NWFP 2009-10 budget was presented by Senior Minister Rahimdad Khan in the absence of Finance Minister Muhammad Humayun Khan in the provincial assembly. Conditions prevalent in NWFP are unfortunately quite distinct from those existing in the other provinces and consequently the same yardstick cannot be used to evaluate the NWFP budget as maybe used for Sindh and Punjab.
First, the ongoing military operation in Swat, that merited special security arrangements for the budget session, is responsible for considerable damage to agricultural output of the province, specifically the tobacco crop.
Second, industrial productivity and the retail and wholesale sector, major contributors to the province's Gross Domestic Product, suffered due to the ongoing operation Rah-e-Rast as well as the rising number of suicide attacks in the province; and as a consequence tax collections, both with respect to federal as well as provincial taxes naturally declined in 2008-09 in NWFP.
This decline may be the real reason behind the provincial estimates showing a 40 percent increase in revenue receipts in budget 2009-10 in comparison to the outgoing year. However this target will only be achieved if peace prevails. It must also be noted that around 92 percent of the province's total revenue does emanate from the Centre - a figure that reflects the lack of financial autonomy in this province in particular.
Thirdly, the issue of the Internally Displaced Persons (IDPs) was rightly considered more of a federal responsibility than a provincial one in the budget. And finally the issue of royalty on oil and gas as well as NWFP's share in net hydel profits remains and the federal government must turn its attention towards resolving this longstanding issue amicably.
Taxes however were increased in spite of the fact that Rahimdad Khan stated that there would be no increase in taxes. The Finance Bill proposed increasing the proportion of provincial taxes and duties and bringing new sectors into the tax net that included restaurants, caterers, wedding halls and chartered accountants.
While this will no doubt anger the already suffering business community of the province yet two facts need to be acknowledged: the provinces need to raise their tax collections in an effort to become more financially autonomous, a longstanding demand, and must also have the courage to raise taxes, a courage that appeared to be lacking in Sindh and Punjab budgets. Be that as it may critics are no doubt going to legitimately lament the imposition of taxes at a time when productivity is down in the entire country and more so in NWFP.
What did the NWFP budget spend on? Like the other provinces the allocations were an adequate reflection of a commitment to improve social and physical infrastructure in the province. Thus NWFP's Annual Development Programme was ambitious and the right social sectors namely education and health did receive funding though it is unclear whether this investment would be fruitful till peace is fully restored.
And of course as is the case in the federal and provincial budgets the question remains: would the government have the necessary funds to inject what it has committed in the budget into development rather than remaining focused on meeting its current expenditure needs. An expenditure which is inexplicable at this point is the outlay on tourism, sports, culture and museums amounting to 332 million rupees for 32 projects - 23 ongoing and the rest new.
This may reflect optimism on the part of the provincial government and its assessment that the ongoing military operation will be successfully completed soon. One hopes that this is indeed the true picture but in case this does not materialise within the year the provincial government would do well to transfer this money into health and education as well for that alone would translate into the end of fundamentalism and terrorism from this country.