KARACHI: Sindh Chief Minister Syed Murad Ali Shah Saturday presented a Rs2.2 trillion budget for the fiscal year 2023-24 in the Sindh Assembly with a deficit of Rs38 billion, aiming to promote the entrepreneurial spirit and provide tax relief to people and businesses.
In his budget speech, amid the PTI legislators’ absence, Murad said the government will tax the rich in a bid to generate revenue to provide the general public with necessary relief, keeping in view their hardships in terms of rising inflation. “We have adopted a strategy of rationalizing various tax bases to protect underprivileged segments of society from unnecessary financial burden,” Murad added.
The budget outlay of provincial expenditures for FY24 is Rs2.248 trillion that marks 31 percent increase over budget estimates of Rs1.714 trillion in FY23. Overall, receipts estimated at Rs2.209 trillion against the estimated expenditure of Rs2.248 trillion for the next fiscal year, showing a deficit of Rs37.795 billion.
Out of overall expenditures, current revenue expenditures budget estimates for the current revenue expenditure (CRE) have been pitched at Rs1.411 trillion for FY24, being 17.65 percent higher than budget estimates Rs1.2 trillion for FY23. The increase is mainly due to a massive recruitment drive by the government especially in the education sector causing the employee-related expenses to take a sharp leap.
Current capital expenditure budget estimates for next fiscal year for current capital expenditure has been proposed to be Rs136.256 billion showing a lofty increase of 150 percent over budget estimates Rs54.481 billion for this fiscal year. This marked increase may be linked with excessive repayment of interest amount due to hike in forex exchange rate from Rs 186 to Rs 300 per US dollar, raising the expenditure disproportionately.
The budget estimates for investment activities have been proposed to be Rs88.2 billion, including inter alia Rs26 billion earmarked for Sindh pension fund and Rs58.0 billion reserved for the next fiscal year for bridge financing of various PPP-led development projects, through viability gap fund, depicting an increase by twofold over the budget estimates Rs23.6 billion for FY23.
Development expenditure budget estimates for next fiscal year for provincial development expenditure stand at Rs700.103 billion against the budget estimates Rs459.657 billion this year. This includes Rs30 billion earmarked for the district Annual Development Program (ADP).
The prevailing economic conditions, currency depreciation, and tightening balance of payment generally have a compelling effect on national economic indicators, Murad said that “we appreciate the federal government’s unrelenting commitment to achieve their annual targets thereby assuring transfers to Sindh according to the plan in the current financial year. We hope to receive funds according to estimates in the next financial year 2023-24 as well, however, federal transfers depend upon the annual collection by the Federal Board of Revenue (FBR)”.
With this hope, he said that the budget estimates for federal transfers have been set at Rs1.353 trillion for the next fiscal year, including Rs1.255 trillion for the divisible pool components, Rs64.424 billion for straight transfer components and Rs33.741 billion for OZT grants. The estimates show an increase of 27 percent over budget estimates of Rs1.055 trillion in current financial year, he added.
Tax revenue during the last five years: He said that some fiscal reforms have been implemented to mobilize provincial revenues to curtail the budget deficit. The augmented collection is expected in the next financial year, therefore, the Sindh Government has proposed the budget estimates of Rs469.9 billion for tax revenue for FY24. The CM said: “the Sindh government has set quite ambitious targets for next year for major revenue streams.”
Non-tax revenue budget estimates for non-tax revenue has been proposed to be Rs32.0 billion for next financial year 2023-24. Other major components of annual receipts are the grants relating to Foreign Project Assistance, Federal PSDP and budgetary support allocations. Budget estimates 2023-24 for FPA components stand at Rs266.691 billion covering 29 foreign assisted projects from the Asian Development Bank, the World Bank, the USAID and the JICA. “Budget estimates for projects offered under federal PSDP stand at Rs22.912 billion and for budgetary support Rs5.92 billion,” he added.
The unprecedented rains in July and August 2022 submerged Sindh and left over 12.4 million people affected, besides ravaging over two million houses, standing crops on 3.8 million acres of land, about 20,000 schools structures and several other sectors. Some 24 districts were declared calamity-hit as 1000 people lost their lives, he said.
The Sindh government, he said, has evolved a “Strategic Action Plan” for floods response in line with the national 4Rs framework for instance “resilient recovery, rehabilitation and reconstruction”, which assessed a financial need of $11.6 billion for the province.
“Even though we reoriented about Rs87 billion of the provincial ADP towards flood rehabilitation, the substantial financial gap in meeting the reconstruction needs remained,” he said that the Sindh government worked with the World Bank and the Asian Development Bank in conceiving projects of over $2 billion for post-flood recovery, rehabilitation and reconstruction.
He said that the government allocates Rs13.4 billion in the next fiscal year for the advancement of transport and mass transit with 92 percent increase over the budget amount of Rs6.9 billion this fiscal year 2022-23. “As an antidote to hiking fuel and fare prices, a one-time fare subsidy of Rs247 million has been provided to Sindh Intra District Peoples Bus to be passed on to commuters,” he said that a provision of Rs2 billion has been earmarked for operations and maintenance of the bus service.
“In Phase-II of the project a huge allocation of Rs10 billion has been kept for inclusion of fleet of 500 diesel hybrid buses. To facilitate employees of Sindh secretariat 03 new routes will start from next year with a provision of Rs6 million,” Murad said and added that Rs2.78 billion has been earmarked in budget estimates 2023-24 for non-development expenditure related to forest and wild life including Rs368 million for conservancy and development of new plants nurseries.
In the budget estimates 2023-24, he said that the government has kept Rs23.47 billion for improvement of roads network and government buildings with an increase of 28 percent over the Rs18.32 billion of budget allocation this fiscal year. Public Health engineering activities will receive a proposed budget of Rs7.87 billion next financial year, he added.
For industries and small and medium enterprises, he said that the budgetary allocation stands for Rs1.8 billion during the next fiscal year including Rs60 million for implementation, coordination, programming and monitoring of SMEs competitiveness strategy. “On top of that, funds Rs500 million has been allocated for the development and promotion of SMEs & Cottage Industries in both rural and urban are under Pro-Poor grants portfolio,” he said.
The next year budget allocation environment and energy related activities stands for Rs46.1 billion, depicting an increase of 46 percent. Similarly, he said that the government proposes Rs7.500 billion, higher by 24 percent, for the promotion of Sindh’s cultural heritage, support literary activities and conserve our archaeological sites and monuments.
He said that a Rs18.9 billion of budget for the next fiscal year has been estimated for the agriculture engineering. A provision of Rs22.02 billion has been spared in for the law and parliamentary affairs. For peace and security, the government allocates Rs143.568 billion for next financial year, up by 15 percent, the Chief Minister Sindh said that a Rs6.1 billion budget has also been marked for empowering persons with disabilities.
Copyright Business Recorder, 2023