Decline in cess collection lands body in trouble: Food ministry seeks Rs666.64m grant for cotton committee
ISLAMABAD: The Ministry of National Food Security and Research has sought an approval for Rs666.640 million from the Economic Coordination Committee (ECC) to pay salary and pension to employees and pensioners of the Pakistan Central Cotton Committee (PCCC) for the remaining period of the current fiscal year.
The ministry has sent a summary to the ECC seeking Rs235.75 million for pay and allowances for the remaining period of the ongoing fiscal year, excluding arrears of salary for the 2018-2022 period, and for pension-related expenses of Rs430.922 million, including arrears of pension for 2018-2022.
The ministry has maintained that there is no allocation in the federal budget for PCCC and the organisation derives its financial resources through levy of cotton cess at the rate of Rs50 per bale on textile mills in respect of all cotton consumed or exported.
The Cotton Cess Act, 1923 authorises the collection of defaulted cess under the West Pakistan Land Revenue Act, 1967 through district collectors. The cess amount is utilised for research and development programmes as well as employee- and non-employee-related expenses of the body and estimates for the year 2022-23 come to Rs1,381 million.
The textile mills have stopped paying cess and the matter is under litigation since 2016; resultantly, cess collection has declined from Rs631.722 million in 2014-15 to Rs207.201 million in 2021-22. During the month of July 2022, the actual income from cess collection was only Rs16.33 million.
The situation has adversely affected the working of PCCC and its research programmes and plans, even as operational expenses have been curtailed to a minimum. The situation has deteriorated so much that the salaries and pensions of the PCCC employees and pensioners have been reduced to just 30 percent from July onwards, making it difficult for them to meet their needs in these inflationary times. This has created unrest and the serving as well as retired employees are continuously agitating.
Considering the current low rate of cess collection, the gap between income and employee-related expenditure is increasing by the day. The ERE estimates for the remaining period of financial year 2022-23 for pay and allowance (excluding arrears of salary for 2018-2022) stand at Rs235.725 million and pension-related expenses (including arrears for 2018-2022 at Rs430.922 million.
The ministry, therefore, moved a draft summary for grant of TSG through Finance Division on 5th August 2022. However, the Finance Division asked how the expenditure was met during the fiscal year 2021-22 without any additional grant by the federal government.
The ministry replied that it had a surplus during the fiscal year 2021-22 of Rs419 million, which actually related to the Prime Minister’s Package for Rabi Crops but which was re-appropriated for PCCC.
In response to the Finance Division’s another observation that each Ministry/ Division is provided with one line budget and MNFSR allocated a total budget of Rs9303.010 million during the current fiscal year, therefore no option for re-appropriation of funds may be explored within the demand, the ministry replied that during the fiscal year 2022-23 the Finance Division allocated Rs9303 million to the ministry.
Contrary to the previous year, Rs7 billion for wheat subsidy is allocated to PASSCO under the MNFSR’s budget, so the ministry is left with Rs2303 million for all the departments against previous year’s allocation of Rs2152 million with increase in salaries, allowances and POL prices; so no cushion is available for re-appropriation of funds. Therefore, the ECC is requested to approve Rs666.640 million as supplementary grant for PCCC to enable it to pay salaries and pensions during the remaining period of the current fiscal year.
The MNFSR, in next year’s budgetary proposal will send estimates for inclusion of ERE expenditure of the organisation in the federal budget, on the lines of Livestock Dairy Development Board and Fisheries Development Board, both public sector companies under MNFSR having budgetary allocations in respect of their ERE.
Copyright Business Recorder, 2023
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