Jun 162008


Even after the announcement of the first budget of the coalition government it is still not clear as to what the major priorities of the government are and what they are going to be.
It is true that the economic situation is bad and the government had to make a budget in very constrained circumstances. International and domestic shocks have increased inflationary pressures, reduced foreign inflows and increased pressure on foreign currency reserves, the interest rates as well as the exchange rate. Domestic slowdown is increasing concerns about lower growth, unemployment as well as increases in poverty.
The government clearly had to cut expenditures at a time when the economy is slowing down and poverty becoming an even larger threat. At the same time the government also had to live up to its electoral promises. This was a difficult position and the budget, clearly, tried to do a little of everything. The question is: while trying to do too much and a bit of everything did the government end up having a budget that does not do anything well and one that does not even tell us what is the grand plan of the government?
Democratic government had come in with the promise of providing relief to the people. The people were hurting from food and fuel inflation, they were hurting from lack of electricity, problems related to access to potable water, sanitation, lack of facilities for health and education and lack of opportunities for gainful employment. The budget has made some promises on these fronts, but it does not seem that providing relief has been given the high priority that was expected from the democratic government.
The commitment to health and education, in the federal budget at least, is only marginally above what it was last year. It is true that expenditure on primary and secondary education is mainly a provincial subject, but this has never, in the past, stopped the federal government from either running or using its funds to supplement the efforts of the provinces. If education and/or health were a priority, the federal government could have used such means again. But it has chosen not to.
This does say a lot about what the government is thinking about, or more properly, what it is not thinking about. Has the economic crisis made the government too focused on the short as opposed to the medium/long run? Is the government trying to manage expectations and the crisis in the short run while forgetting that the real war in Pakistan is against lack of human development; something that PPP and PML-N have clearly been worried about?
The budget speech did talk of two initiatives that might temper what has been said above. First, the finance minister said that the government is committed about setting up a commission on human development issues that will look into issues related to unemployment, vocational training and related areas (quality of education would have to be one of the areas). The commission has also been promised adequate resources to be able to do its job.
The problem with the announcement is that no details about the commission, its remit or powers were given to the people, and there have been so many commissions set-up by the previous governments too, including commissions on government reforms, human development, status of women, and so on, and none of these commissions have been able to deliver a lot and hence a healthy scepticism about this promised commission does not seem unwarranted.
What if this is another lame commission that does nothing except work for the aggrandisement of its chairperson and the top people in the government? Did the commission on government reform do anything else? Or has the National Commission on Human Development achieved anything else?
The other major initiative announced was the initiation of Benazir cards. Although the details of the scheme have not been clearly laid out again, and we will come back to issues involved there, but it does sound as if the government is starting to think about creating a cash transfer based system of social protection. The government has promised Rs 30 billion for the plan, with the promise of topping it up to Rs 50 billion if needed, and it has also promised that this money is going to be used for the poorest of the poor in Pakistan. This is, potentially, a big and positive step and in the right direction, if the government is serious about targeting relief for the poor in our society. But again, the problem is details.

Source: The Nation, 16/6/2008

 Posted by at 7:36 am

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