doesn’t mean that the expansionist outlook adopted in the budget was not necessitated by events, just that its adoption in the present setting, when the impression was that the government was on the contractionary path, does border on the eccentric. Now all eyes will be on what PTI’s governments in the provinces and the centre do to bring their rather ambitious plans to fruition. For that they would have to keep an eye on long-term fundamentals. It’s a great idea for the KP government to increase salaries of government employees by 10 percent, allocate Rs 10 billion each for wheat subsidy and food basket for the poor, another Rs 10 billion for businesses and individuals affected by the pandemic, even shower the market with tax breaks, but as long as it relies on exogenous injections to keep he wheel turning this will only amount to a short-term bulge in the long-term graph.
To conclude, PTI’s central think tank should be given credit for rolling out the budgets that it did, but only if these were only the first of many solid steps that will look beyond the next election and take care of the long-term as well.
Copyright Business Recorder, 2021
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