Punjab slashes inflated ADP by Rs65.5 billion

Lahore has been relying on overdraft throughout the fiscal year to run its administrative affairs.

LAHORE:

The Punjab government has slashed the Annual Development Programme (ADP) 2010-11 by Rs65.5 billion, the biggest cut in its history, on account of poor financial discipline, scarcity of funds and subsidy on politically-motivated schemes, such as the sale of roti for Rs2 in the province.

The Rs193.5 billion ADP budget for the year 2010-2011 presented in June last year was the biggest development budget in the province’s history. The social sector was given top priority with a Rs65 billion allocation, while Rs65.5 billion were earmarked for new schemes. The budget, with a 10 per cent increase over the previous financial year (2009-10), is now being described as ill-conceived. Approved for political mileage, it failed to make an allowance for financial realities, said officers who cannot risk disclosing their names.

The funds were to be utilised on 3,084 ongoing and new development schemes, including Rs3 billion for the heavily-publicised Daanish Schools and Rs6.5 billion for the Punjab Millennium Development Goals Programme.

Since the budget was unrealistic to begin with, the cut in the total outlay of the development budget is also the biggest in the history of the province. As a result, the social sector took the biggest hit, The Express Tribune has learnt. As part of an austerity drive, Rs6.1 billion was also sliced off from the Rs386 billion non-development budget, said an official requesting anonymity.

The federal government is facing a shortfall of 10 per cent in the Rs1,667 billion revenue collection target for 2010-11 which is being passed on to the federating units. Punjab has received only Rs269 billion from its share of the divisible pool which was fixed at Rs435 billion. The Punjab government had fixed its revenue target at Rs91 billion from indigenous resources during the current year, but it so far generated just Rs50 billion. The Federal Bureau of Revenue (FBR) was to provide Punjab Rs51 billion from its collection of General Sale Tax (GST) on services this year, but the GST revenue has fallen short by 15 per cent.

To avert a financial crisis, the government planned to generate some Rs12 billion from the auction of 1,400 properties by June 2011. The Punjab Privatisation Board (PPB) was created for managing government property and putting up assets for auction. Former chairman Nazar Muhammad Chohan sold off properties worth Rs4 billion. After his exit in February, this year, the PPB has not yet auctioned any property.

The ADP budget was inflated for political gain and did not reflect the actual financial position, said an official. The Punjab government has been relying on overdraft throughout the fiscal year to run its administrative affairs, he added.

A senior official of finance department said lack of planning, unrealistic financial policies and revenue shortfall from indigenous sources were to blame for the budget cut and the aborted development projects.

He said the Punjab government incurred an extra expenditure of Rs55 billion by raising salaries in 2010-11.

Secretary Finance Punjab Tariq Bajwa said the budget had to be revised because of lower revenue and the huge expenditure on rehabilitation and reconstruction activities in the wake of the floods.

Published in The Express Tribune, April 25^th, 2011.