EDITORIAL: The Sindh Chief Minister, Syed Murad Ali Shah, who also holds the portfolio of finance, presented an over one trillion rupees budget 2021-22 which outpaced the Punjab government’s budget with respect to the minimum wage and raise in salaries of provincial employees – measures considered to have political implications: 25,000 rupees as opposed to Punjab’s minimum wage of 20,000 rupees (though needless to add enforcement remains a challenge for the provinces) and a raise of 20 percent instead of 10 percent announced by the federal and Punjab governments.
As projected by Business Recorder, the Sindh government presented a deficit budget amounting to 25.7 billion rupees which effectively implies that the 570 billion rupee budgeted provincial surplus by the Centre for next fiscal year, with Punjab announcing a surplus of 125 billion rupees only, is a non-starter. No doubt the federal Finance Minister may well argue that the government would be able to generate the budgeted amount under this head from other sources, particularly from enforcement measures, a source of revenue significantly overstated in past budgets, however this shortfall without doubt would be a source of serious concern to the International Monetary Fund (IMF) and the prospect of cheap borrowing from abroad.
A meaningful engagement with all provinces, specifically the more productive Punjab and Sindh, is critical for formulating a deliverable federal budget – not only in those provinces ruled by the same party as in the Centre (an engagement that is not apparent in the 2021-22 budget given Punjab’s surplus for next year) but also in those which are ruled by another party. The Sindh government has raised its serious concerns with respect to allocations for Sindh projects in the federal Public Sector Development Programme 2021-22 and lamented the 83.8 billion rupee shortfall in transfers in the current year – which could be sourced to lower revenue in the federal divisible pool.
In the outgoing year, Sindh has projected provincial tax receipts other than sales tax at 105.4 billion rupees, and sales tax on services at 125 billion rupees or a total of 230.4 billion rupees while Punjab, with a much higher population, envisages 141.1 billion rupees revenue by the Punjab Revenue Board, 56.2 billion rupees BOR, excise and taxation another 30.5 billion rupees and energy and transport 0.800 billion rupees giving a total of 228.65 billion rupees.
Sindh has budgeted to increase collections from its own sources in the current year with sales tax collection projected at 150 billion rupees and other tax receipts at 154.9 billion rupees or a total of 304.9 billion rupees. In contrast, Punjab Revenue Authority has budgeted to generate 155.9 billion rupees, BOR an additional 66.95 billion rupees and excise and taxation 42.8 billion rupees with energy and transport generating 7.95 billion rupees or a total of 272.6 billion rupees. Or in other words, in spite of a lower population, Sindh intends to keep its lead on Punjab in terms of generating its own resources.
The Sindh Chief Minister claimed that “we have introduced citizens’ budget to improve the citizens’ access to budgetary information with the objective to promote accountability and transparency in public financial management. It presents the provincial budget in a simple and lucid manner, highlighting its salient features and making it easy for the common man to understand.” Irrespective of whether the Sindh government will be able to achieve its budgeted targets for next year the fact remains that unlike the Punjab budget documents the Sindh documents uploaded on its website are definitely easier to peruse and one would hope that provinces do follow the Sindh approach.
Copyright Business Recorder, 2021
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