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KP facing acute revenue shortfall: Major haul of Rs45.3 bn comes in NHP, Rs56.5 bn in foreign assistance

By Riaz Khan Daudzai
July 05, 2019

PESHAWAR: Khyber Pakhtunkhwa is facing an alarming revenue shortfall as the federal government could not facilitate the payment of its share of Net Hydel Profit (NHP) and the arrears on this account besides other payments during the financial year 2018-19.

The document available with The News showing the revenue inflow from both the federal government and province’s own resources shows that the shortfall in the payment of the NHP and arrears alone comes to Rs45.3 billion. The shortfall in the foreign assistance is Rs56.5 billion.

The shortfall in the federal transfers for 2018-19 under Federal Tax Assignment (FTA) includes a differential amount of Rs34 billion that would shortly be met. The province has also yet to receive Rs4billion of the Rs43.3 billion which is one percent share of the province in the Federal Divisible Pool as subvention on account of the war on terror.

According to the document, Khyber Pakhtunkhwa had estimated in its budget for the fiscal year 2018-19 to receive Rs648 billion in the July 1-June 30 period. However, the provincial government managed to receive the revenue of Rs455.1 billion from the external and internal resources during the period. The overall revenue receipts of the province were 70 percent during the previous financial year.

Secretary Finance Shakeel Qadir Khan didn’t agree the situation was alarming. He argued that the revenue inflow continued in a way that would pose no impregnable circumstances for the province.

He told this scribe that receipts from the federal tax assignment (FTA) excluding the deferential amount and some arrears of the war on terror subvention remained at 89 percent. He insisted it wasn’t a bad figure. However, overall revenue that came as the federal transfers was estimated at 83 percent.

The secretary finance admitted that they were still facing issues when it came to Khyber Pakhtunkhwa’s own resource collection. However, he was quick to add that the Board of Revenue had surpassed its target and Khyber Pakhtunkhwa Revenue Authority (KPRA) met its target despite the Supreme Court orders restraining the Authority from doing collections from the telecom companies.

The Finance Department document indicates the province had estimated the FTA at Rs360.5 billion, but it received Rs320.2 billion. Of the Rs34.3 billion war subvention the province received R41.7 billion. The receipts inflow in the straight transfers that mainly included royalty for gas and oil produced in the province remained encouraging because the provincial government expected to receive Rs22.3 billion, but it got Rs24.6 billion. It comes to 110 percent of the receipts at the head.

The major revenue haul came at the receipts on account of the NHP and its arrears that had been budgeted at Rs65.3 billion. On this count, the provincial kitty received just Rs20 billion during the last fiscal year.

The province was expecting to receive Rs40 billion as NHP but it got just Rs6.9 billion. This is 17 percent of the amount it planned to receive. In the fiscal year of 2017-18 it planned to receive Rs20 billion. The Pakistan Muslim League-Nawaz (PML-N) government during its rule transferred Rs26.8 billion to the province, amounting to 129 percent of the amount it expected to receive.

At the arrears of NHP head, the province for the 2018-19 fiscal planned to receive Rs25.3 billion but got Rs13.1 billion, amounting to 52 percent of the estimated amount. For the year before the previous year, it expected to receive Rs15 billion as NHP arrears but instead got Rs14.7 billion, which is 98 percent of the estimated mount. The province’s own receipts stood at Rs26.9 billion against an estimated Rs41.3 billion.