PESHAWAR: Khyber Pakhtunkhwa’s Rs505 billion budget for the financial year 2016-17 sets aside Rs161bn for the annual development programme (ADP), including Rs36bn foreign assistance, and proposes to create 36,232 jobs, mostly in the health and education sectors.
KP Finance Minister Muzafar Said, who presented the budget in the provincial assembly on Tuesday amid slogans by opposition members, termed it a balanced budget.
The current budget’s outlay is Rs17.12bn or three per cent higher than that of outgoing year’s Rs487.88bn.
The budget document suggests that the province faced a revenue shortfall of Rs56.64bn in the outgoing year as it generated Rs431.24bn against a target of Rs487.88bn. The government also admitted to slashing the outgoing ADP to Rs135bn from estimated Rs174bn.
The government’s current expenditures have been pitched at Rs344bn, up by 10pc, from Rs313bn set for the outgoing year.
The budget has set aside Rs344bn for administrative expenditures and Rs161bn for the ADP. The current revenue expenditures have been pitched at Rs333bn.
An amount of Rs222bn has been set aside for general public services, Rs15.091bn for defence affairs and services, Rs41.96bn for public order and safety, Rs18.341bn for economic affairs, Rs890 million for environment protection, Rs4.3bn for housing and community amenities, Rs19.6bn for health, Rs1bn for recreation, culture and religion, Rs19.520bn for education affairs and services and Rs5.94bn for social protection.
The budget document suggests that the KP government has thrown caution to the wind while fixing its revenue targets and the ADP formulation. The projections contained in the document are inflated and in contrast to the finance department’s calls for fiscal realism and curtailing the size of ADP, which it espoused in its two budget strategy papers.
In the outgoing year, the provincial government faced severe resource crunch on account of its unrealistic revenue estimates.
Federal transfers under the National Finance Commission (NFC) award to the tune of Rs346.146bn will make for about 68pc of the province’s revenue. The province is also slated to get Rs33.704bn in lieu of net hydel profit proceeds and its arrears.
An amount of Rs49.507bn will be raised from the province’s own tax and non-tax revenue and Rs75.605bn from foreign aid and other sources.
The province’s own tax and non-tax receipts target at Rs49.507bn suggest that the government has learnt nothing from its last year’s experience and reflected unrealistic and speculative projections, including generation of Rs12.70bn from commercial use of state land. In the outgoing year, the finance department managed to receive over Rs25.48bn against a target of Rs54.42bn in lieu of province’s own tax and non-tax revenue.
The proposed development expenditure of Rs161bn will be 8pc less than that of the outgoing year. It envisages core development component of Rs91.1bn, while Rs339bn will go to the districts for development initiatives. The province is set to receive Rs36bn for foreign-funded development projects. KP will also make internal borrowing to the tune of Rs12.20bn to ensure financing for various ADP projects. The ADP portfolio comprises 1,516 projects – 1,237 ongoing and 279 new ones.
The KP finance minister claimed that the government had devoted most of the resources to ongoing schemes for public benefit.
The finance bill proposes to increase the rate of annual tax on vehicles. It also proposes to authorise the KP Revenue Authority to include facilities for travel by road, cargo service by road, visa processing services, including advisory and consulting services for foreign education and migration, and valuation services, including competency and eligibility testing service, in its first schedule to bring these into the ambit of sales tax.
Fees on stamp duty instruments on affidavits, allotment orders and arms licences have also been increased. The budget proposes to increase electricity duty and bring down tax fee on transfer of immovable property from two to one per cent.
The finance minister announced a 10pc increase in salary of government employees, while setting the minimum wage at Rs14,000. Pensioners will also get a 10pc hike from July 1, while those over 85 years of age will be entitled to a 25pc increase in their pension.
He said the government would create 36,232 jobs, mostly in health and education sectors, while health insurance would be expanded to all areas of the province with an estimated cost of Rs3bn. The government will provide health insurance facility to the tune of Rs175,000 per annum to benefit 10 million poor households.
He said the government had also approved the construction of Swat expressway under public-private partnership with an estimated cost of Rs34bn and was also planning to introduce 100 air-conditioned buses in Peshawar by the end of this year. The 23km rapid bus transit for Peshawar costing Rs20bn will be completed by Dec 2017 and 250 million trees will be planted under the Billion Tree Tsunami Programme.
Published in Dawn, June 15th, 2016