EDITORIAL: The Punjab Finance Minister Makhdum Hashim Jawan Bakht unveiled a 2.65 trillion rupee budget - 18 percent higher than the current year's budget - which compares favourably with the total federal budget outlay of 8.487 trillion rupees minus expenditure that a province does not budget for notably interest payments of 3.06 trillion rupees, defence allocation of 1.37 trillion rupees, grants and transfers to provinces earmarked 1.168 trillion rupees and nationwide subsidies of 682 billion rupees. In other words, the federal government earmarked 2.207 trillion rupees for current expenditure including pensions, civilian administration and the Ehsaas programme and 900 billion rupees for the public sector development programme while the Punjab government budgeted 1.428 trillion rupees on current and 560 billion rupees on development expenditure.

Punjab government, as expected, followed the path set by the Centre in raising salaries by 10 percent and minimum wage to 20,000 rupees per month; however, there is no uploaded data on revised estimates for the current year, also lacking in some of the key data provided in the federal budget, which makes comparisons between one budget to the next a rather fatuous exercise at best as actual disbursements and actual targets achieved are always distinct, in most cases considerably lower than what is optimistically claimed in the budget.

There are three deeply concerning questions with respect to the Punjab budget 2021-22 with respect to the federal budget's declared objectives. First, the capacity of the federal government to achieve the budgeted target of 570 billion rupees as provincial surplus next fiscal year is severely compromised with Punjab, the largest contributor not only by dint of being the most productive and prosperous province but also one able and more than willing to support the Centre's objectives, budgeting a surplus of only 125 billion rupees - about 22 percent of the federal forecast. It is highly unlikely that Sindh, led by the Pakistan People's Party government, would present a budget surplus commensurate with what is budgeted for it by the Centre leave alone make up for Punjab.

Secondly, the Punjab government yet again failed to take the bold step of implementing a farm tax on income at a rate commensurate with what is currently payable by the salaried class - a step that would have strengthened the Centre's negotiating leverage with the International Monetary Fund concerned with the ability of the Shaukat Tarin-led Finance Ministry to generate one trillion rupees additional tax next year from measures including enforcement measures that have so far failed to be implemented due to political reasons. Provincial taxes are budgeted to rise to 272.6 billion rupees which could have more than doubled had a farm tax with teeth been levied.

And finally, the Makhdum in a message uploaded with the budget documents claimed that "this year's budget focuses on four key areas: health, education, agriculture and augmentation of public infrastructure." In this context, it is relevant to note that the federal government has repeatedly pledged support for the farm sector in next fiscal year and has claimed that supply side shortages, the main reason for food inflation, are highly unlikely this year as output of four major crops, including our staple wheat, has been better than target, excepting cotton, though needless to add crops whose output has increased has been due to higher acreage under their cultivation like in the past (cotton acreage declined). It is important to note that agriculture is a provincial subject and Punjab is the bread basket of the country; however, the provincial budget allocated only 28.007 billion rupees next year to agriculture - the sixth highest priority in the budget. While one cannot fault the higher priority given to school education (349.4 billion rupees) followed by a budgeted 137.9 billion rupees for specialized health and medical education, 135.4 billion rupees for primary and secondary healthcare, 128 billion rupees for police and 37 billion rupees for higher education yet perhaps a more balanced appropriation at this stage of the country's economy with growth rightly a priority for the Centre should have been the preferred option.

What however must be appreciated is the decision to allocate 189 billion rupees to southern Punjab, nearly 34 percent of total development budget, to a region that has suffered lack of adequate resources considerably and consistently during the previous administrations and which the Pakistan Tehrik-i-Insaaf government had pledged to support.

Copyright Business Recorder, 2021

Comments

Comments are closed.