Punjab asks Centre to clear Rs128.7 bn pending liabilities

LAHORE: The PTI-led federal government is not clearing the pending financial liabilities of the Punjab government, putting financial pressure on the province despite the repeated requests there was no progress in this connection.

The financial situation of the province further crumbled after the Covid-19 pandemic as the revenue collection of both the federal and provincial governments was adversely affected. Punjab is expecting overall Rs660 billion revenue shortfall both from National Finance Commission (NFC) share and Own Source Revenue (OSR) collection after the pandemic.

Punjab Chief Minister Sardar Usman Buzdar also wrote a letter to Prime Minister Imran Khan for clearing the pending liabilities and sought support from the federal government in March 2020. However, no action was taken on chief minister’s request and provincial Finance Minister Hashim Jawan Bakht again took up the issue with the prime minister in a presentation made on the financial position of the province in the wake of Covid-19 situation in the last week of April.

According to the letter, a copy of which was available with The News, dated March 12, 2020, the chief minister wrote to the prime minister that the province was achieving the Own Source Revenue collection target and registered a growth of 28 percent by January 2020. He further said Punjab fulfilled all the commitments including reducing the one percent stamp duty, reducing sales tax for construction sector which cost Rs14 billion annually to the province. Further, on the request of the federal government, Punjab has taken a step for a provincial estimated budget surplus of Rs233 billion to honour the federal government’s commitments with the International Monetary Fund (IMF).

The chief minister mentioned that Punjab was facing significant shortfall from its National Finance Commission (NFC) share from federal government due to slow FBR growth rate. The province too relies heavily on the NFC share and any further shortfall will inevitably lead to cuts in its already curtailed development portfolio.

Usman Buzdar wrote Punjab claims to the tune of Rs128.7 billion long pending dues with the federal government. He requested for clearing all reconcile amount including Rs 24.09 billion by FBR to Punjab Revenue Authority (PRA), Rs9.96 billion as federal share of wheat subsidy, Rs5.03 billion as Capital Development Authority (CDA) share for operation of Rawalpindi-Islamabad Metro Bus and Rs20 billion out of total outstanding Rs40 billion of net hydel profit share of Punjab.

He further stated ‘the issue of pending liabilities has been time and again taken up with the federal government’. He hoped that the impending financial woes of Punjab will be averted through timely intervention by Prime Minister Imran Khan, enabling it to achieve its development objectives and thereby contributing towards country’s prosperity.

Highlighting the issue of financial constraints faced by the Punjab government in the wake of Covid-19, Hashim Jawan Bakht in the presentation to the premier said the province will face a shortfall of Rs536 billion from its NFC share of federal divisible pool as the FBR may witness a huge shortfall in revenue collection. The FBR collection is estimated around Rs3.7 to 3.8 trillion against the initial budgetary targets of Rs5.56 trillion.

Further, Punjab is also expecting a sizeable shortfall of Rs 143 to 123 billion in its own source revenue collection. Punjab set a target of Rs388 billion Own Source Revenue (OSR) collections in the budget 2019-20 which is now expecting to be around Rs245 to 265 billion.

Thus a total revenue shortfall of over Rs660 billion is expected by Punjab after the Covid-19 pandemic in the country. Major shortfall is expected in PRA which was given an ambitious target of Rs166.6 billion while the Authority is expecting to collect Rs95 to 100 billion. Thus a shortfall of Rs61 to 66 billion is expected from PRA revenue collection targets. Similarly, excise and taxation department set a target of Rs39.7 billion which was downward revised to Rs29 billion while it was expected to miss the revised target too. The excise and taxation department forecasting Rs24 billion collections thus a shortfall of around Rs15 billion is expected. The Board of Revenue assigned target of Rs81.2 billion while it was expected to collect around Rs62 to 65 billion, contributing a shortfall of Rs16 to 19 billion.

After Covid-19 situation, funds were diverted from development to non–development expenditures, besides spending Rs10 billion on Insaf Imdad Programme, Rs15.2 billion on Zakat, health and district management for Covid-19-related spending. Punjab also provided Rs18 billion tax relief after the pandemic.