KARACHI, June 9: The budget makers in Sindh appear determined to present a revenue surplus budget for the next fiscal year despite the collapse of National Finance Commission negotiations , which deny them increase in the share in pool of federal taxes.

Hopes are pinned on the growth of tax collection in the current fiscal year and during 2004-05 when the Central Board of Revenue is expected to mop up as much as Rs575 to Rs580 billion.

A news leakage from Islamabad has already indicated Rs28 billion more for the provinces - from Rs176 billion in the current fiscal year to over Rs204 billion next fiscal year - which should increase Sindh share in the divisible pool to about Rs48 billion from Rs40 billion in the current fiscal year.

"This increase of Rs28 billion in transfer of resources to the provinces from Islamabad being projected for the next fiscal year is not a grant but a legitimate share in natural growth of tax collection," Sindh Finance Minister Sardar Ahmad asserted at a recent press conference.

Budget planners expect a flow of Rs85 to Rs87 billion from Islamabad that include about Rs48 billion share in the taxation pool on the basis of population and about Rs37 billion direct transfers on account of share in surcharge and royalty on gas and oil.

"We hope to generate Rs15 billion from our own resources," Syed Sardar Ahmad had indicated in his last press conference. Mr Sardar has promised to improve collection of tax on agriculturists, which has been neglected for last several years and its yield has hardly been Rs300 million in a year against a conservative potential estimate of Rs2 billion.

With this expected resource availability of over Rs103 billion next fiscal year, the budget planners are drawing up budget of about Rs115 billion. This include about Rs100 billion revenue expenditure budget and Rs15 billion development budget.

"We plan to focus on road sector," an official of Sindh government said last week to this correspondent. Syed Sardar Ahmad in his last press conference has proudly claimed that for last two consecutive years Sindh has been providing resources for its development programmes from its own resources.

For last two consecutive years, the Sindh budget documents used to announce that the financing of annual development plan depends on the availability of the resources. "We have saving on our revenue expenditure budget to provide finances for the development schemes," claimed Syed Sardar Ahmad in his last press conference.

For last two years, the Sindh government has been making revenue surplus budget but announcing that there are no resources to fund the ADP. The federal government has stopped providing loans for the ADP for last three year.

There are apprehensions that budget makers inflate revenue expenditure which gives them enough room to squeeze out funds for the development. With no adequate auditing and scrutiny, financial engineering has remained unnoticed so far.

But budget makers will be hard pressed if government announces a pay raise in government employees. It can bring from Rs1 billion to Rs2 billion additional pressure on the budget for which there appears to be little room.