“We, as a nation, have not been successful in mobilizing revenues,” rued Finance Minister Abdul Hafeez Shaikh before introducing the government’s taxation proposals for the next financial year in his budget speech. And he counted the reasons for the sorry state of affairs – only about three million citizens pay income tax, only half of the registered corporate taxpayers file tax returns, under-invoicing and undervaluation have become a norm in our business practices and, above all, despite reforms collusion between the taxpayers and tax collectors persists. Still, he managed to give the nation “a budget that will build hope and lay the foundation of a better tomorrow.”

How the government proposes to realise that hope was spelled out in the following allocations made in the Federal Budget 2012-2013:

Presidency

Since 2008-09, the expenses of the President House have increased by 74 per cent.

Despite government’s tall claims of austerity, the head of the state has continuously been increasing the Presidency’s budget for the last five years.

According to the budget documents, the expenses of the President House have been increased by 27.78 per cent to Rs616.70 million for the upcoming fiscal year compared to Rs482.63 million in the year 2011-12. However, the increase since the incumbent President took charge is exorbitant – 74 per cent.

The Presidency’s budget in 2008-09, the first presented by the incumbent government, was Rs353.84 million. During the last five years, a major jump has been seen in the expenses borne by the ‘gardens of Presidency’ as in 2008-09 it consumed Rs8.2 million, and the allocation reached Rs21.20 million in 2012-13.

Besides, the spending on the President’s tours have also gone up from Rs3.49 million to Rs5. 85 million during the last five years.

For the upcoming fiscal year, the expenditures have been earmarked at Rs482.63 million. It is noteworthy that the major chunk of the increase will go to pay the increase in the salaries of the staff.

A sum of Rs127.17 million has been set aside for salaries and other expenditures of 291 officers and staff in the Presidency. However, the salary of the President himself has been maintained at Rs1 million annually.

He has a budget of Rs3.5 million for presents and charities and Rs77.00 million for contingency grants.

PM Secretariat

Out of the Rs702.8 million budget, over Rs37m will be spent on conveyance and motorcars of the Prime Minster’s Secretariat

The salaries of more than 73 gardeners at the prime minister’s estate will cost Rs18.68 million for 2012-13. Just last year, these men who maintained the lawns and plants for the prime minister’s enjoyment cost Rs13.31 million.

But the importance of these gardeners cannot be underestimated.

The hike in their salaries has increased the total budget of the Prime Minister House’s gardens from Rs14.33 million in 2011-12 to Rs19.91 million in 2012-13.

The allocation for the PM secretariat in the last budget of the incumbent government has reached Rs702.83 million, which is an increase of more than 204 per cent since the PPP-led government presented its first year’s budget in 2008-09.

Most of this money goes on salaries and upkeep of the premises.

For 2012-13, the budget for the conveyance and motorcars of the Prime Minister’s Secretariat is Rs37.36 million compared to the Rs24.63 million that was spent in the previous fiscal year.

The Prime Minister’s House has 180 domestic servants who cost Rs57.60 million to the government exchequer, while the administrative staff of 274 people costs Rs101 million.

In comparison, a miserly Rs2.9 million will be spent on Prime Minister Yousuf Raza Gilani’s foreign tours in 2012-13.

Ministry of Interior

The prevailing law and order situation in the country continuously strains the budget of the ministry.

The prevailing law and order situation in the country has strained the budget of the interior ministry out of proportion, and against the allocated amount of Rs457.13 million in the fiscal year 2012-13 it incurred an expenditure of Rs1.54 billion.
Due to casualties and injuries faced by the operational forces under the ministry, the grants, subsidies and loan write off reached the mark of Rs1.02 billion compared to Rs21 million in the previous budget.

Similarly, the operating expenses of the ministry increased by 53 per cent to Rs252.53 million against the stipulated amount in 2012-13.

However, for the next fiscal year, the ministry has been allocated Rs572.18 million.

As the country struggles with militancy in Khyber Pakhtunkhwa and Balochistan, the budget for Frontier Corps KP has been increased to Rs14.33 billion from Rs11.47 billion in 2012-13 and that for FC Balochistan from Rs11.85 billion to Rs13.96 billion.

Besides, Frontier Constabulary will get Rs6.23 billion with a nominal increase of Rs605 million.
As Rangers continue to play a key role in maintaining law and order in some parts of the country, their budget remains high at Rs12.60 billion with an increase of Rs1.06 billion.

The budget of the Pakistan Coast Guard has been proposed at Rs1.37 billion.

Defence

The lion’s share of the Rs545 billion defence budget will go to the army.

The defence budget of the country has reached Rs545 billion in 2012-13 compared to Rs495 billion in the fiscal year 2011-12. However, as usual, the lion’s share of the defence budget goes to the army with Rs264.07 billion.

While Rs495 billion had been allocated for the defence forces last year, they made expenditures of Rs509.32 billion by the end of the fiscal year.

Incidentally, due to the size, a major part of the Rs545 billion defence budget for 2012-13 – Rs229.57 billion – will be spent on employees-related expenses whereas the operating expenditures of the armed forces will be Rs143.54 billion.

The air force has been allocated Rs114.21 billion while the navy will get Rs52.72 billion.

In contrast to the army and the navy, the operating expenditure of the air force is close to its employees-related expenses.

The operating expense of the air force is Rs22.71 billion and its employees-related expenditure will be Rs24.80 billion.

Whereas the operating expense of the army is Rs49.27 billion its employees-related expenditure are shown as Rs164.02 billion. For the navy, the operating expenses are Rs8.11 billion compared to employees-related expenditures at Rs16.35 billion.

The budget of the ministry of defence production is Rs554.14 million.

Subsidies

For 2012-13, subsidies have been earmarked at Rs208.59 billion while last year Rs512.29 billion were spent under this head.

Economic hardship may be the talk of town but the government has decided to reduce subsidies for the coming fiscal year.

For 2012-13, subsidies have been earmarked at Rs208.59 billion while last year Rs512.29 billion were spent under this head.

The subsidy for the power sector – the troubled child of the economy if there ever was one – is estimated to be Rs134.97 billion for 2011-12.

In the last fiscal year, the government forked out Rs419.08 billion for this sector.

Food subsidies amount to Rs6 billion which includes Rs2 billion for the Ramazan Package and Rs4 billion to provide cheaper sugar – both these subsidies will be distributed through the Utility Stores.

In addition to this, there are also two subsidies that are aimed at Gilgit-Baltistan – Rs775 million for the sale of wheat and Rs5 million for the sale of salt in this new province.

For Pakistan Railways, another state institution constantly in need of money, the government has allocated Rs31 billion; in the previous fiscal year, it had been given Rs30 billion.

In addition, a special grant of Rs55.73 billion has been earmarked for the four provinces, with Khyber-Pakhtunkhwa set to get Rs25 billion, Balochistan Rs16.57 billion, Punjab Rs5.16 billion and Sindh Rs9 billion.

PSDP

Water and power sector has been given top priority in the PSDP with an allocation of Rs47.19 billion

Though the federal development budget for 2012-13 at Rs360 billion is around 19 per cent higher than the PSDP of the previous year, it continues to fall way behind the defence budget.

However, the important feature of PSDP for the next fiscal year is that the amount for provincial development programmes has been increased by around 19 per cent to Rs513 billion compared to Rs430 billion last year after the 18th Amendment.

The overall development budget of the country is Rs873 billion for 2012-13 compared to Rs730 billion last year.

Incidentally, against the expectation of experts and economic analysts, the government was able to spend all the Rs300 billion for federal PSDP and Rs430 billion provincial PSDP in the outgoing fiscal year.

During the upcoming fiscal year, water and power has been given top priority with an allocation of Rs47.19 billion in the federal PSDP, while the Atomic Energy Commission has been allocated Rs39.16 billion.

The development projects of railways have been allocated Rs22.87 billion, the security-related projects of interior ministry Rs6.51 billion.

An amount of Rs36.05 billion has been allocated for special projects in AJK, Fata and Gilgit-Balitstan.

‘Secret’ budget

The ‘secret’ budget of the information ministry has increased to Rs4.18 billion for 2012-13 while it was merely Rs2.97 billion in 2011-12.

The Ministry of Information and Broadcasting has a generous Rs5.57 billion to spend in 2012-13, which is an increase of Rs1.38 billion over what it got the previous year. This includes what the ministry will spend on its subordinate departments such as Radio Pakistan and PTV and Public Information Department.

However, there is one category that is intriguingly called ‘other expenditures of the information and broadcasting division’ which has been allocated a hefty Rs4.18 billion.

It is widely assumed that the information ministry’s secret funds, which are said to assist a number of famous and infamous journalists, are spent from this amount.

This head includes two subheads that are both equally vague and communicate nothing. One is titled ‘grants subsidies and write off loans’ and is worth Rs3.80 billion for 2012-13. In 2011-12, this amount was only Rs2.7 billion. The other head is called the operating expenses for these expenditures which amounts to Rs379 million and was Rs269 million for 2011-12.

Apart from this, Rs401.23 million has been allocated for the expenses of the information ministry itself which includes the salaries of its employees. The Directorate of Publications, newsreels and documentaries has been allocated Rs139.92 million, against the Rs117.31 million it got in 2011-2012.

Similarly, the budget of the Press Information Department (PID) is Rs34158 million, an increase of Rs16.04 million from last year.

Pakistan Railways

Employees-related expenditure in the cash-strapped state entity will be Rs18.68 billion against Rs11.52 billion allocated in the outgoing fiscal year.

A sum of Rs1.63 billion has been allocated for the railway police because of the poor security situation in the country.

With deteriorating financial conditions, the Pakistan Railways has marked a whopping Rs1.91 billion for debt servicing in 2012-13 while it paid an even larger amount – Rs2.01 billion – under this head in the previous fiscal year.

The total railway budget for 2012-13 is estimated at Rs51 billion.

Incidentally, the allocation for 2011-12 was Rs45 billion but railways did not spend all of this.
The breakdown of this budget estimates that employees-related expenditure for railways would be Rs18.68 billion against the Rs11.52 billion allocated previously. The jump in the allocation is due to the increase in the salaries and perks of government employees.

However, the operating expenditures of the railways has been estimated at Rs11.96 billion, which is Rs1.69 billion less than the amount earmarked under this head in 2011-12.

Pakistan Railways also estimates that it will cough up Rs11.92 billion in 2012-13 for employees’ retirement benefits even though in the previous fiscal years it had not paid benefits including pensions to its employees.

In addition, the poor security situation in the country has also added to Pakistan’s Railways’ financial woes. It has allocated Rs1.63 billion for the railway police which is Rs61 million higher than in 2011-2012.

CDA

Rs209 million will be spent on the Presidency, Parliament House and Parliament Lodges each

The government has allocated Rs3.44 billion for the CDA for 2012-13. The Public Sector

Development Programme (PSDP)’s allocation for CDA in 2011-12 was Rs2.08 billion.

However, a large portion of this allocation was not released in the outgoing year and hence challenging issues such as water scarcity and public transport service were not addressed.

Perhaps this is one reason the government plans to finance only two projects in the capital in 2012-13 – Kashmir Highway expansion and construction of Chirah Dam.

For its plans to draw water from Indus River and to launch a bus service in Islamabad, the CDA has been asked to generate its own funds. And while the government may justify this by pointing to its financial crises, it has made sure the comforts of politicians are taken care of. Out of CDA’s development budget, a hefty sum of Rs2.492 billion will be spent on parliamentarians and government employees.

An amount of Rs1.08 billion will be used for maintenance of government houses — Rs209 million each for Presidency, Parliament House and Parliament Lodges and Rs512 million for building new apartments for the parliamentarians.

Is this what is called democratic development?