Punjab Budget

Punjab Finance Minister Hasnain Bahadur Dreshak has presented a Rs 356.171 billion, tax-free budget for the fiscal year 2007-08 in the Punjab Assembly, that also includes a record development outlay of Rs 150 billion - higher than the outgoing year's allocation of Rs 100 billion. The budget carries a revenue surplus of Rs 112.684 billion. It is being largely seen as the election-year budget, as reflected in the promises of relief for low-income groups and a record ADP outlay.
The total revenue receipts of Punjab government this year have been projected to be 29.9 percent higher than the outgoing year's Rs 274.088 billion, while the expenditure is estimated to be 27.22 percent higher than this year's Rs 191.378 billion.
The ADP includes Rs 93 billion for core provincial development programmes, while the rest has been allocated to special programmes, including special infrastructure, development of Katchi Abadis and development of district and tehsil/town municipal administrations. While no new tax has been levied and the existing ones have not been increased, the provincial tax revenue is projected to be 22.97 percent higher than the Rs 30.343 billion estimated for the outgoing fiscal year, and non-tax revenue is expected to be 41 percent higher than the Rs 42.335 billion estimated for the outgoing year.
Estimates for development/non-development grants are up by 76 percent over the current year's Rs 14.702 billion. The budget carries a Rs 25 billion relief package, including a 15-20 percent increase in employees' salary and pension, discount in electricity bills for agricultural tubewells, aside from Rs 4 billion allocated for cash subsidy to the 642,000 "poorest of the poor," and Rs 3 billion for uplift of 358 Katchi Abadis.
On the expenditure side, the government has increased allocations over the outgoing year's budgetary estimates for general public services by 21.5 percent to Rs 149.765 billion, for public order and safety by 38.87 percent to Rs 34.713 (with Rs 29.449 billion earmarked for police), for economic affairs (agriculture, irrigation, construction, food, transport etc) by 49 percent to Rs 23.182 billion, for health by 22 percent to Rs 7.194 billion, for education and services by 68 percent to Rs 23.745 billion, for social protection by 22 percent to Rs 1.723 billion, and for environment by 4 percent to Rs 27.208 million.
However, the expenditure for housing and community amenities has been squeezed by 57 percent to Rs 2.484 billion. This is clearly a retrogressive step, particularly in view of the growing pressure on housing and civic services in the province. With the current capital receipts estimated at Rs 107.142 billion, up by 98 percent from the outgoing year's estimates of Rs 97.569 billion, the size of the total provincial consolidated fund is estimated to increase by 22.37 percent to Rs 471.258 billion over the current year's estimates of Rs 385.091 billion.
The capital expenditure for the next year is projected at Rs 92.544 billion, which is 5.5 percent higher than the current year's Rs 87.681 billion. Thus there would be a net capital account surplus of Rs 14.598 billion. The Finance Bill, which was a part of the budget speech, has proposed reduction in stamp duty on financial documents like debenture, participation term certificates and term finance certificate.
The stamp duty on these documents will be charged only once at the time of their issuance, as opposed to the current practice of annual charging of stamp duty. The government has also reduced the rate of electricity duty, which the consumers are now supposed to pay instead of energy charges, to 1.5 percent from 7 percent for domestic use, 1.5 percent to 3 percent for office or commercial use, 1 percent to 3 percent for industrial use, 1 percent to 4 percent for agricultural tubewells, and 1.5 percent to 4 percent for temporary electricity meters.
This will provide some relief to these categories of electricity consumers. Though a balanced document with appropriate resource allocations for law and order, water, health and education sectors, the budget fails to address the issue of unemployment. Further, the increase in pensions made in the budget does not correspond to the current rate of inflation in the country. These shortcomings need to be appropriately addressed.