Sindh Chief Minister Syed Murad Ali Shah delivers his budget speech in the Sindh Assembly on Monday.—PPI
Sindh Chief Minister Syed Murad Ali Shah delivers his budget speech in the Sindh Assembly on Monday.—PPI

KARACHI: Chief Minister Syed Murad Ali Shah informed the Sindh Assembly on Monday that the provincial government had axed allocation for new schemes in the annual development programme (ADP) by Rs24 billion due to an ‘unprecedented’ shortfall in federal transfers to the province.

The CM gave this information at the floor of the house while delivering his speech seeking authorisation of the new assembly for the budget for the remaining nine months — Oct 1, 2018 to June 30, 2019 — of the financial year 2018-19.

“The ADP 2018-19 was initially prepared during March-April 2018 when the Sindh government decided to provide development funds of Rs202 billion for ongoing schemes only and authorised the expenditure for first quarter July-September,” he said. “However, a block provision of Rs50bn was kept for new schemes to be decided by the next government. This block allocation has now been reduced and an allocation of Rs26bn is kept in ADP 2018-19 for new schemes.”

Of the Rs26bn, an amount of Rs21bn is allocated for provincial ADP and an additional amount of Rs5bn for district ADP schemes of high priority, especially schemes of education, health, water and sanitation sectors.

Murad presents nine-month budget in PA; opposition protests against street crimes, water shortage

Opposition’s protest

The session, presided over by Speaker Agha Siraj Durrani, began an hour delayed to the schedule time.

The chair administered oath to Shahana Asha’ar of the Muttahida Qaumi Movement-Pakistan and Seema Zia of the Pakistan Tehreek-i-Insaf.

As the chief minister rose to make his budget speech, a number of opposition lawmakers, most of them belonging to the MQM-P, stood on their seats to lodge a protest.

They were holding placards inscribed with demands to reduce street crimes, better water supply and other problems the cities of Sindh, Karachi in particular, were facing.

However, Mr Shah started his speech and said that during the announcement of the budget 2018-19 in May, the house was requested to authorise expenditure for only three months — July1 to Sept 2018.

Rs1.144 trillion Sindh budget

He said total budget outlay for financial year 2018-19 was Rs 1.144 trillion; while, the previous elected government had authorised funds amounting to Rs292.613bn for the first quarter of the current fiscal year.

The total current revenue expenditure was Rs773.3bn out of which Rs193.3bn stood authorised. He said as against current capital expenditure of Rs27.3bn, Rs6.9bn had already been authorised. For development side, Rs63bn were authorised.

Regarding development budget, Mr Shah said the total development budget outlay during 2018-19 was Rs343.911bn, out of which Rs252bn was estimated for provincial ADP and Rs30bn for district ADP schemes; Rs46.895bn from foreign projects assistance (FPA) and Rs15.017bn by the federal government through public sector development programme (PSDP) schemes under execution of the Sindh government.

The provincial ADP 2018-19 included Rs202bn for 2,226 ongoing schemes, and a block allocation of Rs50bn was estimated for new schemes.

He said the provincial development portfolio now faced an allocation cut of Rs24bn. “Now the size of the provincial ADP for 2018-19 is Rs228bn out of which Rs5bn will be diverted to district ADP which would be enhanced from Rs30bn to Rs35bn and Rs21bn would be authorised for new ADP schemes.”

‘Unpleasant decision’

Mr Shah said he had taken ‘this unpleasant decision’ of reducing the ADP allocation because the provincial government was facing financial constraints in view of shortfall in federal transfers.

He added the provincial government was largely dependent on the federal government for its revenue receipts including revenue assignments, straight transfers and octroi zila tax (OZT) grant, which constituted about 75pc of the combined federal receipts and provincial tax and non-tax receipts.

The chief minister said actual transfers from the federation to the Sindh government always fell short of the estimates provided during a fiscal year.

He added with the unpredictability of those fiscal transfers from the federal to provincial government, budget preparation became cumbersome as the projections of non-development expenditure and development portfolio were largely based on those estimates.

Mr Shah said, resultantly, provincial development expenditure had to be adjusted to offset the effect.

“During the last financial year 2017-18 the budgeted receipts of federal transfers were Rs627.3bn which were revised to Rs598.8bn while actually we received only Rs549.9bn i.e. a shortfall of Rs. 77.4 billion,” he said.

He added the receipts of federal PSDP were revised to Rs20.385bn from Rs27.326bn while the revised FPA stood at Rs27.7bn as against Rs42.7bn. Resultantly “we have to cut our development allocation for new schemes from Rs50bn to Rs26bn”.

Delay in NFC award

He said the delay in announcement of the 9th National Finance Commission (NFC) award was causing a huge economic loss to provinces, especially Sindh, because “its revenue collection is much higher as compared to other provinces. We, therefore, urge the federal government to start deliberations of the Commission soon so that further loss to us could be avoided”.

He said performance of the Sindh government in tax collection had improved significantly after 18th Amendment to the Constitution. One of remarkable achievements of the Sindh government was establishment of the Sindh Revenue Board (SRB) for collection of sales tax on services, he said.

“The SRB is now the largest authority to collect sales tax on services in Pakistan and it has registered 25 per cent average growth in collection of sales tax in successive years since its inception. In FY 2017-18 the Sindh government collected a total of Rs100.29bn in sales tax on services. We are again requesting the federal government to hand over collection of general sales tax on goods to provinces for better tax collection.”

The chief minister said focus of the budget was optimal use of the resources to achieve “our objectives of socio-economic development”.

He said the Sindh government had planned to provide adequate infrastructure and services in social sectors like education, health, water supply and sanitation, food security, energy and infrastructure sectors.

He said he had devised a comprehensive development programme.

“Our priority is to provide more funds for the ongoing development schemes and have allocated Rs202bn during 2018-19 for ongoing schemes as compared to Rs151bn last financial year; amounting an increase of 25pc. The government is engaged in development of policies, strategies and plans for key sectors like education, health, agriculture, water resources, energy, transport and communication, clean drinking water and safe disposal of sewage. The government has organised Sindh development forum (SDF) in March where all stakeholders from the government, international development partners, academia, NGOs, INGOs and civil society participated to identify development gaps in these areas.”

Mr Shah said the government had also planned to implement multimillion major projects to provide adequate infrastructure and services in social sectors like education, health and water supply and sanitation and to build urban transport and communication, starting with introducing BRTS lines, like Orange Line and Red Line in Karachi.

“We believe people of Sindh will benefit from these ongoing development initiatives to be completed soon.

He said the government was giving more stress on completion of ongoing schemes, thus, sufficient funds had been allocated for the purpose. He expected 958 schemes of ADP 2018-19, where 100pc remaining funds had been allocated, would complete by June 2019.

Procurement of vehicles

Murad Shah said his government had planned to introduce austerity measures in financial management to keep a check on unproductive government expenditure.

“There would be a reduction on purchase of new vehicles except for the operation vehicles for police force and hospitals like ambulances, buses, police APC carriers, prison vans etc. Purchase of luxury items would also be kept under control,” he said.

“These measures reflect our resolve to bring significant improvement in the life of common man. It is our commitment to implement PPP’s election manifesto as we have returned to assemblies in general elections because of our past performance. Our party has always led from the front on all issues that matter to the people of this great country.”

Published in Dawn, September 18th, 2018