KPK govt presents Rs1.12trn budget for FY22

The Khyber Pakhtunkhwa (KPK) government presented on Friday a Rs1,118.3-billion budget for fiscal year 2021-22, with an allocation of Rs371 billion for the annual development program (ADP) and Rs747.3 billion for current budget expenditure.

Chief Minister Mahmood Khan said the budget 2021-22 was aimed at resurgence and growth, adding that the provincial government was fully committed to investing maximum resources in the development of KPK and providing quality service delivery to its citizens.

He said it was due to the successful handling of the Covid-19 pandemic that the government had an opportunity to present a budget focused on growing the economy and providing maximum relief to the people.

“We plan to introduce long-overdue reforms on pensions: accountability and rewards of public servants; championing e-government and strengthening management of public finances,” he said.

The KPK government announced a 37pc increase in salaries of all those employees who did not take special allowances from the government.

Presenting the third budget of the government, KPK Finance Minister Taimur Jhagra said out of the total budget allocation, Rs919 billion has been earmarked for settled districts and Rs199.3 billion for the development of merged tribal districts during FY 2021-22.

Out of the total Rs371 billion ADP, the province has earmarked Rs270.7 billion for settled districts and Rs100.3 billion for merged tribal districts. Likewise, Rs648.3 billion has been earmarked for settled districts and Rs99 billion for merged districts in a total allocation of Rs747.3 billion for current budget expenditure.

The minister said the budget was based on five main pillars including a record increase in salaries of government employees, development budget, devoted services to people, increasing KPK's own resource revenue, and introduction of goal-oriented reforms and innovation in the overall governance system.

He said two innovative approaches, ‘development plus budget’ and ‘service delivery budget’, were being introduced under which Rs500 billion would be spent on mega projects such as Sehat Plus Cards, provision of furniture to govt schools, and increase in medicines' budget to public sector hospitals. Meanwhile, Rs424 billion out of Rs747 billion would be spent on 'service delivery' with priorities to payment of salaries of doctors, nurses, and teachers besides provision of medicines to hospitals and fuel to Rescue 1122 ambulances.

About the generation of income and revenue during 2021-22, the minister said Rs1,018 billion revenue and income target was set for FY 2021-22 that would be achieved from different financial resources, duties, and taxes.

He said Rs475.6 billion would be collected through federal taxes, Rs57.2 billion through a federal divisible pool of 1pc share under terrorism affected province, Rs26.5 billion under Gas and Oil royalty and surcharge (direct transfer), Rs74.7 billion under hydel new profit (according to MoU 2015-16) and arrears, Rs75 billion for provincial tax and non-tax revenue, Rs85.8 billion through foreign development assistance (for settled areas) and Rs3.3 billion as foreign development assistance (for merged areas), Rs187.7 billion under special assistance grant for the merged areas and Rs132.5 billion from other revenue resources.

About details of expenditure during FY2021-22, the minister said a total of Rs374 billion would be spent on salaries including Rs60 billion in merged areas and Rs314 billion in settled districts. Similarly, Rs92.1 billion would be utilised for payment of pension including Rs0.1 billion for merged areas and Rs92 billion for settled districts.

An amount of Rs244.6 billion was proposed for expenditures under Provincial Development Program including Integrated Implementation Program (AIP) for merged areas, he said, adding Rs17.4 billion is being earmarked for the Annual Development Program including Rs2.4 billion for merged areas and Rs85.8 billion for settled districts while a record Rs19.9 billion is to be obtained from the federal government PSDP.

The salaries of government employees are being increased by 37% including a 20% increase in Functional or Sectoral Allowance, 10% increase in Adhoc Relief Allowance, and 7% in house rent for those employees who do not benefit from government’s accommodation scheme.

Jhagra said a 100% increase in pension expenditure has been witnessed in the last couple of years and the share of pensions, which was only 1% in 2003-04, had jumped to a record 13.8 percent of the total budget in 2021-22.

To overcome pension expenses, he said two proposals including an increase in the upper age limit of govt employees ie 55 years for early retirement or completion of 25 years of service were under consideration that would save Rs12 billion per year.

Similarly, Rs1 billion per year would be saved from a change in the pension rules under which widows, children, and parents of deceased employees would be entitled to pension benefits. The minister announced that minimum wages of laborers and daily wagers were being increased to Rs21,000.

Presenting the budget, Jhagra said that an amount of Rs23 billion has been allocated for the health insurance scheme.

Talking about the government’s achievements in 2020-21, he said that more than 7 million households can now receive free healthcare system in 35 districts of the province.

He said that KPK has become the first province to roll out comprehensive health coverage for every citizen.

While talking about economic achievements, he said that the province has attracted 50 million dollars of foreign investment by providing gas and electricity to Rashakai Economic Zone.

The budget also allocates funds to construct, rehabilitate and upgrade over 2,100 schools to increase enrollment capacity.