The Khyber Pakhtunkhwa (KPK) budget 2016-17 presented by Finance Minister Muzaffar Saeed generated only 46.8 percent of its own budgeted revenue for 2015-16 - which prompted a more realistic lower revenue estimate for 2016-17. In absolute terms, the KPK government budgeted 54,424 million rupees as province's own receipts for the outgoing year but generated only 25,481 million rupees with a projected revenue target of 49,507 million rupees for next year.
Tax revenue shortfall from KPK's own receipts was 8274 million rupees. With respect to direct taxes the biggest shortfall - of 920 million rupees - was from taxes on income while indirect taxes fell short of the budgeted target by 7,286 million rupees with 6,000 million rupees attributed to a shortfall in sales tax collections. This data no doubt prompted the provincial government to reduce its budgetary expectations in the forthcoming fiscal year to 18,171 million rupees with respect to total tax revenue, to 2,955 million rupees with respect to direct tax collections due to scaling down projected taxes on income to 88 million rupees and with respect to indirect taxes reducing sales tax collection target to 10,000 million rupees.
This sensible approach was not visible as far as non-tax revenue was concerned. This was over-estimated by 20,669 million rupees in the outgoing fiscal year - from the budget amount of 31,830 million rupees to 11,161 million rupees in the revised estimates. However, the KPK government has budgeted 31,335 million rupees for next year as well. The basic premise is that the receipts from forests which in 2015-16 were only 6.6 percent of what was budgeted, or in other words, only 525 million rupees against the budget target of 7847 million rupees, would begin to pay off in the forthcoming fiscal year; this area is budgeted at 6028 million rupees - a target that would be fully supported if achieved. Another receipt item that failed to generate the budgeted amount is commercialization of government property that was budgeted to net the provincial government 16,029 million rupees but the revised estimates give a total of 1,813 million rupees, 11 percent only, and is budgeted to generate 15,536.4 million rupees in 2016-17. Again this is a rather innovative form of generating revenue and its success can be emulated by other provinces.
Be that as it may, it is noteworthy that provincial revenue collection rose from 7408 million rupees in 2012-13, the last nine months of the Awami National Party government in KPK as well as three months of a Caretaker setup, to 14,319 million rupees in 2015-16, or double the amount in three years which must be appreciated though there is greater potential to raise it further.
Annual Development Programme for KPK for 2016-17 is estimated at 125 billion rupees (plus a foreign component of 36 billion rupees) with a total outlay of 505 billion rupees - an impressive 47.5 percent. In 2015-16, the budgeted outlay for ADP was 174884 million rupees while the revised estimates placed actual allocation at 135098 million rupees, including the foreign component. Thus 2016-17 envisages a decrease of 12 percent from the local share of last year's ADP but an increase of 11 percent on the revised allocation for last year. The largest share of the ADP in 2016-17 is earmarked for districts (27 percent), followed by E and SE 10 percent (energy and power) followed by roads (which should bring a smile to Mian sahib) 9 percent, health 8 percent, water 6 percent, local government 5 percent and 4 percent each to higher education and urban development.
The KPK government, like the Punjab government, relies on foreign debt to fund development projects (ADP), to the tune of 22.4 percent, while funding the rest from its resources.
The KPK budget stands out from the budgets of Punjab and Sindh in one important aspect: the outlay on education, of considerable political significance, has been synchronized with the absorption capacity of the sector as evident in the outgoing fiscal year. Education, which the chairman of Pakistan Tehreek-e-Insaf has consistently maintained is his party's long-term objective as it would fuel the growth rate and eradicate poverty received a budgeted amount lower than what was earmarked in the budget of 2015-16: 19.7 billion rupees against 28.5 billion rupees last year and the reason was the lower revised estimates of 15.1 billion rupees. Higher allocation for health and housing must be appreciated as well as the addition of a new special package for the transgender which makes one acknowledge that the death of Alisha in Peshawar was not in vain.