THE North West Frontier Province budget for financial year 2007-08, carrying an outlay of Rs114.50 billion with an ambitious Annual Development Programme (ADP) at Rs39.462 billion, follows a similar pattern to those announced earlier by the provincial government during its four-year rule.
An increase of 15-20 per cent in the wages and pensions of public sector employees, exempting widows owning three marla residential house in urban areas from property tax, inclusion of fixed-pay employees of grade 1 into Contributory Provident Fund (CPF) scheme and expansion of social safety net scheme, are the relief measures of the new budget.
In addition to these relief measures, the government seems to be focusing on investment in infrastructure with increased resources allocation as compared to the past. This is likely to benefit the stalwarts of the ruling alliance in the forthcoming general elections.
Like in the past, the NWFP government will continue to rely on external resources for its growing current expenditures and ambitious development agenda.
According to budget documents, estimated current revenue for the next financial year has been pitched at Rs80.579 billion, which is 21 per cent higher than the revised receipts of the outgoing financial year.
Of the total 80.579 billion current revenue receipts, the provincial government will receive Rs47.630 billion on account of federal divisible pool, Rs3.013 billion straight transfers, Rs11.907 billion as subvention, Rs5.807 billion as GST share for district governments and Rs6.2 billion as provincial own receipt (PoR).
An sum of Rs6 billion has been projected as receipts on head of net hydro-profit that had always been a cause of controversy and has been paid by Wapda to the province since 1991-92.
Earlier, the provincial government had been pitching the revenue receipts under this component at Rs8 billion, following a verbal commitment made by the former prime minister Mir Zafarullah Khan Jamali, for the last three years.
NWFP Finance Minister Shah Raz Khan explains: "Projection of actual receipts has been made to avoid inbuilt deficit of the budget. It doesn't mean that we have withdrawn from our principled stance rather, we are the ones who have successfully taken up the matter with the federation and Wapda through arbitration although its judgment is now pending before the Supreme Court of Pakistan."
Apart from current revenue receipts, Rs5.4 billion on account of current capital receipts, Rs6.7 billion as receipts from Account-II, and Rs16.3 billion as developmental receipts will put the overall receipts of the provincial government at Rs109 billion.
The current revenue expenditures in the next fiscal year have been put at Rs61 billion that is almost 10 per cent higher than the revised estimates of the outgoing fiscal year 2006-07.
Likewise, an amount of Rs7.2 billion, Rs39.462 billion and Rs6.844 billion has been estimated on accounts of current capital, development and Account-II expenditures. This makes the total expenditure size at Rs114.507 billion.
Apparently, the new budget is carrying a revenue shortfall of Rs5.489 billion that is 44 per cent higher than the revised budget deficit of the outgoing fiscal 2006-07.
However, assumption made on the basis of information in the budget documents suggests that the deficit is likely to exceed Rs10 billion mark because of expected lower than budgeted revenue.
The financial wizards of the MMA government believe that this deficit will be bridged through external financing which will not disturb the financial management of the province.
Critics say that it is not so easy to bridge such a huge fiscal gap sans mobilising own tax and non-tax bases of the province, whose own contribution to the revenue is just eight per cent.
MPA Pir Muhammad Khan says: “The fiscal deficit ultimately affects the budget meant for public welfare because operational expenses and salaries of employees cannot be cut. In the next fiscal year, major cuts would be levelled on such components of the budget that will affect pro-poor investment in the province."
A target of Rs6.2 billion has been set for the provincial own receipts (PoR) in the next fiscal year that is 21 per cent higher than the revised estimates of the outgoing financial year.
The NWFP government has to increase the PoR volume at 0.7 per cent of the provincial-GDP as per Medium Term Budgetary Framework (MTBF), but this target can not be achieved without streamlining the tax management and administration.
In the outgoing fiscal year the provincial government had nominally missed the PoR target, as its actual collection remained at Rs5.1 billion against the net target of Rs5.2 billion.
The tax collecting agencies consider the new recovery target unrealistic because of their limited capacity, lack of political will in expanding tax net and tax exemptions.
Out of almost 61 per cent of the revenue to be spent on non-developmental sector, Rs16.110 billion has been set aside for general administration in the next financial year against Rs13.789billion revised estimates of the outgoing fiscal year.
In terms of resource allocation, law and order has received second top priority for which Rs6.387 billion has been earmarked.
The government claims to have increased the annual allocation for the law-enforcing agencies manifold. However, if compared with the revised expenditures in the outgoing fiscal year, the law and order has got a nominal raise of just 1.38 per cent in the new budget.
MPA Bashir Ahmad Bilour, who has recently resigned from the chairmanship of NWFP standing committee on law and order, says: "The ongoing so-called war on terror has now spilled over to the settled parts of NWFP and the government cannot protect the lives and property of its citizens with such meagre resource allocations for law and order."
He also advocates sufficient allocation for health and education sectors to keep the existing assets in running condition, which according to him, have been ignored in the new budget.
The government has allocated Rs2.717 billion and Rs2.571 billion for health and education respectively.
The budget envisages an ambitious ADP worth Rs39.46 billion almost 26 per cent higher than the revised ADP of the outgoing fiscal 2006-08.
Major components of the next year ADP are: Rs21.94 billion for core provincial ADP, Rs7.98 for foreign-funded projects, Rs8.338 billion from federal government projects reflected in PSDP and Rs1.204 billion for the districts' ADP.
The next year ADP is focused on the completion of ongoing development projects particularly those initiated by the incumbent government.
The ADP fiscal 2008 is dominated by the infrastructure-related uplift schemes in education, health, water supply and communication sectors.
Will the government achieve development targets in the presence of a number of bottlenecks although its allocation for the development programme has witnessed an unprecedented increase of 44 per cent compared to the outgoing fiscal year?
MPA Anwar Kamal Marwat says that the current ADP is mainly dominated by the politically motivated projects with the ruling alliance mainly focusing on their hometowns rather distributing funds on need basis.
He believed that even with higher budgetary allocation, no significant improvement could be made in the social indicators of the province mainly because the government lacked a coherent and participative approach for the development sector.
He argues that legislators have completely been kept out of preparation process of the ADP that is why it could not really make any change in the lives of over 20 million population of the NWFP.
The government has been claiming that its spending will help generate new jobs and subsequently reduce poverty in the province, where 46 per cent of the population is living below poverty line.
Numan Wazir, President of the Industrialists Association, Peshawar, explains that tourism, mineral and hydropower generations are the avenues that can be greatly utilised for the economic uplift of the province.
He, however, laments that with allocations made in the next ADP these natural advantages could not be exploited for greater economic benefits.
THE North West Frontier Province budget for financial year 2007-08, carrying an outlay of Rs114.50 billion with an ambitious Annual Development Programme (ADP) at Rs39.462 billion, follows a similar pattern to those announced earlier by the provincial government during its four-year rule.
