Of plight and provincial disparity | Pakistan Today

Of plight and provincial disparity

It seems that the terrorism smog has successfully subdued separatist sentiments. Or maybe the terrorist coterie has provided an umbrella to all those with grievances, with a promise to satiate once the bigger ‘war’ is won. In any case, no one complains about Punjab hegemony these days; like all energies eventually converge into one energy, the enemy now is also a consolidated mass. The ironic bit is that the hate although strongly targeted is towards an intangible, unnamed unknown demigod.
In an effort to deconstruct, re-examine and open all the knots like many martyrs before, the first and the most important woe is the inequity in everyone’s take-home, disposable return. All understand that the provincial brawl is historically centered on the distress pivot of “why am I poor when you are not”? If unofficial numbers are considered good approximations, then Punjab’s share in the country’s GDP stands at about 56-59 per cent, Sindh’s at a little more then 30 per cent, KP generates 10 per cent and Balochistan about 4 per cent for about the last two decades.
If money is the centre of everyone’s problems, then it must be understood that the solution only lies in increasing the supply of money! If the government is to be brought under scrutiny first, then with a tax to GDP ratio of about nine per cent, about six per cent of the GDP, or two-thirds of the government’s revenue amounting to Rs1.2 trillion was budgeted to be shared with the provinces. Of this amount, 48 per cent was deemed to be transferred to Punjab, 27 per cent to Sindh, 16 per cent to KP and 9 per cent to Baluchistan.
The essential problem lies with the fact that public spending in sectors, localities, etc, acts as a catalyst for confidence creation, reduction in uncertainty and hence risk. Low levels of formal financial sector’s penetration in Baluchistan and KP, where infrastructure deficit quite eminently prevails, prove this. According to data by the SBP, out of Rs3 trillion disbursed under credit to the private sector, Rs1.6 trillion and Rs1.4 trillion were bagged by Punjab and Sindh respectively. With the major chunk gone, the non-existent and unheard of private sector in Balochistan and KP were advanced Rs14 billion and Rs49 billion respectively. This is lower than advances to the questionable private sector in Islamabad only which was able to borrow more than Rs240 billion as of Dec-10. The numbers have not changed much since.
Moreover, in terms of public spending, Balochistan is the worst hit, as in real terms, the government has in fact been divesting from the province; the budgeted transfer for FY12 was 11 per cent higher on YoY basis whereas inflation is expected to go up by 12 per cent during the year. And so to say, this is perhaps the most resource rich centre of the country, the epicenter of the next phase of growth in the economy, if there is going to be any. Numbers for federal spending on the remaining provinces show a real increase of 12 per cent for Punjab, nine per cent for KP and only four per cent for Sindh. So one can predict where the next wave of dissent is likely to emerge from given that this trend continues.
Miners and others with some common sense of would prudently understand that to use coal or any other natural resource, one has to extract them first. The common lament of policy makers is that the economy lacks funds to invest in the extraction process. In disbelief, one may exclaim, “Reallly?”, because the last time anybody checked the government has been borrowing more than hundreds of billions rupees every quarter,which is only a ‘portion’ of what the financial system has to offer.
If the most corrupt are the richest in this country, then let’s concede to giving them a large cut. But let’s progress…it’s about surviving this time!

The writer is an economic researcher and freelance financial journalist. She can be reached at [email protected]