The respective budgets of Punjab and Sindh for (2016-17) have been talked about recently. Both provinces posted deficit budgets. Punjab posted budget with an outlay of Rs 1.68 trillion whereas Sindh posted Rs 869 billion, which is 17.9 per cent from the last year. The receipts from the federal division pool reflected a 17 per cent increase for both provinces. The focus, however, on how they intend to spend these funds determines the strategy of growth and the future vision for the respective provinces.
During the past few decades, Sindh and in particular Karachi’s economy have been the victim of many political and non-political turmoils. Despite the political unrest due to sectarian, political violence and terrorism, the city still holds the crown of being Pakistan’s economic hub. It enjoys the concentration of major financial institute’s headquarters and MNCs (multinational corporations) and the concentration of skilled financial professionals. In contrast to Karachi and its suburbs, the rest of rural Sindh suffers from a lack of basic amenities and infrastructural facilities.
Hence the budget focused on the social sector, the government has allocated 30 per cent of the budget of Rs 266 billion on the development expenditure, which constitutes around 30 per cent of the total expenditure of the province. The province allocated around Rs 61.7 billion for health projects, an almost 16.8 per cent increase from the last year, creating 3,500 jobs. Education budget rose by 11 per cent to Rs 160b with possibility of creating around 10,000 jobs. This includes addition of new institutes and maintenance of existing institutes. The budget for repairs and maintenance of roads is Rs25b.
There is 14 per cent increase in the internal security budget with the enhancement of security forces including the police, Rangers and other security agencies. The provincial government wants to expand the police force by creating 20,000 new jobs. This is under the intention of curbing violence in the biggest industrial city, Karachi. The strategy of the Sindh government focuses more on enhancing the existing projects and services and improving efficiency and security. It reflects growth through social improvement.
On the other hand, Punjab presented a total budget of Rs1.68 trillion, which shows an increase of 40 per cent from the last year. The budget earmarked Rs 310b for education, with reduction of 18.6 per cent from the previous year. The critics weren’t happy with a budget cut for the ninth consecutive year for the most important investment in youth. The government also earmarked Rs 2b on higher education with major investments in Lahore Technology Park and an IT and Engineering University. Sialkot will get a women’s college and an IT and Engineering University. Rest of the major cities like Rahim Yar Khan, Multan, Faisalabad and Bahawalpur will see an addition of 46 new colleges.
Four billion rupees were allocated for the controversial Laptop-PC distribution scheme under which 400,000 students will be provided with laptops. Critics have always argued about the transparency of the scheme and the logic of spending on providing tools rather than knowledge to use the tools. The government allocated a lower than expected Rs 1.9 b for providing basic literacy by establishing 13,000 non-formal basic education schools. A staggering Rs 50 billion will be spent on a Khadam-e-Punjab school strengthening program that will address the dilapidated and old school buildings.
The health sector saw an allocation of Rs 207 bilion for existing and new projects. Again Lahore will benefit with establishment of Pakistan Kidney and Liver Institute (PKLI), with Rs 4b investment and Rs 2bn for the revamp of four tertiary care hospitals in the province. Rs 4.31bn have been allocated for the upgrading of existing DHQ hospitals into teaching hospitals at Gujranwala, Sialkot, Sahiwal and Dera Ghazi Khan. Rs 3.7bn will be spent on revamp of all DHQ hospitals.
One positive and new initiative was addressing the preventive healthcare measures. The provincial government has allocated Rs 400m for infection-control measures. Rs 2.5 billion have been earmarked for newborn and child healthcare nutrition programme and Rs 1bn for immunisation. Government will invest Rs 1bn on mobile health care unit.
On infrastructure, Rs 550bn have been allocated to ADP (annual development programme) and out of this development fund, Rs 333b will be spent in current fiscal year on projects, including the Lahore Orange line. The budget indicates the focus of the government on infrastructural development programes. Orange line investment remains a highlight, as Rs 72b of ADP fund is solely allocated for this project in the current fiscal year and remaining expense of the project will be funded through a soft loan.
The argument against such massive investment remains the concentration of 13 per cent of the development fund in one area and the fact that economic profitability will not be realised in the short term. The short term benefits include creating immediate job opportunities and better transportation facilities for the general public.
In the long run, the economic benefits of such projects include accessibility of general public that may increase workers’ ability to access education and employment opportunities (thus increasing their productivity and incomes), increase residents’ access to more health and shopping opportunities (providing financial savings), and increase access to recreation and cultural opportunities (i.e. increasing their welfare). Reduce the transportation cost including travel time, vehicle operating costs and road accidents etc. Such projects are never about making money, these are about making a statement, image and long term direct and indirect economic benefits.
The cost/ benefit appraisal of Orange Line will be revealed after several years of operation when the total resource cost out weighted the benefits generated and the opportunity cost prevailing at the time of construction, till than it remains debatable.
The critics of the budget are arguing about concentration of attention in one major city of Lahore, be it big educational institutes, health care facilities or transportation. Although the government has tried to address the sense of deprivation felt by southern Punjab by announcing colleges and health care facilities. However, the massive concentration of funds remains utilized in one city due to ongoing orange line.
One important milestone of the Punjab government remains the focus of automation of vital government departments in order to bring about efficiency and the emphasis on services, record keeping and reduce cost of replacing technology with manual work.
By analysis of the trend of spending between the two provinces we see that the focus of Sindh government is to maintain and enhance the ongoing projects and no major shift in the policy. However, the Government of Punjab is focusing on long term benefits of building infrastructure, transportation that creating markets, employment and turbocharge the economy in the long run.
No one can argue with the need of improving infrastructure, especially transportation facilities. However, it is imperative that these projects must be aligned with the needs of the area and represent the best value for money. The economic viability and direct indirect benefits of such project will only be measurable once these are operational for several years. For the time being it remains an expense.