Punjab Finance Minister Sardar Hasnain Bahadur Dareshak presented the provincial finance bill containing a budgetary outlay of Rs 180.021 billion in the Punjab Assembly on Thursday, showing some creditable initiatives on the part of the government.
As per a new debt management strategy, the Punjab government is swapping expensive cash development loan (CDL) stock with low priced loans drawn from international donors.
The outcome will be reduced debt servicing costs that are to save the province some Rs 10 billion over the next four years. It would create extra fiscal space to facilitate the government's developmental efforts on a larger scale.
Tax revenue receipts have already registered an appreciable above-the-target increase of 29 percent in the outgoing year, and the non-tax receipts a 47 percent rise.
As against the revised estimates of fiscal 2003-04, which projected tax collections of Rs 14.86 billion, the estimated recovery is Rs 18.187 billion while non-tax receipts are expected to generate revenue worth Rs 15.605 billion.
Claiming to have presented a "relief budget", the minister said that no new taxes have been introduced, though some minor adjustments are to be made in certain levies such as vehicle token tax and driving licence fee.
He also claimed that this is a poor people's budget, announcing a 15 percent pay increase for government employees, and property tax exemption on 5-marla houses.
These measures, no doubt, will bring relief to some people, but they hardly provide the answer to the twin problems of pervasive joblessness and poverty.
The public sector is no longer the big employer that it once used to be. Besides, the 5-marla home owners, though not affluent people, happen to live a lot more comfortably than the vast majority of the population that subsists in conditions of extreme deprivation.
What can prove to be an effective plan for addressing the question of unemployment and consequent poverty reduction is the proposal to give a boost to the construction industry.
The minister said that the Punjab government is in the process of revising the land acquisition and rent control laws as well as building by-laws.
Property tax regime is also under review. Of immediate value is the decision to reduce the Stamp Duty on the sale and purchase of urban property from five to two percent and on rural property from four to two percent.
Concessionary treatment for the construction industry is expected to increase economic activity creating the much-needed jobs in the sector and its related industries, which number nearly 40.
An impressive feature of the bill is a substantial allocation of Rs 43.44 billion (Rs 34.70 billion are to come from provincial resources and Rs 8.74 billion from foreign aid programmes) for the Annual Development Programme (ADP).
This is eight percent higher than the revised budget estimates for the outgoing year, reflecting a meaningful resolve on the part of the government to invigorate the development sector.
Thirty percent of this money is to go into the social sector and about 37 percent to infrastructure development programme.
Two billion rupees are to be spent on the construction of metalled roads that are to provide better connectivity between rural and urban centres.
The spending on the social sector is aimed at the improvement of public service delivery in the fields of education, health care, water, and sanitation.
This is to be followed by Chief Minister's Accelerated Programme for Social Development, with an additional investment of Rs 2.8 billion. A major portion of the social sector allocation, one hopes, will be spent on human resource development, particularly on instituting skill-oriented diploma programmes that emphasise systematic learning for prospective plumbers, carpenters, mechanics, etc.
Another commendable goal that the government has set for itself is to effect infrastructure development through public-private partnership.
In this regard it has wisely decided to promote industrial development by focussing on the SME sector through the provision and upgradation of its infrastructure facilities. Yet another important proposal requires allocation of Rs 9 billion in the capital account for encouraging public-private partnerships in equity financing for completing development projects such as the Lahore Ring Road, Jallo Theme Park, and New Murree scheme.
In the agriculture sector, the stated objective is to raise the level and efficacy of public expenditures, modernising wholesale markets, innovation in research and extension, and support to private sector. These are all right moves in the right direction.
Regrettably, however, the budgetary allocation for district governments' development programmes remains static at Rs 9 billion.
Which is indicative of a negative tendency that will deprive the local governments of a meaningful role in the developmental effort.
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