Budget: Energy crisis claims 330,000 jobs in Punjab

Provincial government blames load-shedding for economic downturn.

LAHORE:

Terming the power shortage as the reason for worsening joblessness, the Punjab government in budget 2012-13 has claimed that over 330,000 people in the province have lost their jobs due to load-shedding, resulting in export losses of about $1 billion.

In the summary on the budget, it is claimed that more than 1,300 small to medium sized industrial units have been forced to shut down because of the energy crisis.

Terming Punjab as the province mainly hit by load-shedding, the budget document said that Punjab in particular, continued to face disproportionately high load-shedding of electricity and gas in 2011-12 which besides creating operational problems for the existing industries and business in the province, discouraged new private investments and impeded the process of employment generation. It said that according to the findings of a study - Medium Term Fiscal Framework, cost of load shedding to the province in terms of losses and higher costs of industrial production are as large as Rs250 billion which is equal to 3% of gross domestic product.

It is estimated that the cost to the economy as a consequence of gas shortfall could be as high as Rs110 billion with Punjab facing the major brunt. It said that recognising the role of energy as the major constraint on economic growth in the province, the government of Punjab besides urging the federal government to resolve the problem of energy shortage has evolved a comprehensive strategy and programme for energy generation in the province. The objective is to provide uninterrupted power supply to province’s major industrial hubs, it claimed.

In the budget summary, the provincial government stated that since provinces are largely dependent on Federal Divisible Pool receipts, slippages or variances in actual versus the budgeted amount under Federal Board of Revenue (FBR) receipts have a consequential negative impact on budgetary projections of provincial governments resulting in fiscal constraints. Based on the reported collection of first 11 months of fiscal year 2011-12 to the tune of Rs1,61 trillion, it will be difficult for FBR to achieve the assigned target of Rs1.952 trillion as collection of Rs341 billion will be required in the last month, it said. Consequently, Federal Divisible Pool transfers to Punjab Government are likely to fall short by an amount of Rs15 to 20 billion.

It also said that the General Sales Tax (GST) on services has provided a window of opportunity for provincial government to improve its share of revenue collection in the overall resource envelope. Therefore to fully harness the true potential of GST on services, the Punjab government has decided to establish Punjab Revenue Authority which will initially be responsible for collection of GST on services in the current fiscal year. Similarly, through structural reforms and administrative simplifications in the existing tax collection framework, the provincial government will be striving to further improve its revenue collection in the fiscal year 2012-13.

It said that in the current climate of fiscal restraints and limited resource availability, it will be an endeavour to manage the available resources in an effective, economical and efficient manner. On the expenditure side, besides focusing on allocative efficiency, the administration will aim to encourage reduction in the current expenditure without compromising the capacity and ability of the government to provide basic amenities and services to general public at an affordable cost.

Published in The Express Tribune, June 10^th, 2012.