Sindh Budget

Sindh Senior Minister Syed Sardar Ahmad has presented in the Sindh Assembly a Rs 236.222 billion, tax-free budget, including a development outlay of Rs 50 billion, for the financial year 2007-08. The budget shows a deficit of 12.341 billion, but with no hint about how the shortfall will be met.
The budgetary outlay is about Rs 32.457 billion higher than the current year's revised estimates of Rs 203.795 billion. The current revenue receipts are estimated at Rs 223.881 billion, reflecting an increase of Rs 20 billion against the overall revenue estimates of Rs 203.878 billion for the current fiscal year, but Rs 12.341 billion less than the next fiscal year's expenditures.
The revenue receipts include Rs 81.717 billion from the divisible pool tax transfers, Rs 7.144 billion federal special grants-in-aid, Rs 25.30 billion provisional receipts, Rs 20.381 billion district and other grants, and Rs 42.054 billion straight transfers. In addition, Rs 2.2 billion receipts are estimated from local payments, Rs 6 billion from the World Bank, and grants of Rs 7.70 billion from the European Commission.
The current revenue and capital expenditures have been estimated at Rs 174.593 billion in the budget for 2007-08 against the revenue and capital receipts of Rs 185.569 billion, showing a surplus of Rs 10.976 billion in the next fiscal year.
The current revenue expenditure has been increased by Rs 22.416 billion to Rs 166.651 billion for the next fiscal year, while the provisional expenditure shows an increase of Rs 6.14 billion to Rs 93.904 billion as compared to Rs 84.756 billion revised budget for the current fiscal year. The Sindh budget proposes a current revenue expenditure of Rs 166.65 billion for 2007-08 against the total current revenue resources of Rs 176.59 billion.
The revenue resources include Rs 151.29 billion from Islamabad as Sindh's share in federal taxes, and on account of straight transfers. Further, the provincial government expects to generate Rs 25.30 billion, or about 15 percent of the current revenue on its own.
The provincial government has allocated Rs 50 billion for the Annual Development Plan (ADP) for the fiscal year 2007-08, registering an increase of 49 percent over the current year's revised estimates of Rs 35 billion. The development outlay includes Rs 10 billion for district governments, which represents a 25 percent raise as compared to the current year's revised estimates of Rs 8 billion.
Total development outlay for the coming year will exceed Rs 71 billion, including federal grants and foreign project assistance. The provincial component of ADP will be entirely funded by the provincial government while the district governments will finance their component from the Single Line Transfer, introduced since July 2006.
The major thrust of the next ADP will be on communication sector, which is expected to spearhead development. A sizeable chunk of Rs 7.660 billion, or 19 percent of the total ADP, has been allocated to this sector.
Besides, ADP assistance amounting to Rs 3.05 billion will be available from the Federal Government. Since the provincial economy largely depends on agriculture, availability of irrigation water is being given utmost importance, and the government has almost doubled the allocation from the current year's Rs 1.5 billion to Rs 2.95 billion.
Substantial funds have also been allocated for infrastructure and marketing facilities of farm and livestock products by setting up a modern meat, fish and vegetable market near Super Highway at a cost of Rs 1.965 billion, and the construction of three cold storages, one each at Mirpurkhas, Tando Allahyar and Shahpur Jahanian which will be undertaken at a cost of Rs 500 million. Development funding for livestock and fisheries has been enhanced to Rs 1.850 billion from the existing Rs 251 million.
The development initiatives in this sector are aimed at poverty alleviation, attracting local and foreign investment, and raising exports. Next year's ADP will provide Rs 2.5 billion for education, which is 66 percent higher than the current year's Rs 1.5 billion. Major educational areas to be funded from the new ADP include upgradation of 810 schools at various levels in the province, establishment of three engineering colleges, and a teachers' training institute at a cost of Rs 1 billion.
The budget shows a net surplus of Rs 10.97 billion in the current revenue and capital outlays. A deficit of Rs 12.341 billion is calculated after taking into account the full financing of Rs 71 billion development programme for which Rs 12.5 billion is expected to come from carryover cash balance and a provincial contribution of Rs 16.23 billion.
Analysts believe that development schemes are likely to suffer because of the huge budgetary shortfall, which will be met through receipts from the people. The Sindh government should devise such a strategy as to address this problem without further burdening the taxpayers.