PUNJAB is where the battle for power will be fought between the PML-N-led ruling coalition and the opposition PTI, not only in the next elections, but also during the crucial by-polls on 20 provincial seats, which will be held on July 17. With the future of the fledgling Hamza Shehbaz set-up in Punjab and the timing of the next general elections heavily dependent on who — the coalition or PTI — secures a simple majority of 186 members in the provincial assembly after the by-polls, it was but natural for the ruling alliance to woo voters by proposing a massive development stimulus of Rs685bn, and setting aside Rs392bn for subsidies and relief to poor to middle-class households in its Rs3.22tr budget. That Speaker Parvez Elahi used his office to block the presentation of the budget in the House for two days, and that the government then took away his powers to call or prorogue the session and gave them to the law and parliamentary affairs department, shows how low the two adversaries are willing to stoop in their scramble for power.

Meanwhile, the budget documents show that the new government of Chief Minister Hamza Shehbaz has based its expenditure and revenue estimates for the next year on certain assumptions: the economy will grow by 5pc, the FBR will collect the targeted tax revenue of Rs7tr and inflation will remain at 11.5pc. If things move according to the script written by the federal government, Punjab shouldn’t find it hard to pull off its large tax and non-tax revenue targets of Rs2.52tr, including federal transfers of Rs2.02tr, and finance its huge development programme and the massively increased current expenditure of 1.71tr. But the constrained fiscal environment, external sector vulnerabilities and elevated global oil and food prices mean that these macro targets will be missed by a long margin, forcing Punjab and other provinces to drastically revise down their exaggerated preliminary revenue and spending estimates. That review will not come without significant political costs for the PML-N in its stronghold of Punjab.

Published in Dawn, June 17th, 2022