PESHAWAR: The Khyber Pakhtunkhwa government is likely to slash its budgetary allocations by Rs 79.23 billion for the next financial year due to the financial crunch resulting from the revenue overestimation in the current budget.
This has been suggested in the draft Budget Strategy Paper-II (BSP-II). The estimates contained in the draft BSP-II have been further slashed compared to BSP-I prepared in April. The BSP-I predicted a 10 percent decrease in budgetary allocations for the next year but BSP-II has increased the cut up to 16 percent.
It says the province’s revenue proceeds for ongoing year are likely to be around Rs 404.021 billion against budgetary target of Rs 487.88 billion. The BSP-I had put revenue proceeds at Rs437 billion. A provincial official said that budget will get definite shape after the province’s share in federal divisible pool is clear.
The estimated total revenue for next year has been set at Rs 408.646 billion. This is based on the expectations that the province will get Rs 309.424 billion from the federal government, while the province’s own tax and non-tax revenue will contribute another Rs 32.338 billion.
The paper also said that the stagnant economic condition of the province will continue to impinge upon the efforts of the provincial government to enhance its revenue. “A decrease of about 40 percent is expected in provincial revenues,” it said. It also said that the two major sources which had caused significant increase in budget estimates for non-tax revenue for the current year are housing and forest sectors.
They could not be realised which made significant downward revisions inevitable and put the projections at substantially low levels than the expected figures. The province is likely to get Rs 18.7 billion as Net Hydel Profit (NHP) and an additional Rs 15 billion as NHP arrears. The total expenditures are estimated to be around Rs 316.558 billion which includes salary budget of Rs 79.632 billion, pension outlay of Rs 42.326 billion and transfers to local government of Rs 112.242 billion.
The paper said that the total current budget for the year 2016-17 is likely to increase by six percent as compared to the ongoing year and a progressive increase of 10 percent is also expected for subsequent two years. It said that the development partners of the province will continue to maintain their commitments for the socio-economic development in the province.
The province’s Annual Development Programme (ADP) is likely to get the worst hit with the province’s revenue problems. The document allocates Rs 75.578 billion to the next year’s development. The projection is a massive cut of Rs 100.297 billion compared to ongoing year budget. Volume of ongoing ADP stands at Rs 174.884 billion and BSP-II says that actual volume of ongoing would stand by Rs 149.267 billion.
Earlier Planning and Development (P&D) department had decided to cut the ongoing ADP by Rs 29 billion. The document estimates that the ADP’s provincial component will be around Rs29.892 billion, district component will be at Rs12.811 and foreign project assistance at Rs32.884 billion. Volume of provincial ADP stands at Rs 111.776 billion and district ADP at Rs 30.274 billion. Officials at the P&D and finance departments said that the APD has not been finalized yet.
An official said that the P&D Department was waiting for the receipt of the budgetary ceilings from the finance department to formulate the final ADP. However, a finance department official said that a word on the volume of receipts was awaited from the federal government, which will determine the provincial budget making. “The budget will get a definite shape once we have an idea of the province’s share in the federal divisible pool,” he said.
