KARACHI, June 4: Officials and planners in Sindh government are set for a task to draw up a Rs250 to Rs260 billion budget for the next fiscal year for which the availability of resources from Islamabad is tentative and doubtful as the provincial government itself disclosed in late April a shortfall of Rs14.5 billion in its share of federal resources in the current fiscal year.

Knowledgeable sources are pitching the current revenue expenditure budget for 2008-09 at about Rs200 to Rs210 billion, of which a substantial amount would go for relief measures for the poor.

“This programme is of cosmetic nature designed to serve selectively a small segment of rural and urban population,’’ a well-placed source said as he assessed the poverty in rural Sindh at 40 per cent plus, which conservatively comes to more than 8 million.

The sources say that a big part of about Rs27 billion ‘hole’ in the current fiscal year budget has been offset by way of what is called “financial engineering”.

For several years, block funds are allocated in the revenue expenditure budget for thousands of jobs. The sources say that these jobs are not filled and the allocated funds are utilised to fill gaps.

This year the gap is unusually big because the budget was launched with Rs12.3 billion deficit and it was enlarged to about Rs27 billion as there was a shortfall of Rs14.5 billion in provincial share of federal funds.The year 2007-08 was an election year and, therefore, the previous government of Arbab Rahim followed by the caretakers refused to slash down the development outlay of Rs50 billion. Obviously, Rs176 billion current revenue budget was met from the bulk allocations made in the budget.

But the challenge to the officials and planners for drawing up budget of 2008-09 is that the political leadership in its enthusiasm has promised to provide 40,000 jobs in the province.

“The government is already providing Rs60 billion as wages to half a million employees of provincial and local governments,” a source disclosed, who estimated that by employing 40,000 more persons in next one year, the provincial government will push up its monthly wage bill by at least Rs5 to Rs6 billion plus the provident fund and pension liabilities.

The sources also expect the current revenue expenditure budget in 2008-09 to go up because of more demands for maintenance, furniture and other equipments.

In the current fiscal year, the federal government cut down funds to Sindh because of its inability to collect projected Rs1,025 billion. The new tax collection target is now Rs990 billion and for the next fiscal year, the target is Rs1,225 billion.

In a situation, when international oil prices are still volatile, inflation is running in double digit, commodities prices in global markets are on rise, the domestic business environment is under tremendous stress, the recovery of Rs1,225 billion taxes in 2008-09 appears to be too optimistic. As a result, the Sindh government is bound to suffer a shortfall.

At the provincial level, the Sindh government is collecting about Rs25 billion only. The agricultural income tax has lot of potential but for last several years the collection has never been more than Rs200 to Rs250 million. The Sindh Board of Revenue has no capacity to collect tax from the big landlords. Sources say that the budget seems to be an ambitious plan that looks impossible to be achieved.

“The best course is to adopt a realistic approach and political leaders should themselves be a role model of austerity rather than roaming around in plush cars with party flags,” a critic said, who fear a massive public outcry against widening economic and social disparities.