The Punjab Finance Minister Ayesha Ghous Pasha presented the supplementary budget for the ongoing fiscal year in the Punjab Assembly chaired by Speaker Rana Muhammad Iqbal amid protest by the Pakistan Tehreek-e-Insaf (PTI). The protest was not on the supplementary budget presentation but to allow PTI to move an anti-Nawaz Sharif resolution subsequent to his remarks on the 26/11/2008 Mumbai attack. This is unfortunate as the session was called specifically for the presentation of the Punjab supplementary budget and PTI would have been better advised to focus on critiquing it.
The Punjab Finance Minister must be appreciated as she succeeded in convincing Chief Minister Shahbaz Sharif, the likely party candidate for the post of prime minister in the event that PML-N wins the 2018 elections, not to toe the line taken by the Abbasi-led federal government that opted to present the budget for next fiscal year 2018-19 amidst allegations of pre-poll rigging.
Be that as it may, Punjab’s supplementary budget raises serious questions about the provincial government’s reliance on borrowing, which appears to be mirroring decisions/actions taken by the federal government, that is responsible for raising foreign debt from around 60 billion dollars in 2013 to over 90 billion dollars today and more than doubled domestic debt in just five years whose interest/repayments as and when due is accounting for an increasing budget allocation leaving little for development expenditure.
The supplementary budget envisages 85.4 billion rupees increase in current expenditure budgeted at 1 trillion rupees last year, giving a total of 1.85 trillion rupees. This sizeable increase, of 85 percent, was utilized by most of the ministries/departments on salaries, perks, allowances, travel allowances/daily allowances, maintenance and rent. In contrast, development outlay utilized was on average around 48 to 65 percent of the budgeted allocation. These figures must be a source of serious concern to the Punjab government and the public as they lend credence to reports of gross irregularities, waste of public resources, lack of transparency in tendering various projects, not undertaking regular audits, favouritism in appointments and inordinate delays in completion of different projects. National Accountability Bureau Chairman has begun investigating around 56 companies, including the Punjab Saaf Pani Company in which the Chief Minister’s son-in-law is also under investigation – a company that has since been closed.
The additional funding required for enhancement of the current expenditure came largely from borrowing, accounting for 50 percent of the supplementary budget to be spent on repayment of loans to the federal government and 47 percent on interest on debt and other obligations. Administration of justice is earmarked to receive only 2 percent of the funds and civil works 1 percent.
There is also considerable criticism of the priorities of the development budget with the Finance Minister acknowledging that the Orange Line and power projects were the priority. Unfortunately, however, there are two major concerns with respect to the power projects in Punjab: (i) coal projects have been located away from the source of coal (port for imported coal and away from the site of domestic coal) - a mineral posing considerable health/environment hazards as well as raising transport costs; and (ii) the transmission network remains inadequate and should have been prioritized.
Thus the Punjab government has faced considerable criticism for prioritizing mega infrastructure projects at the cost of the well being of the people of Punjab, or in other words the Orange Line/power projects received disbursements at the cost of social sectors, including education and health. Critics argue that the government was guilty of manipulating the economic and internal rates of return of these mega projects relative to social sector projects which allowed it to begin implementing mega projects. This data manipulation must stop immediately.
To conclude, one can only hope that the Punjab government has learned some valuable lessons and will take appropriate mitigating measures if it succeeds in forming a government in Punjab after the elections 2018.
