PESHAWAR: The Khyber Pakhtunkhwa government on Tuesday said it faced a revenue shortfall of over Rs275 billion in the current fiscal due to the recent flash floods as well as non-payment of net hydel profit and cuts in funding for tribal districts by the federal government.

Finance minister Taimur Saleem Jhagra told reporters at the Civil Officers Mess that the province’s share in the current financial year’s federal divisible pool was likely to shrink by Rs65.7 billion on account of lower tax collection by the Federal Board of Revenue (FBR) than target.

He said the province also had a Rs61.2 billion shortfall on account of non-payment of the NHP proceeds by the centre, which hadn’t paid even a single penny under that head since the Pakistan Tehreek-i-Insaf-led federal government was topped in March this year.

Mr Jhagra said the cuts in the tribal districts’ funding by the centre would cost the province Rs25.9 billion compared with the last year’s Rs20 billion shortfall on that account.

He said tax collections by the FBR had gone up by 10 per cent in the first months of the current fiscal against the target of 22 per cent and that collection rate was unlikely to improve in the wake of flash floods.

“The contraction of FBR revenue target will reduce the province’s federal divisible projection by Rs65 billion,” he said.

The minister said a long delay in the payment of due net hydel profit to KP was hampering flood relief efforts and thus, putting the province in a ‘critical situation’.

He also complained about a massive reduction in the federal government’s funding for tribal districts and said the war-torn region’s current budget was kept at Rs60 billion against the projected Rs85.9 billion needs.

Mr Jhagra said the grants for internally displaced persons came down from Rs17 billion to zero, while the development funds were reduced from Rs54 billion first to Rs50 billion and then to Rs55 billion after the ‘agitation and pursuit of principled stand’ by the province.

He said the province spent an additional amount of Rs16 billion annually in tribal districts from its own resources.

The minister said the province had halved its development releases in the current fiscal to address funding shortage.

He said the destruction caused by floods had added to the woes of the province.

Mr Jhagra declared security more critical than development and said the provincial government’s funding for the purpose was likely to increase.

Published in Dawn, September 21st, 2022