PESHAWAR, Sept 23: The impact of shortfall, likely to be recorded in the provincial government’s direct federal transfers during the 2002-03 financial year, would duly be passed on to the financially-fragile district governments, according to official sources.

“In case of fluctuation — upward or downward — in the provincial government’s direct federal transfers, the district governments would duly share the impact,” said the official sources.

A decision to this effect was taken by the provincial cabinet, according to the sources.

In line with this decision, the district governments would be transferred funds in cash every month “on the basis of actual receipts of the provincial government,” said the sources.

The provincial government recorded around Rs2bn shortfall in its federal tax assignment during the 2001-02 financial year. Against the initially projected figure of Rs21.72 bn — under this head — for the last financial year, the province received Rs19.7bn.

Same was the case with the subvention head under which the province received Rs3.89bn during the 2001-02 financial year against the previously projected amount of Rs4.248bn.

The Rs350 million shortfall under the subvention head occurred due to the application of the rate of inflation on the NWFP’s share — in line with the current NFC award.

“The anticipated shortfall would subsequently be passed on to every district government on the basis of their share in the total population of the NWFP,” said the sources.

So far the district governments — 24 in the case of the NWFP — have been released funds for the expenditure heads other than salary in two monthly instalments, one each in July and August.

In the case of salary budget, the provincial government has released 40 per cent of the total annual salary bill the district governments would need to pay monthly salaries to their employees.

The sources said the district governments would duly take the plunge — if the provincial government recorded shortfall in its annual income as had been the case in the past — because during the current financial year they would be receiving funds in accordance with the resource distribution formula laid down under the Provincial Finance Commission (PFC) award.

Under this arrangement, district governments would be provided funds for their non-salary expenses on monthly basis in accordance with their share under the total population of the province.

Though the provincial government has released substantial amount to cater to the salary head of the district government, said the sources, its financial position was not so strong that the district governments were released funds in advance to help them meet their obligation under other heads of expenditure.

In line with a decision of the provincial cabinet, the district governments would be released 50 per cent more of their salary budget in the 7th month of the current financial year. However, this would also depend on the trend of flow of resources from the federal government and Peshawar’s income from the province’s own receipts up till then.

“The provincial government may or may not release 50 per cent more of the salary budget to the district governments in January, 2003, as this would entirely depend on the financial health of the provincial kitty,” said the sources.