News

Check out market updates

AREAS THAT MATTER MOST: Subsidies reduced, development funds increased

These are certainly hard times for the nation which demand austerity and wise management of money all around. Following are the allocations the federal budget 2011-12 announced on Friday provides for some of the important state institutions reflecting the government’s priorities in managing the resources available to it.

Presidency
The expenses of the President House have been increased by 12.88 per cent for the upcoming fiscal year.

Despite tall claims by the government that it would freeze its expenditures, the president has evidently decided that austerity does not begin at home.

The expenses of the staff household and the allowances of the president exceeded the allocation by 8.31 per cent in the outgoing fiscal year. As a result, the expenses of the President House have been increased by 12.88 per cent for the upcoming fiscal year.

The budget of the President’s House was set at Rs427.25 million at the time budget 2010-11 was approved but the actual expenditures of the President house ended up at Rs462.81 million.

So for the upcoming fiscal year the expenditures have been earmarked at Rs482.63 million. It is noteworthy that the major chunk of the increase will go to pay for the increase in the salaries of the staff.

However, the annual salary of the president remains at Rs1 million for the upcoming fiscal year too; he has a budget of Rs3.5 million for presents and charities and Rs15.8 million for entertainments and gifts.

The president has kept his discretionary grant at Rs1 million for the next fiscal year.

PM Secretariat
Salaries of more than 70 gardeners will eat away Rs13.31 million, while more than Rs1 million have been allocated for the maintenance of Prime Minister’s House gardens.

An amount of Rs2.8 million will be spent on Prime Minister Yousuf Raza Gilani’s foreign tours in 2011-12 as against Rs2.6 million in the outgoing fiscal year.

The overall budget of the Prime Minister’s House is Rs1.37 billion for 2011-12 against Rs1.18 billion in 2010-11.

The budget of Prime Minister’s Estate Gardens is Rs14.33 million, with an increase of Rs2.78 million from last year budget of Rs11.55 million.

Salaries of more than 70 gardeners will eat away Rs13.31 million, while more than Rs1 million have been allocated for the maintenance of Prime Minister’s House gardens.

The Prime Minister’s House has 180 servants whose salaries and expenditures stood at Rs45.41 million.

The budget for the conveyance and motor cars of the Prime Minister’s Secretariat is Rs24.63 million, which has increased by
less than Rs1 million, mainly owing to higher fuel prices.

The budget of the prime minister and the president are under the head of charged expenditure which are merely presented to the parliament but the legislators cannot amend the allocations under the law.

CDA
The PSDP allocation for CDA in 2011-12 will be Rs2.08 billion while that of the ICT will be Rs1.26 billion.

The development budget for the capital city has been reduced by 24 per cent to Rs4.361 billion for 2011-12 which is to be used for development schemes, security measures, the local justice system, education and health.

These projects are located in both the urban and the rural areas of Islamabad, managed by the Capital Development Authority (CDA) and the Islamabad Capital Territory (ICT) administration respectively.

The PSDP allocation for CDA in 2011-12 will be Rs2.08 billion while that of the ICT will be Rs1.26 billion. On the other hand, the local police will get Rs362.35 million, and the allocations for the newly formed Capital Administration and Development Division amount to Rs677.35 million.

The development projects in the capital include the construction of 106 family suites for parliamentarians at the Parliament Lodges Complex at a whopping cost of Rs1 billion.

Small amounts have been allocated for other development projects including Rs300 million for the construction of Charah Dam in Islamabad and Rs300 million for the widening of Kashmir Highway. Interestingly, CDA plans to replace the carpets of Faisal Mosque at the cost of Rs14.1 million.

Defence
The operating expenses of the three services stand at Rs128.28 billion, up from Rs111.24 billion in 2010-11.

Of the total Rs501.85 billion given to the defence ministry for fiscal 2011-2012, the Pakistani armed forces walk away with Rs495 billion – an increase of 12 per cent from the Rs442 billion allotted in the last fiscal.

Nearly 50 per cent — Rs206.48 billion — of this significant chunk bestowed to the armed forces is expected to be spent on employees-related expenditures.

Meanwhile, the remainder of the Defence Ministry budget has been split between the ministry itself (Rs963 million), the Airport Security Force (Rs2.52 billion), the Meteorology Department (Rs578 million), Survey of Pakistan (Rs648.54 million) and the FG schools and colleges in cantonments (Rs2.14 billion). It is noteworthy that in contrast to previous years, the actual expenditure incurred by the army, navy and the air force last year was Rs444.64 billion, which was only Rs2.47 billion higher than the budgetary allocation for that fiscal.

The limited escalation in the expenses is attributed to the massive floods of 2010, which diverted the energies of the forces from the operations in the ‘war against terror’ toward the flood relief operations.

For 2011-2012, the operating expenses of the three services stand at Rs128.28 billion, up from Rs111.24 billion in 2010-11.

Interior
The government has slashed expenditures of the civil armed forces.

As the country struggles with the spectre of militancy, the home security departments falling under the interior ministry are given Rs56.09 billion.

The government may claim that institutions such as the police suffer the brunt of the suicide attacks but in reality it has slashed expenditures of the civil armed forces by Rs2.54 billion from the Rs24.08 billion they were given last year.

Nonetheless, the allocation for the Frontier Constabulary is Rs5.63 billion with a nominal increase of Rs1.44 million while the Pakistan Rangers will get Rs11.45 billion which means an increase of Rs218 million over last year. However, Coast Guards’ allocation has been increased by 56 per cent to Rs1.07 billion.

Out of the total budget, Rs5.80 billion has been allocated for development projects of departments under the interior ministry.

The budget of the passport office has been proposed at Rs856 million.

Subsidies
Subsidies for Wapda/Pepco has been slashed by over 50 per cent.

As feared, the government has slashed the subsidies on essential food items and electricity.

The overall amount of subsidies – direct and indirect – was Rs395 billion in outgoing fiscal year. This has now been reduced to Rs166.44 billion for 2011–12.

The subsidies for Wapda/Pepco has been slashed by over 50 per cent to Rs122.70 for 2011-12, while KESC’s hand outs from the government will drop by 48 percent to Rs24.58 billion.

Deep cuts are also proposed on edible items sold for the convenience of the people through the Trading Corporation of Pakistan (TCP) and the Utility Stores. Slashed by 76.64 per cent, the allocation for the new fiscal year is Rs4 billion; there are no allocations for buying wheat and cotton crops at government announced rates to help the farmers.

The subsidies to the utility stores have been proposed to be Rs2 billion, down from Rs4.2 billion in the outgoing fiscal year.

Pakistan Railways
Pakistan Railways is estimated to pay Rs1.84 billion for debt servicing.

In a strange allocation, Rs45 billion has been earmarked for Pakistan Railways in the federal budget 2011-12 whereas its expenditures in the outgoing fiscal year 2010-11 was Rs51.78 billion.

The budget has estimated that the employees-related expenditure for railways in the next fiscal would be Rs11.52 billion although it was Rs15.21 billion in 2010-11.

The operating expenditure of railways is Rs34.23 billion which includes Rs4.69 billion for repair and maintenance, Rs2.58 billion for transportation and Rs1.71 billion for infrastructure development.

During the next fiscal year, Pakistan Railways is estimated to pay Rs1.84 billion for debt servicing. Incidentally the railways was scheduled to pay Rs1.66 billion in debt servicing at the start of fiscal 2010-11, but ended up paying Rs1.94 billion at the close of fiscal 2010-11.

Under the new budget, railways would have to pay Rs5.58 billion as interest payment. The expenditure of Railway police amounts to Rs991 million.

Information & broadcasting
The information ministry has a hidden budget of Rs2.97 billion.

The Ministry of Information and Broadcasting has a hefty budget of Rs4.19 billion for 2011-12, with an increase of Rs672 million against the allocations of Rs3.51 billion in the outgoing fiscal year.

However, under the Information and Broadcasting Division, the ministry has a hidden budget of Rs2.97 billion. This head includes “grants subsidies and write off loans” worth Rs2.7 billion for 2011-12. It was Rs2.39 billion in the budget for 2010-11.

Similarly the operating expenses for these expenditures amount to Rs269 million for 2011-12. The employees related and operating budget of the information ministry amounts to Rs325 million, which includes Rs8.95 million for the “grants
subsidies and write off loans” for its employees.

The ministry still maintains the Directorate of Publications, newsreels and documentaries having a budget of Rs117.31 million, registering an increase of Rs23.65 million over the 2010-11 fiscal year. The budget of Press and Information Department (PID) is Rs325.54 million, with the information services abroad getting Rs456.03 million for 2011-12.

PSDP
The most important feature of this PSDP is that this is the first since the implementation of 18th Amendment and hence Rs430 billion has been set aside for the provinces.

The overall development budget of the country is Rs730 billion for the year that is just ending which is 10 per cent higher than the allocations for the coming year. From the new budget, Rs300 billion is meant for the federal PSDP and Rs430 billion for the provinces.

However, the actual development spending in the outgoing fiscal year was Rs462 billion as the provinces and the federal government could not execute projects due to the floods and the financial crunch because of which PSDP was whittled down.

The most important feature of this PSDP is that this is the first since the implementation of 18th Amendment and hence Rs430 billion has been set aside for the provinces.

Overall, water and energy have been given priority for the new fiscal year. An allocation of Rs33.2 billion or 12 per cent of the total PSDP has been allocated for water projects including the completion of the raising of Mangla; the construction of Satpara Multipurpose Dam (Gilgit-Baltistan) and the Gomalzam Dam (Khyber Pakhtunkhwa).

An allocation of Rs32.5 billion is earmarked for power generation, transmission, distribution and conservation. From this Rs18 billion has been allocated for the Diamer-Bhasha Dam and Rs10.8 billion will be spent on the Neelum Jhelum Hydro Project.

An amount of Rs10 billion has been allocated for the Earthquake Reconstruction and Rehabilitation Authority (Erra) and Rs28.04 billion for AJK, GB and Fata.

HEC
The budgetary allocation will cater to over 160 projects under the HEC.

With the devolution of Higher Education Commission (HEC) round the corner, the government has limited the commission’s budget to Rs14 billion for 2011-12, down by nearly Rs2 billion from last fiscal.

The budgetary allocation will cater to over 160 projects under the Higher Education Commission, which vary from establishment of new universities, laboratories and institutes to the extension of campuses, and cost anywhere between Rs5 million and Rs1 billion.

The current budget provides monetary cover for at least six new projects such as the establishment of the National Institute of Liver and Gastro-Intestinal Diseases at Dow University of Health Sciences, Karachi, two universities at Turbat and Loralai, and the National Defence University. None exceeds Rs60 million.

For other projects, the government has been less thrifty allocating Rs200 million for indigenous PhD Fellowship for 5,000 scholars (phase II); Rs200 million for the Foreign Hiring Programme; Rs300 million for the establishment of University of
Malakand, Swat; and Rs600 million for strengthening University of Engineering and Technology, Lahore.

The two costliest projects are the establishment of the Air University Campus, Multan (worth Rs1 billion) and the Overseas Scholarship for MS MPhil leading to PhD in selected fields (worth Rs1.8 billion).

Discuss, analyse & share your views (kindly avoid sharing your email & contact number for your safety)