KP Budget: Everyone’s Friend, Except for the Industry

Following in the footsteps of the Centre and Punjab, the budget for 2021-22 in Khyber Pakhtunkhwa emphasizes boosting economic growth and mitigating the effects of Covid-19 by significant development expenditure, tax reductions, and pay and pension increases.

The PKR 1.1 trillion budget proposes increased spending for tourism, research and information technology, local government, health, education, and a historic development outlay of PKR 370 billion.

KP Finance Minister Taimur Saleem Jhagra remarked in a post-budget briefing that the budget was historical and created under a challenging situation. He did, however, appear upbeat about the future, claiming that they passed the difficult phase.

It is also the first time the province budget has surpassed a trillion dollars. It tries to appease every element of the populace with whatever incentives the government can muster when the ruling Pakistan Tehreek – e Insaf is gearing up for the next election.

In KP, where the PTI has been amid power for eight years, the government’s chances of keeping the population happy in difficult economic times are significantly higher. The government’s budget plans reveal that it has the same goal in mind and has attempted to transform the budget into enticing bait for every economic sector.

Government employees, who were on the verge of going on strike just three weeks ago, have been handed a 10% pay hike. To entice business, industry, and professionals, the government has lowered taxes on 31 services, granted exemption from professional and land taxes, and imposed a one-time Rs1 registration fee.

Mr. Jhagra stated, “The agriculture land tax breaks alone would benefit nearly 700,000 farmers across the province.” In addition, the government has set aside PKR 2.6 billion to provide monthly stipends to around 20,000 prayer leaders across the province.

The idea proposed by Pervez Khattak’s government in the run-up to the 2018 general elections is still in the works and would be implemented when the Mahmoud Khan government goes to the polls. The government has also proposed a PKR 10 billion credit scheme to help small firms that the outbreak has severely harmed.

The Bank of Khyber will be in charge of disbursing these minor loans. A subsidy on wheat and the provision of food baskets to the needy have each been granted PKR 10 billion. The government has also raised the salary for workers to PKR 21,000 per month.

The budget also proposes hiring 23,000 instructors, establishing 10,000 model classrooms across the province as part of the early childhood education program, and spending PKR 4.5 billion on new furniture.

In the health sector, the government plans to spend PKR 14.9 billion over two years to renovate all of the province’s major hospitals.

In addition, the government has decided to cover liver transplants under the Sehat Sahulat Scheme, with PKR 1 billion set aside for the purpose. All primary health units and rural health institutes in the province will be refurbished at the cost of PKR 2.7 billion. The extension of Rescue 1122 services, which will set up at all tehsil levels, will cost PKR 2.8 billion.

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The tourism department has also increased development money from PKR 2 billion to PKR 12 billion, which will be used to establish integrated tourism zones, a PKR 3.8 billion innovation fund, and a KP 400-Kanal water park in the Swabi district. The research and information technology sector has also boosted PKR 1.1 billion to PKR 2.5 billion. The road sector would receive PKR 48 billion, agriculture will receive PKR 13 billion, and women’s empowerment will receive PKR 1 billion.

The administration has also set a big tax target for the next fiscal year of PKR 75 billion, 52 percent is greater than the present aim. During the current fiscal year, the KP government has managed to raise more than PKR 50 billion.

Former president of the Sarhad Chamber of Commerce and Business, Zahid Ullah Shinwari, believes there is little in the budget for the industry but that the only thing that could help them is a professional tax exemption.

Mr. Shinwar, on the other hand, raised concerns about the high tax target for the coming year, saying that instead of legitimately boosting the province’s revenue base, tax collectors will continue to pursue the business community to meet their target. “It will be difficult,” he predicted. He said that the industry received only PKR 5 billion from the PKR 371 billion development budget, which he described as “peanuts.”

Mr. Shinwari criticized the administration for failing to take advantage of commerce with Afghanistan, which accounted for about 70% of local industries and 80% of services.