KP govt jacks up grants to local councils by 29pc for current fiscal

PESHAWAR: After the discontinuation of grant in lieu Octroi and Zilla Tax (OZT) by the federal government, the Khyber Pakhtunkhwa government has decided to increase grant to the local councils on the same account by 29 percent during the current financial year 2018-19.

The grant in lieu of OZT equal to one-sixth (1/6) of the sale tax share of the provincial government out of the Federal Consolidated Fund has been discontinued by the federal government following the 7th NFC Award. Since then, the provincial government has been providing share to local councils in lieu of OZT out of its own resources. Therefore, the provision of this grant has become a permanent liability for the provincial government.

The provincial government has renamed the grant as "Grant to Local Councils" through Finance Act 2016. The estimated grant to be transferred to Local Councils for the financial year 2018-19 are Rs6.706 billion, indicating an increase of 29.28 percent over budget estimates 2017-18.

The provincial government has earmarked an overall sum of Rs199 billion for the local governments, which includes Rs140 billion for salary, Rs23.143billion for non-salary component, Rs6.706billion for recurring expenditure of local councils, and Rs29.345billon for development schemes for the current financial.

The documents of the Finance Department indicate that keeping in view the actual needs of local governments, block-allocation of Rs16.328 billion have been earmarked under district non-salary for distribution on need basis.

The amount also includes a sum of Rs11 billion million allocated for providing missing facilities in schools, autonomy to higher secondary schools, scholarship under Stoori da Pakhtunkhwa, purchase of emergency medicines, required equipment and enrolment campaign.

The district salary for the last fiscal year (2017-18) had been pitched at Rs46.666 billion but for the current financial year Rs140 billion, district non-salary estimates for the previous financial year were Rs7.714 billion while for the current fiscal Rs23.143 billion sum has been set aside for the head.

Similarly, grant to local councils last stood at R2.235, while this year the local councils will receive a grant of Rs6.706 billion. The document further shows that last year the local councils received the development budget of mere Rs9.8 billion, while during the current fiscal year these councils will receive Rs29.345 allocations for development.

However, the sources said that the Finance Department will continue to strictly stick to its own guidelines it worked out for the local governments for the release of funds. They said that local councils will also have to judiciously utilise funds released to them for each quarters of the financial year to get further funds for the development schemes.