Unlike the previous governments at the centre and in three provinces, the last PTI-led coalition government was unable to present the annual budget for Khyber Pakhtunkhwa (KP) before the July 25 general elections. As such, the KP budget was delayed and presented in the provincial assembly on 15th October, 2018. The budget involves a total outlay of Rs 648 billion, which also includes the estimates for the first four months of the current fiscal year, already authorised by the caretaker government. Since the total expenditures are estimated at Rs 618 billion, the budget carries a surplus of Rs 30 billion. Of the budgeted revenues of Rs 648 billion which are 30 percent higher than the actual receipts of last year, Rs 360 billion will be received from the federal tax assignments, Rs 43.31 billion as compensation for the war on terrorism, Rs 22.32 billion on account of straight transfers, Rs 25.29 billion as arrears of net hydel profit and Rs 41.26 billion as provincial receipts. The government also plans to generate Rs 115.36 billion on account of general capital and development receipts.

On the expenditure side of Rs 618 billion, Rs 430 billion has been allocated for current expenditures which are higher by 10 percent compared to the revised estimates of the last year while the Annual Development Programme (ADP) has been allocated Rs 180 billion or 21 percent more than the revised estimates of the last fiscal. The development budget includes Rs 109 billion from own resources and Rs 71 billion from the foreign-funded development initiatives. The ADP consists of total 1,376 development schemes, which include 1155 ongoing schemes and 221 new projects. As the improvement of financial management is under way, 90 percent of the total ADP has been earmarked for ongoing projects. The major plank of the budget is that it aims to improve service delivery at the local level. Out of the total development outlay, Rs 29.35 billion has been allocated to three tiers of local government system. Its breakdown shows that Rs 13.1 billion has been earmarked for village and neighbourhood councils, Rs 8.12 billion for district governments and Rs 8.12 billion for tehsils.

The best aspect of the KP budget, in our view, is that it carries a reasonable surplus and is quite in line with the priorities of the PTI government. The surplus of Rs 30 billion shows that the KP government would live within its means and also contribute to the reduction of overall budget deficit of the Pakistan government which may be a conditionality when the country decides to conclude a programme with the Fund. Another positive point of the budget is the containment of current expenditures and boosting development expenditures to build infrastructure and spur growth in the province. While current expenditures are estimated to increase only by 10 percent, the outlay on ADP is estimated to jump by 21 percent. Besides, 90 percent of the ADP has been allocated for ongoing schemes with a view to reducing the throw forward liability of the overall development programme. Such an arrangement is quite contrary to the earlier budgets when all kinds of projects were included in the ADP to appease members of provincial assembly and others, which were later abandoned due to paucity of funds.

The PTI’s stamp on the budget is apparent from a number of measures it has taken in the budget. It is quite clear that the KP government is utterly serious for devolution of powers from the provincial headquarters to village levels. That is why a good part of the budget has been allocated for village and neighbourhood councils, district governments and tehsils. If this plan is successful, it would bring a lot of relief to the common man residing in far-flung areas of the province. Besides, record funds have been allocated for education, health, law and order, construction, water and local government in keeping with the priorities of the PTI government to give more importance to social sectors. The government has increased the budget for education by 28 percent, which is more than the other provinces while budget for maintenance of law and order has gone up from Rs 54.5 billion last year to Rs 62.5 billion this year. This means that the KP government is walking the talk. However, the financing of development budget by as much as Rs 71 billion from foreign-funded development initiatives looks odd and against the spirit of self-reliance. It is better to reduce the country’s reliance on foreign sources for current and development expenditures overtime.