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In its forthcoming fifth budget, Khyber Pakhtunkhwa’s coalition government is unlikely to break any new ground but is largely expected to retain its focus on social sector and grassroots level development.
The key specific priorities in the budget for resource allocation will be education, health, law and order and local governance.
The province would remain largely dependent on Punjab, as it has been over the past four years, for meeting food deficits, particularly wheat supplies, for want of adequate funding of agriculture and irrigation departments.
A meagre amount of Rs5bn has been proposed for the agriculture sector, an official of the finance department said, adding that irrigation is another neglected area. Before devolution, the federal government investment in the agriculture sector was around Rs10bn.
Experts say investment in the irrigation sector should be the top priority to bring barren land under cultivation thereby enabling the province to become self-sufficient in food.
According to an official document of the provincial finance department, the Budget Strategy Paper (BSP) estimates an increase of Rs974m, or 0.193pc, for 2017-18 over the current fiscal year’s budget outlay of Rs505bn.
The most disturbing part of the document is the rise in current expenditure — projected to grow at an average rate of 10pc in the next three years — which constitutes 72.4pc of total budget spending. The bulk of it goes towards payment of salaries, pension, non-salary expenditures, interest payments and federal and foreign debt repayments.
The province would remain largely dependent on Punjab for meeting food deficits. Experts say investment in the irrigation sector should be the top priority thereby enabling the province to become self-sufficient in food
Despite proposed austerity measures, the number of employees is on the rise in all provincial departments. Data shows that around 30,000 jobs alone were created in two sectors — health and education — in the last three years.
The province’s tax and non-tax receipts are projected at Rs40.48bn for the next fiscal year against current year’s Rs49.50bn — a fall of Rs9bn or 18pc. The tax revenue is projected at Rs19.98bn against current year’s Rs18.17bn.
KP’s own tax and non-tax revenues fall short of its needs and result in drastic cuts in development allocation. The document projects that KP will be able to spare Rs133.03bn for development in 2017-18 against the current year’s Rs161bn, a decline of 20.4pc.
This projection is on the assumption that the province will get Rs36bn as foreign aid. On the revenue side, the province will receive Rs337.74bn from the federal divisible pool in 2017-18 against current year’s Rs293.69bn, an increase of 15pc.
The ADP for the district government is projected at Rs29.11bn for 2017-18 against current year’s Rs33.9bn, a decline of 4.7pc.
The province is expected to receive Rs40.58bn as one per cent of the divisible pool for its contribution to the war against terror. It will receive Rs17.2bn in straight transfers or payment on duties and royalties on the production of oil and gas.
Haji Ghulam Ali, a former FPCCI president, blamed the provincial government for neglecting industrialisation which could in turn create jobs.
But an official of the finance department said it is too difficult to attract investors in the province owing to the war on terror.
Published in Dawn, The Business and Finance Weekly, May 1st, 2017
