LAHORE, June 14: The Punjab government on Thursday placed before the assembly the budget for fiscal year 2007-08 amounting to Rs356.17 billion with no new taxes and a surplus of Rs112.68 billion.
The budget was presented amid loud protests by the opposition against the current spate of arrests of its activists ahead of Chief Justice Iftikhar Mohammad Chaudhry’s visit to Faisalabad this weekend, which drowned out provincial Finance Minister Hasnain Dareshak’s speech.
The opposition and officials view it as the election-year budget with promises of relief for lower-income groups and a record annual development programme (ADP) of Rs150 billion – 50 per cent higher than the outgoing year’s estimates of Rs100 billion.
The budget includes a Rs25 billion relief package that includes 15-20 per cent increase in employees’ salary and pension, discount in electricity bills for agricultural tube-wells, in addition to Rs4 billion allocated for cash subsidy to 642,000 ‘poorest of the poor’, Rs3 billion for the development of 385 katchi abadis, and distribution of 2-kanal plots of land among the rural poor and the launch of a self-employment loan scheme.
Revenue receipts have been projected to be 29.9 per cent higher than the outgoing year’s Rs274.088 billion while the expenditure is estimated to be 27.22 per cent higher than this year’s Rs191.378 billion.
While no new tax has been levied and the existing ones have not been increased, the provincial tax revenue is projected to be 22.97 per cent higher than Rs30.343 billion estimated for the outgoing fiscal year, while non-tax revenue is expected to be 41 per cent higher than Rs42.335 billion estimated for the outgoing year. Estimates for non-development/development grants are up by 76 per cent over the current year’s Rs14.702 billion.
On the expenditure side, the government has increased allocations over outgoing year’s budgetary estimates for general public services by 21.5 per cent to Rs149.765 billion, for public order and safety by 38.87 per cent to Rs34.713 billion (with Rs29.449 billion going to police), for economic affairs (agriculture, food, irrigation, construction, transport, etc) by 49 per cent to Rs23.182 billion, for health by 22 per cent to Rs7.194 billion, for education and services by 68 per cent to Rs23.745 billion, for social protection by 22 per cent to Rs1.723 billion, for culture and religion by 29 per cent to Rs650.363 million, and for environment by 4 per cent to Rs27.208 million. The expenditure for housing and community amenities has been squeezed by 57 per cent to Rs2.484 billion.
With current capital receipts estimated at Rs107.142 billion, up by 9.8 per cent from outgoing year’s estimates of Rs97.569 billion, the size of total provincial consolidated fund is estimated to grow by 22.37 per cent to Rs471.258 billion over current year’s estimates of Rs385.091 billion. The current capital expenditure for the next year is estimated at Rs92.544 billion, which is 5.5 per cent more than current year’s Rs87.681 billion. Thus, there is a net capital account surplus of Rs14.598 billion.
Similarly, the public account receipts for the next financial year are projected to be Rs106.051 billion, which is lower by 15.5 per cent than the outgoing year’s Rs125.425 billion. The public account disbursements are estimated at Rs91.278 billion or 11 per cent higher than the current year’s Rs82.248 billion, showing a net public account surplus of Rs14.773 billion.
Thus the net budgetary surplus for the next year is projected to be Rs142.056 billion, which will be used by the government to finance its annual development programme of Rs150 billion. The shortfall will be bridged by foreign assistance amounting to Rs7.943 billion.
In view of the federal government’s refusal so far to transfer electricity profits of estimated Rs15.970 billion and consequent shrinkage in revenue account surplus, a gap is expected to accrue in the financing of the ADP. To finance this gap, the government has parked Rs16.572 under the head of account of public works development remittances in the public account.
Of the total development spending, the government has set aside Rs93 billion for its core provincial programme, and Rs3 billion for development of katchi abadis across the province. Another Rs14 billion have been allocated for the district development programme, which is 16 per cent higher than Rs12 billion allocated in the current year’s budget. The districts’ share in the revenue budget has also been upped by 16 per cent to Rs116 billion from current year’s Rs100 billion.
The allocation in the ADP for special infrastructure (Lahore Ring Road, Sialkot-Lahore Motorway, and Lahore Rapid Mass Transit System) development has been increased by 74 per cent to Rs40 billion from Rs23 billion allocated in the outgoing year’s budget.
In his budget speech, the minister said the government had increased its development spending as percentage of current expenditure to 42 per cent in the next fiscal year from 36 per cent for the current year and 18.4 per cent from 2002-03.
He said a sum of Rs14 billion had been allocated for the road sector, Rs11 billion for irrigation and Rs3.8 billion for urban development. Agriculture has received Rs2.8 billion and livestock Rs1.2 billion. Similarly, he said, the services sector has been much greater share than last year.
He announced to increase the pay and pension of government employees by 15-20 per cent and said the provincial government had also increased wages of labour by 15 per cent, which will be notified shortly.
The finance bill, which was made a part of the budget speech, proposes to reduce stamp duty on financial documents like debenture, participation term certificate and term finance certificate.
According to the minister the stamp duty on these documents will be charged only once at the time of their issuance. Currently, the stamp duty is applied on an annual basis. Similarly, the maximum limit for charging 0.02 per cent stamp duty on promissory notes has been capped at Rs100,000.
The government has also reduced the rate of electricity duty, which the people are now supposed to pay on variable charges instead of energy charges, to 1.5 per cent from 7 per cent for domestic use, 1.5 per cent from 3 per cent for office or commercial use, 1 per cent from 3 per cent for industrial use, 1 per cent from 4 per cent for tube-wells for agricultural use and 1.5 per cent from 4 per cent for temporary electricity meters.
