KP Development budget 2014-15

No change in sight

Will the KP government be able to meet ambitious development targets set in the budget?

 
No change in sight
 
The Khyber Pakhtunkhwa government presented its budget for 2014-15 with an outlay of Rs404.8 billion last week. The Rs139.8 billion annual development programme is 20 per cent higher than the current year. It also includes Rs39 billion foreign component of which 79 per cent are grants.

KP Finance Minister Sirajul Haq says the province has abundant human and natural resources but its population is living under poverty and backwardness due unfair distribution of resources and lack of good governance.

Major revenue receipts include Rs227.12 billion federal tax assignments, Rs12 billion net hydel profit plus Rs32.27 billion as NHP arrears, Rs29.26 billion oil/gas royalty, Rs27.29 billion war on terror grant, Rs35.35 billion as foreign assistance besides some others sources.

KP’s own revenue receipts estimated at Rs29 billion (up by 70 per cent against the current year) include Rs19.45 billion tax receipts and non-tax receipts of Rs9.3 billion. Rs12 billion as GST on services which rose by 100 per cent is inclusive of tax receipts. The province also earns Rs2.85 billion from own power plants. Current expenditure (welfare and administrative) will be Rs265 billion.

The government’s development priorities are right, people say, but they doubt it will be able to meet its defined goals. Our successive governments have failed to create jobs thus leaving Pakhtuns searching for even menial jobs in other provinces or abroad, they argue. Most of the development funds for the outgoing year largely remain unutilised, claims an industrialist.

Various hydel and alternate energy projects are being launched — Rs7 billion have been allocated to construct 350 small dams, while 400 megawatts of electricity will be produced through gas whose cheap energy will be given to industries.

The public-private partnership act has been approved. The private sector would be involved in the construction and maintenance of public sector development projects. New industrial zones will be established but there is no plan for the revival of the sick industrial clusters like Gadoon Industrial estate.

Various hydel and alternate energy projects are being launched — Rs7 billion have been allocated to construct 350 small dams, while 400 megawatts of electricity will be produced through gas whose cheap energy will be given to industries.

Zahidullah Shinwari, the president of the KP Chamber of Commerce and Industry, terms the budget a status-quo budget devoid of any vision and reform agenda. “KP is beset with flight of capital, rising unemployment, terrorism and energy shortage. Joblessness is on the rise — there is 14.8 per cent unemployment in Khyber Pakhtunkhwa against around 9.5 per cent at national level.”

“Emergency steps were needed for economic growth, industrial revival, infrastructure development, energy supply, revival of sick industrial units and improvement in law and order, but there is no proper roadmap. The government has failed to give new mineral, industrial, hydel, oil/gas and tourism policies reflective of its change agenda,” he said.

There is contradiction in the figures. The finance minister said the current ADP has 611 on going and 378 new projects of which 209 will be completed this fiscal. The remaining and ongoing project are therefore 780. But he said the next budget will have 1251 projects including 611 ongoing and 540 new projects.

In education sector, the government will upgrade schools, establish IT laboratories in high schools, provide furniture to 2300 schools, provide sports facilities in 2400 schools, provide scholarships to talented students and offer free education to special persons in all colleges of the province.

Agriculture is the mainstay of livelihood for over 70 per cent of KP people, acknowledges the minister, but for 46 projects, only Rs1.58 billion have been allocated. While the allocation has been marginally increased, it has in fact come down as percentage to the ADP — while the current year’s allocation was 1.8 per cent of local ADP, the new apportionment is 1.5 per cent.

In Rs39 billion foreign component of ADP, education again was the major beneficiary with Rs11.7 billion, followed by Rs7.6 billion for roads for five projects but agriculture gets only Rs0.8 billion, energy Rs2.6 billion and industries Rs1.6 billion.

The poverty and inability of farmers to use enough quality inputs to raise their produce is the biggest hitch, the minister says, but he comes up with only loans on easy terms for them.

The PTI fans and even some ministers are taking pride in ‘a record increase’ in education spending to Rs111 billion but critics say most of the allocation (over Rs80 billion) comprises current budget which is but natural for being the biggest employees-wise department of the province.

The detailed expenditure report for the current year also reveals that vital social and economic sectors of the ADP like social welfare, education, agriculture, energy/power and industries had been allocated Rs0.6 billion, Rs24 billion, Rs1.53 billion, Rs2.2 billion and Rs4.4 billion respectively, but actual utilisation remained at Rs.2 billion, Rs3.72 billion, Rs0.63 billion, Rs0.65 billion and Rs1 billion in this fiscal.

In a bid to increase KP’s own revenue receipts, the government intends to raise the ratio of provincial taxes and fees on stamp duty, professionals and professional institutions, business establishments, agriculture income and salaries. The rise in taxes/fees is expected to hit the consumers ultimately for it will be passed on to them. Strangely, a PTI-led government is to tax educational institutions including medical, engineering and law colleges.

As per the Finance Bill 2014-15, an annual tax of Rs330 will be levied on a person in any profession and trade who earns between Rs10,000-Rs20,000. While a person earning between Rs200,000-Rs500,000 will pay tax of Rs10,000.

The employees of grade 1-5 have been exempted from the tax and the minimum professional tax threshold has been increased from Rs6000/pm to Rs10000 a month which, the finance minister said, will provide relief to low income class. But does the assertion hold any ground on the face of the fact that minimum monthly pay has been already fixed at Rs12000/pm.

Twelve categories are suggested for urban immovable property (UIP) tax. For technical education, Rs3.7 billion have been allocated and a technical university will be established. Rs2.7 billion have been earmarked to give interest-free loans of Rs50,000-200,000 to jobless youth on their personal guarantee.

The government proposed ‘several austerity measures’ to bring down expenditure. No foreign treatment/training, no new cars and no posts to be allowed unless approved by the chief minister.

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ORIGINAL TEXT OF THE ARTICLE AS IT WAS SENT TO THE NEWS

KP budget 2014-15

By Tahir Ali

The Pakistan Tehreek-e-Insaf-led Khyber Pakhtunkhwa government presented its balanced budget for 2014-15 with an outlay of Rs404.8bn last week.

The Rs139.8bn annual development programme is 20 per cent higher than the current year. It also includes Rs39bn foreign component of which 79 % are grants.

The KP finance minister Sirajul Haq says KP has abundant human and natural resources but its population is living under poverty and backwardness for unfair distribution of resources, flawed planning, joblessness, illiteracy, corruption, nepotism, weak accountability system and lack of good governance. He pledged making KP free of social, political and economic exploitation.

Major revenue receipts include Rs227.12bn federal tax assignments, Rs12bn net hydel profit plus Rs32.27bn as NHP arrears, Rs29.26bn oil/gas royalty, Rs27.29bn war on terror grant Rs35.35bn as foreign assistance besides some others sources.

KP’s own revenue receipts estimated at Rs29bn (up by 70 per cent against the current year) include Rs19.45bn tax receipts and non tax receipts of Rs9.3bn. Rs12bn as GST on services which rose by 100 per cent is inclusive of tax receipts. The province also earns Rs2.85bn from own power plants.

Current expenditure (welfare and administrative) will be Rs265bn. It needs to be checked or it will in future restrict room for development portfolio.

The government’s development priorities are right, people say, but they doubt it will be able to meet its defined goals. Our successive governments have failed to create jobs thus leaving Pakhtuns searching for even menial jobs in other provinces or abroad, they argue.

Most of the development funds for the outgoing year largely remains unutilised, claims an industrialist.

The public private partnership act has been approved. The private sector would be involved in the construction and maintenance of public sector development projects.

New industrial zones to be established but there is no plan for the revival of the sick industrial clusters like Gadoon estate.

Various hydel and alternate energy projects being launched. Rs7bn have been allocated to construct 350 small dams. 400 megawatts of electricity will be produced through gas whose cheap energy will be given to industries.

To bring down poverty and accountability, the government has promulgated the right to information law and established a commission for access to information, access to services’ commission and conflict of interest commission, ihtesab commission, a complaint cell in CM secretariat. And a public procurement regulatory authority established to make the procurement system of hiring of services, goods and construction transparent and corruption free and introduced the market rate system instead of the composite scheduled rates to ensure transparency in development schemes. .

Zahidullah Shinwari, the president of the KP chamber of commerce and industry terms the budget a status-quo budget devoid of any vision and reform agenda.

“KP is beset with flight of capital, rising unemployment, terrorism and energy shortage. Joblessness is on the rise –there is 14.8 percent unemployment in Khyber Pakhtunkhwa against around 9.5 percent at national level. Emergency steps were needed for economic growth, industrial revival, infrastructure development, energy supply, revival of sick industrial units, improvement in law and order, focus on technical and IT education but there is no proper roadmap for the areas. The government has failed to give a new mineral, industrial, hydel, oilg/gas and tourism policies reflective of its change agenda,” he said.

There is contradiction in the figures. The finance minister said the current ADP has 611 on going and 378 new projects of which 209 will be completed this fiscal. The remaining and ongoing project are therefore 780. But he said the next budget will have 1251 projects including 611 ongoing and 540 new projects.

In education sector, the government will upgrade schools, establish IT laboratories in high schools, provide furniture to 2300 schools, provide sports facilities in 2400 schools, provide scholarships to talented students and offer free education to special persons in all colleges of the province.

In Rs100bn provincial ADP, Education got Rs15bn but important economic sectors have been allocated paltry sums: Rs3.4bn for power sector against Rs1.4bn in current year, Rs4.7bn against Rs3.28bn for irrigation and agriculture Rs1.58bn against Rs1.53bn in current year.

Agriculture is the mainstay of livelihood for over 70 per cent of KP people, acknowledges the minister, but for 46 projects, only Rs1.58bnn have been allocated. While the allocation has been marginally increased, it has in fact come down as percentage to the ADP – while the current year’s allocation was 1.8 per cent of local ADP, the new apportionment is 1.5 per cent.

In Rs39bnforeign component of ADP, education again was the major beneficiary Rs11.7bn, followed by Rs7.6bn for roads for five projects but agriculture gets only Rs0.8bn, energy Rs2.6bn and industries Rs1.6bn.

The poverty and inability of farmers to use enough quality inputs to raise their produce is the biggest hitch, the minister says, but he comes up with only loans on easy terms for them.

The PTI fans and even some ministers are taking pride in ‘a record increase’ in education spending to Rs111bn but critics say most of the allocation (over Rs80bn) comprises current budget which is but natural for being the biggest employees-wise department of the province.

The detailed expenditure report for the current year also reveals that vital social and economic sectors of the ADP like social welfare, education, agriculture, energy/power and industries had been allocated Rs0.6bn, Rs24bn, Rs1.53bn, Rs2.2bn and Rs4.4bn respectively but actual utilisation remained at Rs.2bn, Rs3.72bn, Rs0.63bn, Rs0.65bn and Rs1bn could be utilised in this fiscal.

In a bid to increase KP own revenue receipts, the government intends to raise the ratio of provincial taxes and fees on stamp duty, professionals and professional institutions, business establishments, agriculture income and salaries. The rise in taxes/fees is expected to hit the consumers ultimately for it will be passed on to them. Strangely, a PTI-led government is to tax educational institutions including medical, engineering and law colleges.

As per the Finance Bill 2014-15, an annual tax of Rs330 will be levied on a person in any profession and trade who earns between Rs10,000-Rs20,000. While a person earning between Rs200,000-Rs500,000 will pay tax of Rs10,000. There are such slabs.

The employees of grade 1-5 have been exempted from the tax and the minimum professional tax threshold has been increased from Rs6000/pm to Rs10000 a month which, the finance minister said, will provide relief to low income class but does the assertion hold any ground on the face of the fact that minimum monthly pay has been already fixed at Rs12000/pm.

Twelve categories are suggested for urban immovable property (UIP) tax. An owner of upto 5 marlas house (other than self-occupied) in category A, B and C will pay Rs1000, Rs 900 and Rs750 in UIP respectively. Owners of over 5 marlas will pay UIP tax of Rs1700, Rs1600 and Rs1500, owners of 10 marlas will pay Rs2200, Rs2100 and Rs2000, owners of 15 marlas house will deposit Rs3300, Rs3200, and Rs3000 while those with 18-20 marlas houses and flats will pay UIP tax of Rs10000, Rs9000 and Rs8000 in the three categories respectively. Similarly other eight categories have different tax slabs for the immovable properties.

For technical education Rs3.7bn have been allocated and a technical University will be established. Rs2.7bn have been earmarked to give interest free loans of Rs50,000-200,000 to jobless youth on their personal guarantee.

The mineral sector could be used for poverty alleviation but only Rs0.62cbn have been allotted to it in the ADP.

The government intends to set up stock exchange in Peshawar to support the progress of industry and trade sectors.

The government proposed ‘several austerity measures’ to bring down expenditure. No foreign treatment/training, no new cars and no posts to be allowed unless approved by CM. But he didn’t specify what happened to similar measures in the current budget. The minister said the government has formed committees for monetization and economy which are working with far reaching consequences, though he failed to identify any.

The construction of houses for officials and ministers on 20 marlas and 110 per cent raise in salaries of minister, advisors etc however is being resented.

Rs7.9bn has been allocated for a pro-poor initiative under which various welfare programs, such as health insurance, long-term loan for development of industries, and provincial youth technical education scheme etc would be launched. Rs6bn more allocated for a special relief package program for giving subsidized edible items to the poor.

The education budget was Rs13.87bn in current fiscal while this year it will be Rs14.31bn for the next year.

 

 

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