While focusing on food and security, the NWFP government has evolved a strategy to stimulate economic activities with a pro-poor bias. The Rs170.9 billion budget with a small surplus of Rs345 million provides a hefty Rs2 billion subsidy on wheat, as the province deficit in wheat is dependent for its supplies of flour and wheat from Punjab. It is generally the first province and the worst to be affected by any wheat crisis Smuggling to Afghanistan is yet another major problem that has to be tackled.

While trying to take care of the immediate problem of food security, the budget allocates Rs500 million for development of agriculture and livestock . On agenda is also a review of the procedures for farm loans which may improve access of credit to small farmers. A Rs850 million allocation for infrastructure is expected to help improve some farm-to-markets roads and will enable orchards’ owners in getting better market price for their fruits..

In addition to these proposals, a sum of Rs1.218 billion has been earmarked for district development programme with grass root orientation. Included in the budget proposals is the construction of small dams to bring thousands of acres of barren land under cultivation.

The social sector received over 43 per cent of the total budgeted funds, the highest allocation of 20.29 per cent went for education, 16.48 per cent for infrastructure, and 14.5 for health. Rural development got 19.6 per cent of the total funds.

To improve living conditions of the people, the provincial finance minister Mohammad

Humayun Khan says that employment will be provided to the jobless through employment loans.

Skills development would be undertaken by vocational training. Education will be made accessible to the poor by providing scholarships. All these facilities and more would be extended under a special programme called “Chief Minister’s Project for Poverty Alleviation.

The budgetary measures reflect a serious move towards national building which is the primary responsibility of the provinces but their efforts are handicapped by financial constraints.

The distribution of resources is skewed in favour of the federation and the biggest province in the country. NWFP has been denied its legitimate share in hydro profits and Wapda owes the province Rs110 billion on this count.. On the top of it, the militancy in the tribal belt is a drain on its resources. A sum of Rs6.5 billion will be spent to strengthen the police force and improve the security situation.

Unfortunately, the provinces which are mere administrative units, have not been given the status of the federating units. However, a positive development is the informal decision of the four provinces to persuade the federation to entrust to the provinces to levy and collect consumer sales tax on services—a tax with vast potential in the future.

NWFP is also looking for more resources from the National Finance Commission which is to be reconstituted soon after the provinces have nominated their NFC representatives. Since the PPP is a coalition partner in the centre and all the four provinces, some positive outcome may emerge to the satisfaction of the minority provinces and particularly for the cash-starved NWFP and Balochistan.