Long road ahead
Well, the provinces wanted autonomy, now they’re going to have to take up the responsibility that comes with it. The federal government is reportedly planning to move out of social development programmes. Barring the few ongoing programmes, all the other programmes are going to be run by the provincial governments. It certainly does make sense; with ministries like Health and Education being devolved, it is only fitting that the provinces do all the planning, implementation and, more importantly, spending.
This being an election year, there is much political pressure to hike up the PSDP, that too, in the most simplistic “income support” heads. The government’s economic planning czar, Dr Nadeem-ul-Haq admitted the possibility but cautioned the government to watch its fiscal deficit level at the same time. The target for fiscal deficit is set to slip, even though the aforementioned had already been revised downwards since the beginning of the current fiscal year – from 4 percent of the GDP to 4.7 percent.
The deficit jumps could be attributed to a number of reasons. The Coalition Support Fund payments, for instance, were projected at $1.2 billion at the start of the fiscal; that isn’t happening and things might continue to be dicey, given the rather precarious nature of our relations with the US. Then there was the low-lying fruit that the auction of 3G licenses would have yielded. No cigar there, either.
Things don’t get much better because of the lowering of the revenue target – from 11.7 percent to 10.7 percent. Our non-tax revenue is to fall as well with the sum total of our revenues falling from 15.9 percent to 14.7 percent.
In the short run, there really is nothing to be done about the revenues. In the long run, tax reform, rationalisation of the utilities’ tariffs, plugging the leaks at the public sector enterprises and getting some of them off the government’s hands entirely, are all steps that could do the trick. To reforms, then!
