An Analysis of Development Budget of the Punjab, 2018-19

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An Analysis of Development Budget of the Punjab, 2018-19 Geographic Spread of Resources: An Analysis of Development Budget of the Punjab, 2018-19 Geographic Spread of Resources: An Analysis of Development Budget of the Punjab, 2018-19 Table of Contents Geographic Spread of Resources: .......................................................................................................... 1 An Analysis of Development Budget of the Punjab, 2018-19 ................................................................ 1 Geographic Spread of Resources: An Analysis of Development Budget of the Punjab, 2018-19 ......... 2 Executive Summary ................................................................................................................................ 1 Rationale of this Study ....................................................................................................................... 2 Methodology ........................................................................................................................................... 3 Background ........................................................................................................................................ 3 Methodology ....................................................................................................................................... 3 Revenue Development Budget ........................................................................................................... 6 Revenue Development Budget-District Wise ................................................................................... 14 Capital Development Budget ........................................................................................................... 17 Capital Development Budget (District Profile) ................................................................................. 20 Percentage Share of Departments in Total Development Budget .............................................. 24 District Allocation Comparison with District Population .................................................................. 29 Recommendations: ............................................................................................................................. 33 i Geographic Spread of Resources: An Analysis of Development Budget of the Punjab, 2018-19 Executive Summary May and June are the months when government presents budget estimates in the assemblies. The members of the assembly discuss these estimates and give approval. The implementation of the approved budget starts from 1st of July. By February/March during the same fiscal year another exercise for revision of budget estimates takes place. Revised Estimates are mid-year review of expenditure, considering the expenditure for the rest of the year, and new services. Revised Estimates are not voted by the Parliament until by the end of the year. Revised estimates can be prepared under any one of the following circumstances: When the original approved estimate is likely to exceed (or decreased) or if there is an unforeseen natural disaster, drought, war etc. and the state finds it necessary to divert the funds to address the immediate needs of the citizens or when the government feels that a scheme originally not conceived is necessary for the welfare of the citizens and should be initiated mid-year. Art 124 gives the constitutional cover for this mid-year diversion1. In Pakistan, the funds are diverted for other reasons too. This study discovers that there are hundreds of development schemes that appears in budget estimates but are abandoned mid-year and hundreds of new schemes are started without sharing information with the citizens or legislators. The development budget is divided into two parts: Revenue Development Budget and Capital Development Budget. When comparing budget estimates with revised estimates, there is no notable fluctuation in the overall volume of the budget. The revenue development budget increases from 168.5 billion in budget estimates to 169.5 billion in revised estimates. The budget estimates for capital development budget are PKR 89.6 billion in budget estimates which are reduced to PKR 87.2 billion in revised estimates. The overall reduction in the total development budget is 0.5 percent only but there is quite a drastic reshuffling of budget within departments and districts. This study also makes a comparison of total development budget with the population of the districts. There are some districts with proportional share of budget allocation more than their population. District Lahore tops the list with 10 percent of population share in the province but 43 percent of development budget allocation. Next in line are Dera Ghazi Khan with 2.6 percent population and 5 percent allocation and Rawalpindi with 4.9 percent population and 6 percent allocation. For most of the districts, percentage population is more than the development budget allocations. The worst affected districts under this category are Muzaffargarh with 3.9 percent population and 1 percent budget allocation, Okara 2.8 percent population and 1 percent allocation, Multan 4.3 percent population and 2 percent allocation and Gujranwala with 4.6 percent population and 3 percent 1 Supplementary and excess grant 124. If in respect of any financial year it is found— (a) that the amount authorized to be expended for a particular service for the current financial year is insufficient, or that a need has arisen for expenditure upon some new service not included in the Annual Budget Statement for that year; or (b) that any money has been spent on any service during a financial year in excess of the amount granted for that service for that year; the Provincial Government shall have power to authorize expenditure from the Provincial Consolidated Fund, whether the expenditure is charged by the Constitution upon that Fund or not, and shall cause to be laid before the Provincial Assembly a Supplementary Budget Statement or, as the case may be, an Excess Budget Statement, setting out the amount of that expenditure, and the provisions of Articles 120 to 123 shall apply to those statements as they apply to the Annual Budget Statement. 1 Geographic Spread of Resources: An Analysis of Development Budget of the Punjab, 2018-19 allocation. This is not the scope of this study, but it will be interesting to link the beneficiary districts with the political propensity of the district. One such obvious link is Dera Ghazi Khan. Rationale of this Study Every year federal and provincial governments in Pakistan undergo a gigantic months-long budget making exercise. The respective finance departments at provincial level and finance ministry at federal level is the focal point for this non- participative and highly secretive exercise. Once budget is prepared, it is presented in the assembly by government usually by the end of May/start of June each year, undergoes a shallow and insufficient discussion in assemblies and passed post-haste. There are three important observations about the approved budget. The approved demands for grants is a porous document. New development schemes keep on entering throughout the year and the provision for these revisions are traced in Art 124 of the constitution. In the later part of the fiscal year, usually by March 15, finance department completes another exercise with the help of line departments to revise the budget estimates, hence the term revised estimates. Looking through the lens of budget transparency, most the revised estimates are deviation from the initial development plan discussed and approved by peoples’ representatives. The economic managers have the liberty to abandon any scheme mid-year and conceive a new scheme which was not the part of the initial annual development plan. The budget keeps on modifying and changing throughout the year without the knowledge of legislators and citizens. All these changes are then enclosed in a document, called supplementary budget, and government gets it approved from the assembly along with the next year budget. As at this point of time, much of the media and citizens’ focus is on next year’s budget, the supplementary budget gets approved by the assembly without much ado and does not make headlines. Second, the general observation is that there is not much difference between the overall volume of budget estimates and revised estimates. The overall volume of the budget is a function of collected revenue and realized foreign commitments and the government adjusts it according to the available resources. But the budget of individual department changes, sometimes so drastically, that it can render the initial budget making exercise useless and wastage of time and resources. As noted, budget is a porous document, the development schemes keep on permeating and leaving at the will of financial managers. When budget estimates of individual departments and development schemes are compared with revised estimates, there are clear deviations. This study will highlight these deviations and will advocate for the need of budget reforms to arrest this trend. Finally, since the suspension of local government system in the province and due to non- implementation of any resource sharing formula between province and districts, provincial government now manages the development planning for the districts. As development schemes are listed under the departments in the budget document, it is difficult for citizens to segregate the district data to know about the development schemes of their districts. This is partly due to
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