Sindh has unveiled a surplus budget of Rs 457 billion, up from Rs 422 billion last year. Being the first budget after the passage of the 18th Amendment that gave provinces a better share in the federal divisible pool and the powers to collect some taxes, the budget imposed no new taxes and has an estimated surplus of Rs 882 million. The estimated revenue receipts from the federal divisible pool will be Rs 251.9 billion, up by 21 percent compared to the current year’s Rs 207.3 billion. The biggest chunk of the budget has as usual been claimed by recurring expenditures, which are estimated at Rs 283.147 billion. However, the Sindh government has been acclaimed for an unprecedented allocation of Rs 161 billion for development, up from an estimated Rs115 billion in the current fiscal year, which was later revised to Rs 77 billion after the devastating floods in 2010. Perhaps more than allocation, it is the capacity to utilise this amount that is important. It is unfortunate that, more often than not, a substantial part of the development budget lapses in almost all the provinces due to their inability to successfully initiate new projects or properly run/complete the ongoing ones. Education has received Rs 26.8 billion, up by 15 percent compared to the current year, which constitutes about 5.1 percent of the entire outlay. According to the provincial education minister, the focus is on the completion of ongoing projects rather than initiating new ones. The allocation for elementary, secondary and higher secondary levels forms a pyramid. Given the need to ensure universal literacy and strengthen the base, this seems to be the right approach. Now that higher education has been devolved to the provinces, it is yet to be seen how the province will manage universities in its jurisdiction with this budget, when the actual devolution takes place. Surprisingly, the budget for education is less than that of irrigation, transport and communications, livestock, etc, which is reflective of the priorities of the province.The highlight of the budget is that Sindh’s right to collect tax on services has been acceded, in accordance with the 18th Amendment. For a long time, there was a disagreement between Sindh and the Centre over who will collect this tax, which is a substantial amount due to the presence of the port/industrial city, Karachi, in Sindh. On the whole, the budget appears to be optimistic. The expanded outlay is a step towards strengthening of the provinces. It is for Sindh to now prove that it has the capacity to upgrade its structures and systems and absorb the ministries and functions passed to it from the Centre as well as successfully utilise its development budget. *