Cut in expenditure: there’s a way, but not will

THE Khyber Pakhtunkhwa government intends to curtail its administration cost to bridge the gap between resources and expenditures, which is growing at a staggering proportion at the moment. A number of measures aimed at curtailing the government spending have been worked out in a provincial cabinet meeting held earlier this week. Little information about the decisions and issues discussed in this extraordinary session were made public, but the government spokesperson, Mian Iftikhar Hussain, shared with media the broader measures the coalition government intends to pursue in days to come for the sake of what he called 'better financial management'. One of the major decisions of this session was to fix upper ceiling for the expenditures incurred by 12 major departments so that they cannot exceed from what they have been allocated at the start of the fiscal year. Similarly, a decision was also taken to link the budgetary allocations with the performance of the departments, which according to a senior financial manager in the current dispensation, will help ensure better financial management. Financial crisis and Khyber Pakhtunkhwa are synonymous to each other. Though, blessed with numerous natural resources, fertile land and hardworking cheap labour, the province has not been able to capitalise on these advantages for greater economic benefits. It has been officially rated as the poorest province of Pakistan with higher unemployment ratio more than once and its overall social indicators are well below the national and international standards. Its government and civil administration is run through the fiscal proceeds from the Centre under the National Finance Commission (NFC) award, grants and subsidies, whereas its own contribution to the provincial budget is not more than 8 per cent, which used to be over 12 per cent in past. The civil administration, which is growing both vertically and horizontally, consumes almost 70 per cent of the resources the province mobilises mainly from the external means including proceeds from NFC, grants, subventions and royalty on gas and hydel power generation. It leaves just 30 per cent for the development sector, which too suffers from lack of vision and inefficiencies. These otherwise belt-tightening instruments worked out in the cabinet meeting are not new to the province. Government announces these measures every now and then just to make everybody feel that it is concerned about the financial health of the province and doing whatever possible. Neither the past nor the present coalition government ever tried to address the root cause of the problem that keeps endangering the financial viability of the province. Wastage and leakage of this hard-earned money is rampant in the public sector and nobody wants to stop it. More and more departments and agencies are created apparently to improve service delivery and minimise the public suffering. One can see cropping up of multi-storey buildings in and around the civil secretariat housing these growing departments. Even dozens of departments have been accommodated in premises rented in posh residential localities. However, one can hardly feel the change when it comes to service delivery. The biggest issue with this rapid expansion is that it is not demand-driven and is rather motivated by political and vested interests. If the government's own data of the last five years is to be believed, strength of the government employees has witnessed almost 30 per cent growth. Just within one year 21,534 new recruitments were made at provincial level. Most of these appointments are in lower grades, where constituents of ministers had to be accommodated. For example, the government has set up five reforms units to spearhead reforms in different sectors such as education, health, planning and development, finance and social welfare. The government is annually spending over Rs100 million on functioning of these units, which are unable to come up with any major change in the way these departments work. The Punjab government also had a similar sort of arrangement to introduce reforms in the public sector through a Management Change Department. But it also proved to be a failure and it subsequently it was dismantled recently, when Chief Minister Shehbaz Sharif embarked upon a plan to cut down administrative cost of his administration. There are countless examples of more-than-required staff in almost all the departments that causes wastage of resources and subsequently contribute to the financial crunch the province is currently into. The government move to determine the upper ceiling for these departments, at this moment as decided by the cabinet, cannot work for the reason that budgetary allocations are always surpassed because they never identify the actual requirements. Our provincial budget gives merely token allocations on the current side and usually it gets surpassed when the revised estimates are made in the month of June. So the government has little to curtail the expenditures of these departments mainly because bulk of the funding goes into salaries and allowances of the officers and officials. The government is creating almost 10,000 more vacancies in the current financial year, which is going to further increase the burden on the provincial kitty. Also, devolution of federal ministries from Centre to the province will enhance its financial liabilities in days to come. Financial woes of the province cannot be removed through such cosmetic arrangements, as the government needs to address root cause of the problem. For doing so, it needs a political will, which is, unfortunately, not there at the moment.