KARACHI, July 16: An inflated and unrealistic revenue target based on short-term political considerations rather than solid economic reasons is said to be behind the city government’s surplus budget for the financial year 2007-08, Dawn has learnt.
Sources said that the city government’s optimism about the revenue target seemed to be grossly misplaced in view of the fact that in the previous financial year it missed most revenue targets save the annual grant released by the federal and provincial governments.
The sources claimed that setting unrealistic revenue targets reflected the budget-makers’ gimmicks to help the city government proudly announce a surplus budget.
The total expenditure shown in the budget has been estimated at Rs45.479 billion as against the expected receipts of Rs45.695 billion, with the surplus amount put at Rs216 million.
Unrealistic revenue targets
Well-placed sources told Dawn that instead of revising the previous fiscal’s targets in the light of shortfall in revenues generated by the departments concerned, the city government’s Finance and Planning Department had chosen to set even higher revenue targets.
The sources argued that the budget makers estimated that the city government’s revenue department would generate Rs9.367 billion in the current financial year although it could not meet the Rs7.638 billion target given to it in the previous year.
“This seems to be aimed at keeping the budget outlay at a higher side compared to that of the previous financial year,” said a source.
Similarly, Rs1.5 billion was shown as projected revenue under the head of octroi to be recovered from the Karachi Electric Supply Corporation (KESC), the sources indicated, and wondered that how the authorities expected any receipts under this head while the city government had already mentioned this amount in the previous budget but failed to realise it.
Don’t count your chickens...
The budget estimates put the expected receipts of Rs1 billion from the Karachi Building Control Authority; Rs1.44 billion from the Master Plan department; Rs1.307 billion from the Finance and Planning department; Rs9.153 billion from devolved departments; Rs10.171 billion from the Karachi Water and Sewerage Board; Rs17.23 million from the Municipal Services department; Rs10.5 million from the Enterprise and Investment Promotion department; Rs2.9 million from the Information Technology department; Rs1 million from the Law department; Rs942.62 million from the Works and Services department; Rs298.6 million from the Coordination department; Rs244.71 million from the Health department; Rs75.33 million from the Agriculture department; Rs67.75 million from Community Development department; Rs67 million from the Transport and Communication department and Rs17.45 million from the Mass Transit Cell, besides Rs10.01 billion to be granted by the federal and provincial governments.
The sources observed that the all these departments failed to meet the targets set for the financial year 2006-07. The only realistic figures appeared to be the ones shown under the head of grants from the federal and provincial governments.
The KWSB, which was given the revenue target of Rs5.305 billion last year and failed to meet the same, has now been given a higher target of Rs10.171 billion.
EDO Finance Naila Wajid told Dawn that the budget was prepared on the basis of a fixed amount and the revenue targets were increased in the light of a review of the projected avenues of revenue generation.
“We keep an eye on the departments’ performance vis-à-vis meeting their targets and whenever necessary during the year, we ask them to improve the revenue generation situation in order to meet the targets. Besides, a 30 per cent cut in expenditure helps the city government bridge a gap between its receipts and expenditure,” she added.
The “financial wizard” of the city government said that her department had to mention in the budget the Rs1.5 billion dues outstanding against the KESC because the city government expected the release of the amount through the court where the case was pending a verdict.
According to the sources, the budgets prepared by the now defunct Karachi Metropolitan Corporation (KMC) used to be based on realistic figures.
“But it was the former city nazim Niamatullah Khan who set a precedent for presenting a record budget every year,” they claimed
Criticising the incumbent city government for treading the same path, the sources said: “Elected governments refrain from coming out with a deficit budget or the one which has an outlay smaller than that of the previous budget. For that reason, they force the finance departments to prepare a surplus or balanced budget.”
