Budget size higher by Rs 42.58 billion


From KHALID BUTT, Lahore
June 20 - 26, 2005




The Punjab government has announced a surplus and tax-free budget with a total outlay of Rs 224 billion for the fiscal year 2005-06. Provincial Finance Minister Hasnain Bahadur Dareshak presented the budget proposals before the Provincial Assembly.

The size of the new budget is higher by Rs 42.58 billion or 24 per cent when compared to Rs 181.82 billion total budget for the fiscal year 2004-05. Out of a total outlay of Rs 224 billion, the provincial government has estimated Rs 131.11 billion from federal divisible pool, Rs 4.193 billion from straight transfers, Rs 30.20 billion from federal grants, Rs 25.77 billion from provincial tax revenue and Rs 33.124 billion from provincial non-tax revenue.

In conformity with the federal government's decision, the Punjab government has also announced abolition of the sales tax on various public utility entities like marriage halls, lawns, laundries, dry cleaners, beauty parlors and slimming clinics.

Yet another major policy decision initiated by the provincial government is to establish two funds---Pension Fund and Investment Fund ---to capitalize GP Fund in financial year 2005-06.

The budget plans to fund this activity in a manner that in seven years time the burden of pensions and GP Fund disbursement is shifted to the newly created funds, while Rs 8 billion have been allocated as seed money to be invested in the above mentioned funds.

The local governments are expected to receive an aggregate amount of Rs 90 billion, including a development outlay of Rs10 billion to be financed out of the capital budget of the province.

The Punjab government is anticipating an addition of Rs 34.16 billion to its revenue receipts, Rs 11.86 billion from federal divisible pool and Rs 5 billion increase in the provincial tax revenues and Rs 17.30 billion in the non-tax revenue during the new financial year.

The projected cash flows include Rs 131.117 billion from federal divisible pool in 2005-06 as against Rs 119.25 billion in 2004-05, while provincial tax revenue receipts have been worked out at Rs 25.77 billion in coming fiscal, compared to Rs 20.77 billion in the current financial year. The non-tax revenue receipts have been estimated at Rs 33.12 billion.

Meanwhile, the Punjab government has anticipated a total of Rs 165.5 billion receipts on account of divisible pool taxes, straight transfers and grants from the federal government.

The province has estimated its own receipts at Rs 58.89 billion which include Rs 25.77 billion tax revenue and Rs 33.124 billion non-tax revenue in 2005-06. The government has estimated its current expenditures at Rs 157.5 billion i.e.11% higher than the previous year's budget estimates. This includes a provision of Rs 8.1 billion for the recently announced pay and pension revision.

Breakdown of the expenditures indicates an allocation of Rs 108.16 billion for general public services and Rs 20.836 billion public order/safety affairs. Rs 12.978 billion have been earmarked for economic affairs, Rs 5.971 billion to be spent on health, Rs 4.976 billion on education, Rs 2.207 billion for housing/community amenities, Rs 1.114 billion for social protection and Rs 822 million for environment protection.

The quantum of liabilities has been estimated at Rs 94.55 billion, which is Rs 14.97 billion higher, when compared to Rs 79.58 billion liabilities in 2004-05.

The government has also estimated its borrowings of foreign loans at Rs 9.872 billion in the coming fiscal year. To increase fiscal space, the government in pursuance of its debt management strategy would continue to swap its expensive cash development loans with cheaper program loans.

An impressive Annual Development Program (ADP) worth Rs53 billion has been evolved for Punjab which is 54 per cent higher than the last year's ADP allocations. An additional allocation of Rs 8 billion has also been made in the capital account of the province to fund the development programs of autonomous bodies.

The provincial government has also allocated Rs 10 billion for development grants to the local governments, to be funded out of the capital account of the province. Thus the total development outlay for the province is in excess of Rs.71 billion, which is 45% of the total revenue expenditure of the province.

In the outgoing financial year the aggregate development investment of the province is estimated at Rs 62.849 billion. The Punjab government has earmarked Rs 90 billion for transfers to the local governments, 22 per cent higher than the previous year's allocation.

Out of the total tax revenues of Rs 25.77 billion, the provincial government has a target of raising Rs 1.312 billion from agriculture income tax. Other income generating areas pointed out in the budget are: Rs 4 billion property tax, Rs 3.391 billion land revenue, Rs 7.505 billion stamp duties, Rs 4.1 billion motor vehicles tax, Rs 1.63 billion from electricity duty and Rs 1.742 billion sales tax on services, etc.




Total size of the budget

Rs224 bln

Amount to come from federal divisible pool

Rs131.11 bln

Amount to come from Federal Govt.

Rs30.20 bln

Amount to come from straight Transfers

Rs4.193 Bln

Amount to come from Provincial Tax Revnue

Rs25.77 bln

Amount to come from Non-Tax revenue sorces

Rs 33.124 bln

Total Revenue expenditure budget

Rs158 bln

Total Public sector development budget

Rs 71bln

Annual development programme

Rs 58 bln


Rs9.5 billion

Education sector reforms

Rs5000 mln


Rs 200 mln

IT education

Rs250 mln

Water and Power sector

Rs7 billion