Punjab Finance Minister Hasnain Bahadur Dreshak has presented in the Provincial Assembly a Rs 274 billion surplus budget for the year 2006-07, which proposes no fresh taxation and also includes a record Rs 100 billion ADP outlay, higher than current year's Rs 63 billion development programme. As such, it has been described as a development-oriented, pro-people budget.
The total revenue receipts of Punjab government are estimated at Rs 274 billion, 66 percent of it coming from the divisible pool, with straight transfers, subventions and grants contributing 13 percent of the total revenues. The province's own source revenue forms 21 percent of the total.
The break-up of the current expenditure, estimated at Rs 191 billion, shows that Rs 87.3 billion will go to local governments, Rs 20.3 billion to police, Rs 13.8 billion to general administration, Rs 13.7 billion to education, Rs 11 billion to pensions, Rs 6.1 billion to irrigation, Rs 6 billion to health, Rs 5.5 billion to public health, Rs 2.5 billion to agriculture and Rs 2 billion to industries.
The province will get Rs 6.47 billion under straight transfers as against Rs 4.19 billion in the outgoing year. However, Punjab's share of the federal grants has been slashed to Rs 14.70 billion from Rs 25.77 billion this year.
The province's total tax revenue is estimated at Rs 30.34 billion as against Rs 25.77 billion this year. The increase can be attributed to a more vigorous tax collection strategy by CBR. Revenue disbursement in the fiscal 2006-07 is projected at Rs 191.38 billion against this year's estimates of Rs 157.53 billion.
This shows that the revenue is progressively yielding a surplus for the provincial government as apparent from Rs 82.71 billion estimated for 2006-07 against this year's Rs 66.88 billion. Special attention has, meanwhile, been paid in the proposed budget to the development of infrastructure to increase economic activity.
A look at the ADP 2006-07 reveals that while the gross size of the development programme has been fixed at Rs 100 billion, an amount of Rs 65 billion has been earmarked for the provincial annual development programme, including Rs 23 billion for special infrastructure.
In the budgetary outlay, the local governments have been allocated Rs 12 billion, but this may not be adequate. Social sectors like health, water supply, sanitation etc will get 55 percent of the development funds. The allocation to pro-poor sectors has been increased by 82 percent, with special emphasis on uplift projects in rural areas.
The education sector has been allocated Rs 12.48 billion, showing a 35.7 percent increase over this year's outlay of 9.2 billion. Reforms in education sector will be carried out with an amount of Rs 5 billion, while Rs 4.30 billion will go to rectify inadequacies in primary and secondary healthcare services.
A deficit of Rs 6.91 billion is expected in capital account in the financial year 2006-07, which includes disbursements made for investment of pension funds and GP Fund, amounting to Rs 12 billion. There is a perception that the impact of these disbursements will eventually lead to making pension and GP Fund payments an off-budget item.
The Punjab government has also not been able to maintain the pace of the development programme for agriculture as only 18.9 percent raise has been proposed in the fiscal 2006-07 as against this year's raise of 26 percent. This shows that agriculture, which accounts for nearly 25 percent of the country's GDP has taken a back seat in the provincial government's scheme of things.
Further, only 21.4 percent increase has been made in ADP for irrigation sector, which is 10 percent less than this year's raise of 31.4 percent. This is going to disappoint the farmers who have been expecting a much larger raise in view of the bleak water availability situation in the country.
As was only to be expected, the budget has evoked diametrically opposite reactions from the public. While some have termed it a mere jugglery of figures, government's supporters have heaped disproportionate praise on it, which is a measure of the societal cleavages that have come to haunt us.
The budget seems by and large to be a balanced document, though allocation to the neglected social sector could have been appreciably enhanced. Incidentally, there is a need to narrow the widening gap between allocation and purposeful utilisation of funds. How the government actually utilises the allocated funds will be the true measure of its commitment to good governance.