• Salaries, pensions to cost province a whopping Rs466bn
• Minimum wage for labourers set at Rs21,000 per month
• 10pc pay raise for government employees
• Registration fee for vehicles reduced to nominal Re1
• Rs10bn each for wheat subsidy, food basket for poor
• Rs10bn for businesses and individuals affected by pandemic
PESHAWAR: The Khyber Pakhtunkhwa government on Friday unveiled a Rs1.118 trillion budget for the fiscal year 2021-22 with a record development outlay of Rs371 billion to mitigate the impact of Covid-19 and boost economic development.
The budgeted figure of Rs1.118tr is 21 per cent higher than current year’s Rs923bn.
Minister for Finance Taimur Saleem Jhagra presented the budget in the KP Assembly. Unlike the tumult seen in the National Assembly, Mr Jhagra faced no hurdle in his speech as the opposition benches sat patiently and listened to his speech following a pre-session agreement between the two sides.
KP Chief Minister Mahmood Khan also showed up, ending his yearlong absence from the house, and was received with huge desk-thumping from both sides of the aisle. Leader of the Opposition Akram Khan Durrnai did not attend the session due to health reasons.
In his budget speech, Mr Jhagra said the province had come out of the difficult period caused by the global pandemic which it faced a year ago and now was well on the road with a carefully crafted plans. He boasted about the provision of universal health insurance to all citizens of the province.
Spelling out prominent features of the budget, Mr Jhagra said the government had increased salaries of its employees and was also committed to increasing the province’s revenue base and introducing reforms and improving governance.
Revenue estimates showed that the province would receive Rs559bn from the federal divisible pool, Rs74.5bn net hydel profit on hydroelectricity produced in the province and Rs75bn own revenue. The Centre would provide Rs187.7bn in lieu of federal grants for merged districts with a transfer of Rs34.6bn from the divisible pool at Rs34.6bn. Foreign assistance for development projects has been pitched at Rs89.2bn.
The budget document put the province’s total expenditure at Rs1.118tr, of which Rs919bn has been earmarked for settled districts and Rs199bn for merged districts. Government has allocated Rs747.3bn for the current expenditures — Rs648bn for settled areas and Rs99bn for merged districts.
The development outlay has earmarked Rs270bn for settled districts and Rs100bn for merged districts.
Expenditure estimates showed that salaries of government employees and pensions would cost the province a whopping Rs466bn. The documents stated that there was a significant increase in salaries this year, and the overall salary bill will rise by 15pc compared to last year’s budgeted figures due to an ad hoc relief for all employees, coupled with an increase in selected allowances. Similarly, pension bill will increase by 7pc.
Total salary bill for the provincial government’s 622,000 strong workforce stood at Rs374bn, an increase of 74pc since 2018-19. Pension bill has been pitched at Rs92bn for the next fiscal year, up from over Rs83bn actual figure for the current year.
The development outlay of Rs371bn has proposed a provincial component of Rs150bn and Rs24bn for merged districts. District ADP for settled parts of the province has been pitched at Rs15bn and that for merged districts at Rs2.4bn.
Under the Accelerated Implementation Plan (AIP), Rs36bn has been allocated for merged districts, of which Centre will provide Rs30bn and KP Rs6bn in line with the commitment to providing 3pc of the National Finance Commission (NFC) share for the erstwhile Fata development.
Curiously, an unfunded portion of AIP amounting to Rs34.6bn has been reflected in the budget documents. Breakdown of unfunded AIP shows Punjab would chip in Rs21bn, Sindh Rs10bn and Baluchistan Rs3.6bn of three per cent share of the NFC. In reality, other provinces have thus far not provided even a single penny of their committed share for merged areas but some have also opposed it.
The donor-funded projects have been pitched at Rs89bn.
Mr Jhagra said that increasing the early retirement age would save the province about Rs12bn a year while pension rule changes would save another Rs1bn a year. He said the government had set the minimum wage at Rs21,000 a month for labourers, while Rs10bn each has been allocated for wheat subsidy and provision of food basket for poor.
For economic recovery, Rs10bn will be provided to small and medium enterprises, women, minorities, youth and businesses hit by the pandemic.
The finance minister also announced a 10pc pay raise in salary of all government employees and said those employees who did not draw special allowances would get a pay raise of 37pc.
He said the province would also spend Rs10.4bn on reducing regional disparities and Rs2.6bn on providing stipends to 20,000 prayer leaders in the province.
Mr Jhagra said that in order to boost economic activities in the province, the government had reduced taxes. He said farmers had been given exemption from landholding tax during the next year, while registration fee for vehicles has been reduced to a nominal rate of Re1. He also announced tax exemption for all professionals.
The finance minister said the government would spend Rs2.8bn on extension of Rescue 1122 services to other parts of the province. He said the tourism department development budget had been increased to Rs12bn from Rs2bn and that of science and technology to Rs2bn from Rs1.1bn.
Published in Dawn, June 19th, 2021