NWFP unveils Rs214bn deficit budget -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

NWFP unveils Rs214bn deficit budget

By Mohammad Ali Khan

PESHAWAR: The Frontier government unveiled on Wednesday a deficit budget of Rs214.181 billion for 2009-10, which includes a development programme of Rs51.156 billion.

The provincial government estimated total revenue receipts of Rs211.114 billion, showing a deficit of Rs3.066 billion. The receipts were about 40 per cent higher than those for the outgoing financial year.

Tight security arrangements were made around the provincial assembly for the budget session and all roads leading to the building were heavily manned by law enforcement personnel.

Senior Minister for Planning and Development Rahimdad Khan who presented budgetary proposals claimed that no new tax had been levied in the new budget.

However, the Finance Bill 2009 contains proposals for increasing the ratio of different provincial taxes and duties, besides bringing a number of new sectors into the tax net. The new sectors to be brought under professional tax are restaurants, caterers, wedding halls and charted accountant firms.

The move is likely to spark resentment from businesses and service providers who are already bearing the brunt of worsening law and order situation in the province.An official told Dawn that the provincial government was expected to collect additional resources of Rs1.317 billion through increasing ratio of different taxes and bringing more sectors into the tax net.

Analysts believe that the revenue shortfall of the cash-strapped province would grow further because of the impact of 15 per cent increase in pay and pension for government employees.

The budget carries relief measures for serving and retired civil servants, internally displaced persons and creation of a provincial employment fund for unemployed youths.

The budget outlay last year was projected at Rs170.904 billion, but it stood at Rs159.451 billion as per the revised estimates because of lower-than-budgeted transfers from the federal government. The budget was projected as surplus with Rs345.561 million, but it ended up with a deficit of Rs9.149 billion.

According to budget estimates for the financial year 2009-10, total general revenue receipts stand at Rs113.688 billion, which include Rs67.808 billion from the federal divisible pool, Rs7.549 billion as royalty on gas and oil production, Rs2.110 billion as province’s share of GST on services and Rs7.861 billion on account of sales tax from district and cantonment boards in lieu of defunct zila tax.In addition to this, the NWFP government will receive a special grant of Rs14.822 billion from the federal government under the interim National Finance Commission award and Rs6 billion as capped proceeds on account of net hydel profit.

The provincial government’s own contribution to the overall resource pool will be merely three per cent, the lowest-ever, of the total revenue during the next fiscal year. The target for provincial own receipts has been estimated at Rs7.537 billion, showing an increase of 17 per cent as compared to the last year.

An amount of Rs97.244 billion is expected from federal and foreign lenders and donors on account of capital and development receipts.

An amount of Rs80 billion would be spent on general administration, Rs3.266 billion on debt serving, Rs51.156 billion on development and Rs79.757 billion on state trading, which mainly deals with procurement of wheat for local consumption from the open market.

A major portion of Rs11.487 billion allocated for general administration, public order and safety affairs will be consumed by police. The allocation for police has been projected at Rs9.677 billion, which is almost 48 per cent higher than last year’s allocation. The amount will be spent on creation of special elite force, incentive to constables and compensation to the heirs of police personnel killed in the line of duty.

Allocations for health and education have been slightly increased to Rs2.989 billion and Rs3.942 billion, respectively.

Source: Dawn