LAHORE: Punjab’s Rs1.194 trillion budget for the fiscal year 2015-16 has sought to boost public investments on large infrastructure projects to escalate economic growth and create jobs as private investors are reluctant to invest their money because of energy crunch, policy deficiencies and security concerns.
The strategy of the Shahbaz Sharif government to develop the regional economy of the province is focused on development of mega projects in power, roads, urban transport and water sectors as its total investment spending is targeted to spike by 16 per cent to Rs400 billion next year from the original estimate of Rs345bn for the outgoing fiscal. The stimulus also includes foreign project assistance of Rs34.5bn and Rs67bn set aside for special initiatives.
The budget presented by Punjab Finance Minister Ayesha Ghous-Pasha on Friday also proposed to reform the provincial tax system without pushing the unmet collection target for the outgoing fiscal year.
In her budget speech, she said the government’s investment plan was in line with the Punjab Growth Strategy 2018 to spur growth to 7-8pc a year, create one million jobs, help double private investment and eliminate terrorism from the province by 2018 – the year of next elections in the country. She said the focus would be on cutting poverty in the province and pushing inclusive growth.
The bulk of investment spending on infrastructure development (Rs161.5bn) has been earmarked for roads (Rs69.4bn), water sector (Rs35bn), energy (Rs31bn, including Rs15bn for the 1,300MW LNG-based power plant) and urban development (Rs16.5bn). The proposed allocations for the mass transport sector (Rs28bn) will be spent on Multan Metro Bus (Rs17bn) and Lahore Orange Line Metro Train (Rs10bn).
The other major focus of investment spending will be the social sector on which the government plans to spend Rs119bn and the production sector for which it has allocated Rs28.5bn.
|Punjab Finance Minister Dr Ayesha Ghous-Pasha talking to reporters after unveiling the provincial budget.—INP|
Additionally, it will provide farmers 25,000 tractors and other agriculture implements and equipment at subsidised prices that will cost the government Rs6bn, and implement the Rs11bn clean drinking water project in the rural Punjab for 40 million people.
The budget has proposed to upgrade schools and hospitals by providing them necessary equipment and renovating their buildings, create 18,400 jobs for doctors and over 900 for additional district and session judges and civil judges, provide interest-free loans to the youth, initiate a Rs2bn cash assistance programme for the poor and the disabled and construct low-cost homes for low-income families.
A safe city project will be launched at a cost of Rs4bn. It will first be implemented in Lahore and then in Multan, Rawalpindi, Faisalabad and Gujranwala. The project will be completed by the end of next year.
The budget documents show that the government is going to miss its investment target for the outgoing year by a hefty margin of Rs110-105bn or 30-32pc of the original target.
The finance minister blamed it for shortfall in federal transfers from the divisible tax pool because of Federal Board of Revenue’s failure to collect the targeted tax, last year’s floods in Punjab and five months’ protest by the PTI against alleged rigging in the last elections.
The next year’s budget is 16pc higher than the current year’s Rs1.033tr. Almost four-fifth of Punjab’s income will come from the federal divisible tax pool. The provincial tax revenues will form just above 14pc, federal grants almost 4pc and foreign loans under 3pc of the province’s total income next year.
The province’s total revenue receipts for the next year are 11pc heavier than the outgoing fiscal, but the government has tried to contain the spike in its current expenditure to 7.6pc despite an increase in pay and pension of its employees announced by the federal government. It will help the province spare Rs365.5bn for its investment stimulus.
The provincial tax estimate for the next year has been cut by 2.4pc to Rs160.6bn from the present fiscal’s target of Rs164.7bn as the actual collection is estimated to have fallen short of the target by 31pc.
In order to boost its tax revenues, the government broadened the net of provincial GST by taxing 10 new services, announced reward for those identifying tax evaders and pledged to punish non-compliant individuals and businesses. It has imposed a tax on immoveable property in rural areas, withdrew capital value tax exemption on immoveable urban property valuing Rs1m.
Published in Dawn, June 13th, 2015