• With total outlay of Rs1.7tr, Rs100bn surplus budget proposes Rs416bn for development projects
• 10pc hike in salaries, pensions; minimum wage increased to Rs36,000 per month

PESHAWAR: In an unprecedented move that drew the Centre’s ire, the PTI-led Khyber Pakhtunkhwa government on Friday unveiled its first budget of Rs1.7 trillion for the upcoming fiscal year (FY25) with a development outlay of Rs416 billion mainly focusing on social protection, law and order and economic development.

It is extremely rare for a provincial government to present its budget before the federal government lays out its financial plan, scheduled to be unveiled on June 7 this year.

The budget, presented by KP Finance Minister Aftab Alam Afridi in a provincial assembly session presided over by Speaker Babar Saleem Swati, envisages a surplus of Rs100bn. The budgeted expenditure of Rs1.65tr is 21 per cent higher than Rs1.3tr incurred during the current fiscal year (FY24).

Mr Afridi said an amount of Rs28bn has been allocated for the provincial government’s flagship Sehat Card Plus programme. Similarly, he said Rs29bn has been allocated for wheat subsidy and Rs12bn for three youth employment programmes.

Mr Afridi said Ehsaas Roz­gar, Ehsaas Youth and Ehsaas Hunar programmes will generate 100,000 employment opportunities for the youth.

He said the provincial government has allocated Rs3bn for Ehsaas Apna Ghar scheme under which 5,000 houses would be constructed.

In a major development, the KP government has also allocated Rs10bn for the much-delayed Chashma Right Bank Canal lift-cum-gravity project in Dera Ismail Khan district, the hometown of KP Chief Minister Ali Amin Gandapur. Mr Afridi said this project would resolve the food security issue of the province.

He said the government has earmarked Rs3bn in subsidy for the Peshawar Bus Rapid Transit (BRT).

Centre’s reaction

Minister of State for Finance Ali Pervez Malik came down hard on the PTI-led KP government for announcing the provincial budget before the federal budget for FY25, calling it ‘irresponsible’.

At a press conference in Islamabad, Mr Malik accused the PTI of “bringing the country to the brink of bankruptcy”. “The KP government should have waited for the federal budget announcement,” he said, alleging that Imran Khan’s party is determined to ruin Pakistan’s economy.

He said the KP budget was based on assumptions and hoped that the KP government would “review its behaviour”. He also expressed the hope that Chief Minister Gandapur would cooperate with the federal government and the finance minister.

Salaries, pensions

The KP finance minister announced a 10pc hike in salary and pension for government employees and pensioners, besides increasing the minimum wage from Rs32,000 to Rs36,000 per month.

Budgetary estimates have pitched the province’s receipts at Rs1.7tr, with the federal receipts totaling over Rs1.2tr. Province’s share of federal tax assignment has been pitched at Rs902.5bn, 1pc of federal divisible pool in lieu of war on terror at Rs108.4bn, straight transfers at Rs42.9bn, windfall levy on oil at Rs46.3bn, net hydel profit (NHP) at Rs33.1bn, and NHP arrears at Rs78.21bn.

Province’s own revenue estimates have been projected to be Rs93.5bn, including Rs63.1bn tax and Rs30.2bn non-tax receipts. Similarly, the ways and means advance facility from the federal government has been proposed at Rs31.3bn. In addition to this, Rs259.9bn has been earmarked for federal receipts for the merged districts. This includes current budget allocation of Rs72.6bn, additional de­­mand for current budget at Rs55.3bn, annual development programme (ADP) of Rs36bn, Accelerated Implementa­tion Progra­mme (AIP) of Rs40bn, unfunded Rs39.2bn, 3pc share (Rs17bn) for merged areas and rehabilitation of temporary-displaced persons.

Foreign project assistance has been estimated at Rs130bn, including Rs122.7bn foreign loans and Rs7.8bn donors’ grants. In addition to this, development and non-development grants under the federal Public Sector Development Programme (PSDP) have been pitched at Rs26.4bn.

Expenditures have been estimated at Rs1.23tr, including Rs1.093tr for settled districts and Rs144.5bn for the merged districts. Settled areas’ provincial salary has been pitched at Rs246bn, medical teaching institutions’ (MTIs) salary at Rs26.9bn, tehsils’ salary at Rs263bn, pension at Rs162.4bn, non-salary expenditures at Rs264.7bn, MTI’s non-salary budget at Rs28.68bn, tehsils’ non-salary at Rs29.5bn, capital expenditure at Rs40.3bn and repayment of ways and means advance at Rs31.3bn.

On the other hand, merged districts’ provincial salary has been estimated at Rs52.1bn, tehsils’ salary at Rs42.6bn, pension at Rs4.4bn, non-salary expenditure at Rs418.5bn, temporary-displaced persons’ allocation at Rs17bn and tehsils’ non-salary expenditure at Rs9.8bn.

Development expenditure

An amount of Rs416.3bn has been earmarked for development expenditure for the next fiscal year, including Rs120bn provincial ADP, Rs24bn for districts, Rs36bn for merged districts, Rs79.2bn for the Accelerated Imple­menta­tion Programme, Rs130.5bn for foreign-assisted projects and Rs416bn for federal PSDP projects.

Finance minister Afridi said the provincial government has proposed a drop in sales tax on services in various categories. He said sales tax on hotels has been cut to 6pc from 8pc, but at the same time, restaurant invoice management system has been made mandatory for all hotels.

Similarly, the budget proposes a fixed tax on wedding halls.

Mr Afridi said the government also decided to reduce per kanal property tax to Rs10,000 from Rs13,600. Commercial tax rate on rentals has been reduced to 10pc of the rent from the existing 16pc, while tax on the private hospitals, medical stores and other health-related businesses has been reduced to 5pc from 16pc.

Published in Dawn, May 25th, 2024