Rs686 billion Sindh budget unveiled

Development outlay slashed; chief minister rails against centre for poor tax collection.

KARACHI:

The Sindh government on Friday presented its budget for fiscal year 2014-15 with a total outlay of Rs686 billion.

Presenting the budget before the Sindh Assembly, Sindh Chief Minister Qaim Ali Shah – who holds the province’s finance portfolio as well – announced the provincial development outlay would be slashed from Rs185 billion in the outgoing fiscal year to Rs168 billion for the upcoming year. The budget deficit has been estimated at Rs14 billion.

“Poor tax collection by the federal government is the main reason we were compelled to slash development expenditure,” Shah said in his speech. “We managed to release only Rs115 billion against the annual development programme (ADP) allocation of Rs185 billion,” he said, adding that the provincial government is heavily dependent on the centre for transfer of its receipts.

“Sindh’s share in federal transfers was estimated to be about Rs409 billion in 2013-14,” the chief minister said. “Only Rs327 billion of this has been transferred up till now, leaving a shortfall of over Rs81 billion.”

Shah said it was unfortunate that provinces had to bear the brunt of ‘poor governance at the federal level’. He demanded further fiscal decentralisation and called for the transfer of sales tax collection to provinces due to Sindh government’s “success in collecting sales tax on services.”



Seven sectors have been prioritised in the new Sindh budget. These included service delivery across all sectors, peace and security through investment in law and order, education and youth development, improved heath care for people of Sindh, energy generation, building a robust infrastructure and developing agriculture, livestock and fisheries.

Regarding law and order, Shah said that the budget for law enforcement agencies will be increased by 20% – from Rs44.86 billion in 2013-14 to Rs54 billion in 2014-15. He announced Rs4.65 billion for the police, which is intended to be spent on recruitment and procuring arms, vehicles and other necessary equipment.

In the education sector, the Sindh government set aside Rs134 billion for non-development expenditure. Rs15 billion have been allocated for different elementary, primary and secondary education schemes. Rs5 billion have been earmarked for universities in Sindh.

The government allocated Rs43 billion for health – a 20% increase over last year’s allocation for the sector. Rs15 billion of this amount is earmarked for development schemes.

Rs20 billion have been set aside for various energy projects in the province. “Rs13 billion will be spent on Thar coal infrastructure and Rs7 billion will be kept for other power development initiatives,” the chief minister said.

Rs9.7 billion have been earmarked for development and repair of roads and civic infrastructure in the province. “Expenditure on maintenance and rehabilitation of existing infrastructure will increase by 58% from Rs 5.77 billion to Rs 9.1 billion next year,” Shah said.

Special packages, amounting to Rs13 billion, have also been announced for various districts of the province. The government has given importance to Karachi in its development portfolio, allocating Rs42 billion for the city’s schemes in ADP 2014-15. Rs900 million have been announced for Tharparkar on the other hand.

The provincial government also announced plans to increase the salaries of all government servants and enhance minimum wage to Rs11,000 and pensions to Rs6,000 per month.

The revenue expenditure for 2014-15 has been estimated at Rs436 billion, 22% higher than the estimate for 2013-14. Capital expenditure has been estimated at Rs34. 7 billion, up from the outgoing year’s estimate of Rs31 billion.

The chief minister announced the reduction of Sindh sales tax on services from 16% to 15% from July 2014. However, he proposed levying sales tax on services which are already liable to sales tax in other provinces, but not yet taxable in Sindh.

“These services are technical, scientific and engineering consultants, tour operator (Hajj and Umrah tour package shall remain exempt), manpower recruiting agents, share transfer agents, property dealers, fashion designers, interior decorators, rent-a-car services, automobile dealers and laundry and dry cleaning services.

Published in The Express Tribune, June 14^th, 2014.