MUZAFFARABAD: The Azad Jammu and Kashmir (AJK) government on Monday accused the Shehbaz Sharif-led federal government of slashing its development grant and share in federal taxes in a move that could deal a serious blow to its development and other plans for the ongoing and next fiscal years.

The allegation was made by AJK minister for finance and inland revenue Abdul Majid Khan at a press conference in the PM House.

He was accompanied by minister for planning and development Chaudhry Mohammad Rasheed, minister for civil deference and disaster management Chaudhry Akbar Ibrahim and special assistant on information Rafique Nayyar.

The finance minister said that AJK’s development budget, which is provided by the federal government in totality, stood at Rs28 billion in the ongoing fiscal year, but the federal finance division had unilaterally slashed it by Rs5.2bn.

Similarly, he said, the federal government was to provide Rs49.9bn to AJK during the ongoing fiscal year (2021-22) as the latter’s 3.64pc share in the federal taxes pool (variable grant) but that too had been slashed by Rs4.4bn.

The 3.64pc share from the federal taxes pool was agreed under a financial arrangement between Islamabad and Muzaffarabad in 2018 and constituted a major source of AJK income for its recurring budget, he said.

Mr Khan said that according to the working of AJK finance department, the 3.64pc in FY 2022-23 equalled Rs74.32bn, but the federal government had recently informed that it would provide only Rs60bn.

“This will create a shortfall of Rs14bn in our income which we cannot bridge from any other source,” the AJK minister said, warning that the decision, if not reviewed, could affect AJK’s financial system beyond control.

“It’s for the first time in AJK’s history that the federal government is going to cut our normal [recurring] budget,” he added.

He said immediately it was not clear as to how much funds would be provided for AJK’s development budget.

The AJK minister alleged that the federal government had also stopped funds for the LoC-package despite the fact that 40pc work had already been done.

Mr Ismail had convened a meeting of the finance ministers of provinces and AJK on May 13 but adjourned it without any notice, he said.

Published in Dawn, May 31st, 2022