KARACHI: Following are the salient features of Sindh government's budget for the fiscal year 2015-16.
Receipts of the province :
The total receipts of province for financial year 2015-16 are estimated at Rs 726.57 billion as against budget estimate of Rs 672 billion for the current fiscal year; showing overall increase of 8.1 per cent.
Receipts from Federal Government on account of revenue assignment, straight transfers and grants are estimated at Rs 494 billion, which constitute 68 % of total receipts of the province.
It is an increase of 4.2 % against the estimated amount of Rs 474 billion last year.
Straight transfers for next fiscal year have decreased substantially by 25.6% to Rs 61 billion from the budget estimates of Rs 82 billion of the current fiscal year.
The receipts from federal public sector development programme (PSDP) are estimated at Rs 9.6 billion; showing significant decrease of 57% over the budget estimates of RS 22.47 billion in the current fiscal year 2014-15.
The receipts on account of foreign project assistance (FPA), budgetary support loans and grants, are estimated at Rs 47.473 billion.
The receipts from provincial own sources on account of tax and non-tax receipts are estimated at Rs 144 billion, which constitute 19.7% of total receipts. This is an increase of 15.2 % over estimates of Rs 125 billion of the current fiscal year.
The receipts from repayment of loans and borrowings are estimated at 11.489 billion.
Expenditure of the province :
The total budget outlay for financial year 2015-16 is estimated at Rs 739.3 billion, as against budget estimate of Rs 686 billion for current fiscal year, showing overall increase of 7.7%.
The current expenditure of the province is projected at Rs 525.6 billion, which includes current revenue expenditure of Rs 503 billion and current capital expenditure of Rs 22 billion. This is 71% of total expenditure of the province and shows an increase of 11.6% over estimates of Rs 470.8 billion for last year.
The development expenditure of the province is estimated at Rs 213.6 billion which includes provincial ADP of Rs 177 billion including development financing through VGF, FPA of Rs 26.9 billion and federal PSDP of Rs 9.6 billion.
Current revenue expenditure is projected at Rs 503.34 billion against budget estimates of Rs 436.09 billion for current fiscal year, indicating increase of 15.4% and it constitutes 68% of total expenditure.
The increase is due to raise in salaries, significant increase in non-salary expenditure of health, education and law enforcement agencies, increase in grants in aid to non-financial institutions and allocations for payment of electricity liabilities.
Current revenue expenditure (CRE) of the province includes the salaries of government employees (Rs 232 billion; 46% of CRE), pension and gratuity of retired employees (Rs 46 billion; 9% of CRE), operational expenses including utilities (Rs 85.82 billion; 17% of CRE), grants and subsidies including grants to local bodies and health and educational institutions (Rs 91.1 billion; 18% of CRE), repair and maintenance of roads, buildings, furniture and machinery and equipment (Rs 20 billion, 6.55% of CRE) and other major head including interest payments, transfer payments and physical assets (Rs 28 billion; 5.56% of CRE).
The total allocation for SNE is RS 9.1 billion, which includes creation of 14,242 new posts at an estimated cost of Rs 2.4 billion.
Other Major Objects (Interest Payment, Transfer Payment, M&R, Physical Assets, Civil Works)
The core thematic concerns of this year's budget are the improved service delivery across all sectors, beefed up security to ensure peace and socio-economic harmony, education and women empowerment, uplift of health care for Sindh, energy generation, building sturdy infrastructure, enhanced public-private partnership Initiatives. In the upcoming fiscal year 2015-16, a legitimate priority has been assigned to step up the public service delivery machinery with our foremost thrust on education, health, energy, law and order, irrigation, women empowerment and minorities.
Education:
Sindh government attaches top most priority to education. This is evident from the fact that it leads in terms of resource allocation with a share of 28.65% in total current revenue expenditure {BE 2015-16}.
The budget estimates for current revenue expenditure for education including medical education and technical education have been enhanced from Rs 134.37 billion in the current fiscal year to Rs 144.67 billion for the next year, showing an increase of 7.6 %.
This includes grants for universities and educational institutions, which are proposed at Rs 6.12 billion in next budget as against current fiscal year allocation of Rs 5.89 billion.
For the next financial year the volume of the annual development programme (ADP) has been increased to Rs 13.2 billion, including Rs 2 billion kept separately for boards and universities, 1 billion for STEVTA and Rs 200 million for special education.
Besides provincial ADP, Rs 2.616 billion have been allocated for foreign funded projects of education department, which include Sindh Basic Education Programme (Rs 2.113 billion; USAID) and upgrading primary schools into elementary schools in rural Sindh (Rs 0.5 billion ; JICA).
For better management of schools, 1484 new posts have been created in education department, which includes creation of 1300 posts for Head Masters/Mistresses.
With an objective to ensure availability of teachers and to eliminate the menace of ghost teachers and ghost schools, through better monitoring and evaluation, Rs 200 million have been earmarked for provision of physical assets including vehicles for school management cadre.
Benazir Bhutto Shaheed Youth Development Programme (BBSYDP) is on its way to step up the process of skill augmentation of around 100,000 youth in diverse disciplines. Health:
The current revenue expenditure of health excluding medical education and population welfare has been significantly increased by 32% from Rs 43.48 billion in the current fiscal year to Rs 54 billion in next financial year.
In addition to allocation for health, Rs 3.94 billion have been allocated for medical education as against budget estimates of Rs 3.36 billion showing yearly increase of 17.26 %; and Rs 3.4 billion have been earmarked for population welfare.
The next year's ADP of health is pitched at Rs 13 billion, which includes Rs 10.063 billion for on-going schemes and Rs 2.937 billion for new schemes.
This is almost 35% higher than the released amount in the current fiscal year.
Besides provincial ADP and Federal PSDP, Rs 2.38 billion have been allocated for foreign funded projects of health department, which are nutrition support programme of Sindh (Rs 1.385 billion; IDA) and establishment of Child Health Care Institute at Sukkur (Rs 1 billion; Korea).
The grants to acclaimed health institutions like Sindh Institute of Urology and Transplantation (SlUT) (Rs 3 billion), GIMHS (Rs 1.867 billion), National Institute Cardiovascular Diseases (NICVD) (Rs 1.1 billion), Peoples Public Health Initiative (PPHI) (Rs 3.225 billion), Indus Hospital Karachi (Rs 300 million), Institute of Medical Science Jacobabad (Rs 500 million) and other health institutions has been significantly increased by 105% from Rs 6.46 billion in current financial year to Rs 13.26 billion in the next financial year.
This includes new grants of Rs 10 million for Kidney Centre, Rs 35 million for LBRT and one time grant of Rs 2.3 billion for liver transplant at SlUT Sukkur Complex in the next financial year. This is in addition to Rs 500 million provided during current fiscal year.
Grant for PPHI Sindh has been significantly increased by 19% from Rs 2.73 billion in the current fiscal year to Rs 3.255 billion In the next fiscal year to improve primary health care services in rural areas of Sindh.
For elimination of the menace of polio, thalassemia and kidney failure, an allocation of Rs 412 million is proposed for remuneration of polio workers, Rs 250 million for treatment of thalassemia and Rs 250 million for dialysis.
For ensuring availability of services of qualified surgeons, physicians and specialists in the DHQs and THQs, especially in remote areas, an amount of Rs 500 million has been earmarked for their hiring on market pay packages on contract basis.
For procurement of equipment and machinery for existing hospitals in Sindh, an amount of Rs 500 million has been allocated for the next financial year.
A few vital initiatives of the Sindh Government in the health realm include the founding of SlUT multi-organ transplant and biological centre at Karachi, construction of Talib-ul- Moula Medical College and Teaching Hospital at Hala and equipment for the new 580 bedded surgical complex at Jinnah Postgradue Medical Centre (JPMC).
For beating starvation and under-nourishment, particularly among children in Thar, a nutrition support programme has been launched, which is to be piloted in 9 districts at a cost of Rs 5 billion in collaboration with World Bank.
Furthermore, mobile emergency health care unit project will pave way for mobile operation theatre facility, Intensive Care Unit (ICU) facility with 4 beds, Outdoor Patients Department (OPD), cardiac treatment and immunisation. 16 such units will be made functional by next year with a cost of Rs 1.2 billion.
Law and Order :
The Government has accorded premier precedence to the law and order issues of the province, for which, it has allocated Rs 65.33 billion. Out of this figure, Rs 61.82 billion have been allocated for the Sindh Police, Rs 2.43 billion for the Rangers and Rs l.05 billion for the Frontier Constabulary and Rs 1.52 billion for training and research in law and order.
For consolidating and fortifying the law enforcing agencies, 10,030 new vacancies are being created in Sindh Police through sanctioned new expenditures (SNE) 2015-16.
During the fiscal year 2014-15, 10,025 new vacancies had been created in Sindh police and it is highly commendable that for the first time to attend to the long ensuing grievance of Sindh police, 132 posts of DSPs were released for promotion which has bestowed a proper career path upon the provincial police.
Rs 6.23 billion have been allocated in the financial year 2015-16 to equip our police with state-of-the-art operational and security paraphernalia such as bullet- proof police mobiles, fortified jackets, solid helmets, arms and ammunition and close circuit television (CCTV) cameras.
The Government has also allocated Rs 500 million in financial year 2015-16 for the expansion of security surveillance system in Karachi. In addition, security and surveillance cameras in eight districts of Sindh including Larkana, Hyderabad, Ghotki, Kashmore, and Matiari have been upgraded.
Energy :
This year, we have earmarked Rs 16.5 billion for annual development programme (ADP) of energy sector which is reflective of our Government's commitment to its coal, wind and other energy projects.
Five projects of 20 MW each have been etched in PPP mode for solar based power generation facilities at Thatta, Benazirabad, Sukkur, Jamshoro and Larkana districts.
With a view to realise the vision of generating 10,000 MW from Thar Coal by 2020, the Government of Sindh is crafting a conducive environment for foreign direct investment, through the development of both physical and institutional infrastructure.
MOUs with some investors have been signed up while the rest are in pipeline.
The energy department has also entered PPP ventures and the upshot is Sindh's first gas- based project, Sindh Nooriabad Power Project of 100 MW which is likely to start off by early 2016. Nevertheless, the Federal Government's cooperation is essential as its support will go a long way in realising this project.
An allocation of Rs 300 million has been earmarked for the maintenance and repair of RO plants in Districts Tharparkar, Thatta, Badin and Sajawal.
Irrigation :
Being a predominantly agrarian economy, Sindh Government has taken utmost efforts to optimise its output level. Irrigation Department has been galvanised to initiate both long term as well as short term development plans such as rehabilitation of barrages, rehabilitation, protection and capacity enhancement of irrigation and drainage networks.
Budget Estimates for Current Revenue Expenditure of Irrigation Department are estimated at Rs 17.685 billion as against current fiscal year allocation of Rs 15.974 ; this indicates increase of 10.7%.
The allocation for ADP 2015-16 is Rs 12 billion, out of which Rs 8.964 billion is for on-going schemes, whereas Rs 3.035 billion is for new schemes.
Two new special projects are also being planned. One is the lining of the Rohri Canal at a cost of Rs 9.14 billion and other is the lining of Jamrao Canal at an estimated cost of Rs 9.535 billion.
Government of Sindh is also executing 15 development programmes funded by the Federal Government, costing Rs 1020487 billion.
In addition to provincial ADP of Rs 12 billion for financial year 2015-16, foreign project assistance of Rs 90457 billion will be available to irrigation department for rehabilitation and modernisation of Guddu Barrage, Sindh Water Sector Improvement Project and procurement of machinery for rehabilitation of infrastructure.
Agriculture :
Current revenue expenditure of agriculture department has been increased by 5.79% to Rs 5.482 billion in next financial year as against Rs 5.182 billion in current fiscal year.
The annual development programme (ADP) for the next financial year is pitched at Rs 4.5 billion. Out of which Rs 3.976 billion is the allocation for on-going schemes and Rs 0.532 billion is for new schemes.
Besides provincial ADP, Rs 4.24 billion have been allocated for foreign funded projects of agriculture department, which are Sindh Agriculture Growth Project and Sindh Irrigated Agriculture Productivity Enhancement Project.
Local Government, Research and Development, and Public Health Engineering (PHE) :
Local Government and PHE Department, and Local Bodies stand at fourth in terms of resource allocation with a share of 10.5% in current revenue expenditure.
Rs 52.457 billion has been allocated in next fiscal year for Local Government and PHE Department, which includes Rs 47.3 billion grants to local bodies.
The grant of Rs 47.3 billion includes performance grant of Rs 4 billion, which will be distributed among the local bodies of the notified criteria of performance in delivery of municipal services.
Provincial ADP of Rs 18.76 billion have been allocated in the next year for Local Government, Rural Development and Public Health Engineering Department.
Greater Karachi Bulk Water Supply Scheme K-IV has been envisioned at a cost of Rs 25.522 billion with 50% share of Government of Sindh to address the water shortage issues of Karachi.
Presently, Karachi is drawing 1200 cusecs {650 MGD} approved quota of water from Indus which is scarce for a mega-polis of Karachi's magnitude.
K-IV project is planned for additional 1200 cusecs (650 MGD) in three phases. Rs 2.5 billion have been earmarked for this project in the fiscal year 2015-16.
Besides, Rs 6.12 billion have been earmarked under foreign funded project for improving municipal service delivery, which includes Sindh Cities Improvement Programme (Rs 3.87 billion; ADB) and Municipal Service Delivery Programme (Rs 2.25 billion; USAID). With an objective to make our surroundings hazard-free and uncluttered, Sindh Solid Waste Management Board has been set up.
The Board will set the ball rolling for Integrated Municipal Solid Waste Management Projects which will launch mechanical sweepers, methodical door to door collection of garbage, complete prohibition of plastic bags and garbage burning, and transportation of waste from community dustbins to garbage transfer stations.
Works and Services :
During the fiscal year 2014-15, construction of 387 kms of new roads and improvement over 410 km of existing ones have been expedited. Foreign aided projects of 84 kms of roads have also been accomplished. This entire developmental hallmark has been achieved with a cost of Rs 10 billion.
The proposed allocation under the road sector in the ADP of fiscal year 2015-16 is around Rs 8.54 billion.
The government has set its target to complete 314 schemes with a total length of 2760 kms in fiscal year 2015-16 against 40 schemes in the current fiscal year.
ln addition to provincial ADP, Rs 1.211 billion have been allocated for foreign- funded development projects of roads sector, which include construction of Nawabshah-Sanghar Road (Rs 1 billion; Chinese loan) and Japanese Assisted Rural Roads Construction Project (Rs 211.5 million; JICA).
Transport :
Responding to the ever- escalating transportation needs of Karachi, 4 Rapid Bus Transit projects have been chiseled out.
The BRT Yellow Line project is in progress in the PPP mode with an estimated cost of Rs 13 billion. Its route is 26 kms long and it will facilitate 150,000 commuters per day.
The BRT Orange Line Project is being carried out under the ADP at a cost of Rs 2.36 million.
The BRT Green Line Project is to be funded by the Federal Government, while BRT Red Line Project will be implemented through ADP with an estimated cost of Rs 15 billion for which Rs 2 billion have been allocated in fiscal year 2015-16.
Government of Sindh is also fully committed to the revival of Karachi Circular Railway Project in collaboration with JICA.
KCR will have a dual track of 43.3 km with 24 stations at an average distance of 1.5 km. The estimated cost of the project is $ 2.6 billion and the JICA mission is expected for negotiations and signing of loan agreement during fiscal year 2015-16.
Public Private Partnership :
For getting Sindh Government moving on a fast learning curve by steeping it in private sector expertise and competence, public private partnership initiates have been stepped up. This paradigm shift was successful to the hilt with Hyderabad- Mirpurkhas Dual Carriageway at a cost of Rs 6.5 billion.
Jhirk- Mullah Katiar Bridge is another success story in the making, with an estimated cost of Rs 4.2 billion and is scheduled to be wrapped up in fiscal year 2015-16.
The Health Department also signed up a management contract under PPP mode for outsourcing the safety and security of National Institute of Child Health in Karachi.
Division-wise Development Expenditure : Karachi Division :
A comprehensive programme for developmental needs of Karachi has been planned and the government has allocated Rs 49.736 billion for development schemes in next financial year 2015-16.
The Government of Sindh has planned mega projects in the area of transport, water supply and sewerage, and waste management in the metropolis.
Hyderabad Division :
Rs 37.56 billion (including District ADPs) have been allocated for Hyderabad Division. Sukkur Division:
For next financial year 2015-16, Rs 27.346 billion have been proposed for Sukkur Division to execute on-going and new development schemes.
Larkana Division:
In next years' ADP 2015-16, an amount of Rs 33.586 billion has been proposed for ongoing and new schemes of Larkana division. Mirpurkhas Division:
For the next ADP-2015-16, Rs 34.584 billion for executing ongoing and new schemes have been proposed. Benazirabad Division:
In the next year ADP 2015-16, Rs 18.015 billion have been proposed for ongoing and new schemes.
Pays and Allowances of Government Employees and Minimum Wages in Private Sector :
The Government of Sindh being cognizant of hardship of government employees and pensioners, and workers in private sector has taken the following measures:- 10% Ad-hoc Relief Allowance on running basic pay will be allowed to all Sindh Government employees with effect from July 1, 2015-- Ad-hoc increases of 2011 and 2012 will be merged in the pay scales -- Medical Allowances of all government employees will be enhanced by 25% -- One premature increment will be allowed to employees of grade 5 with effect from July 1, 2015. Last year pre-mature increment was allowed to employees of grade 1 to 4-- A uniform Ph.D. allowance of Rs 10,OOO per month will be allowed to Ph.D./D.Sc. degree holders working under Sindh government with effect from July 1, 2015. This will replace the existing Science and Technology Allowance of Rs 7,500 per month and Ph.D. Allowance of Rs 2,250 per month -- The rates of special pay to Senior Private Secretaries, Private Secretaries and Assistant Private Secretaries are being increased by 100%-- The rate of orderly allowance and special additional pension is also being increased to Rs 12,000 per month-- For the welfare of the labour class and in line with increase in pay of government employees, the minimum wage rate is also being increased from Rs 12,000 to Rs 13,000 per month.
Fiscal Measures :
Sales Tax on Services (STS) - Sindh Revenue Board (SRB)
For further improving collection, SRB has devised a programme to substitute the existing positive list of taxable services with a negative list implying that all services shall be liable to tax except the ones specified in the negative list schedule. This will make the tariff schedule simpler and dispute-free, which, in turn, will reduce litigations and classification disputes.
SRB expects to introduce this negative list schedule during 2015-16. The rate of Sindh sales tax on services is reduced from 15% to 14%. The minimum rate of SST is proposed to increase from 5% to 6%). With this we intend to gradually move towards uniform rate of taxation. The tax on telecommunication sector will be reduced from 19.5% to 18%. There will also be reduction in rate for programme producers from 10% to 6%.
The construction and building industry will be given the option of selecting between higher rate of 14% with input adjustments and lower rate without input adjustments on a financial year basis.
The education and medical services have been exempted from Sindh sales tax on services. These measures are intended for the benefit of the common man. The advertisements in newspapers will also be exempted from tax.
To achieve higher STS target of Rs 61 billion for fiscal year 2015-16, the tax net is proposed to be broadened by bringing those services in the tax net that have not been taxed up till now.
In this context following categories of services will start to be taxed from the next fiscal year : Travel Agents @ 10% (Federal 16%, Punjab 16% KPK 15%)-- Credit rating agencies @ 14% (Punjab 16%)-- Underwriters @ 14% (Punjab 16%) --Indenters @ 14% (Punjab 16%)--Commission Agents @ 14% (Punjab 16%)-- Auctioneers @ 14% (Punjab 16%)-- Dredging and Desilting @ 10% (Punjab 16%)-- Copyright or Intellectual property right Services @ 10% (Punjab 16%)-- Technical inspection and certification services-- Quality control and testing and erection services @ 14% (Fed 16% Punjab 16%)-- Packers and Mover Services @ 14% (Fed 16%)-- Services of Shares / Derivatives / Reg/ Trf/ Custodianship@ 14% (Fed 16%) -- Valuation services @ 14% (Federal 16%) --Services by labs (other than the labs doing pathological/ medical diagnostic tests for patients) @ 14% (Federal 16%) -- Utility Bill Collection by Banks and NADRA @ 14% (Fed 16%) -- Renting of commercial property @ 6% Ready Mix Concrete Services @ 14% or 6% service provider option.
Excise & Taxation :
The rate of Infrastructure Cess collection is proposed to be revised from existing 0.9% - 0.95% to 1% - 1.05% through Finance Act. This will help in collecting an additional Rs 2.5 billion from this Cess for the maintenance and development of infrastructure of the province.
Exemption of Property Tax to the properties, owned by retired government servants, having gross annual rental value up to Rs 48000 is proposed through Finance Act with effect from 30.06.2010. Board of Revenue :
Stamp duty is proposed to be increased on every hundred rupees by 5 paisas on contract and purchase order. We also intend to rationalise the rate of stamp duty on policies of insurance as well as impose duty on transfer of shares of CDC account holders at the rate of one paisa for each share.
This will result in an additional revenue generation of Rs 175 million. Governance Reforms :
Government of Sindh has initiated governance reforms with the assistance of World Bank and European Union to address systematic weakness and missing links in the Public Financial Management such as credibility of the Budget, budget predictability, policy-based budgeting, transparency, predictability, accounting and reporting. With the approval of provincial cabinet and Chief Minister Sindh, Syed Qaim Ali Shah. Government is implementing Sindh Tax Revenue Mobilisation Plan and Public Financial Management Strategy (PFMS) with the overall objective of revenue mobilisation and expenditure management. Sindh Tax Revenue Mobilisation Plan (STRMP) :
Sindh Tax Revenue Mobilisation Plan (STRMP) envisages establishment of tax reform unit in Finance Department for evidence based tax policy formulation, administration and coordination; re-engineering and simplification of business process with the use of leT to enhance tax revenues, tax-payer education and facilitation to increase tax base, and policy dialogue to create and sustain tax reforms. Public Financial Management Strategy:
Public Financial Management Strategy aims to improve budgeting and planning process, strengthen budget execution, reporting, accountability and transparency.
It also aims at enhancing revenue generation, and strengthening institutional framework for oversight. Budget Strategy Paper :
Government of Sindh, under Sindh Public Sector Management Reform Programme (initiated with the assistance of the World Bank), has for the first time, prepared Budget Strategy Paper 2015-16. The Budget Strategy Paper (BSP) is a three year rolling plan that sets policies and priorities of the government in the medium term.
The paper presents the fiscal performance of the government over the last two financial years and provides an insight into the fiscal performance of current financial year. The BSP project estimates of provincial receipts (from federal government and own resources) and estimates of development and non- development expenditures over the next three years.
The paper also sets out strategic resource allocations and lays down the underlying sub-national macro- economic assumptions.
In a quest to make budgetary process more transparent and participative and to engage elected public representative in budget formulation process well before actual budgetary proposals are firmed up, the Budget Strategy Paper is to be placed before the cabinet every year for its input and recommendations.
The BSP once approved by the cabinet becomes the guiding policy document for consolidation of budgetary proposals. This is a leap forward in the realism of transparency in fiscal policy formulation embedded with spirit of participation and ownership of the stakeholders.
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