KP Budget: PTI Budget—A Look Ahead – Newspaper
That a budget can be “populist and fiscally expansionary” while advancing governance and financial reforms is the main lesson to be learned from Khyber Pakhtunkhwa’s budget proposals for the next fiscal year.
The Rs 1.33 trillion budget prepared for the upcoming general elections is a distinctive combination of populist initiatives aimed at meeting the electoral needs of the PTI provincial government in that province and innovative reformist initiatives aimed at improving governance to make advance its development. agenda.
Credit for meeting his party’s political needs in an election year with populist measures without compromising financial discipline must be given to Finance Minister Taimur Khan Jhagra. That’s not all. The budget documents give a clear idea of the direction the minister wants to take for his province and his economy.
Improved security conditions, governance reforms and economic infrastructure development in the province over the past few years have reportedly already prompted investment from multinationals across a range of sectors, the Kuwait Investment Fund financing the creation of a smart city.
Despite exaggerated revenue figures, the province has smartly enough weaved together populism and reform without jeopardizing its broader future agenda
Upcoming budget allocates massive development funds of Rs 418 billion, maintains tax breaks for different sectors given during virus pandemic, boosts spending on health, education and other public services, allows increases of 16 % of salaries and pensions of civil servants and creates thousands of new jobs in the public sector.
As the country enters an election year, the PTI, which was recently ousted from power in the center and Punjab and is calling for snap elections, is still in power in the province. He was expected to propose populist initiatives even if they ran counter to austere fiscal policies targeted by the federal government to meet International Monetary Fund demands for a revival of its suspended bailout.
That a province which has already increased its tax and non-tax revenue by two and a half times to Rs 75 billion in three years is now considering the possibility of introducing a contributory pension scheme for its new employees. This will make the KP the first federation unit in Pakistan to take this initiative to reduce its rising pension expenses.
KP’s annual pension expenses have increased an average of 22% per year over the past few years. During the same period, its payroll increased by 13% against a much lower growth in its financial resources. Similarly, the government has announced a policy of monetization of transport and vehicle rental and better health care facilities than those available under its health insurance scheme for civil servants.
Other major reforms and populist initiatives include free wheat flour for one million of its poorest households, allocating Rs 25 billion for rolling out its flagship health insurance scheme and expanding its coverage to diseases like advanced stage cancer, bone marrow transplants, multiple sclerosis, etc. it can be costly for people to seek medical care, free higher education for young men and women in the best universities in the country, and the restructuring of the primary health care system and the involvement of the private sector as part of the modes public-private partnership (PPP).
In addition, the government extended the emergency rescue service down to the tehsil level and integrated the fire service. It also became the first province to set aside funds for polio eradication in Bannu and Dera Ismail Khan Divisions, launched an ambulance service for pregnant women to reduce the maternal/ child and start a safe city project for Peshawar.
A look at the details of these initiatives reveals that the province’s finance team has quite cleverly weaved together populism and reform without jeopardizing their broader future agenda and that is to be commended.
That said, one is nevertheless compelled to point out here that the revenue estimates made by the KP government are exaggerated and its allocations for its current and development expenditures expansionary just like the budgets of Punjab and Sindh.
Among the three provinces, the KP has “balanced” its total revenue and expenditure. How will he achieve this even if he receives resources according to the budget plan at a time when the minister says the federal government has reduced its transfers for the merged districts of the federally administered tribal area from 90 to 110 billions of rupees and that the province will find it difficult to manage the payment of salaries of its employees in the tribal areas in the next financial year?
“It will be a challenge for us to fund salaries as the federal government has left about 25% of tribal district salary bills unfunded,” Mr. Jhagra said at the post-budget press conference. “Doctors, teachers and other local government workers should be aware,” he added.
Next, the province made its budget estimates and allocations on the federal assumptions of economic growth of 5pc, collection of Rs7tr in RBF taxes and inflation at 11.5pc.
If the assumptions prove correct, the province hopes to get just over 670 billion rupees as a share of federal taxes, direct transfers and the cost of being on the front lines of the war on terror, receiving 61, 89 billion rupees in net profits Hydel and raise 85 billion rupees. as its own tax and non-tax revenue.
Of the Rs 418 billion set aside for the development program, programs worth Rs 43 billion remain unfunded. What happens if revenue estimates go wrong? The budget documents are silent on this subject.
Given the long-term challenge of activism that the province has faced for decades, it has done much better in recent years under the PTI than other units in reforming its financial management and its governance. It has improved the delivery of its public services despite resource constraints.
It is heartening to note that the government has linked its political ambitions in this province to its long-term goals of public welfare. Other provinces should follow suit. —New Jersey
Posted in Dawn, The Business and Finance Weekly, June 20, 2022