Is this fair?

Society Pakistan & World Affairs
1

I am posting this because I don’t really no what to make of this report. I have a hard time understanding why such an obvious injustice is being done with Sindh? Is this what Pakistan was supposed to be about? And why are people so silent?

I’d like to believe this is not true and Sindh is not getting just 9% back from the 64% we contributed to Pakistan. What has Sindh gotten out of Pakistan except more poverty? I don’t agree with confrontational politics of Altaf Hussein and GM Syed, but after reading this I cannot blame those who have become dissidents against the system.

Sindh got only Rs 36bn

By GN Mughul

HYDERABAD: Out of a total revenue of Rs 400 billion estimated to have been collected by the CBR during the financial year 2001-2002 from all over the country, the estimated collections from the Punjab were Rs 108 billion, ie 27 per cent.

The estimated share that Punjab received from the national divisible pool is Rs 98 billion, ie 24.5 per cent. As against this, the estimated share of Sindh in total collections made from all over the country during the financial year, was calculated to be Rs 256 billion, ie 64 per cent, while in return the estimated amount it received as its share from the NDP is only Rs 36 billion, ie 9 per cent.

Similarly, during the financial year 1999-2000, the Punjab’s total actual collection in the divisible pool was Rs 77,912 million while its share from the pool was Rs 70,069.1 million. As against this, during the same financial year, Sindh’s actual total collection in the divisible pool was Rs 189,461 million while the share it received from the pool in return was only Rs 30,056.1 million.

Those collections comprised income tax, sales tax, federal taxes and customs duties, said sources in the Sindh government while quoting the statistics compiled by the relevant agencies of the government of Pakistan.

Based on these facts and figures, the financial managers are of the strong contention that the “disbalance” is only because of the formula for the distribution of national divisible pool among the provinces, based exclusively on the population of the provinces. They regretted that the formula had been in vogue since the 1970s despite repeated representations and protests lodged by successive governments of Sindh. According to the financial managers, with the continuous implementation of the formula the resources continue to be siphoned off from Sindh to the Centre and Punjab, rendering Sindh the poorest province of the country, despite having very rich natural resources.

These circles said some increase in the receipts of Sindh from the Centre was due to the amount it was receiving in lieu of the oil and gas drilled out in Sindh. They said that Sindh had 62 per cent share in the total oil drilled out in the country. Besides, they said, 48 per cent of total gas quantum of the country was drilled out in Sindh.

These quarters claimed that during the next five to six years the quantum of oil and gas to be found in Sindh would increase to about 80 per cent of total oil and gas estimated to be found in Pakistan.

However, the financial managers of Sindh have expressed complete dissatisfaction over the formula on which presently royalty etc is being paid to the province for the oil and gas and termed it peanuts.

The financial managers of Sindh are quietly carrying out homework to study the formulae of different oil producing countries under which the areas where oil or gas is found are paid royalty or other benefits.

According to these circles, three members of a group formed by the National Finance Commission to devise a formula for the distribution of national divisible pool among the provinces, recommended taking into consideration some other factors too in addition to the population, while devising the formula.

The three members represented Sindh, Punjab and Balochistan. But since the Punjab did not endorse the recommendation, it was rejected.

2

If California had been a separate state, outside the United States, it would be the world's 5th largest economy! It pays a bulk load of revenues to the Feds & in return gets half in %age to what states like Alabama, Mississippi get in regular Fed aid (not including the emergency appropriations that they got). In this case a bigger, wealthier state in the Union is helping out the poor ones but they are happy as they collect enough in state taxes that they can give all their school graduates pretty good scholarships.

Though the above doesn't mean that the same 'rule of thumb' applies in the case of Sindh. I am sure there must be misappropriations. But what this article & usually this argument fails is the lack of identification of steps to remedy this issue.

Is another Commission with a broader representation an answer?

Should we look up to the technocrats & bureaucrat for a solution? Or is it a problem of public representation & electoral college and the elected officials from Sindh need to make their case?

3

Re: Is this fair?

[QUOTE]
*Originally posted by Imdad Ali: *

The estimated share that Punjab received from the national divisible pool is Rs 98 billion, ie 24.5 per cent. As against this, the estimated share of Sindh in total collections made from all over the country during the financial year, was calculated to be Rs 256 billion, ie 64 per cent, while in return the estimated amount it received as its share from the NDP is only Rs 36 billion, ie 9 per cent.

[/QUOTE]

So Punjab gets 24.5%, and Sindh gets 9% - that makes 33.5%.

Who gets the remaining 66.5%? Balochistan and NWFP?

This article is short on full facts and reasoning, and long on presumptions, based on these limited facts. But I think ahmadjee makes a sensible argument to counter the supposed facts in this article, and the reasoning behind it.

4

You are right about California and how the US system works. But in the US, the states have huge powers to collect taxes and in the case of California, it is a rich state and that is why its resources are shared with poorer states.

This is not the case with Sindh. Balochistan and Sindh are many times more poorer than the Punjab and NWFP. And they are getting poorer and poorer. 50% of people in Sindh are below poverty level compared to 29% in Punjab and 26% in NWFP. I don't even know how bad Balochistan is doing. This doesn't make sense when 64% of revenue is coming from Sindh, but Sindh is so much poorer than Punjab? In this case, shouldn't Punjab lend a hand to Sindh, instead of Sindh paying the salaries of generals?

The solution is to reduce the emphasis of population when calculating the national finance commision. Sindh and Balochistan's poverty and revenue generation must be taken into account as well and I am not totally against redistribution but the current system is a joke!

If Punjab had been a seperate state from Pakistan, how would it get enough money to run itself? A better question, no?

5

Re: Re: Is this fair?

Well you forgot to calculate how much the federal government (read army) eats up.

http://www.dawn.com/2002/09/09/ebr3.htm

6

Re: Re: Re: Is this fair?

[QUOTE]
*Originally posted by Imdad Ali: *
Well you forgot to calculate how much the federal government (read army) eats up.

[/QUOTE]

Not quite, you forgot to explain in detail the figures you were bandying about. Now please tell us in simple detail where that 66.5% goes to? If it goes to the federal government, then how much of that is spent on Sindh, and how much is not?

Also, as the city of Karachi, accounts for the bulk of the tax reveunes that 'Sindh' contributes, do you think all that should on 'fairness' be spent just on Karachi, not on the rest of Sindh and Pakistan?

7

The idea is that the spending should be proportionate. The ones getting larger revenues for the state must not suffer to the extent of poverty at the expanse of others who are acting like sponges.

8

Punjab is the industrial center of Pakistan, like it or not. Thus it require larger amounts of money for maintenance of infrastructure and creating additional infrastructure for sustainable development. Ideally and morally everything should be proportional, but that way Punjab should get all the Forex the govt recieves from exports and Balochistan thus gets no money. Is that fair?

9

Actually CM, Karachi is the Industrial Centre, generating the revvenue mentioned and being the headquarters of most major businesses. I believe the bulk of the remaining money goes to the Federal govt, which spends 40% on the Army-40% on debt servicing and the remaining mostly on peoples salaries!

Pakistan has one of the most over centralised systems of revenue distribution in the World. It is only comparable to Communist countries in the manner it diburses money. in any case the NFC should give tax collecting power to the provinces for everything except GST, Income and Customs..and if it gives money anywhere the priority should be poverty alleviation. In my mind it doesn't matter who's in majority or minority, the poorest areas need money more then anything else..

10

Re: Re: Re: Re: Is this fair?

[QUOTE]
*Originally posted by Malik73: *

Not quite, you forgot to explain in detail the figures you were bandying about. Now please tell us in simple detail where that 66.5% goes to? If it goes to the federal government, then how much of that is spent on Sindh, and how much is not?

Also, as the city of Karachi, accounts for the bulk of the tax reveunes that 'Sindh' contributes, do you think all that should on 'fairness' be spent just on Karachi, not on the rest of Sindh and Pakistan?
[/QUOTE]

right!

Imdad you also need to think again, do you really think all the finiacial headquarters / centres that generates huge revenues only belong to karachi? for instance if you separte sindh or karachi from pak do you really think karachi will still stay financial capital of pakistan?

I am not agreed with the figures anyway.
there are two kind of revenues. one federal and one provincial

only federal are distributed among provinces apart from the spending federal development programs i.e, roads, telecoms, defence, that are also considered as contribution.

11

[QUOTE]
*Originally posted by Zakk: *
Actually CM, Karachi is the Industrial Centre, generating the revvenue mentioned and being the headquarters of most major businesses. I believe the bulk of the remaining money goes to the Federal govt, which spends 40% on the Army-40% on debt servicing and the remaining mostly on peoples salaries!
[/QUOTE]

Impossible. A city of 10 million can not generate more industrial activity than a province the size of Punjab and with a population of +60 million. That assumption is logically incorrect.

[QUOTE]
*Originally posted by Zakk: *
Pakistan has one of the most over centralised systems of revenue distribution in the World. It is only comparable to Communist countries in the manner it diburses money. in any case the NFC should give tax collecting power to the provinces for everything except GST, Income and Customs..and if it gives money anywhere the priority should be poverty alleviation. In my mind it doesn't matter who's in majority or minority, the poorest areas need money more then anything else..
[/QUOTE]

Most third world countries have a heavily centeralised revenue system. It is because the total revenue is to be collected and to be allocated to areas that are most likely to provide better rewards than others. If you allocate taxes with the exception of the 3 you mentioned, Sindhs revenue would fall by nearly 75%. Because in Pakistan 25% of the total budget is covered by customs taxes and sindh being our only port makes a majority of that money. Thus we are back to square one.

12

This has nothing to do with fairness, and everything to do with prejudice.

Sialkot, 1/25th the size of Karachi in both size and population, earns better than 7% of Pakistans entire GDP. Perhaps Sialkot should start asking for its 7%.
And wheres Faisalabad? there goes another large chunk.

13

well its true that Karachi generates about 60-70% of Pakistan's GDP...even if it isnt given its due share, but still their amount should be increased, so that rural Sindh and Balochistan could be brought at par with Northern Pakistan...the development of those areas mean development of Pakistan...they are Pakistan's life line...and by doing that we would only reduce the seccesionist feelings that some quarters have at the moment...and it would improve Pakistan's unity...and in long term good for Pakistan's economy...

14

Nothing against Karachi, but the city generates 24% of Pakistans GDP....definitely not anywhere near 60%.

15

60 or 70% GDP is correct however that includes the revenue generated due to Karachi being our sole port and not only its production capabilies. If we had more than 1 port the portion of GDP would fall as trade would move to other cities. Remember pakistan's actual production is extremely pathetic compared to our abilities. Only 30% of the factories in Pakistan work at production capabilities....the rest are under production capabilities. I have nothing against developing all the provinces. However i do have a problem when incorrect facts as Malik pointed out are used to convey a false message.

16

[QUOTE]
*Originally posted by Zakk: *

I believe the bulk of the remaining money goes to the Federal govt, which spends 40% on the Army-40% on debt servicing and the remaining mostly on peoples salaries!
[/QUOTE]

I doubt your figures very much, because you have produced nothing to back them up with. But say you are right about all that spending on the armed forces? Please could you explain to us where almost all of Pakistan's Naval Bases are? Where probably half our Air Bases are stationed? And where a significant amount of our Army Bases are?

17

Malik I have had this argument with people, plenty of times on gupshup. Especially with my friend Rajput Fury, I do not want to get into a protracted argument with you to prove what I said, but The Facts are:
Unemployment in Many areas of the South of Pakistan is as much as double that of the rest of the country.
Poverty levels are higher..
Caloric intake is also lower
Employment and representation in Labour Export and in the Armed Forces/Civil Service is unfairly tilted towards the Northern Parts of Pakistan
The fact is resource distribution in Pakistan is discriminatory..
as fara s links are concerned I hope these satisfy you:
:
http://www.dawn.com/2002/08/10/op.htm#2
** Regional inequality between the provinces and within the provinces has worsened as well. The analysis of deprivation level in the 100 districts of the country shows that a north-south divide has emerged in the country, with the percentage decrease in the Deprivation Index being the highest in Punjab and the lowest in Balochistan. The rural economies of Punjab and the NWFP have shown considerable dynamism.

Rural Punjab has emerged as the economic powerhouse of the province and Punjab is the only province where nearly half of its rural population can be classified as being in a state of low deprivation. Rural NWFP has also posted significant gains and propelled a substantial proportion of the rural population out of the high deprivation category. Today, nearly half its rural population can be classified as medium deprivation and a quarter of its rural population as low deprivation.

By contrast, rural Sindh has deteriorated. Only three per cent of Sindh’s rural population classifies as low deprivation and half its rural population subsists in a state of high deprivation. Sindh’s development lag can also be seen from the fact that Hyderabad, the second least deprived district of Sindh, ranks 12th in terms of national ranking.

Balochistan has remained trapped in a high deprivation state, with 89 per cent of its rural population classifying as high deprivation. This is despite the initiation of a number of major development projects over the years. For example, the industrial estate in Hub Chowki has emerged as an enclave of exclusive benefit to entrepreneurs from Punjab and Karachi and only marginally benefited local labour. There is widespread fear in the province that the development of Gwadar port will likewise create another enclave, bypassing the people of Balochistan.

Inequality within the provinces is also shown to be high. In Punjab, a north-south divide has emerged, with all low deprivation districts being in northern and central Punjab and none in southern Punjab and all the most deprived districts being in south and southwest Punjab. In Sindh, Karachi stands far above the rest of the province and the high deprivation districts are concentrated in the north and southwest of the province. **

http://www.dawn.com/2001/03/06/fea.htm#1

**Sindh also faces discrimination in the matter of distribution of development funds. Reportedly, out of 112 development projects funded during the last 10 years by the largest bilateral donor to Pakistan, only two were located in Sindh. Less than 15 per cent of the National Highway Authority development budget is devoted to Sindh. And so on. There has been open discrimination in matters of public employment as well. As against the rural Sindh quota of 11.4 per cent in federal employment, actual employment is only about 5 per cent. The plight of Balochs is worse. **

http://www.dawn.com/2002/09/19/nat28.htm

**Experts pointed out that Punjab had a contribution of 25 per cent resources in the national economy but it took away 58 per cent share. **

**The Balochistan government has declared 22 districts calamity hit. The poverty level of interior of Balochistan was 50 per cent prior to the drought. Now it has jumped to 70 per cent or more in the rural areas. **

In India the Eleventh NFC Award has been announced for distribution of resources between the Union and States. In sharp contrast to Pakistan, the Indian finance commission gives only 10 percent weightage to population and provides 32.5 percent share in resources to states. Also the income tax revenues are transferred entirely to the states. Effort has been made in India to promote equity among the states and the criteria have depended on one or more of the following: (1) size of population (2) index of infrastructure (3) index of backwardness (4) percentage of poor in the states (5) distance of state’s per capita income from the per capita income of the richest state. Revenue collection was also provided due weightage in the 10th Finance Commission in India. The report of 11th Finance Commission in India has also suggested revision of royalties on minerals.

also read this book:
Feroz Ahmed, "Ethnicity, Class and State in Pakistan " Economic and Political Weekly,

18

Well done Zakk. These are not incorrect facts. These are true figures. Once again, 50% of people in Sindh are under the poverty level as compared to 29% in Punjab. Can you please answer why then Sindh does not get mroe than 9% back from the govnt when it generates 64% of all revenue. Obviously the inductry in Sindh and especially Karachi is paying a lot more taxes then Punjab is, so why is msot of the development limited to Punjab?

And as for spending in Sindh or Karachi, first priority should be devloping poor areas of the country, if they are in Sindh or Punjab I don't care. But giving so much to relatively better off Punjab and so little to much more backward areas in Sindh is unacceptable.

And Akif, Sindh (not just Karachi) does generate 64% of Pakistan's revenue. This is offical CBR data, and unless you have proof that it is falseified by govnt, please come up with a better argument. Also, about Sialkot, what is the level of poverty their and how much money does the govnt give back to the city? I'm sure the situation is not much better their then in Karachi's case. This is absouletly about fairness, unless you feel it's ok to swindle Sindh like this.

And their are many navy bases in Sindh and even Balochistan, but guess who works in them? Certianly not that many locals!

19

I just want to comment on Karachi vs. Punjab as the industrial center of Pakistan...

Okay, did you guys realize you're comparing 1 CITY with 1 PROVINCE?

Think about it please.

If you compare Karachi with Sialkot or Karachi with Lahore, or Karachi with Faislabad, etc...then I'd say your arguments concrete.

20

[QUOTE]
*Originally posted by Zakk: *

Malik I have had this argument with people, plenty of times on gupshup. Especially with my friend Rajput Fury, I do not want to get into a protracted argument with you to prove what I said, but The Facts are:

[/QUOTE]

Sorry, but if you are going to make accusations of "unfairness, discrimination and bias" by certain ethnic groups, provinces and institutions in Pakistan then I am sure we expect you to show us all the facts. Some opinion piece by this "Kaiser Bengali" that you have posted is a pretty flimsy attempt to back up your argument, because it is only that, an opinion piece, nothing more. Lets see some facts from you to answer the following:-

1) Someone posted an article saying the following - Punjab gets 24.5%, and Sindh gets 9% of tax revenues - that makes 33.5%. Now who gets the remaining 66.5% of tax revenues? - Balochistan and NWFP?

2) If you are going to say the Federal government, then I would like to see a breakdown of amounts spent province by province, just saw that we can see how "discrimnatory" federal spending is?

3) On your assertion that a great deal is spent on the Pakistani armed forces, I asked you Please could you explain to us where almost all of Pakistan's Naval Bases are? Where probably half our Air Bases are stationed? And where a significant amount of our Army Bases are? I still await your answer on this question...

4) Another person made the claim that ...that Karachi generates about 60-70% of Pakistan's GDP... Do you have any facts and figures to prove this claim?

5) You are proud to quote claims of poverty in the smaller provinces, and obviously blame Punjab for this? But please tell me what part the Wadera system in interior Sindh, the feudal system in Balochistan, and the tribal system in NWFP plays in this?

I would appreciate if you present us with some solid facts and figures, not opinion pieces from the "Kaiser Bengali" and "geocities" of this world. Because one thing I dislike is people spreading accusations and untruths, that cause fasad among the peoples of Pakistan, and then failing to present some facts to prove their case. Thanks. :)