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EDITORIAL: Sindh Chief Minister Syed Murad Ali Shah presented an ambitious Rs 2.2 trillion provincial budget for FY2023-24, jacking up development expenditure by 72.3 percent, compared to the outgoing fiscal’s revised estimate, to Rs 700 billion and lacing his speech with populist rhetoric about tax relief to individuals and businesses and promotion of the “entrepreneurial spirit”.

In a move clearly meant to resonate with the voter base, especially after all the devastation caused by floods and exogenous economic shocks over the last couple of years, the sum allocated to development constitutes more than 31 percent of the total outlay, which means that Rs 31.15 out of every Rs 100 that the provincial government plans to spend in the new fiscal year will be routed to this head, leaving the rest of the funds to take care of “recurring expenses or one-time capital spending of non-development nature”.

Interestingly, this 72.3 percent hike in the development budget overtakes the total increase in the outlay of the complete budget, which is estimated to grow by 27.3 percent over revised estimates of FY2022-23.

CM Shah also took advantage of the relative calm on the assembly floor, mainly due to the absence of PTI’s (Pakistan Tehreek-e-Insaf’s) vocal lawmakers, to stress that the Rs38b deficit budget centred around rehabilitation of flood-affected people and social protection for the poor.

The decision to raise the minimum wage from Rs 25,000 to Rs 35,000, salaries by up to 35 percent (for government employees from grades 1-16, 30 percent for those above grade 16) and pensions by 17.5 percent was also largely in keeping with expectations since this was, after all, an election year budget just when the provincial government was being hounded by a very charged opposition on the streets.

The Sindh government could, however, have taken a leaf out of the Punjab budget book – just like the federal government – and gone a step further to encourage further documentation of the economy. Initiatives like a lower tax on card payments at restaurants, duly adopted by the centre, should have found their way into the Sindh budget as well.

This measure has the potential to bring sizeable food business into the tax net restaurants that do not accept payment through cards would come under pressure from their customers who would have an incentive tagged to it. This can be done can be done through a notification by SRB with due approval of the government without a change in the law.

Another desirable measure pertains to IT-related export and domestic services. The domestic regime is already quite liberal, however, through the federal budget changes have been introduced in definition of IT services in line with demand by PASHA.

The Sindh and other provincial governments would do well to consider similar changes in scope of IT services in their own laws for seamless working of this sector. It is heartening to note that the provinces have finally prevailed in getting the federal government to recognise transmission and distribution of electricity as ‘Service’. This would hopefully prove to be reasonably good source of revenue generation for the provinces.

The budget for school education has been raised by 13 percent to Rs 267.7 billion, and the health budget by 10 percent to Rs 227.8 billion. These increases, though by no means enough to cater properly to the province’s education and health needs, are still appreciated.

Still, the proof of the pudding will lie in the eating, and it can only be hoped at this stage that this section will not be the first to face cuts in case the deficit widens, which is very likely, and money is urgently needed elsewhere.

For now, though, it is encouraging that the Sindh government has successfully secured Chinese grants of Rs 7.66 billion for rehabilitating and rebuilding 646 schools.

The health sector has been under unrelenting stress since the beginning of the Covid pandemic. It had just handled two severe waves of the virus when the worst floods in living memory ravaged the country, especially Sindh. It will, therefore, be important to make sure that this sector, at least, is not deprived of its allocation for the usual, often trivial reasons.

CM Shah acknowledged that prevailing economic conditions, unrelenting currency depreciation, and a tightening balance of payments (BoP) situation tend to have a compelling effect on important economic indicators.

And while Sindh hopes to receive its share of funds from the federal government, the federal transfers will ultimately depend on the annual collection by FBR (Federal Board of Revenue). That is always a tricky prospect, since the Board is not exactly known for meeting its own targets year after year.

For now, though, budget estimates for federal transfers have been set at Rs 1.353 trillion, including Rs 1.255 trillion for the divisible pool components, Rs64.424 billion for straight transfer components and Rs 33.741 billion for OZT grants.

Copyright Business Recorder, 2023


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Rebirth Jun 22, 2023 01:11am
Zardari made a suggestion about 7-8 years ago that he will leave politics if his children are given an opportunity to partake in politics in foreign countries, most probably the UK because they grew up there and can’t speak in any other language other than British English. They can’t read or write Urdu and barely speak it. It is about time that the Labor Party and the Guardian take him up on that offer. Pakistanis will be very proud of people of Pakistani origin being represented in foreign nations. Lord Bilawal has a nice ring to it. Or Baroness Bakhtawar or Asifa does too. The more such “rich” people leave Pakistan, the better our country will be. As some supposed westerners put it, rich Pakistanis leave Pakistan to migrate to their countries. They say it like it’s a bad thing for us and reaffirmation of their superiority. Little do they know, we couldn’t be happier. We would like our money back from these “rich” people, however.
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