Saturday, 23 June 2007

More on the Pakistani Budget

Sherry Rehman has an excellent critique of the government's proposed budget here in Dawn which is simply a must read. She adds a great deal of nuance and detail to the point I made in my blog here about how the budget is once again concerned with growth at the expense of welfare, thereby benefiting the rich at the expense of the poor. She also points out the following:

1. The Rs. 60 billion handout from the US Pentagon isn't in the budget. Where is it? Rahman reminds us that there is no parliamentary oversight over the military budget (the military does not report what its spending the public's money on).

2. Despite massive economic growth, the Pakistani government still borrows heavily. Massive borrowing from local banks drives interest rates up, inhibits local investment and drives inflation.

3. My point about the need to tax luxury consumer imports is made. (I had made the point about imported cars.) These account for $2.04 billion out of $27 billion spent on imports.

4. Where's the pork? Rahman points out the expenditure of the President House is earmarked as Rs. 316 million. NAB's budget has now been inflated to Rs. 897 million (Rs. 2.4 million a day!) By contrast, the Ministry of Law, Justice and Human Rights is a paltry Rs. 197 million! Does NAB have any kind of results to show for this kind of expenditure? What possible use will this money be put to? One answer might lie in the fact that NAB is now a civilian fa├žade for a retirement welfare club for ex-ISI officials.

As it happens, in the same issue of the Dawn is a small op-ed on the Provincial Budget of Baluchistan. Widespread resentment about the exploitation of Baluchistan's rich mineral and fossil fuel wealth, while the provincial government remained starved of funds, helped fuel the civil war that has raged in the province over the last few years. One might have expected the government to try and address some of these concerns, even on a cosmetic level. Alas, this has not happened.

Firstly, the total budget outlay is Rs. 63 billion. This in a province where the "the federal government extracts no less than an estimated Rs. 78 billion annually from Baluchistan's oil fields alone." That does not, of course count the huge amounts earned from the extraction of sui gas, or the large amounts of coal, iron ore and copper deposits found there. Overall 39 different minerals are being mined in the province (source: Baluchistan Economic Report 2005). Yet the Public Sector Development Programme has budgeted only Rs. 13 billion for social development - of which Rs. 10 billion is unfunded, with the province hoping for handouts from foreign development donors and the Federal government. This amount is solely for the continuance of current projects. No new projects are envisaged.

All this in a province where 47% of the population is below the poverty line, there is no significant private investment in productive sectors of the economy - whether agricultural, mining, or industrial. Female literacy is half that of the national average and maternal mortality is almost twice the national average.

The Federal government argues that it is investing billions in Baluchistan - these billions are all going into the development of the new port and its environs in Gwadar, and the building of a highway infrastructure to link military and naval installations to the rest of the country. While there is some trickle down in terms of menial jobs, this is offset by the navy's encroachment onto coastal areas through which they are destroying the livelihood of Makrani fishing communities. Productive investment this is not.

These are important concerns and needed to be given due consideration by the people's representatives. Alas, the NA has adopted the budget with hardly any changes, or any debate, whatsoever.


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