Despite securing a surplus budget for the current fiscal year, the Rawalpindi Municipal Corporation (RMC) might find itself amidst a financial storm in coming years due to an unforeseen hike in pensions and salaries with no new income streams in sight.
Sources privy to the matter say the civic body had to allocate Rs750 million for pensions this year, an increase from the previous sum of Rs600 million.
Similarly, salary expenses increased to Rs440 million from the earlier budgeted Rs370 million, owing to recent wage hikes. Furthermore, a major source of income that came from advertising was shifted to the Parks and Horticulture Authority (PHA), reducing the municipal corporation's revenue. Additionally, 50% of the User Industry Promotion (UIP) tax was allocated to the Water and Sanitation Agency (WASA) from its income sources.
Similarly, the revenue from one of the tax sources was redirected to the Cattle Management Company, preventing the RMC from receiving its portion. The administration of the Transferred Property Tax (TIP Tax) was transferred from the municipal corporation to the Punjab Land Record Authority, the Board of Revenue, and the Bank of Punjab.
Sources also said the proliferation of various authorities, agencies, and companies in Punjab has gradually clipped the powers of local government entities. “The recent salary and pension increases, while not immediately impacting the budget, could pose challenges if the municipal corporation's income doesn't substantially rise over the next three years.”
The current trajectory suggests that the corporation's revenue growth is unlikely to increase. This fiscal year marks the first time in its history that the RMC has approved a budget of Rs6.92 billion, with a surplus of Rs377.7 million. In contrast, the total expenditures for the current fiscal year are estimated at over Rs6.54 billion.
The non-development expenditure for the fiscal year has been forecasted at over Rs420 million. Additionally, a sum of Rs770.8 million has been designated for ongoing development projects.
The fiscal year's budget allocates Rs2.8 billion for new development programmes, guided by government directives.
Published in The Express Tribune, August 8th, 2023.
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