Review of Provincial Budget FY2022

Statistics showed that worldwide GDP is now predicted to increase by 6 percent during 2021. In Pakistan, the present report of Government of Pakistan showed that a nascent economic recovery of 3.94 percent growth in GDP is emerging in FY2021, from a pessimistic growth in FY2020. However, it is said that the fiscal framework remains under stress with higher than budgeted deficits and a resultant high debt-to-GDP ratio. Despite myriad of challenges, Pakistan’s economy is moving progressively on higher inclusive and sustainable growth path on the back of various initiatives and achievements during FY2021. Here, I would like to mention the key notes of provincial budget FY2022:

Sindh Budget

Presently the Government of Sindh announced at Rs1,477.9 billion tax-free budget with a development outlay of Rs 329 billion. An amount of Rs 17.4 billion had been set aside as health risk allowance for all health professionals in FY2020-21. Statistics showed that against an estimated budgetary amount of Rs 1,073.7 billion, the revised receipts of the province for FY2020-21 reached at Rs 960.4 billion. The federal PSDP receipts were revised to Rs 8.302 billion, whereas revised foreign project assistance reached at Rs 38.29 billion. It is also recorded that the provincial tax and non-tax receipt is revised to Rs 242.9 billion against an estimated target of Rs 313.4 billion. Total receipts of the province for FY2021-22 were estimated at Rs 1.452 trillion as against budget estimate of Rs 1.22 trillion for the ongoing financial year. Receipts from the federal government on account of revenue assignment, straight transfers and grants are estimated at Rs 869.68 billion, which constitute 72.5 percent of total receipts of the province.

Statistics identified that the total budget outlay for FY2022 is estimated at Rs 1.477 trillion as against Rs 1.241 trillion for the ongoing financial year. The Government of Sindh also announced that the current expenditure of the province was projected at Rs 1.14 trillion, which included current revenue expenditure of Rs 1.089 trillion and current capital expenditure of Rs 59.49 billion. Budget statistics also showed that Rs 10 billion was proposed for cash transfers to the individuals affected by Covid-19 pandemic under the Sindh Peoples Support Programme.

Punjab Budget

Government of Punjab announced the Punjab Budget FY2021-22 with a total outlay of Rs 2.653 trillion with tax concessions worth Rs 50 billion, Rs 196 billion allocation for South Punjab, Rs 370 billion for the health sector and Rs 442 billion for the education sector. Statistics identified that Rs 54 billion would be spent on development schemes and Rs 388 billion would be spent for current expenditures in education sector. An amount of Rs 6.5 billion was allocated under the initiative to upgrade 8,360 primary schools to the level of elementary, which was 25 percent of the total schools in Punjab. Total 6 new universities in various districts would be constructed while 8 more in dissimilar cities in province would be set up. Statistics showed that Universal Health Coverage for the entire population of Punjab was given an allocation of Rs 80 billion. It is also said that Lahore which has huge economic, social and cultural importance has been allocated Rs 28 billion for health, infrastructure and surface water treatment plant while the social sector allotment approved is Rs 205 billion. The minister announced that all the 721,000 Punjab government employees from Grade 1 to 19 will get a 10 percent raise in their salary while pensioners will get a similar increase and a special 25 percent allowance for financially distressed employees.

Khyber Pakhtunkhwa Budget

It is also important to note here the Government of Khyber Pakhtunkhwa (KPK) of Rs1,118.3 billion balanced budget for FY2022, with a record allocation of Rs371 billion for Annual Development Programme (ADP) and Rs 747.3 billion for current budget expenditure. The Government of KPK also announced a record 37 percent rise in salaries of all those employees who did not take special allowances from the government. Statistics showed that Rs 919 billion have been earmarked for settled districts and Rs 199.3 billion for development of merged tribal districts. Out of the total Rs 371 billion for ADP, the government has proposed an allocation of Rs 270.7 billion for settled districts and Rs 100.3 billion for merged tribal districts.

Likewise, Rs 648.3 billion have been earmarked for settled districts and Rs 99 billion for merged districts in the total allocation of Rs 747.3 billion. Statistics also showed that two innovative approaches development plus budget and service delivery budget were being introduced under which Rs 500 billion would be spent on the former, focusing on mega projects such as Sehat Plus Cards, provision of furniture to government schools, and increase in medicines budget to public sector hospitals, while Rs 424 billion would be spent on the latter with priorities to payment of salaries of doctors, nurses, and teachers, besides provision of medicines to hospitals and fuel to Rescue 1122 ambulances.

The salaries of all government employees except those who didn’t get special allowances are being increased to 37 percent, counting a 20 percent raise in functional or Sectoral Allowance, 10 percent rise in Adhoc Relief Allowance, 7 percent in house rent for those employees who don’t benefit from government’s accommodation scheme. The government also showed that a 100 percent raise in pension expenditure has been witnessed in the last couple of years and the share of pensions, which was only 1 percent in 2003-04 had jumped to a record 13.8 percent of the total budget during FY2022.

Balochistan Budget

The Government of Balochistan announced a budget of Rs 584.1 billion, with a huge amount of Rs 237.2 billion allocated for development and a deficit of Rs 84.6 billion as a consequence of the protest by the Opposition. To meet the development needs, it is said that Balochistan is expecting Rs 355.9 billion federal transfers, provincial own tax and nontax receipts of Rs 103.2 billion, cash carryover of Rs 15.5 billion and foreign project assistance of Rs 17.3 billion. Total revenue showed a deficit of Rs 84.6 billion. Statistics showed that the development spending had been reduced to Rs 104.6 billion as against to the Rs 156.5 billion spending in the ongoing fiscal year. Health expenditures have been increased to Rs 38.5 billion as compared to the current year’s Rs 31.4 billion. The education expenditure has been increased to Rs 71.9 billion from Rs 70.3 billion while the allocation for social protection has been doubled to Rs 10.7 billion. A sum of Rs 3.6 billion has been set aside for combating the Covid-19 pandemic in the province.

The Government of Balochistan also announced a 10 percent raise in government employee’s salaries as per the federal government’s decisions. Statistics showed that plans for the increase in the pension where retired government employees would get 65 percent of their basic salary. The government plans to allocate Rs 13 billion for the pension. The nontax revenue objective has also been raised to Rs 11.8 billion from Rs 6.5 billion.

Conclusion

No doubt, the Pakistan’s economy is consumption-based, not production-focused. A low growth rate and volatility in the growth rate were the main causes of the economic problems of Pakistan. The majority of the budget expenditures went to the debt- servicing and then to the defence budget. The governments in Pakistan were mostly relying on IMF and World Bank loans, and for getting loans, they had to follow strict conditions imposed by those lenders.

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