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June 15, 2019

Sindh unveils Rs1.2tr deficit-free budget for FY2019-20

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June 15, 2019

KARACHI: The Sindh government on Friday proposed a deficit-free budget of Rs1.218 trillion for the next fiscal year of 2019/20, betting on steady growth in revenue.

Sindh Chief Minister Murad Ali Shah presented the annual budget proposals amid uproar from the opposition members in the provincial assembly. The opposition lawmakers chanted slogans against the provincial government ruled by Pakistan Peoples Party.

“Our own provincial receipts are growing steadily and provincial revenue targets have been increased to Rs355.4 billion for the next financial year from Rs243.082 billion,” Shah said. Total receipts of the province are estimated at Rs1.218 trillion against estimated expenditures of Rs1.218 trillion. The government revised up expenditures for the outgoing fiscal year to Rs1.144 trillion from Rs956.779 billion.

The province is expected to receive Rs835.375 billion as federal transfers, accounting for 74 percent of the total provincial receipts. The development portfolio for the next fiscal year is Rs283.5 billion, including Rs228 billion on account of provincial and district annual development program.

The government proposed a 15 percent increase in salaries of its employees as adhoc relief allowance and pensioners and 3,000 new job openings in the police department. The chief minister expressed concerns over 3.5 percent allocation in the federal public sector development program (PSDP) for Sindh.

Shah said overall size of the federal PSDP is Rs951 billion with Rs127 billion of foreign project assistance.

“In the above portfolio, Sindh-specific schemes are 50 – ongoing and new – with an allocation of Rs33.7 billion,” he said in a budget speech. “Further, total schemes included in the federal PSDP 2019/20, which are executed by the government of Sindh, are 12 having an allocation of Rs4.89 billion as compared to Rs15 billion in 2018/19 and Rs27.3 billion in 2017-18.”

In March, Prime Minister Imran Khan announced a package of Rs162 billion for Karachi. “(However), there are only 19 Karachi-based schemes with a total allocation of Rs12.1 billion,” Shah said. “The new schemes for Karachi are only six with an allocation of Rs3.9 billion.”

The chief minister said the federal government ‘deliberately’ put the welfare of the people of Pakistan at risk “through their sheer incompetence and unwillingness to perform”.

“They have failed consistently to reach their tax collection targets. With a record shortfall of almost 447 billion in 11 months, FBR (Federal Board of Revenue) performance reached an all-time low during the last one year,” he said. “Consequently, Sindh has been deprived of its due share and we are enduring a shortfall of Rs117.5 billion owing entirely to the federal government. The federal government’s clear vendetta against Sindh and its people cannot be denied.”

The government set Rs145 billion as sales tax collection target for the next fiscal year as it grew to Rs100 billion in 2017/18 from Rs16.6 billion in 2010/11 when the 18th amendment into the constitution devolved the collection of sales tax on services to provinces.

The provincial government proposed the centre to also collect sales tax on goods on its behalf. “We believe that once devolved the returns from sales tax on goods can be maximised as it has been done in case of sales tax on services,” Shah said.

The chief minister rejected the revised federal transfer estimate of Rs631.543 billion for the fiscal year of 2018/19.

“In the last 11 months, Sindh has received only Rs492.135 billion on account of federal transfers and it is anticipated that by the end of financial year, the shortfall will be Rs117.527 billion,” he said. The chief minister said the federal government showed no real intent to develop consensus on 9th national finance commission award. “The delay in the announcement of the award is at the expense of rights of provinces.”

The provincial revenue for the current fiscal year is estimated at Rs940.777 billion from the budgetary estimate of Rs1.123 trillion.

“Many development schemes that could have been completed have been delayed due to non-availability of funds,” Shah said. The provincial government increased allocation for non-development expenditures for education sector to Rs178.618 billion in FY2020 from Rs170.832 in FY2019. Rs15.15 billion has been earmarked for the sector in the annual development program FY2020. There was no change in allocation for the health sector as it remained at Rs13.50 billion.

Shah also criticised the federal government for taking over control of three major health facilities in the province without any discussion with the provincial government on devising a mechanism for such transfers. The centre took over National Institute of Cardiovascular Disease, Jinnah Post Graduate Medical Centre and National Institute of Child Health. The provincial government has already filed a review petition against the takeover in the Supreme Court.

The provincial government further allocated Rs1 billion for endowment fund for the welfare HIV/AIDS-infected persons during the next fiscal year. Several cases of HIV patients were reported in Larkana division during the last couple of months.

The government increased non-development allocation to control law and order to Rs109.788 billion in FY2020 from Rs100.483 in FY2019. The provincial government has already recruited 3,690 police personnel through National Testing Service and hiring of more 4,507 is underway. “In order to fill in the gaps of actual requirement of police force, we plan to create 3,000 new posts in different grades in budget 2019­/20,” Shah said.

The provincial government allocated Rs12.3 billion for social protection and poverty reduction program in the development budget of 2019/20. The government earmarked Rs35.90 billion for the development of water supply, sewage and solid waste management sectors in FY2020 compared to Rs37.73 billion in FY2019. The province with 47.886 million population has an estimated demand of 1,538 million gallons of drinking water per day.

“Against the present demand of drinking water, there is a shortfall of 30 percent to 40 percent of water largely due to low availability, system losses and inadequate infrastructure,” he said.

The provincial government earmarked Rs8.4 billion for agriculture department under the annual development program 2019/20. The amount includes Rs4.7 billion of foreign assistance. The chief minister said all the pensioners (200,667) in the province would receive their monthly pension payments into their bank accounts.

“The finance department has achieved a milestone of converting all manual pensioners to DCS (direct credit system), leaving the government of Punjab, KPK (Khyber Pakhtunkhwa) and Balochistan behind,” he said.

The provincial government has proposed Rs2 billion as allocation from the budget FY202 for compensation of the martyred and injured personnel of police department. Shah said construction of ‘Ghotki – Kandhkot bridge with the project cost of Rs14 billion would soon start under public private partnership mode. He also announced road project ‘Malir Expressway’ in Karachi.

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