KARACHI: Chief Minister Sindh, Syed Murad Ali Shah on Wednesday presented the fiscal budget 2020-21, envisaging an outlay of Rs1.241 trillion and warned that "threats to the 18th Constitutional Amendment" are creeping in the midst of Covid-19 spread.
The development expenditure has been reduced by 19 percent because of the economic slowdown from Covid-19 and low revenue generation, as the financial plan 2020-21 stands higher by 2 percent, he told the Sindh Assembly that the budget deficit is Rs18.38 billion.
The next fiscal year's expenditure estimated Rs1.242 trillion as against the estimated receipts of Rs1.23 trillion. A noisy protest by opposition lawmakers, who were seeking reports of the two quarters of financial year 2019-20 from the Chief Minister, marked the start of the budget session. "While our country is facing the grave challenges of COVID-19, some quarters are underscoring the need for revisiting the contents of the 18th Constitutional Amendment passed in 2010 by Majlis-e-Shoora. Not only is the 18th Amendment is being discussed, the share distribution formula of the NFC Awards is also being questioned. I would iterate our commitment to stand by the autonomy given to provinces by 18th Amendment," Murad said.
He said the federal government has set for Federal Board of Revenue a target of Rs4.9 trillion for the next financial year. Sindh has been conveyed its anticipated Federal Transfers under NFC share distribution formula. The total receivables from the federal government for the financial year 2019-20 stand at Rs760.3 billion, wherein Rs679.7 billion is share from divisible pool, Rs62.3 billion as straight transfers and Rs18.3 billion in respect of grants to offset losses on abolition of Octroi Zila Tax (OZT).
It is estimated that total provincial receipts for the financial year 2020-21 will be Rs313.3 billion, approximately 9 percent higher than the budget estimates for the financial year 2019-20. In order to achieve the provincial target in receipts, the Revenue Collecting Agencies are being strengthened with increased emphasise on automation. Moreover, mechanisms will also be developed to monitor provincial receipts, the Chief Minister said.
"The total outlay of budget for the next financial year 2020-21 is Rs1.2 trillion. The total size of Current Revenue Expenditure is Rs968.9 billion. It is important to highlight here that for the next financial year, we have tried to align our development as well as non-development expenditure priorities in line with the post COVID-19 situation," he told the assembly.
During financial year 2019-20, he said, the government faced financial constraints because of COVID-19, which significantly affected development progress in the entire country. The Sindh government budgeted Rs284.0 billion as total development outlay in financial year 2019-20, wherein Rs208.0 billion is earmarked for Provincial ADP, Rs20.0 billion for District ADP, Rs51.0 billion in the head of foreign projects assistance, and Rs4.9 billion from Federal PSDP grant. "Looking at the financial constraints, stakeholder departments are likely to complete 425 schemes during 2019-20, 33 schemes less as compared to 458 completed in 2018-19," Murad maintained.
For the next financial year, the Administrative Departments in Sindh were earlier advised to prepare proposals for Provincial ADP 2020-21 at the size similar or identical to that of 2019-20 while allocating 85 percent for ongoing schemes and 15 percent new schemes, he said.
However, he said, in the post Covid-19 scenario, with a reduction in federal transfers and funding for development, the total development outlay for Sindh during the next financial year 2020-21 is proposed at Rs232.9 billion, including a Rs155.0 billion allocation to Provincial ADP and Rs15.0 billion to District ADP schemes. "It would be pertinent to highlight that in this context Rs54.6 billions is expected from Foreign Projects Assistance (FPA) and Rs8.3 billion from federal government in Federal PSDP for 10 schemes under execution by Government of Sindh," he added.
He said the government had earlier decided to keep the size of development budget for the next financial year 2020-21 for important sectors such as education, health, social safety and poverty reduction and water and sanitation as that of the 2019-20 development budget. "In exceptional cases such as health, allocation has been increased from Rs.13.50 billion to Rs23.50 billion in order to meet the challenges of COVID-19 situation. The throw-forward amount in Provincial ADP 2020-21 for 2209 schemes has reached Rs564.00 billion as compared to Rs606.0 billion for 2705 schemes in 2019-20," the Chief Minister said.
Keeping in view the non-development and development expenditure priorities, he said, the major "milestone" of the following government objectives: 1. Exercise maximum austerity measures in our non-development expenditures. 2. Provide maximum resources for Health sector. 3. Enlarge substantially province's social protection net through increased cash transfers to poverty inflicted people. 4. Provide ways and means for employment generation as well sustaining economic activity for the poorest of the poor, in rural as well as urban areas. 5. Continuing our focus on education, through increased allocations in financial year on development and non-development, despite huge resource constraints. 6. Fashion our development spending in sync with the above mentioned post-Covid-19 preferences with increased focus on Public Private Partnership (PPP) projects.
"Thus, a talk of reversal of 18th amendment, or a change in the amendment in any form may reduce the powers of the province, which may consequently weaken the federation itself. Eventually, trust deficit may develop between the federation and the federating units. If, God forbid, this happens, it will exacerbate the suffering of people, and the provincial governments may not be in a position to respond in a timely manner to mitigate distress or disappointment," Murad said.
He said the PPP government stands committed to granting the rights of the people enshrined in the Constitution of Islamic Republic of Pakistan. "We are also committed to protecting provincial autonomy as extended to the people of Pakistan by the Constitution. We will not compromise our principled stand on the 18th amendment in the public interest," he vowed.
"The outbreak of COVID-19 has nearly halted world economy. Pakistan is affected too. The COVID-19 crisis has three sources of socio-economic impact for the population: Morbidity and mortality; containment measures - such as general lockdown, work / travel restrictions and SOPs easing as well as restricting of lockdowns in response to disease spread, local and targeted lockdowns and Reduced global demand," he said.
In order to assess and manage potential post COVID-19 crisis, Finance department had a brief study conducted to analyze the severity of economic challenges to prepare a strategic plan for providing fiscal stimuli, economic resuscitation and social protection. Current situation has affected every sector which contributes to economic growth. Agriculture sector contributes to be a significant portion to our economy is affected badly. In the post-Covid-19 scenario, unemployment is on the rise, businesses are at standstill and small medium-term enterprises need assistance for revival, he said.
The chief minister said that for ensuring food security and reducing inflation and unemployment, a strategy to encourage community-driven economic activities, focusing on supporting home-based businesses, small and medium enterprises, a social protection and economic sustainability package of Rs34.2 billion is proposed for the next financial year 2020-21:
Twenty billion rupees is proposed for cash transfers to individuals affected by COVID-19 under Sindh Peoples Support Program through Social Protection Strategic Unit, Social Welfare department. Similarly, Rs5.0 billion is allocated for a Soft Loan Program for Small and Medium Enterprises. The loan size will range from Rs0.5 million to a maximum of Rs2.0 million. Rs one billion subsidy will be provided for purchase of Quality Rice Seeds to the farmers with land holding of 25 acres or less.
Rs 11 billion is allocated on account of wheat subsidy for the year 2020-21. The amount has been enhanced from Rs.5.0 billion allocated in the current financial year 2019-20. Rs one billion will be provided on account of Fertilizer subsidy to the farmers with landholding of 25 acres or less.
Rs one billion will be provided as subsidy for Pesticides to small farmers with landholding of 25 acres or less. Rs 3 billion is earmarked for a Small Business Support Fund in urban areas through Social Protection Strategist Unit, Social Welfare department. Loan size will be a maximum of Rs0.20 million.
An allocation of Rs2 billion is proposed under Poverty Alleviation Program for small farmers/community-based loans in rural areas. The size of load of Rs25, 000 as using poverty reduction score cards of ongoing poverty reduction program by utilizing services of SRSO, NRSP, Thar Deep etc., through the Social Protection Strategist Unit and Social Welfare department is proposed.
Rs 500 million is kept for Supporting Technology-based startups, incubators and accelerators through Investment Department. Rupees700 million is kept for Support of I.T Interventions and Innovations Solutions in Goods and Accelerators through Investment department in consultation with I.T Department. For livestock breeding, Rs.500.0 million is proposed.
Seats were arranged in a fashion to ensure social distancing the arrangement was set mutually agreed by opposition and treasury with the consent of Speaker Aga Siraj Khan Durrani to allow only 25 percent of the total strength of the legislators to attend the budget presentation. The majority of lawmakers attended the session via video links.
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