Sindh presents Rs3.056tr balanced budget

KARACHI: The Sindh government Thursday proposed a balanced budget for the Fiscal Year 2024-25 with an outlay of Rs3.056 trillion.

Chief Minister Murad Ali Shah, who also holds the portfolio of finance minister, presented the budget in the provincial assembly.

It was his 13th budget address, and it was delivered to the legislature without any major commotion in the house.

An important feature of the budget is the increase in the salaries of government employees.

The salaries of public employees have been increased by 30 percent for grades 1-6, 25 percent for grades 7-16 and 22 percent for grades 17 and above.

Delivering his speech, Shah said the minimum wage had been increased to 37,000 from Rs33,750, while an increase of 15 percent had been proposed in the pensions.

He said the public employees, who would not get the minimum wages even after an increase of 30 percent in their salaries, would get extra monetary support.

Benazir Haari Card

The chief minister introduced Benazir Haari Card under which Rs8 billion would be distributed among 1.2 million peasants. The registration of 788,000 peasants having 12.5 acres of land or less would start soon.

Benazir Mazdoor Card

An amount of Rs5 billion has been earmarked for Benazir Mazdoor Card, which is in addition to the workers’ welfare fund. This fund would be provided to labourers registered with the labour department.

The provincial development expenditure has been proposed at Rs959.1 billion against Rs735.103 for 2023-24. This includes Rs55 billion earmarked for the district ADP.

The total receipts of the province have been projected at Rs3,056.262 billion against Rs2,228.790 billion revised estimates of 2023-24.

Murad said the province would focus on completing the existing development schemes and no new scheme would be launched in the new year.

He talked about construction of houses for the people affected by the 2022 floods and highlighted services in the field of health sector, especially in major hospitals of Karachi.

Revised Estimates of FY 2023-24

Revised estimates for provincial expenditures have been proposed to be Rs2.252 trillion for Financial Year 2023-24 as against the budget estimates of Rs2.282 trillion. It includes current revenue, capital and development expenditures.

The revised estimates for federal transfers have been proposed to be Rs1.395 trillion, as compared to the budget estimates of Rs1.353 trillion for the Financial Year 2023-24. The revised estimates for year 2023-24 for provincial revenues have been proposed to be Rs475.049 billion against the budgeted amount of Rs469.900 billion for the current financial year.

Budget estimate for FY 2024-25

The budget outlay of provincial expenditures for the year 2024-25 is Rs3.056 trillion, which marks a 36 percent increase over revised budget estimates of Rs2.252 trillion in the current year 2023-24.

Budget, estimates of FY2024-25 for the Current Revenue Expenditure (CRE) have been pitched at Rs1.912 trillion, being 21 percent higher than the revised budget estimates Rs1.584 trillion for the year 2023-24.

Budget estimates for the current capital expenditure have been proposed at Rs184.838 billion showing an increase of 33 percent over the budget estimates of Rs139.105 billion for the year 2023-24.

Development expenditure

The budget estimates for year 2023-24 for provincial development expenditure stand at Rs959.064 billion against the revised budget estimates Rs529.603 billion this year. This includes Rs55 billion earmarked for district ADP. The provincial ADP remains at Rs493.092 billion against Rs283 billion revised estimates of FY23-24. The provincial ADP excludes foreign project assistance, which would be Rs334 billion.

Revenue receipts

The chief minister said the budget estimates for federal transfers had been set at Rs1.900 trillion for the financial year 2024-25.

He hoped for better support from Prime Minister Shehbaz Sharif saying Sindh had been neglected for four years before his government.

The Sindh Revenue Board would collect Rs350 billion, while the other provincial receipts, excluding sales tax on services, would be Rs268.966 billion. The estimate of provincial non-tax receipts is Rs42.944 billion.

“We are proposing enhancing the standard rate of Sindh Sales Tax (SST) from 13 percent to 15 percent with a view to harmonizing the tax rates with other Service Tax Administrations in Pakistan. However, the exemptions and reduced rates of SST, where notified, shall remain effective,” he said.

To promote digitalization in the economy, it was proposed to reduce the SST rate to 8 percent for the restaurant services involving customers’ payments though digital means like debit/credit card, mobile wallet, QR scanning etc.

Flood devastation & govt response

Sindh was the most affected province during the unprecedented rainfall in July and August 2022, with 70 percent of the land submerged and over 12.4 million people affected.

Around 2.1 million houses were damaged. An amount of Rs25 billion has been spent on the construction of one-room climate-resilient houses, while Rs25 billion would be spent next year.

A total of 125,000 houses have been constructed while 7,700 houses were financed by the private sector. The government would construct 0.8 million houses for women.

Shah called it the biggest housing scheme in the world, which was initiated with the support of international financial institutions.

Budget Estimates 2024-25 (Annual Development Plan)

The budget estimates for development expenditure for FY2024-25 have been proposed at Rs959.064 billion. It includes Rs493.092 billion for Provincial ADP and Rs55.0 billion for district ADP, Rs334 billion for Foreign Projects Assistance and Rs76.971 billion for federal PSDP schemes under the execution of Sindh government.

In addition to regular ADP, the Sindh government’s development portfolio under the public-private partnership mode stands at Rs714 billion whereby projects of Rs62 billion have already been executed. Projects of Rs142 billion are presently at different stages of construction while projects of worth Rs236 billion are in the bidding stage. No new scheme is included in the next financial year.

Sector-wise grants Education

Murad Ali Shah said an amount of Rs454 billion had been earmarked for the education sector in budget estimates for FY2024-25, with an increase of 36 percent increase over the last year’s budget estimates of Rs334 billion. It represents 25 percent of the total current revenue expenditure.

Health Services

An amount of Rs300 billion has been proposed for health services against the allocation of Rs227.8 billion last year.

Local councils

For the next financial year, a provision of Rs160 billion has been kept for local councils against Rs121.9 billion in the current financial year.

Security and policing

An estimated amount of Rs172 billion has been proposed for public safety and policing against an allocation of Rs133 billion last year with an increase of 29 percent.

Irrigation and agriculture sectors

The proposed allocation for the irrigation sector stands at Rs35.9 billion as against Rs25.7 billion of last year showing an increase of 40 percent. The agriculture budget stands with the proposed allocation of Rs30.7 billion as compared to Rs18.9 billion last year with an increase of 62 percent.

Free electricity through solarization

Murad said Rs25 billion had been earmarked for solar and water initiatives under the vision of PPP Chairman Bilawal Bhutto Zardari, whose mission was to provide clean drinking water to every person in the province in next five years. Besides, there is a project to increase water supply to Karachi by 100 million gallons.

Shah said Sindh’s 2.6 million families were not connected with the national grid in the province, who would be provided with solar rooftops in the next five years. In the first phase in next FY, solar home systems will be provided to 500,000 households.

In order to support differently-abled persons, a society on 80 acres of land will be developed in Karachi alongside the Malir Expressway.

Sindh Safe Cities Authority

During the next year, safe city authority would be established in Karachi, which would later be expanded to Hyderabad and Sukkur. The purpose of authority is to combat the rising tide of crimes, especially in Karachi city.

Taxes have been proposed on the purchase of imported, local vehicles, real estate, and air tickets besides an increase in the sales tax.

An increase in the Sindh Sales Tax (SST) to 15 percent from 13 percent for the financial year 2024-25 has been proposed.

In the finance bill, the government has proposed several taxes including on purchase of vehicles and air tickets.

A tax of Rs450,000 has been proposed on imported car/jeeps etc with engine capacity 3000cc and above. Imported cars with engine capacity 2000cc to 2,999cc will have to pay Rs275,000 and imported vehicles with 1,500cc to 1,999cc will have to pay Rs100,000 in tax.

A tax of Rs50,000 has been proposed on locally manufactured/assembled vehicles with engine capacity 2000cc or above while locally manufactured cars/jeeps with engine capacity of 1,500cc or above will have to pay Rs25,000.

A tax of Rs250 has been proposed on domestic air tickets and Rs1,000 on international tickets.

In the real estate sector, three percent tax has been proposed on value of lands, shops and residential flats.

A tax of Rs1,000 has been proposed on sale or transfer of a regional motor vehicle, sale or transfer of immovable property.

Three additional sectors, educational services, hospital and clinic services and pet-related establishments have been brought under the GST on services. Individuals who delay in depositing the SST will have to pay an additional amount equal to the unpaid tax or Rs100,000, whichever is higher.

Restaurants, hotels, wedding halls, management services, airport services and warehouses have already been paying GST on services.

Businesses failing in installation of e-invoicing systems will have to pay a penalty of up to Rs1 million.