Sindh's revenue jumps to Rs 1.364 trillion during July-December of fiscal year 2018

Provincial fiscal operations posted a surplus of Rs 204 billion during the first half (H1) of this fiscal year (FY18) mainly due to hefty increase in the provincial revenue.
The total provincial revenue grew by 28.2 percent to Rs 1.364 trillion during July-December of FY18 as compared to a meager 1.3 percent growth reported in last year (FY17). This improvement is attributed to increase in federal transfers, bolstered by an impressive growth in FBR tax collection, and provinces' own tax revenue. According to State Bank of Pakistan (SBP), the provinces cumulatively posted a surplus of Rs 204 billion, which is about 59 percent of the target of Rs 347.3 billion for the year during the first half of FY18.
The detailed analysis revealed that the major contribution to this surplus came from Punjab Rs 69.5 billion, followed by Sindh Rs 60.7 billion and Balochistan Rs 52.7 billion, while the surplus of KP Rs 21 billion is almost halved in H1-FY18 compared to last year. The higher provincial surplus was a result of a considerable increase in the provincial revenue.
The SBP in its recent report has reported that the total provincial revenue grew by 28.2 percent to Rs 1.364 trillion during H1-FY18 as compared to a meager 1.3 percent growth to Rs 1.064 trillion reported in last year. This improvement is attributed to increase in federal transfers, bolstered by an impressive growth in FBR tax collection, and provinces' own tax revenue.
The provinces' own tax revenue continued to build on expanding coverage of general sales tax on services (GSTS), increasing by 33 percent to Rs 241 billion during H1-FY18 compared to 17.9 percent growth last year.
According to the SBP, improved economic activity had a spillover effect on provinces' own revenue collection as well. Besides collection from sales tax on services, provinces saw an encouraging growth in excise and stamp duties, followed by property and motor vehicle taxes.
Overall provincial non-tax revenue also grew sharply by 82.3 percent to Rs 64.5 billion during H1- FY18. This mainly came from KP with Rs 27.6 billion, out of which Rs 18.2 billion was received under profits from hydroelectricity. Moreover, non-tax revenue of Punjab also almost doubled to Rs 21.3 billion during July-December of FY18.
Higher revenue collection created more fiscal space for provincial spending, which is reflected in 18.7 percent increase in provincial expenditure and it reached to Rs 1.213 trillion end of first half of this fiscal year.
Most of the increase in spending during H1-FY18 was meant for development purposes, as growth in current expenditures was slightly higher compared to last year. However, the province-wise analysis shows that growth in provincial development spending was primarily due to Punjab, as the other three provinces reported either a negligible growth or decline.
Therefore, provinces spent only Rs 316.8 billion during first half of FY18 out of total Public Sector Development Spending (PSDP) allocation of Rs 1.112 trillion given in provincial Annual Development Programs (ADPs).
Since most of the development functions have been devolved to provinces after 18th Amendment, provinces need to set a road map for the effective allocation of resources in view of new opportunities such as CPEC, the SBP suggested.