BUDGET 2021-22: Record spending of Rs 371 billion in KP budget of Rs 1.1 trillion – Journal

• Wages and pensions will cost the province a huge Rs466bn
• Minimum wage for workers set at Rs21,000 per month
• 10% salary increase for government employees
• Registration fees for vehicles reduced to the nominal Re1
• Rs10bn each for the wheat subsidy, food basket for the poor
• Rs10bn for businesses and individuals affected by the pandemic

PESHAWAR: Khyber Pakhtunkhwa’s government on Friday unveiled a budget of Rs.1118 trillion for fiscal year 2021-2022 with a record development spending of Rs.371 billion to mitigate the impact of Covid-19 and boost economic development.

The budgeted figure of Rs1.118tr is 21% higher than the current year Rs923bn.

Finance Minister Taimur Saleem Jhagra presented the budget to the KP Assembly. Contrary to the uproar observed in the National Assembly, Mr Jhagra encountered no obstacles in his speech as the opposition benches sat patiently and listened to his speech following a pre-session agreement between the two parties.

KP Chief Minister Mahmood Khan also showed up, ending his year-long absence from the house, and was received with huge office beats on both sides of the aisle. Opposition leader Akram Khan Durrnai did not attend the session for health reasons.

In his budget speech, Jhagra said the province had emerged from the tough times caused by the global pandemic it faced a year ago and was now on the right track with carefully crafted plans. He bragged about providing universal health insurance to all citizens of the province.

Explaining the main features of the budget, Jhagra said the government has increased the salaries of its employees and is also committed to increasing the province’s revenue base, introducing reforms and improving governance.

Revenue estimates showed that the province would receive 559 billion rupees from the federal divisible pool, 74.5 billion rupees in net profits on hydropower produced in the province and 75 billion rupees in own revenues. The Center would provide Rs 187.7 billion instead of federal subsidies for the merged districts with a transfer of Rs 34.6 billion from the divisible pool to Rs 34.6 billion. Foreign aid for development projects amounts to 89.2 billion rupees.

The budget document estimated the total expenditure of the province at Rs 1.118 tr, of which Rs 919 billion was allocated to settled districts and Rs 199 billion to merged districts. The government has allocated Rs747.3bn for current expenditure – Rs648bn for inhabited areas and Rs99bn for merged districts.

Development spending allocated 270 billion rupees to the colonized districts and 100 billion rupees to the amalgamated districts.

Spending estimates showed government employee salaries and pensions would cost the province a whopping Rs466bn. The documents indicate that there has been a significant increase in wages this year and that the overall payroll will increase by 15% from last year’s budgeted figures due to ad hoc relief for all employees, coupled with an increase in the allowances selected. Likewise, the pension bill will increase by 7pc.

The total payroll of the 622,000 provincial government employees stood at Rs 374 billion, an increase of 74% since 2018-19. The pension bill stands at 92 billion rupees for the next fiscal year, compared to over 83 billion rupees for the current year.

The development expenditure of Rs371bn proposed a provincial component of Rs150bn and Rs24bn for the merged districts. The district ADP for the inhabited parts of the province was set at Rs15bn and that for the merged districts at Rs2.4bn.

Under the Accelerated Implementation Plan (AIP) 36 billion rupees has been allocated to the merged districts, the center of which will provide 30 billion rupees and 6 billion rupees KP in accordance with the commitment to provide 3pc from the share of the National Finance Commission (NFC) for the former development of Fata.

Curiously, an unfunded portion of the AIP amounting to Rs34.6 billion was reflected in the budget documents. The breakdown of unfunded AIP shows that Punjab would bring 21 billion rupees, 10 billion rupees to Sindh and 3.6 billion rupees to Baluchistan from 3% of NFC shares. In fact, other provinces have so far not provided a single penny of their pledged share for the merged areas, but some have also objected.

Donor funded projects were started at Rs89bn.

Mr Jhagra said raising the early retirement age would save the province around 12 billion rupees per year, while changes to pension rules would save an additional 1 billion rupees per year. He said the government had set the minimum wage at 21,000 rupees per month for workers, while 10 billion rupees each was allocated to subsidize wheat and provide a food basket for the poor.

For economic recovery, 10 billion rupees will be provided to small and medium enterprises, women, minorities, youth and businesses affected by the pandemic.

The finance minister also announced a 10% pay hike for all government employees and said employees who did not receive special allowances would get a 37% pay hike.

He said the province would also spend 10.4 billion rupees to reduce regional disparities and 2.6 billion rupees to provide stipends to 20,000 prayer leaders in the province.

Mr. Jhagra said that in order to stimulate economic activity in the province, the government had cut taxes. He said farmers had been exempt from property tax over the next year, while vehicle registration fees were reduced to a nominal rate of Re1. He also announced a tax exemption for all professionals.

The finance minister said the government would spend 2.8 billion rupees to expand Rescue 1122’s services to other parts of the province. He said that the tourism department’s development budget has been increased to Rs12bn from Rs2bn and that of science and technology to Rs2bn from Rs1.1bn.

Posted in Dawn, June 19, 2021

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