LAHORE: With an outlay of Rs1.719 trillion, the caretaker Punjab government Monday presented a tax-free budget for the first four months of the next financial year 2023-24 (July to October), which was approved by the cabinet with Chief Minister Mohsin Naqvi in the chair.
In the budget, Rs 325 billion have been allocated for the development programme of the next four months, while an amount of Rs 426.87 billion has been allocated for ongoing development schemes. Additionally, Rs 941.34 billion have been earmarked for current expenditures. The salaries of all government employees have also been increased by 30 percent, while pensions will be raised by five percent. However, there will be a 20 percent increase in the pension of those pensioners who are over 80 years of age.
Under Article 126 of the Constitution, the caretaker government may authorize expenditures for a period not exceeding four months. As per the constitutional provision, a four-month budget has been proposed under the supervision of the Punjab caretaker government, which will be effective from July 1, 2023, to October 30, 2023. The budget estimates the total expenditure for the four months at Rs 1,719.3 billion, with Rs 881 billion to be contributed by the federal government and Rs. 194 billion by the provincial revenue.
Punjab caretaker setup unveils budget for four months
The budget highlights several key features, including a 31% increase in the allocation for education and health, a 30% increase in basic salaries of government employees, elimination of all provincial taxes on the IT industry, establishment of a Rs 1 billion journalist endowment fund, allocation of Rs. 70 billion for social welfare and Rs. 120.4 billion allocations for service delivery. No new taxes have been introduced in the budget.
The proposed 3% increase in stamp duty has been rejected, and the rate will remain at 1%. A capital investment of Rs 16.4 billion has been allocated for the energy sector, while Rs 47.6 billion has been approved for agricultural sector development. Secretary Finance Punjab Mujahid Sherdil revealed that a block allocation has been made in the budget to control inflation. Additionally, the Punjab government has commenced the repayment of Rs. 600 billion in loans obtained from banks for wheat subsidies. This step has been taken to address the daily interest burden of Rs. 250 million on the provincial treasury. It is hoped that these loans will be fully repaid within the next four months, enabling the diverted interest amount to be utilized for public welfare.
Regarding pensions, the finance secretary stated that a 5% increase has been announced for retirees aged 60 to 80 years, while retirees above 80 years will receive an approximately 20% increase in their pensions. Previously, retired employees’ salaries would cease on their retirement day, and they had to wait for one and a half years to start receiving their pensions after submitting the necessary documents. However, the finance department will soon issue a notification ensuring that retired employees continue to receive 65% of their pensions one year after their retirement.
This will provide significant relief to the pensioners. The finance secretary also clarified that election expenses are the responsibility of the federal government. The provincial government will allocate funds for security expenses during general elections. Furthermore, the increase in loans taken for wheat subsidies was due to the non-targeted nature of the subsidies, where even well-off individuals benefited from the stipulated price of flour meant for low-income strata. This time, targeted relief will be provided for public welfare, which may include cash transfers instead of subsidized flour, as subsidies on food items are not long-term solutions, he added.
As per the budget document, Rs 195 billion have been allocated for education, Rs183 billion for health, Rs70 billion for social protection for providing relief to the people, Rs 65 billion for agriculture, Rs10 billion for PKLI, Rs 1 billion for Journalists Endowment Fund, Rs18 billion for irrigation and Rs5.3 billion set aside for IT sector.
According to the budget document, Punjab will get Rs3,645 billion from the federal budget under the NFC Award, while the revenue target has been set at Rs579 billion. The province will get Rs30 billion under net hydel profit, whereas an amount of Rs240 billion will be received under the head of sales tax.
Punjab Caretaker Minister for Information Amir Mir and interim Minister for Industries, Commerce and Energy S.M. Tanveer said this four-month Punjab budget will be Rs336 billion in surplus, and the caretaker chief minister has decided to immediately retire Rs600 billion loans.
Amir Mir said there was an increase of 31 percent in education spending. In the budget, a total of Rs413 billion have been allocated for salaries, pensions and other expenditures of government employees. The increased salaries and pensions will place an additional burden of Rs 42 billion on the provincial exchequer, he added.
He said in a bid to promote information technology business education, all taxes and duties have been abolished. This move aims to encourage growth and innovation in the IT sector. The provincial government has granted approval to exempt IT industries from any taxes or duties, fostering a favourable environment for businesses to thrive, he said. Furthermore, to alleviate the financial burden on the people of Punjab, an allocation of Rs70 billion has been approved for a four-month period, he said. In an effort to boost the construction industry, the rate of stamp duty has been fixed at a modest one percent, he added.
As per the budget document, the Punjab government currently owes Rs565 billion to various banks and anticipates making a mark-up payment of Rs32 billion in the fiscal year 2023-24. To formulate the budget for the four-month period and forecast projections for the entire fiscal year, the caretaker government established a Joint Priorities Committee (JPC), which has already given its approval to the proposed budget, offering recommendations on the allocation of funds for various sectors.
As per the JPC’s proposals, Rs69.8 billion have been allocated for ongoing development schemes in higher education, Rs4.64 billion for literacy and non-formal education, Rs64.84 billion for primary and secondary healthcare, Rs58.21 billion for school education, Rs32.18 billion for industries, commerce and trade, Rs11.44 billion for youth affairs and sports, Rs4.82 billion for tourism and archaeology, Rs8.81 billion for environmental protection projects, Rs3.41 billion for information and culture, Rs62.69 billion for irrigation, Rs2.3 billion for labor and human resource, Rs24.26 billion for livestock and dairy development, Rs12.69 billion for population welfare, Rs5.47 billion for social welfare and Baitul-Mal, Rs1.85 billion for special education, Rs29.35 billion for transport, Rs10.6 billion for energy development projects, Rs2.9 billion for women development, Rs8.5 billion for urban development, Rs3 billion for law and order, Rs2.64 billion for local government and rural development, Rs5 billion for planning and development, Rs3.95 billion for the provincial assembly, Rs19 billion for the Board of Revenue, Rs50 billion for Services and General Administration Department, Rs420 million for Zakat, Rs3 billion for prosecution and Rs161 billion for the health department. Apart from this, Rs860 million was allocated for the chief minister’s house, Rs140 million for the CM Inspection Team and Rs630 million for the Governor’s Secretariat expenses.
Punjab CM Mohsin Naqvi said no new tax had been imposed in the budget. He emphasized the government’s commitment to providing relief during these challenging times. He appreciated the Punjab chief secretary, Planning and Development Board chairman, Punjab finance secretary and the team for presenting the people-friendly budget. Provincial ministers, advisors, and secretaries of relevant departments attended the meeting.
Copyright Business Recorder, 2023
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