LAHORE: Punjab’s Rs1.452 trillion budget for the next financial year proposes to create half a million jobs in the province through a massive development investment of Rs550 billion in large infrastructure, transport, irrigation, agriculture, water supply and energy projects, as well as heavily subsidise smallholders and landless cultivators.
The ambitious development programme will be financed by a revenue surplus of over Rs435bn and a soft foreign debt amounting to Rs115bn, including a Chinese loan of Rs85bn for the controversial Lahore Orange Line Metro Train project.
About 86pc of this amount constitutes the core provincial annual development programme (ADP) and the rest is qualified as ‘other development initiatives’.
The proposed development investment for the financial year 2016-17 is 37.5pc bigger than the original estimates of Rs400bn, including core development spending of Rs333bn, for the outgoing fiscal, provincial finance minister Ayesha Ghaus-Pasha said while presenting the budget on Monday amidst continuous heckling by the Pakistan Tehreek-i-Insaf-led opposition. The Shahbaz Sharif government expects to utilise three quarters of the development funds by the close of the outgoing year.
The current expenditure of the government has been pitched at Rs850bn, up by 12.88pc from original estimates of Rs753bn for the outgoing year. A little more than half of the current budget has been set aside for general public services, including transfer of Rs274bn to the local governments, 15.60pc for police, courts and public safety affairs, 14.41pc for agriculture, irrigation, industries, etc, 8.3pc for health and 7.5pc for education.
The current expenditure also includes allocations of Rs63bn for providing subsidies to the poorer segments of population, including smallholders and landless growers in the province, the minister told Dawn after the budget speech. The major chunk of the subsidies is set aside for supplying cheap fertilisers to farmers under the federal Kisan Package and providing interest-free credit of Rs30bn to the growers.
The rest of the money will be spent to share the cost of public transport travel and provision of interest-free loans to youths. Other major current expenditure includes foreign debt repayment of Rs16.55bn and allocation of Rs10bn for capitalisation of the Punjab Pension Fund.
More than 70pc of the provincial income, or Rs1.04trn, is estimated to come as federal transfers under the National Finance Commission award. Almost one-fifth of the income, Rs280bn, will be raised from provincial taxes and non-tax resources, and the rest 10pc, or Rs147bn, through foreign loans.
The provincial government has increased its tax revenue collection target for the next year by 13pc to Rs184.436bn from the original estimates of Rs160.59bn for the current year. This also includes general sales tax (GST) on services target of Rs85.500bn, up by about 19pc from the current year.
The finance bill for the next financial year proposes to extend the scope of GST on services to two more services – cosmetic surgery and hair implants and warehouses and cold storages. Additionally, it recommends extending the coverage of property tax to vacant plots of land and increase motor vehicle tax on imported cars above engine strength of 1300CC.
The government plans to spend around Rs230bn on its wheat procurement operations next year, which will raise the size of the provincial consolidated fund to a whopping Rs1.68trn.
Minister Ayesha Ghaus-Pasha told Dawn that she intended to increase tax revenues through better management and administration rather than imposing new taxes or increasing their rates burdening the taxpayers.
“The major objectives of our tax policy are to discourage speculative investment and encourage people to invest in productive sectors for creating jobs,” she said. “The extension of provincial property tax coverage to include vacant plots of land is an indication of our intent and our objective.”
In her budget speech, the minister spoke at length of the government’s vision for economic growth to convert Punjab into a secure, economically vibrant, industrialised and knowledge-based province under its growth strategy 2015-18. She said the government was creating an investment-friendly environment to attract private investment in the province for job creation.
The minister said the government had allocated over 31pc, or Rs173bn, of its development budget for various education, transport, irrigation and other sectors, including Multan Metro Bus project, an engineering and information technology university and cadet colleges.
She said the provision of education, healthcare, clean water and security were the top priority of the Punjab government and it will spend 57pc of the budget on these sectors. She said the budgetary allocations for education have been spiked by 47pc and for school education by 71pc. The health allocations are 62pc higher than the current year.
Similarly, the increase in the funding for agriculture, irrigation, livestock, forests, fisheries and food has been estimated 47pc greater than the outgoing year. She said the province had designed a Rs100bn support programme for the agriculture sector in addition to implementing the Rs150bn rural roads programme to connect farms with markets.
She also talked about the measures the government was taking to improve governance through computerisation of land revenue record and formation of E-Khidmat centres at divisional headquarters to provide the citizens 14 services under one roof. The centres have already started working in Lahore, Rawalpindi and Sargodha.
Published in Dawn, June 14th, 2016