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February 9, 2019

CM laments unprecedented decrease in transfer of fiscal resources from centre

Karachi

February 9, 2019

The federal government has decreased the provision of fiscal resources to Sindh to such an unprecedented extent as if some natural calamity had hit the country or the country was going through a state of war.

Sindh Chief Minister Syed Murad Ali Shah said this while briefing the Sindh Assembly on Friday on his recent visit to Islamabad to attend the National Finance Commission (NFC) meeting.

Shah informed the house that as the province had not received enough funds from the federal government, his government was likely to face serious problems in carrying out work on development projects in the province in coming months.

“This has never happened earlier in the history of the country that the transfer of funds from the centre to the province in a year decreased compared to the last year as this could only happen if the country was going through a state of crisis either due to a natural calamity or war.”

According to the CM, the unprecedented decrease in the transfer of fiscal resources had forced him to adopt a number of stringent measures to curtail the cost of governance in the province. He informed the PA that his government would have to take more such measures if the bleak situation of transfer of funds from the federal government persisted.

Shah said the financial condition of his government could only improve if the federal government was able to meet its revenue collection targets in the remaining months of the current financial year 2018-19.

The CM told the house that against Rs353 billion which the Sindh government was supposed to receive from the federal divisible pool during the first seven months of the ongoing fiscal year, the government actually received only Rs256 billion.

He maintained that the transfer of funds from the centre during the corresponding seven-month period of the last financial year 2017-18 had been Rs266 billion, which was more than the amount received during the ongoing year.

This is the first time in the history of the country that the release of finances under the federal divisible pool had decreased by Rs10 billion, the CM said.

Shah informed the house that he had raised this issue in the meeting of the NFC as he had been told that the revenue generation of the federal government had increased by 4.5 per cent this year. “I raised the question that if the income generation of the federal government had increased by 4.5 per cent, where was the money going and why did this fiscal shortfall happen?”

Federal Finance Minister Asad Umer had chaired the first meeting of the newly constituted NFC in Islamabad. The CM represented Sindh in the meeting as he also holds the additional portfolio of the provincial finance department.

Shah informed the assembly that his government had to face fiscal shortfall at the time when its recurring expenses had also increased due to the increase in the cost of utility services like gas and electricity. “It is like a situation when someone deducts your salary,” he said.

The CM added that in terms of revenue generation, his government had fared well as a 14 per cent increase was recorded in its revenues this year. Sindh has surpassed other provinces in tax collection, he claimed.

Whereas the federal government could only collect a mere Rs17 billion in the head of general sales tax (GST) on services, the Sindh government’s GST collections increased by over Rs100 billion, Shah said.

“Today this GST collection would have been at the level of mere Rs45 billion had it remained with the centre because it is the way how the federal government performs,” the CM remarked.

Shah said his government had also been demanding that the authority to collect GST on goods be also devolved to the provinces for more revenue generation. “The province of Sindh can do a much better job compared to the federal government,” he said.

The CM praised the federal finance minister for his stance in favour of the 18th constitutional amendment. “I’m grateful to the federal finance minister who said that he had always regarded the 18th Amendment as a step taken in the right direction,” Shah said.

Gas crisis

The CM also censured the federal government for causing severe crisis of natural gas in the province, especially Karachi. Sindh has been denied its due constitutional right to consume the gas indigenously produced in the province, Shah said, adding that the province had right to its gas as defined in the Article 158 of the constitution.

The CM informed the PA that Sindh had been producing 2,700 to 3,000 MMCFD natural gas. He maintained that as per the provisions of the Article 158 of the constitution, the province alone could consume this volume of gas to generate inexpensive electricity and fulfil other needs of its people.

The total demand of natural gas in the province stood at 1,500 MMCFD at present which was mainly due to its industrial consumption, Shah said, adding that the province was being provided less than 1,200 MMCFD gas, which had resulted in shortfall.

The assembly was informed by Shah that he had written a letter to the prime minister last month after the house passed a resolution stressing the constitutional right of the province to consume its natural gas as explained in the Article 158. “I wrote to the PM to apprise him that the province merely needs fulfilment of its rights in accordance with the Article 158.”

He said within 14 to 15 days after he wrote the letter to the PM, Sindh had to face again a crisis-like situation in terms of gas supply. “I’m constrained to send again a letter to the prime minister today after the present state of crisis,” the CM said. He added that there had been no response to his earlier correspondence sent to the PM.

Leader of the opposition in the Sindh Assembly Firdous Shamim Naqvi, who belongs to the Pakistan Tehreek-e-Insaf, the ruling party in the centre, said the people of Sindh should be supplied natural gas as per their domestic, commercial, and industrial needs and his party would strive for the fulfilment of this fundamental right of the province.

Naqvi said the federal petroleum minister was under obligation to explain the reasons due to which Sindh had been denied its constitutional right to consume natural gas indigenously produced in the province. “We will fully support this cause of the people of Sindh,” the PTI leader asserted.

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