The Khyber Pakhtunkhwa (KPK) government presented a budget that envisages an 89 percent rise in its own revenue – to 54.4 billion rupees against 28.7 billion rupees budgeted in 2014-15.
The major contributor to this rise would be sales tax from services budgeted to net around 44 billion rupees as opposed to around 12 billion rupees in 2014-15. This can be supported to some extent; however, the concern is that this does not lead to a shift of services to other provinces.
Tax on farm income, a provincial subject, did not receive due consideration and its contribution to strengthening the revenue of the province was ignored like in Sindh and Punjab budgets. Change, the electoral cry of the Pakistan Tehreek-e-Insaf (PTI), did merit taxing the under-taxed farm income at the same level as the salaried class.
What has sadly become the hallmark of all provincial governments is to sustain their heavy reliance on the federal divisible pool (and hydel profits that remain pending in case of KPK) which is calculated on the basis of an unrealistic assessment of not only the growth rate of the economy but also in terms of the capacity of the Federal Board of Revenue (FBR).
In the federal budget for the ongoing year a 5.1 percent growth rate was budgeted and only 4.2 percent achieved (academics maintain that this revised rate is also an over-estimation placing the growth rate at around 3.7 percent for this year) and revised estimates of 1,476.5 billion rupees against the budgeted divisible pool transfers of 1,580.7 billion rupees reflect a shortfall of 104 billion rupees.
In addition, the KPK Finance Minister revealed that the centre did not clear 51.8 billion rupees under hydel arrears nor released the 30 billion rupee budgeted under war on terror in 2014-15. Or in other words, too optimistic revenue figures were revealed for the next fiscal year.
Another disturbing trend evident in provincial budgets including KPK is the inordinate percentage allocated for salaries and pensions. In a spirit of one upmanship the KPK budget announced a 10 percent increase in salaries of government employees and a 25 percent increase in their medical allowance with pensions rising by 10 percent.
This strategy, believed to be targeted towards gaining bureaucratic support, must be resisted for the time that the economy is growing at a slow pace because this would simply fuel inflation. There is a desperate need to cap incomes of the government sector, and the PTI would do well to support a form of incomes policy that seeks to negotiate a smaller pay rise till growth picks up in the province.
Like other provincial budgets, KPK’s budget can not be faulted with respect to its sectoral allocations. Education is budgeted to receive 97 billion rupees (21 percent higher than last year) with reports indicating that governance has improved considerably in this sector and health is to receive 29.5 billion rupees – allocations that one can fully support.
The KPK government, led by Pakistan Tehreek-e-Insaf (PTI) presented the budget for 2015-16 amidst the walkout of three parties – two that were almost wiped out of the province in the 2013 elections namely the Awami National Party (from 30 elected and 8 reserved seats in 2008 elections to 4 elected and 1 reserved seat in 2013) and the Pakistan People’s Party (from 16 elected and 4 reserved seats in 2008 elections to 3 elected and 1 reserved seat in 2013).
Maulana Fazlur Rehman’s JUI, and the PTI, almost pathologically at odds with each other, won 13 elected and 4 reserved seats in 2013 elections – a party almost constantly engaged in bringing a vote of no-confidence against the PTI government through support from the 17 PML-N members in the provincial assembly though without success so far.
The PML-N’s decision not to stage a walkout during the budget session reflects the obvious: that the JUI (F) has yet to convince the PML-N to support its bid for government without which its chances of success are almost non-existent.
During the tenure of the PPP-led coalition government at Centre a walkout by the main opposition PML-N was widely believed to have been the outcome of an agreement between the leadership of the two parties to ensure no disruption of a budget session while at the same time saving face of the opposition for not making cogent remarks on flawed budgetary policies.
Be that as it may, the walkout by the three parties in KPK assembly appears to be to get political mileage out of the irregularities – be they deliberate or part of the system – in the recently held local bodies’ elections though at this stage it is unlikely to benefit any of the three parties.
It is however to be hoped that in future all parties consider it appropriate to attend the budget session and present their alternate views in terms of revenue generation and expenditure allocation, thereby strengthening the very democracy that they invariably claim to strengthen.
The text appeared as editorial of Business Recorder today
Source: Business Recorder