EDITORIAL: The Khyber Pakhtunkhwa (KPK) budget 2022-23 was expected to emphasise the signature programmes launched by the then Prime Minister, Imran Khan, particularly the Sehat Sahulat Card (budgeted to receive 205.7 billion rupees next year against 142 billion rupees in the outgoing year — a rise of 45 percent reflecting the rising use of the card) and Ehsaas programme which never attained the level of a full-fledged programme on paper in the federal budget (its allocation remained subsumed in the Benazir Income Support Programme); however, the provincial budget unexpectedly devoted an entire section to the economic achievements of the federal government during the past three years and a quarter in the document titled Khuddaar KPK: A Citizen’s Guide Part 1.
While this simply reinforces Pakistan Tehreek-e-Insaf’s use of the province to spearhead its national political agenda yet what is significant is that the total outlay for 2022-23 is 1,332 billion rupees against 1,118.3 billion rupees in the outgoing year — a 19 percent rise against the federal budget’s envisaged rise of 10.4 percent, clearly indicating that savings is even less of a priority than in the federal government — a key requirement to contain inflation.
The largest budgeted increase is in salaries, 19 percent — from 374 billion rupees last year to 447.9 billion rupees this year — a raise higher than that proposed in the federal budget; however, sadly, the objective is undoubtedly the same: to gain support of the civilian administration through raising salaries with little if any concern over the impact of such a raise at this time on the Sensitive Price Index which is currently hovering at over 21 percent.
The federal budget has yet to be passed by parliament and amendments are expected though the opposition is expected to be muted with PTI non-attendance following its resignations. Be that as it may, it is fairly evident that the federal government will face an uphill task to ensure that its tax proposals are supported by the International Monetary Fund (IMF), with Finance Minister Miftah Ismail already acknowledging that there are a few thorny issues pertaining to the taxation proposals, particularly those taxes that contribute to the divisible pool that, in turn, are distributed between the federation and the provinces as per the National Finance Commission award.
Additionally, collections of over 600 billion rupees, more than 60 percent envisaged increase in FBR revenue collections for next fiscal year, are projected on the basis of 5 percent growth that is simply unrealistic especially if the Fund’s seventh review is to be successful with Ismail repeatedly stating that the IMF lending is critical to averting default. Whatever amount is collected by the federal government will, therefore, impact on provincial resources as the lion’s share of revenue of all provinces is from their share of the divisible pool.
KPK has budgeted its share from the divisible pool at 570.9 billion rupees for next year based on the federal government’s optimistic estimates of 3.974 trillion rupees, with one percent of the divisible pool for war on terror (budgeted at 68.6 billion rupees), and net hydel profit with arrears that remained pending even during the Khan administration due to lack of fiscal space amounting to 61.6 billion rupees. KPK’s own resources and non-tax revenue are budgeted at a mere 85 billion rupees for next year. Thus the claim of the KPK government that it will be a balanced budget will depend on the collections under the divisible pool but more importantly indicates its intent not to contribute to the federal government’s budgeted whopping 800 billion rupees provincial surplus.
In descending order of allocations for next year, the largest recipient would be elementary and secondary education at 227 billion rupees, followed by health at 205 billion rupees, with the third highest recipient being home department at 104 billion rupees. Agriculture is ninth in priority in terms of allocation at 29.4 billion rupees though it is more than double the budgeted amount of 13.2 billion rupees in the current year with energy and power next in line at 29.3 billion rupees.
The KPK government envisages allocation of 319.2 billion rupees for development of settled districts and 99 billion rupees for merged districts while current expenditure is projected at 789 billion rupees for settled and 124 billion rupees for merged districts for next year. In percentage terms current expenditure will account for 68 percent of total outlay while development expenditure would account for 31 percent. This compares extremely favourably with 91 percent for federal current expenditure; however, a more meaningful comparison would be with other provincial budgets rather than the federal budget which earmarks the bulk of its expenditure for interest payments and defence.
Copyright Business Recorder, 2022
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