The PML-N led center was under fire for reduced federal transfers during the outgoing FY15, as the PPP-dominated Sindh government unveiled its Rs 739.301 billion budget for Financial Year 2015-16 Saturday. The budget, however invited a strong protest from province's largest urban party Muttahida Qaumi Movement (MQM). Terming the budget 'anti-Sindh', it called for a shutter-down strike on Sunday.
The federal government whereas has estimated for FY16 the provincial budgets to show a Rs 297.173 billion surplus, the new fiscal plan of Sindh province envisages a deficit of Rs 12.72 billion. Wary of decreasing the country's fiscal deficit, targeted to be arrested at Rs 1.32 trillion or 4.3 percent of GDP in FY16, the federal government had estimated in FY15 the provincial surplus at Rs 289.289 billion but had to revise the same at Rs 141.561 billion.
"This budget has been prepared with focus on overall prosperity of the people," Finance Minister Murad Ali Shah told Sindh Assembly's budget session which was started by Speaker Agha Siraj Durrani at 1pm instead of scheduled 11:30am. The provincial government estimated its annual receipts at Rs 726.574 billion against FY15's Rs 672.118 billion target that was missed by 8.2 percent.
As the budget documents show, the revenue receipts targets were missed apparently due to the non-materialization of financial pledges made by the center and Sindh's foreign lenders and donors. The federal government transferred Rs 423.021 billion on account of revenue assignments, straight transfers and grants under Octroi Zilla Tax (OZT) against the budgeted Rs 474.260 billion. Underpayment was significant under the head of straight transfers under which Sindh received from centre Rs 59.74 billion against Rs 82.62 billion estimated for FY15.
"With the unpredictability of these fiscal transfers from the federal to provincial government, budget preparation becomes cumbersome," the finance minister said. The opposition members were on their feet when the minister requested the coalition "partners" of ruling PML-N in center to ensure full payment of Sindh's share. Shah carried his speech on as the PML-F led opposition members, chanting slogans like "Shame" and "No", finally walked out of the house.
Sindh depends for its revenues on federal receipts that constitute 77 percent of the combined federal and provincial tax and non-tax receipts. In FY16, the province expects Rs 494.126 billion from the federal government under federal transfers. The province, which is planning to replace the existing list of taxable services with a negative one and has included 17 more categories in the sales tax on services net, is expecting to collect Rs 638.247 billion as taxes.
Of the total 63.62 billion would be raised as provincial tax receipts, Rs 61 billion as sales tax on services and Rs 19.5 billion as provincial non-tax receipts. It is worth mentioning here that Sindh government's tax related revenues during FY15 amounted to Rs 127.97 billion compared to the budgeted Rs 125.06 billion. The current capital receipts have been projected at Rs 31.978 billion against last year's Rs 18.438 billion. The revised estimates for FY15 stood higher at Rs 20.988 billion, however.
Having missed its FY15 target of Rs 47.358 billion for its receipts under Foreign Project Assistance (FPA), Flood Emergency Reconstruction Project (FERPA) and federal grants for block allocation for provincial projects by more than 43 percent, the provincial government expects these heads to fetch for it during next fiscal year Rs 36.648 billion.
Noteworthy is the provincial government's Rs 8.334 billion FPA receipts, far lower than budgeted Rs 23.631 billion. The PPP government, having allocated Rs 2.4 billion for creating 14,242 jobs next year, has estimated its carryover cash balance for FY16 at Rs 7 billion against last year's Rs 5 billion which now has been revised at Rs 8.782 billion.
As the finance minister, in his budget speech, expressed his distaste for building financial assets, the provincial government could not utilize more than Rs 154.588 billion of the Rs 215.358 billion it had budgeted as provincial development expenditure (PDE) for FY15. Perhaps for this reason, for new financial year, the PDE has been revised down to Rs 213.648 billion, including Rs 162 billion Annual Development Program (ADP).
Revised upward to Rs 9.119 billion for FY15 against the budgeted Rs 2 billion, the net public accounts of the province have been estimated to accumulate at Rs 12.699 billion in the next fiscal year.
Planning to spend Rs 739.301 billion of the taxpayers' money in FY16, the elected government appears to have curbed its total expenditures during the current year at Rs 630.729 billion against the budgeted Rs 686.179 billion. Of the total, the current revenue expenditures, including salaries, pension and gratuity, operational expenses, grants and subsidies etc, are estimated at Rs 503.341 billion, 15.4 percent up from FY15's Rs 436.090 billion. The hike is attributable to a significant growth in salaries and government's non-salary expenses.
The government employees are suggested to get 10 percent ad-hoc raise in their salaries, have their ad-hoc increments of 2011 and 2012 merged in the pay scales and medical allowance enhanced by 25 percent. The government's spendings under the head of current capital expenditure have been projected at Rs 22.311 billion against Rs 34.729 billion targeted but not achieved in FY15. The revised estimates for this head are Rs 21.573 billion.
Of total Rs 213.648 billion uplift fund, the Sindh government earmarked Rs 162 billion as provincial ADP, Rs 26.98 billion as FPA and FERP and Rs 9.66 billion as other federal grants. Being disappointed by the center in extending the allocated Rs 8 billion under block allocation for (Thar coal) projects, the provincial government, this year, allocated zero funds against the head. A development financing of Rs 15 billion has been envisaged through Viability Gap Funding (VGF).
Sector-wise budget allocations are given below:
Energy Budget estimates for current revenue expenditure of Energy Department are estimated at 25.9 billion, which includes Rs 25 billion for clearance of outstanding liabilities of electricity dues of various government departments pertaining to DISCOs such as KE, HESCO and SEPCO. ADP for energy department is pitched at Rs 16.5 billion for fiscal year 2015-16, which includes Rs 13.833 billion for continuing schemes and Rs 2.666 billion for new ones.
Thar Coal Thar Coal and Wind Projects at Thatta have been enlisted as early harvest projects by the China-Pakistan Economic Corridor (CPEC). Sindh Engro Coal Mining Company's (SECMC) and Sino-Sindh Resources have been prioritized which Chinese institutions would finance.
Working towards our goal of producing 10,000 MW from Thar coal by 2020, Government of Sindh is attracting foreign direct investment through development of physical infrastructure and institutional infrastructure necessary for setting tariff, pricing and other concessions. MOUs with some investors have been signed and the rest are in process.
Physical work on Sindh Engro Coal Mining Company's (SECMC) Project at Thar Block-II has begun during current year and about 3Mn BCM (Bank Cubic Meter) overburden has been removed. Commercial operation of first phase of 2x330 MWs power plants by SECMC is scheduled in 2018.
Solar Energy Five projects of 20 MW each have been planned at Thatta, Shaheed Benazirabad, Sukkur, Jamshoro and Larkana districts in PPP mode. Six projects of 100 MW each have been proposed under IPP mode.
Hydropower The Sindh government has issued Letters of Intent for construction of nine MW and 15 MW power generation facilities at Rohri Canal and Nara Canal. Power generation from these two projects is expected to begin by 2017.
Sindh Transmission and Dispatch Company (STDC) The Sindh government has established "Sindh Transmission and Dispatch Company (STDC)". Initially, the STDC is constructing a power dispatch line of 90 km from Nooriabad up to KDA Scheme 33 Grid Station of K-Electric at Karachi. He said he would give details of this project later in his speech when he talks about the Sindh Nooriabad Power Project.
The Sindh Energy Department has also entered Public Private Partnership ventures. Sindh's first gas based project. Sindh Nooriabad Power Project of 100MW is likely to receive soft commissioning by early 2016. The Sindh government seeks the Federal government's cooperation to finish up the project.
Sindh Power Policy The main thrust of the province Power Policy is to magnetize private sector investment. Only strategic projects will be developed in the public sector in case of no interest and initiative from the private sector. The Sindh government will, in no way, act as a competitor to the private sector but as facilitator.
The Policy covers (i) Private Sector Power and/or Transmission Line Projects, (ii) Public-Private Partnership Power and/or Transmission Line Projects and (iii) Public Sector Power and/or Transmission Line Projects with a definitive time frame for divestment.
Law and Order The Sindh government earmarked Rs 64.458 billion for the Home Department in next fiscal year 2015-16 up by 10 percent. Last fiscal allocation stood at Rs 58.623 billion.
The Sindh government scaled up Police Department's fiscal budget 2015-16 to Rs 61.84 from 50.915 billion in fiscal year 2014-15. The Rangers' budgetary allocation was increased to Rs 2.448 billion for next fiscal year from Rs 2.22 billion in current fiscal year. A raise in salaries of Sindh Police has been announced to equate in amount with that of Punjab Police.
The finance minister told the house that the government has planned a number of measures to improve law and order in the province. The government has earmarked Rs 6.23 billion for the next financial year to equip the police with latest operational and security tools such as bullet proof vans, jackets, helmets, arms and ammunition and CCTV cameras.
Besides, 10030 new posts have been proposed in the budget of 2015-16 with a Rs 1 billion allocation to overcome personnel shortage. Rs 2 billion have allocated for purchase of transport and Rs 500 million for bullet-proofing of 200 vehicles and bomb-proofing of 100 police vehicles. Rs 2 billion allocated for the purchase of new weapons and other assets for police. Rs 650 million have been allocated for expansion of security surveillance system and purchase of other equipment for technical advancement of police and Rs 250 million for the up-gradation and renovation of police training centres.
Local Government The government has allocated Rs 52.457 billion in next fiscal year Local Government and Public Health Engineering Department. It includes Rs 47.3 billion grants to Local Bodies.
Provincial ADP of Rs 18.76 billion has been allocated in the next year for Local Government, Rural Development and Public Health Engineering Department. Besides, Rs 6.12 billion have been earmarked under foreign funded project for improving municipal service delivery, which includes Sindh Cities Improvement Program (Rs 3.87; ADB) and Municipal Service Delivery Program (Rs 2.25 billion; USAID)
Agriculture The government has proposed an increase in Current Revenue Expenditure of Agriculture Department by 5.79 percent to Rs 5.482 billion in next financial year as against Rs 5.182 billion in the current fiscal year.
The allocation of ADP for this sector for the next financial year is pitched at Rs 4.5 billion, out of which Rs 3.976 billion has been spared for continuing schemes and Rs 0.532 billion for new ones. For promotion of the mechanized farming, Agriculture Department has been provided a subsidy of Rs 200,000 - 300,000 on a purchase of 29,089 tractors to the farmers.
Sindh Agriculture Growth Project has been approved by ECNEC at a cost of Rs 8.867 billion, with the assistance of the World Bank for five years from 2014-15. It aims to improve the productivity and market access of small and medium producers in important commodity value chains and strengthening public sector institutions.
Sindh Irrigated Agriculture Productivity Enhancement Program Phase-I Project (World Bank Assisted) has been prepared at a cost of Rs 30.139 billion. 5,500 watercourses will be improved and high efficiency irrigation system will be installed on 14,267 hectares. The project has been approved by ECNEC and will start from July 2015.
Irrigation The allocation for ADP 2015-16 is Rs 12 billion, out of which Rs 8.964 billion is for the continuing schemes, whereas Rs 3.035 billion is for new ones. Two new special projects are also being planned - the lining of the Rohri canal at a cost of Rs 9.14 billion and the lining of Jamrao canal at a cost of Rs 9.535 billion. Government of Sindh is also executing 15 development programs funded by the Federal Government, costing Rs 102.487 billion.
In addition to provincial ADP of Rs 12 billion for fiscal year 2015-16, foreign project assistance of Rs 9.457 billion will be available to irrigation department for rehabilitation and modernization of Guddu Barrage, Sindh water sector improvement project and procurement of machinery for rehabilitation of infrastructure.
Budget Estimates for Current Revenue Expenditure of Irrigation Department are estimated at Rs 17.685 billion as against current fiscal year's allocation of Rs 15.974 billion indicating an increase of 10.7 percent.
The current Annual Development Program consists of 310 schemes costing Rs 99 billion, with current allocation of Rs 12.602 billion. Out of these 160 were the continuing ones while 150 have been initiated during current financial year. The program has a throw-forward of Rs 68.266 billion.
Road Infrastructure The proposed allocation under road sector in the ADP for the next financial year 2015-16 is about Rs 8.5 billion. In addition, Rs 1.211 billion have been allocated for foreign funded development projects of Roads Sector, which includes construction of Nawabshah Sanghar Road (Rs 1 billion; Chinese loan) and Japanese Assisted Rural Roads Construction Project (Rs 211.5 million; JICA).
The ADB Assisted Provincial Road Improvement Project - Sindh. Works & Services Department has received Technical Assistance (TA) of $200 million from Asian Development Bank for the improvement of its city to city roads, during the financial year 2015-16. Six roads having length of 328 kilometres will be rehabilitated with the proceeds of this loan. They include: Saifal to Jacobabad 44 kilometres, SM Thahim to Ratodero 36 kilometres, Khyber to Sanghar via Tando Adam 64 kilometres, Sanghar to Mirpurkhas via Sindhri 63 kilometres, Tando Muhammad Khan to Badin 67 kilometres and Digri to Naukot 55 kilometres.
Health The current revenue expenditure of health excluding medical education has been increased by 32 percent from Rs 43.48 billion in the current fiscal year to Rs 57.49 billion in the next fiscal year 2015.
In addition to allocation for health, Rs 3.94 billion have been allocated for medical education as against Budget Estimates of Rs 3.36 billion; showing a yearly increase of 17.26 percent The next year ADP of health sector is estimated at Rs 13 billion, which includes Rs 10.063 billion for the continuing schemes and Rs 2.937 billion for new ones.
This is almost 35 percent higher than the released amount in the current fiscal year. In addition, an amount of more than Rs 1 billion is estimated to be spent pm vertical programs in health such as EPI, MNCH, Hepatitis control, Prevention & Control of Blindness, TB and Malaria Control Programs.
Besides, provincial ADP and Federal PSDP, Rs 2.38 billion have been allocated for foreign funded projects of Health Department, which are Nutrition Support Program of Sindh (Rs 1.385 billion; IDA) and Establishment of Child Health Care Institute at Sukkur(Rs 1 billion; Korea)
Education The Budget Estimates for Current Revenue Expenditure for Education including medical education and technical education have been scaled up from Rs 134.37 billion in the current fiscal year to Rs 144.67 billion for the next year, showing an increase of 7.6 percent. This includes grants for universities and educational institutions, which are proposed at Rs 6.12 billion in the next budget as against CFY allocation of Rs 5.89 billion.
Allocation for Education Sector in the ADP 2014-15 was Rs 10.71 billion. For the next financial year the volume of ADP has been increased to Rs 13.2 billion, including Rs 2 billion kept separately for Boards and Universities, Rs 1 billion for STEVTA and Rs 200 million for special education.
This allocation is 83 percent higher than the released amount for development of Rs 7.2 billion during the current financial year. Besides, provincial ADP, Rs 2.616 billion have been allocated for foreign funded projects of education department, which include Sindh Basic Education Program (Rs 2.113 billion; USAID) and upgrading Primary Schools into Elementary Schools in Rural Sindh (Rs 0.5 billion; JICA).
Sindh Infrastructure Development Bond The provincial government plans to launch a Sindh Infrastructure Development Bond (SIDB) to raise up to $200 million for development and infrastructure projects in the province. The Islamic Bond issued will also be a tradable instrument creating a secondary market and encouraging greater public participation in development of Sindh, which is one of the objectives of the present Government.
"Our aim is the empowerment of people through polices and programs that can facilitate growth and development, and help us move towards medium and long term economic growth; a growth which is not for the few but for many," said the finance minister.
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