Karachi, June 12, 2020: The federal government for the first time in the history has reduced budget estimates for the next fiscal year 2020-21 compared to estimates of last fiscal year (FY20) due to Coronavirus pandemic.
According to budget documents available to thebizupdate.com, the total outlay of budget 2020-21 is estimated Rs 7,295 billion compare to last year’s budgeted outlay of rs 8238 billion. The next year budget size is some 11 percent lower than the size of budget estimates for this fiscal year. The resource availability during 2020-21 has been estimated at Rs 6,315 billion against Rs 4,917 billion in the budget estimates of 2019-20.
Federal Public sector development fund approved was Rs 650 billion, while the allocation for provinces would be around Rs 674 billion. Government approved Rs 70 billion as Corona related funding. Allocations of Rs 80 billion have been made for Energy, and Rs 70 billion for Water projects. For Transport and Communications, Rs 179 billion of allocation was approved.
For Social Safety Nets, an amount of Rs 249 billion has been approved. For AJK, Kashmir and Gilgilat Baltistan, an amount of Rs 40 billion has been approved. Allocations of Rs 35 billion for HEC, Rs 20 billion for Health, Rs 20 billion for Science and Technology, and Rs 48 billion for KPK areas, have been approved. For Locust Attack on Agriculture sector, Rs 14 billion, and for Erra, Rs 3 billion have been approved.
The net revenue receipts for 2020-21 have been estimated at Rs 3,699 billion indicating an increase of 6.7 percent over the budget estimates of 2019-20. The provincial share in federal taxes is estimated at Rs 2,873 billion during 2020-21, which is 11.7 percent lower than the budget estimates for 2019-20.
The net capital receipts for 2020-21 have been estimated at Rs 1,463.2 billion against the budget estimates of Rs 831.7 billion in 2019-20 reflecting an increase of 75.93 percent. The external receipts in 2020-21 are estimated at Rs 2,222.9 billion. This shows an decrease of 26.7 percent over the budget estimates for 2019-20.
The overall expenditure during 2020-21 has been estimated at Rs 7,294.9 billion, out of which the current expenditure is Rs 6,345 billion. The development expenditure outside PSDP has been estimated at Rs 70.0 billion in the budget 2020-21.
The size of Public Sector Development Programme (PSDP) for 2020-21 is Rs 1,324 billion. Out of this, Rs 676 billion has been allocated to provinces. Federal PSDP has been estimated at Rs 650 billion, out of which Rs 418.7 billion for Federal Ministries/Divisions, Rs 100.4 billion for Corporations, Rs 3 billion for Earthquake Reconstruction and Rehabilitation Authority (ERRA), and 7 B for COVID responsive and Other Natural Calamities Program.
Table below presents the comparative position of budget and revised estimates for fiscal year 2019-20 and budget estimates for fiscal year 2020-21.
There are two type of resources i.e. internal and external. The internal resources comprise of revenue receipts, capital receipts and estimated provincial surplus. The external resources come from foreign loans and grants. Table-2 below presents the overall comparative resource position for the year 2019-20 (budget and revised) and 2020-21 (budget).
Net Revenue Receipts:
The various components of tax revenue and non-tax revenue in 2019-20 revised Rs 4,208 billion and in 2020-21 budgeted Rs 5,464 billion.
General Public Service
The comparative position of the budget and revised estimates of current expenditure for the year 2019-20 along with the budget estimates 2020-21. It shows breakup of Current Expenditure according to functional classification.
Under the head of General Public Service, the major portion goes to executive & legislative organs, financial, fiscal and external affairs which stood at Rs 3,663,740 million. This component forms 82.73 percent of the allocation for General Public Service.
The main heads of expenses are Superannuation Allowances & Pensions, Servicing of Foreign Debt, Foreign Loans Repayment Servicing of Domestic Debt and Others. Transfer payments constitute another important item.
Defence Affairs and Services
Details of estimates of expenditure on Defence Affairs and Services budget in 2020-2021 are Rs 1,289 billion compared to 2019-20 are Rs 1,227 billion.
Public Order and Safety Affairs
Under the head of Public Order and Safety Affairs, an amount of Rs 169,927 million has been provided in the budget 2020-21 as compared to Rs 152,919 million in the budget estimates 2019-20 and Rs 153,269 million in revised estimates of the outgoing fiscal year 2019-20.
The allocation for Police (Rs 158,621 million) forms the major component, with a share of 93.35 percent, in the total allocation under this head. Table-14 below provides the details.
The allocation under the head of Economic Affairs in the budget 2020-21 has been projected at Rs 71,751 million, as compared with Rs 84,167 million in the budget estimates 2019-20 and Rs 106,411 million in revised estimates 2019-20. Major share of this head goes to Construction and Transport is 21.79 percent of total allocation for Economic Affairs.
Under the head of Environment Protection, an amount of Rs 431 million has been estimated in budget 2020-21 for Waste Water Management, which is lower by 8.3 percent than budget estimates 2019-20.
Housing and Community Amenities
Under the head of Housing and Community Amenities, an amount of Rs 31,000 million has been provided in the budget 2020-21 for Housing Development as compared to Rs 31,000 million in the Budget 2020-21 as to Revised 2019-20 i.e Rs 252 million in revised estimates 2019-20.
Health Affairs and Services
Under the head of Health Affairs and Services, a total allocation of Rs 25,494 million has been made in the budget estimates 2020-21, which is higher by 130.55 percent from the budget estimates 2019-20. The allocation for Hospital Services forms the major component with amounting to Rs 22,774, which is 89.33 percent under this classification.
Recreation, Culture and Religion
In budget 2020-21 an amount of Rs 9,822 million has been budgeted for Recreation, Culture and Religion. Overall estimates under this classification for 2020-21 are almost equal with budget estimates 2019-20, and higher by 5.6 percent when compared with revised estimates 2019-20. The bulk of expenditure at Rs 7,500 million under this head has been earmarked for Broadcasting and Publishing, which is 76.36 percent of the total allocation.
Education Affairs and Services
Education Affairs and Services have been provided with Rs 83,363 million in the budget estimates 2020-21 as compared with Rs 77,262 million in budget estimates 2019-20 and Rs 81,253 million in revised estimates 2019-20. The bulk of expenditure at Rs 70,741 million has been allocated for Tertiary Education Affairs and Services in budget 2020-21, which is 84.86 percent of the total allocation under this head.
Under the head of Social Protection, an amount of Rs 230,907 million has been allocated in the budget 2020-21, which is higher by 21.15 percent as compared to the budget estimates 2019-20. The bulk of expenditure at Rs 208,258 million has been allocated for Social Protection (not elsewhere class) in budget 2020-21, which is 90.19 percent of the total allocation under this head.
Subsidies, Grants and Transfers 2020-21
In order to alleviate the impact of inflation on citizens, especially the poor segments of society, the Federal Government spends a fairly large sum on providing power and food subsidies. In the budget estimates 2019-20 subsidies were Rs 271,500 million; in revised estimates 2019-20 that increased to Rs 349,500 million due to grant of subsidy to DISCOs, Subsiday on Sale of essentials, Corona Stimules and Fertilizer Plant Subsidy (Engro, Fatima).
Total subsidies for fiscal year 2020-21 have been estimated at Rs 209,000 million which is decreased by 23.02 percent and 40 percent over budget estimates and revised estimates of 2019-20 respectively.
In budget 2020-21, the allocation for subsidies to WAPDA/PEPCO forms the major component, which is 59.33 percent of the total allocation followed by subsidy to Naya Pakistan Housing Authority with share of 14.36 percent, KESC with share of 12.2 percent and, PASSCO with share of 3.35 percent.
Grants and Transfers
Grants and transfers to provinces and others for the year 2020-21 have been estimated at Rs 904,644 million as compared with Rs 835,496 million in budget estimates 2019-20 and Rs 1,177,322 million in revised estimates.
Loans and Investments 2020-21
The financial assets of the Federal Government consist of investible funds and loans provided to Government Azad Jammu and Kashmir (AJK) and various agencies/institutions as well as government servants to enable them to meet their financial requirements.
Current Loans and Advances
Total current loans and advances have been estimated at Rs 66,776 million in budget 2020-21.
Development Loans and Advances
Development loans and advances are made by the Federal Government to Provinces, Government of Azad Jammu and Kashmir, Public Sector Enterprises (PSEs), Financial/Non-Financial Institutions, District Governments/TMAs and Others to assist them in carrying out their development programmes.
Total development loans and advances (local and external) were estimated at Rs 406,448 million in the budget 2019-20, which have now been revised downwards to Rs 321,691 million in revised estimates 2019-20. For budget 2020-21, total development loans and advances have been estimated at Rs 400,943 million, showing a minor decrease of 0.01 percent over budget estimates 2019-20 and 24.63 percent over revised estimates 2019-20.
For budget 2020-21, development loans and advances (local) have been estimated at Rs 128,319 million, while External development loans and advances has been estimated at Rs 272,623 million.
The federal current investments for the year 2020-21 have been estimated at Rs 11,717 million as compared with Rs 15,468 million and Rs 6,470 million in the budget estimates and revised estimates of 2019-20 respectively. The allocation for investment in 2020-21 is higher by 81 percent as compared with revised estimates 2019-20.
Public Sector Development Programme (PSDP) 2020-21
The Public Sector Development Programme (PSDP) is the main instrument for improving the socio-economic conditions in the country and achieving the macroeconomic and development objectives and targets set by the government, which yield maximum benefits in the shortest possible time for the society.
For the year 2020-21, National Economic Council (NEC) has approved an overall size of PSDP at Rs 1,324 billion, which is 2.9 percent of Gross Domestic Product (GDP).
The Salient features of PSDP allocation for 2020-21 are as follows:
- The size of national PSDP estimated in the budget for 2020-21 showing decrease of 17.91 percent over budget estimates of 2019-20.
- Federal PSDP for the year 2020-21 has been kept at Rs 650 billion, which is lower by 7.27 percent than budget estimates of 2019-20.
- The share of Federal Ministries/Divisions in 2020-21 PSDP is Rs 418.676 billion which indicates an increase of 20.22 percent over budget estimates of 2019-20.
- The Corporations’ PSDP for 2020-21 has been placed at Rs 158.325 billion which is lower by 19.94 percent as on the budget estimates of 2019-20.
- An amount of Rs 70 billion has been allocated in the budget 2020-21 for Covid Responsive and other Natural Calamities Program.
- Earthquake Rehabilitation and Reconstruction Authority (ERRA) has been allocated Rs 3 billion in the budget 2020-21.
- The Provincial Development Programme for 2020-21 has been estimated at Rs 674 billion as against Rs 912 billion in budget estimates 2019-20, showing a decrease of 26 percent.
- The following Table-27 indicates details of the size of Public Sector Development Programme (PSDP).
Development Expenditure Outside PSDP 2020-21
Under the head of Development Expenditure Outside Public Sector Development Programme, an amount of Rs 70,000 million has been allocated in the budget 2020-21, reflecting an decrease of 18.40 percent over budget estimates 2019-20 and 6.35 percent over revised estimates 2019-20.