EDITORIAL: The budgets of the two provinces announced on Monday 19 June reflect the expected duration of the Caretaker Punjab administration (an additional four months) and Balochistan (the entire year) as its assembly is not dissolved (though the administration was changed) conform to the relevant constitutional provisions.
The Punjab government seems to have acted in accordance with Article 126 of the constitution (Power to authorise expenditure when Assembly stands dissolved), which clearly and unambiguously states: “Notwithstanding anything contained in the foregoing provisions relating to financial matters, at any time when the Provincial Assembly stands dissolved, the Provincial Government may authorise expenditure from the Provincial Consolidated Fund in respect of the estimated expenditure for a period not exceeding four months in any financial year, pending completion of the procedure prescribed in Article 122 for the voting of grants and the authentication of the schedule of the authorized expenditure in accordance with the provisions of Article 123 in relation to expenditure.”
The four-month Punjab budget, comprising 33.33 percent of the entire year, envisages 1.719 trillion rupee outlay, which if projected for the remaining eight months gives a total outlay of 5.157 trillion rupees – a 60 percent rise that is untenable given the severe economic crisis facing the country today.
A significant portion of the rise maybe associated with following the federal budget provision to raise salaries by 30 percent and pensions by 5 percent though those over the age of 80 will be given a pension raise of 20 percent (a distinction that is unfathomable) while all retired employees will continue to receive 65 percent of their pensions one year after retirement – a budget provision that does not factor in the fact that while the National Assembly does not stand dissolved the provincial one was dissolved on 14 January 2023.
The development outlay has been raised to 325 billion rupees against the budgeted 685 billion rupees for the entire outgoing year (with 426.87 billion rupees earmarked for ongoing development schemes for the entire year, which leaves a mere 24 percent for the elected government) though one would hope that no new schemes will be launched by the caretakers who do not have the mandate; while current expenditure for the next four months has been budgeted at 941.34 billion rupees against the 1.711 trillion rupees budgeted for the entire outgoing year – or a very concerning raise of a little more than a trillion rupees.
In addition, even if one may be tempted to support the rise in education and health expenditures yet what must be emphasised is that the caretakers simply do not have the right to determine expenditure priorities and must simply hold the fort till they hand over the administration to the elected government.
The block allocation to control inflation must also not be supported because it no doubt envisages subsidies, either in the form of cheaper prices at Utility Stores or free wheat, implemented at considerable cost to the national exchequer by the federal government recently.
With respect to revenue generation the Caretakers followed the bad example set by their more legitimate predecessors in not levying any new taxes. And this may well be a lost opportunity to impose farm income tax on the rich landlords as well as on the low taxed real estate sector – which would have ushered in reforms and greatly assisted the federal government in its stalled ninth review IMF negotiations.
The projection of 3.645 trillion rupees from the federal consolidated fund by the Punjab caretakers is almost certainly going to be a gross over-estimation, given the widespread consensus that the federal revenue budget for 2023-24 is too optimistic to be remotely realistic.
Balochistan’s total budgeted outlay for next year is 750 billion rupees while 539.9 billion rupees was budgeted for the outgoing year - a rise of 39 percent. The budget for next year continues its heavy reliance on receipts from the federal government, to the tune of 521 billion rupees against the 372.1 billion rupees budgeted in the outgoing year, or 70 percent of its total outlay.
This in turn presupposes that the federal budgeted tax revenue (under the divisible pool taxes) will be realised which for the same reasons as in the case of Punjab is highly unlikely. Provincial receipts are estimated at appallingly low tax receipts of 38 billion rupees.
However, it is noteworthy that the Balochistan government has made credible growth projections for its budgeted current expenditure as well budgeted revenue from own sources – current revenue expenditure for next year to be 400 billion rupees against the budgeted amount for outgoing year at 343 billion rupees, public sector development programme at 229 billion rupees against the 191.5 billion rupees budgeted in the outgoing year.
We hope that the next National Assembly makes appropriate amendments in the constitution to severely limit the powers of the caretakers to proceed with existing expenditure priorities, defined as those determined by the dissolved assembly, and not follow the federal budget if that is presented by an assembly that has yet to be dissolved.
Normally, election year budgets are expansionary and profligate; but four-month Punjab budget appears to be excessively extravagant, to say the least.
Copyright Business Recorder, 2023
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