EDITORIAL: The government is to begin a legislative process this month designed to initiate implementation of austerity measures that have been formulated by committees established under the directives of Prime Minister Shehbaz Sharif with media reports indicating that the list includes (i) dissolution of various regulatory councils of subjects that were devolved way back in 2010, education and health, though this would then imply a commensurate outlay by the provinces; however, federal universities and hospitals are to be run by corporate boards in the private sector under Public Private Partnership (PPP) mode; (ii) complete ban on appointment of staff to federal universities and hospitals and freeze on recruitment in grades 1 to 16 after a position falls vacant; and (iii) transport facility for ministries and divisions would be abolished though sadly the scope of monetisation would be expanded with the top tier not only drawing hefty transport allowances but also using official transport.
One must extend full support to the federal government for taking this initiative that has been pending for 14 years now, a pendency that has cost the national exchequer billions of rupees annually that the current ongoing economic impasse can no longer withstand.
Five observations are, however, critical. First and foremost, the process is not going to be smooth as it envisages considerable relocation by staff which, if past precedence is anything to go by, may generate strike action.
Given the ongoing protest by the Jamaat-i-Islami against eroding incomes of not only the poor and vulnerable but also of lower to middle income groups that are increasingly disabled from incurring expenditures other than meeting their kitchen budgets it maybe more advisable to look at slashing current expenditure to generate immediate leverage with lenders particularly with respect to deferring taxes on the salaried announced in the Finance Bill 2024.
In 2024-25 budget, quite bafflingly, the current expenditure was raised by a whopping 21 percent – higher than the projected inflation rate of 11.85 percent for the year.
Even if one takes the higher rate of 12.7 percent as projected by the International Monetary Fund for the current year, there is no economic justification for raising current expenditure by 21 percent. This would require voluntary sacrifice by the major recipients of current expenditure, including civilian administration, for the current year at least.
Second, the transfer of devolved subjects to the provinces who have yet to exhibit any capacity to run them may account for the proposal to run hospitals and universities through corporate boards under the PPP mechanism.
However, in this instance too, the general public may be unable to foot the increased fees that would be associated with a corporate board which, in turn, would have negative repercussions on the already abysmal education and health statistics in this country.
Third, monetisation has and continues to be abused, and perhaps the time has come for the government to abandon the provision of housing, transport and other benefits, including a limit of utilities used that are paid for at the taxpayers’ expense to members of the cabinet as well as those who are serving in organisations/utilities. In addition, given the current state of the economy, it would be appropriate for cabinet members as well as National Assembly members to not accept salaries for one year if their income is higher than the taxable amount.
Fourth, while the Motorway Police has a good reputation in terms of performance, the same cannot be said about the National Highway Authority (NHA). True that the PML-N is associated with large road projects yet one would have hoped that NHA was devolved to the provinces for increased accountability.
And finally, reports suggest that the government is considering setting up a social sector affairs division. This would simply be duplicating efforts of the Benazir Income Support Programme (BISP), which must be strengthened, and its scope expanded to include all subsidies to be provided through this well-established mechanism rather than through a parallel state-run organisation.
To conclude, while one must appreciate the efforts of the committees to come up with solid recommendations yet given the current economic impasse it is simply not immediate enough to make it acceptable to the general public.
Copyright Business Recorder, 2024
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