Sindh Budget presented by Chief Minister Syed Murad Ali Shah who also happens to be the finance minister envisages an all-time high outlay of Rs 1.043 trillion and focuses largely on health, education, security, maintenance and upgradation of infrastructure in the province. Total receipts of the province for FY18 have been estimated at Rs 1.02 trillion against an expenditure of Rs 1.043 trillion, depicting a deficit of Rs 14.32 billion. Receipts from federal government on account of revenue assignment, straight transfers and grants are estimated at Rs 627.3 billion for FY18, up from Rs 61.5 billion in 2016-17. These receipts would be 61.5 percent of the total receipts of the province. Receipts of federal PSDP are estimated at Rs 27.3 billion for the next fiscal year while receipts on account of foreign project assistance, budgetary support loans and grants are estimated at Rs 42.7 billion. Receipts from province’s own sources, including tax and non-tax receipts, are estimated at Rs 199 billion as against the revised estimates of Rs 166.03 billion in the outgoing year. On the expenditure side, current expenditures have been estimated at Rs 699.11 billion, including a current revenue expenditure of Rs 666.47 billion, and a current capital expenditure of Rs 32.64 billion. Current expenditures will constitute 68.2 percent of the total provincial budget, showing an increase of 14 percent over the estimates of Rs 572.7 billion during FY17. Development expenditures have been pitched at Rs 274 billion which is an all-time high. Commenting on the development budget, Murad Ali Shah claimed that “Sindh has witnessed a decade of sustainable development. We are committed to taking Sindh to new heights of progress and prosperity.”

Sector-wise, the Sindh government has proposed to increase the allocation for education by 24 percent to Rs 202.2 billion from Rs 163.12 billion during FY17. The allocation from health sector has been raised by 26 percent from Rs 79.88 billion to Rs 100.32 billion, including an amount of Rs 15.50 billion for ADP. The budgetary share of Home Department, including police, jails, rangers and other law enforcing agencies, has been proposed at Rs 92.91 billion for the next fiscal year, denoting an increase of 10 percent over Rs 84.26 billion for the next fiscal year. ADP allocation of Rs 25.77 billion has been proposed for the real sector while Rs 5 billion is allocated for the maintenance of road infrastructure. Rehabilitation of Karachi circular railway is included in the CPEC with an investment of dollar 2.4 billion. The Chief Minister claimed that no new taxes are imposed and only slight amendments have been made in the Stamp Act, Registration and Sindh Sales Tax Act with the objective to widening the tax net. There is a proposal to rationalise rate of Sindh sales tax on telecom services and bring it at par with other provinces by increasing it from 19 percent to 19.5 percent. Sales tax on travel agents and tour operators is proposed to be reduced from 10 percent to 8 percent while on services provided by specific class of indenters and call centres, it is proposed to be reduced from 13 percent to 3 percent and from 8 percent to 3 percent on the services of renting immovable property services.

A special feature of the Sindh budget this time is criticism of the federal government on the delay of 9th NFC Award. According to the Chief Minister, “the failure of the federal government to grant the 9th NFC Award yet again is a proof of the inefficiencies plaguing the system at such a high level.” He added that “the federal government is the major contributor to Sindh’s finances comprising 75 percent in its entirety. It is a fact that these shares inevitably fall short of estimates we provide every year. As a result, there is ambivalence and inconsistency in achieving our outlined targets. We have always extended the maximum possible support to the Federal Government but this continuous oversight is disheartening to say the least.”

A detailed review of the Sindh budget would reveal that the provincial government has made several over-optimistic revenue assumptions but tried to prioritise spending according to the needs of the province. For instance, revenue receipts have been projected to increase and no major increase has been proposed in the provincial tax heads. Lower receipts than targeted would increase the deficit of Sindh government and raise the overall deficit of the country. It may be mentioned that provinces are expected to generate a surplus of Rs 347.3 billion during 2017-18 and if other provinces follow the same pattern, it would be impossible to achieve the overall deficit target. A peculiar aspect of the Sindh budget continues to be lack of any effort to tax the agriculture sector, heavy reliance on the receipts under NFC Award and dependence on urban centres for the revenues for tax purposes. This was mainly due to large number of parliamentarians for the rural areas sitting in the provincial assembly who dictated the fiscal strategy of the province but such a tendency is of course against the fundamental principle of equity in taxation and is a reason for great frustration in the urban centres of the province. It goes to the credit of the Chief Minister that he has tried to avoid putting extra burden of taxation on the urban centres of the province and also made an attempt, however feeble, to exhort the landlords to contribute something to the provincial exchequer. He told the assembly that agriculture income tax collection during FY2016-17 stood at only Rs 393 million. In consultation with the leading agriculturists, farmers and parliamentarians, the target for this tax is proposed at Rs one billion for the coming year. Although, even the proposed amount is a kind of joke yet the very fact that he realises the importance of tax collection for the agriculture sector could be appreciated. May be next time he will be more bold and just. Another good thing about the budget is the right stress on the priority areas. Both education and health sectors are in poor shape, particularly in the rural areas of the provinces, and a higher allocation of resources could play a commercial role in reforming the relevant institutions and providing better services to the common man. Higher allocation for improving the security situation is also a must in order to sustain the relatively calm law and order condition and attract investors from the rest of the country and abroad. It is also good to see that the provincial government has proposed to create 49,000 new jobs. Of these, 10,000 personnel will be recruited in Sindh Police while 25,000 will be absorbed as lady health workers. We only urge upon the provincial government to induct the new employees in the government service purely on merit and without any political interference.

The decision of the Sindh government to raise the salaries and pensions of government employees by 15 percent, more than 5 percentage points than the federal employees, makes no real sense and is hard to understand, especially when there is no such a demand and the rate of inflation in the country is much lower than this raise. We know that this is a populous measure and could benefit the Pakistan People’s Party in an election year but it would increase the fiscal burden on the provincial exchequer and force the private sector to do the same, thus raising the cost of production. It would have been better for the Sindh government to follow the trend set by the federal government. However, we are happy to note that Murad Ali Shah has announced a record development budget. This an all-time high allocation could only yield the desired results if corruption and inefficiency in the system are rooted out. He also wanted to take credit that Sindh had witnessed “a decade of sustainable development” when crumbling roads, vanishing water supplies, fleeing investors and deaths of newborn babies in Thar tell a different story. We recognise that the induction of the new Chief Minister has made some difference but it would still take a long time and a major effort to make such claim. So far as criticism on the Federal government for delaying the 9th NFC Award and postponing receipts is concerned, Murad Ali Shah may be justified in his assertions but the provincial governments are also to be blamed to a certain extent for their insistence on getting higher shares from the divisible pool on one pretext or the other.