Sindh leads on salaries, minimum wage: Rs1.47tr tax-free, deficit Sindh budget presented

KARACHI: The Sindh chief minister on Tuesday complained over hold up of funding by the federal government that has created a financial crunch in the province while presenting a Rs1.47 trillion provincial budget for the fiscal year 2021-22 with an estimated 19 percent growth in revenue collection. “We are facing a shortfall on account of federal transfers. During 11 months of this financial year against budgeted receipts of Rs696.9 billion, we have only received Rs623.6 billion,” Sindh Chief Minister Murad Ali Shah said. "Based on these figures, we will be facing a shortfall of Rs83.8 billion."

He said: "Receipts of federal public sector development program (PSDP) are revised at Rs8.3 billion whereas revised foreign project assistance stands at Rs38.2 billion.” For FY2022, total budget outlay is estimated at Rs1.47 trillion, up 19.1 percent growth over an estimated Rs1.24 trillion in the current fiscal year. Receipts of the province are estimated at Rs1.45 trillion, up 18.8 percent year-over-year. The budget deficit was estimated at Rs25.7 billion.

Shah presented the budget with the opposition members protesting inside and outside the provincial assembly with placards and whistles reminiscent of ruckus at the time of federal budget announcement.

The government proposed 20 percent increase in basic salary of all its employees and 10 percent increase in pensions, besides setting the minimum wage at Rs25,000 in the province, against Rs 20,000 of the federal government. A personal allowance was also proposed for employees of up to BPS-05 grade. The percentage increase in salaries of provincial employees is double to that proposed by the federal government, which has suggested a hike of 10 percent.

The total receipts of the province for 2021/22 are estimated at Rs1.4 trillion as against the budget estimate of Rs1.2 trillion for the current fiscal year, showing an overall increase of 19 percent. Receipts from the federal government on account of revenue assignment, straight transfers and grants are estimated at Rs869.6 billion. It is an increase of 12.6 percent over estimates of Rs760.3 billion last year.

However, the budget estimates of straight transfers for next fiscal year have decreased substantially by approximately 20.6 percent to Rs49.5 billion from the budget estimates of Rs62.3 billion of the current fiscal year.

The federal government is the major contributor to Sindh’s finances comprising 72.5 percent in its entirety. Receipts of federal public sector development program are estimated at Rs5.3 billion. Receipts on account of foreign project assistance, budgetary support loans and grants are estimated at Rs71 billion. Receipts from provincial own sources on account of tax and non-tax receipts are estimated at Rs329 billion, which constitute 27.5 percent of total receipts. This is an increase of 4.8 percent over estimates of Rs313.4 billion in the current fiscal year.

Against an estimated budgetary amount of Rs1.07 trillion, the revised receipts of the province for current financial year 2020-21 stand at Rs960.4 billion. The provincial tax and non-tax receipt was revised to Rs242.9 billion against an estimated target of Rs313.4 billion.

On the expenditure side, the budget has been revised from Rs968.9 billion to Rs954.4 billion. The development expenditure is revised at Rs160.3 billion against an estimated allocation of Rs232.9 billion.

“There has been a severe financial crunch due to reduced resources from the federal government and low collection from provincial resources due to Covid-19. The provincial ADP, which was Rs228 billion in year 2019-20, was reduced to Rs170 billion in 2020/21. The revised estimates of current year’s ADP will be about Rs113 billion,” the chief minister said.

“Despite various constraints, stakeholder departments are likely to complete 460 schemes during 2020/21. By the end of current fiscal year, we will be able to spend 85 percent of the development budget that is 15 percent higher than last fiscal year. It reflects on our growing capacity and our rational financial management,” Shah said.

Murad Ali Shah said that the province of Sindh leads the entire country in Public Private Partnership and our project portfolio has grown up to Rs400 billion. "It must be noted that this portfolio consists of projects worth around Rs288.9 billion for Karachi, which includes mega projects like Malir Expressway, Karachi Hub Water Canal, Urban Road Initiatives in Karachi, Waste Water Treatment Plant at TP1 and Technology Park at NED University, which shows the practical manifestation of the provincial government's commitment for the people of Karachi," he said.

For FY2022, the government proposed Rs172 billion for the health sector against an allocation of Rs132.8 billion in 2020-21. The ADP of health is pitched at Rs18.5 billion. The next financial year will witness an increase of 30 percent in total allocation for Health Sector, including medical education. Murad Ali Shah said Rs 24.73 bn have been reserved for overcoming Covid-19. The budget allocation for education sector was revised up to Rs277.5 billion for FY2022 from Rs244.5 billion in FY2021.

A social protection and economic sustainability package of Rs30.9 billion is proposed for the next financial year, Rs119.97 bn for law and order and agriculture gets Rs14.8 bn. The stamp duty for sale and purchase of property, rent and power of attorney has been reduced.