• Salaries of govt employees raised up to 35pc, pensions by 17.5pc • 43 provincial taxes cut to promote business activity • All populist, election-related measures set to increase non-development expenditure

QUETTA: With an eye on the upcoming elections, the Chief Minister Mir Abdul Qadoos Bizenjo-led Balochistan government on Monday presented a populist budget for the fiscal year 2023-24, envisaging an expansionary spending plan of Rs750.5 billion that carries a record development stimulus of Rs313.3bn in spite of a resource crunch.

The budget presented by Finance Minister Zamaruk Khan Achakzai proposed to raise the pay of government employees by 35pc for BPS-1 to BPS-16 and 30pc for BPS-17 to BPS-22, while pensions have been increased by 17.5pc in line with the federal decision. The minimum wages have been revised up to Rs32,000 a month.

Other important populist measures announced in the budget included creation of 4,389 government jobs, laptop and scholarship schemes for students, allocation of Rs5.5bn for health cards, launch of 5,068 new infrastructure development schemes, upgrade of nine district headquarters hospitals as teaching hospitals, upgrade of teachers’ posts, subsidies for farmers on purchase of bulldozers, tractors and seeds, provision of subsidised wheat flour and interest-free loans for wheat purchases.

The government also announced significantly generous cuts in 43 provincial taxes for promoting business activity.

The new incentives include a reduction in services tax on hotels from 15pc to 4pc and on health-related services from 15pc to 2pc. For education services, the tax rate has been fixed at Rs3,000 a month instead of existing 15pc.

Likewise, the tax on X-ray, MRI, ultrasound, CT scan machines and lab tests has been reduced to 2pc from standard 15pc tax.

• Salaries of govt employees raised up to 35pc, pensions by 17.5pc • 43 provincial taxes cut to promote business activity • All populist, election-related measures set to increase non-development expenditure

All the populist, election-related policies are billed to increase the non-development expenditure next year, bringing more pressure on the scarce resources available to the government for development and essential expenditure.

The mismatch between the projected cash receipts and planned expenditure in the budget shows that the province will struggle to cover a deficit of over Rs49bn through the year despite cutting its development stimulus.

The Balochistan Awami Party government had to slash the provincial share in the development programme by nearly a third from the original estimates of Rs192.4bn to Rs127.6bn during the outgoing year due to a resource crunch that saw the exaggerated projected receipts drop by almost 12pc from Rs613.6bn to Rs541bn.

The reduced development programme notwithstanding, the government succeeded in curtailing the operational budget deficit only partially to Rs37.5bn.

The next year is not expected to be any different. The new budget expects to receive the bulk of financial resources though federal transfers of Rs520.8bn, up by 30.6pc year-over-year, almost stagnant provincial own tax and non-tax receipts amounting to Rs112bn, and foreign development loans of Rs12.4bn.

The capital receipts are projected to be Rs34.7bn, while the cash carryover is estimated at Rs10.4bn.

The provincial own tax receipts are estimated to rise to Rs37.6bn from Rs34.7bn year-over-year despite lower than the target collection of Rs29.8bn this year. The non-tax revenue target is based on Rs55bn in receipts, including the Sui gas fields lease extension bonus. The same amount was budgeted this year but it did not materialise.

On the spending side, the non-development expenditures are estimated to soar by 19.5pc from Rs365.7bn to Rs437bn and the development programme is projected to rise by 19.2pc from Rs246.9bn to Rs313.3bn year-over-year. Overall, the total expenditure will grow by 22.5pc from Rs612.6bn to Rs75.5bn.

The government plans to finance its development stimulus from the provincial resources of Rs229.3bn and foreign assistance of Rs12.4bn. Additionally it hopes federally funded projects of Rs44.7bn to complement its development effort next year.

This year, the size of the federally funded projects was slashed to Rs20.4bn from the projected Rs39.6bn due to acute cash crunch facing the federal government.

In his budget speech, Mr Achakzai spoke in great length on how the present Bizenjo government was making efforts to improve the lot of the people of Balochistan in spite of cash crunch. “From the very first day, this government has strived to create employment opportunity for the youth, provided food subsidy to the people during Ramazan, facilitated new Reko Diq agreement, helped the flood-affected communities, launched Sehat and Kissan cards, upgraded teachers’ posts, reinstated communication & works department employees, digitised land revenue record, implemented financial reforms and so on and on.”

He said the biggest challenge for the government was to execute the development programme in the face of a severe resource crunch. “We slashed our non-development expenditure as much as we could and ensured the release of record funds of Rs127.6bn this year.

We also ensured that social productive sectors get the required funds, and that no part of the province was ignored. There is no segment of population for which whose well-being we have not taken measures,“ he claimed.

Published in Dawn, June 20th, 2023