Government failure to implement austerity plan adding to economic, energy woes

The government's failure to implement the austerity plan prepared by the former Finance Minister Shaukat Tarin and approved by the Cabinet last year has compounded the economic and energy crisis in the country.
Sources argue that implementation of 'Austerity Plan' would have enabled the government to minimise the fiscal deficit and massive power outages because the plan envisaged restructuring of Public Sector Enterprises (PSEs), rationalisation of government size, review of current and federal legislative lists, corrective budgetary measures, substantial curtailment of foreign visits, use of commercial flights instead of chartered flights, rationalisation of expenses of public offices, two weekly holidays, security and energy efficiency and conservation.
However, on paper and during briefings to the donors as well as while talking to the media, the economic managers have been claiming that they have taken a host of measures to curtail losses of PSEs and reform the power sector but massive power outages and rising fiscal deficit contradict their claims.
The austerity measures were reportedly finalised after deliberations of the committee with reference to its meeting on 18th August 2009, the findings of Gallup Survey Pakistan, feedback from the Business Persons Council (BPC) and the final meeting of the committee which was held on November 3, 2009, a day before the Cabinet meeting.
The government was compelled to increase power subsidy to Rs 239 billion from Rs 30 billion in 2010-11, and budgetary allocation for the current fiscal year would have been considerably less if proposed measures for energy efficiency and conservation along with power generation had been implemented. The proposals in the austerity plan provided for generation of power through public-private partnership, optimal energy mix by tapping alternative energy sources at lower cost; introduction of solar energy in agriculture/rural sector, reduction in line losses and energy audit/conservation initiatives focusing on the public sector organisations.
The plan also included free Time-of-Day (ToD) electricity meters installation to reduce electricity theft, campaign for energy conservation and introduction of energy savers. The number of ministries, under the austerity plan was proposed to be trimmed to around 30-40 at the federal level and the provinces were expected to follow the same policy. It was suggested that a detailed review of government establishments should be carried out to discard unnecessary and avoidable organisations/bodies.
To ensure Parliamentary oversight of expenditure, it was proposed in the austerity plan that the government would seek approval of supplementary grants from the National Assembly on quarterly basis instead of annually, and expenditure on all development programmes would be linked to result-oriented performance. To reduce the expenditure on foreign visits, it was proposed that video conferencing facilities may be promoted, Pakistan embassies may be used more efficiently to participate in meetings, and ministries may reduce expenditure on foreign visits by 30 percent. The expenditures on visits of ministers, prime minister and the president should be reduced by 40 percent and there should be no Hajj on official expenses. It was also recommended that commercial flights be used instead of chartered planes and number of delegates for foreign visits be kept to a minimum.
It was recommended that utilities of the President and the Prime Minister be capped after imposing a 25 percent cut. Similar action may be taken in respect of governors, chief ministers, federal and provincial ministers and other government servants/offices.
The Federal budget 2011-12 epitomises the difference between theory and practice. First of all, overall expenses of the President House have been increased by Rs 12.88 million for the next fiscal year 2011-12 while the budget of the President's House was approved to be Rs 427.25 million for 2010-11 but actual expenditures were Rs 462.81 million. For the year 2011-12, the expenditures of the President House are earmarked at Rs 482.63 million.
Again contrary to the austerity plan, Rs 2.8 million have been allocated for the Prime Minister Yousuf Raza Gilani's foreign tours in 2011-12 while the amount for the same purpose was Rs 2.6 million in 2010-11. Total budget of the Prime Minister's House is Rs 1.37 billion for 2011-12 against Rs 1.18 billion in 2010-11.
The budget for the conveyance and motor cars of the Prime Minister's Secretariat is Rs 24.63 million that was Rs 23.7 million during the current fiscal year. A total allocation of Rs 501.85 billion was earmarked for the defence ministry for fiscal 2011-2012, with armed forces allocated Rs 495 billion - 12 per cent more than Rs 442 billion allotted in the 2010-11.