LAHORE: Punjab expects transfer of Rs1,494.5 billion as its share from the federal divisible pool in 2019/2020, basing its estimates on projection that the Federal Board of Revenue (FBR) would not be able to collect more than Rs5,200bn – almost 5.5 per cent less than the targeted tax revenue of Rs5,500bn – next year.

The transfers from the pool projected for the next fiscal year are 17 per cent higher than the original provincial budget estimates of Rs1,276.3bn and over 29pc greater than the revised number of Rs1,156.8bn for the present year. The poor performance of the FBR in meeting its collection target of Rs4,435bn has resulted in substantial decrease in transfers to the provinces. Consequently, Punjab, which had promised to produce a cash surplus of Rs147.8bn to help Islamabad reduce the consolidated budget deficit, is unlikely to keep its pledge.

According to documents detailing provincial revenue income estimates for the next financial year available with Dawn, the province has estimated a growth of 12.8pc in its total revenue income next fiscal year from original estimate of Rs1,652.2bn to Rs1,863.2bn. The growth is mainly based on the expected higher transfers from the divisible pool as the provincial own tax and non-tax income is estimated to drop by two per cent from original estimates of Rs375.9bn.

Province’s own tax and non-tax income likely to drop by 2pc

The Usman Buzdar government has increased its own provincial tax collection target by just 2.7pc to Rs283.2bn in view of a very dismal performance of its tax agencies during the present year owing to massive reduction in public investment stimulus, economic slowdown and the hit it had to take because of suspension of services tax on mobile phone top-ups by the court. Similarly, the province’s non-tax receipts are likely to face a shortfall of 45pc this year. The government is hoping to raise Rs368.7bn from its own tax and non-tax resources next year.

In all, the government is expecting the provincial consolidated fund to be around Rs2,161.3bn next year, up by 6.65pc from the current year. The consolidated fund includes foreign project assistance of Rs27bn, current capital receipts of Rs33.5bn and loans for food (wheat) procurement of Rs237.7bn.

The government is expected to increase its public development spending to Rs430-450 billion, including foreign project loans, grants and other assistance of Rs27bn, from the original estimates of Rs238bn, and produce a cash surplus of Rs155bn. The major thrust of the provincial development budget would be on development of infrastructure and social sector.

Published in Dawn, June 11th, 2019