For a left-leaning party
battling for its political life in an election year, the Awami National
Party included, surprisingly, little populist spending in the Rs303
billion Khyber-Pakhtunkhwa budget for fiscal year 2013.
In the budget speech delivered at the
provincial assembly on Friday, Khyber-Pakhtunkhwa Finance Minister
Muhammad Humayun Khan essentially listed off some of the government’s
political achievements before essentially reading out the entire budget
document, numbers and all.
Far from the political drama and
fistfights on the floor of the National Assembly during the federal
budget, the K-P budget session was more akin to a particularly boring,
corporate annual shareholders meeting.
There were at least a few populist items
on the finance minister’s agenda. The provincial government announced
that it would follow Islamabad’s lead and provide an ad-hoc bump of 20%
in the salaries of its employees, a move that had been a foregone
conclusion since provincial bureaucrats work alongside federal ones in
provincial capitals and a pay disparity would cause tension.
And taking a page from Punjab Chief
Minister Shahbaz Sharif’s book, the K-P government announced its own Rs1
billion free laptop scheme – named Naway Sahar (New Dawn) – for
students in the province, saying it would hand out 25,000 such laptops
to top-performing students.
Peshawar will also be spending close to
Rs2.5 billion subsidising wheat, though this policy is rarely trumpeted
by any provincial government since it is essentially a mandate that the
federal government forces on the provinces.
The budget includes about Rs97.5 billion
for development spending, about 24% of which will be funded by foreign
governments. The single biggest donor to the province is the United
Kingdom, followed by Japan. The United States, by contrast, is among the
smallest foreign donors to the province.
Education and health
Like Sindh, K-P allocates most of its
education and health spending at the district level rather than at the
provincial level. Hence, education appears to account for less than 11%
of the total provincial budget. Yet a closer look shows that well over
99% of the province’s education department staff is in fact at the
district level and is accounted for in the lump-sum transfers to the
districts.
Health, similarly, appears to account for
just 5.7% of the total budget, but again, most of the spending takes
place at the district level. K-P transfers about 28.2% of its total
budget – the largest chunk allocated to any category – to the districts,
a level surpassed only by Sindh in previous years.
Like most other provinces, K-P complains
that the overwhelming majority of its budget ends up getting spent on
salaries, with little left for development expenditure. Nonetheless, the
province has allocated just over 9% of its budget – or about Rs27.5
billion – to expenditures such as building roads, improving the
province’s water supply, developing urban infrastructure, etc.
By contrast, the districts spend are
expected to spend about 83% of their budget on salaries, with just
one-sixth left over for non-salary expenses – and that includes such
needs as paying their utility bills.
The largest chunk of the budget, however,
goes to public safety, unsurprising in a province wracked by a militant
insurgency and sporadic violence. The province expects its public safety
budget to go up by 24% this year, to Rs34 billion.
Spending efficiency
Yet K-P – alone among the provinces – has
also decided to get innovative with its project. It introduced “output
based budgeting” for education and healthcare in two districts. Having
successfully tested the pilot project where it asks provinces to meet
specific targets for which the province allocates money, the province
now wants to roll out the unique methodology – designed to get more
efficiency in its spending – to twelve districts.
Revenues
On the revenue side, Peshawar admits to
being largely dependent on Islamabad for much of its revenues. Federal
transfers to Khyber-Pakhtunkhwa account for about 75% of its total
budget, and on foreign donors for another 7.7%. The remainder – which
comes to about Rs52 billion – comes from the province’s own tax
receipts, though even these are collected by the federal government,
which charges a 1% service fee.
Of its own revenues, the single largest
chunk of Rs25 billion, or about half the province’s own collections,
actually comes from other provinces paying royalties for the
hydroelectricity generated by dams located in K-P. Despite promises made
at the 7th National Finance Commission Award and at the passage of the
18th Amendment to the constitution, K-P appears to join the other
provinces in not having built up the capacity to collect its own taxes.
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