Finance Department-Government of Balochistan Whitepaper

July 3, 2015 Government Institutions

Karachi, July 03, 2015 (PPI-OT): Life is stillin grip of chilling poverty and deprivation. The first crescent is yet to be visible and children are yet to learn to pick flowers. Flowers may lose fragrance but atleast not lose petals.

Balochistan is distinct from rest of Pakistan not only geographically but also in its sufferings and treatment meted out. It is distinct to receive attention and negligence. Its presentation at Pakistan Secretariat level is explicit, similarly clout on its socioeconomic and political decisions. This is an established impediment to progress and development of the province.

Balochistan is known to all for its enticing natural resources and Gwadar. No one wants to be aware of suffocation of people in Balochistan. Their mouth, nostrils and eyes are filled with sand particles. The irritation is rendered more terrible by scorching and destructive hot winds of miseries of all possible hues. Quickly end this misery but not annihilation.

This is the fateful hour for Balochistan. It is needed to avoid confusion and disorder, survival is of grave importance. The aspired way of life, distinguished by guaranteed individual liberty and freedom from destitutions, stands for bare minimum needs of life, honour and respect for self and customs.

The discontent due to hatred and alienation and lack of voice in own affairs nurtured miseries and expropriation. Mistrust and hatred spreads and grows in evil soil of poverty and strife. These reach their full growth when the hope of a people for a better life is dead. The hope should be kept alive. Investment is needed for happiness and living of people struggling against overwhelming odds since long. No remorse can mend a heart deprived of love. The truth exists, and ultimately comes out.

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Balochistan: An Overview Balochistan is nearly half of the country`s land mass; however it is with the least population density. Balochistan has a close geographical, social and cultural proximity with Iran and Afghanistan. This province is one of the leading factors accountable for overall relationship between Pakistan, Iran and Afghanistan. The geo-strategic location of Balochistan makes it the most attractive province for transit route to Iran and other countries in the region. The common border-line is responsible for the regular interactions between the similar people living in Pakistan and Iranian and beyond. The strategic trans-national gas pipeline projects and construction of seaport, oil refinery and oil at Gwadar further increase the significance of Balochistan as an important energy conduit in the region. Balochistan`s geography might also be its main economic resource, gold line for Pakistan. The land mass of the province endows Pakistan with a strategic space that might shorten trade and travel costs between emerging economic regions. The long coastline is not only a possible site of transit routes for trade and travel, but also the gatekeeper of rich marine resource The population density is very low, this implies that the province enjoys a potentially high value of natural resources per person.

Division Area Population Districts
Sq Km (1988)
Quetta 64,310 1,699,957 Quetta, Pishin, Qilla Abdullah, Chagai, and Nushki.

Zhob 46,200 1,003,851 Zhob, Musakhail, QillaSaifullah, Loralai, Barkhan, and
Sherani.

Kalat 140,612 1,457,722 Kalat, Mastung, Khuzdar, Kharan, Washuk, Awaran,
and Lasbela.

Sibi 270,55 4,94,894 Sibi, Ziarat, DeraBugti, Kohlu, and Harnai

Nasirabad 16,946 1,076,708 Nasirabad, Jaffarabad, JhalMagsi, Sohbatpur, and
Kachi.

Makran 52,067 832,753 Kech, Panjgur, and Gwadar

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The principal strengths of Balochistan’s economy are natural resource based: mines and minerals, fruit and crops, livestock and fishing. While the economy lacks diversification at the local level, the distinct ecological systems in different areas – flood-plains, uplands, and deserts to the coastal area – lead to a considerable variety at the provincial level. Balochistan’s agriculture focuses on non-staple and high-value products, suitable for the water-scarce high-altitude environment, in addition to crop cultivation in the canal irrigated districts in the northeast close to the Indus Basin. The northern area specializes in horticulture; the central and western districts engage foremost in livestock rearing, and the coastal belt relies on fishery. In addition, rich mineral deposits, such as coal, copper, gold to natural gas, are scattered around the province. Compared with rest of provinces, and the country taken as a whole, Balochistan`s economic and social development appears to face particularly daunting challenges. The province starts from a relatively low level in terms of social achievements such as health, education and gender equity indicators, economic development and physical infrastructure. The fact that Balochistan covers nearly half of the land area of Pakistan while accounting for only a twentieth of the country`s population is a stark enough reminder that any understanding of the province`s economic and social development will need to pay attention to its geographical and demographic peculiarities. Indeed, remoteness, environmental fragility and geographical diversity might be viewed as defining the context of development in the province. Another set of challenges to Balochistan`s economic and social development namely, those relating to institutions, social structures and political fragmentation. The province first came into existence in its present form in 1970. It`s main economic resource is its geography. Low population density means that the province enjoys a potentially high value of na ural resources per person. The forbidding topography is home to rich mineral deposits some of which have been explored and exploited while yet others remain to be put to economic use. The land mass of the province endows Pakistan with a strategic space that might shorten trade and travel costs between emerging economic regions. The long coastline is not only a possible site of transit routes for trade and travel, but also the gatekeeper of rich marine resources. There are both internal and outside political obstacles to social and economic development of Balochistan. It may be argued that the main political obstacles to development might actually lie outside the province: Balochistan`s position in th e federal system; resource rents and allocations to the province; and the role of extra-provincial political stakeholders. There are important contrasts between Balochistan and the rest of Pakistan in terms of comparative advantage and potential sectors of economic growth. While the rest of Pakistan is a labou -abundant economy with potential growth modes in agriculture, manufacturing as well as labour-intensive service sectors; Balochistan is relatively scarce in its endowments of human

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capital, agricultural growth and industrial investment. For the last fifteen years, the overall share of Balochistan in the national GDP has remained constant at 4 percent. Balochistan`s growth potential appears to be closely connected to its integration with the national economy and other regional economies. Any growth strategy for Balochistan would need to take these differences as a point of departure.The agriculture continues to attract interest, like in the rest of Pakistan, as a source of growth, its relative potential in Balochistan is circumscribed by the chronic scarcity of water over much of the province. Livestock and horticulture dominate the agricultural sector in the rest of the province. The introduction of deep submersible tube wells as a drought mitigation measure was meant to support the horticultural economy. Three main nodes of potential economic growth in Balochistan, within the context of Pakistan`s national economy, and the wider regional and global economy, have been identified. These are: (a) mineral resources; (b) trade and transit routes; (c) coastal development The mineral sector is a potentially significant but as yet under-developed sector in Balochistan`s economy. Gas and coal have traditionally been more important amongst the mineral resources of the province and have been utilized widely for national use and export purposes. The share of the provincial governments in oil and gas resources is composed of royalties, Excise Duty and Gas Development Surcharge. In accordance with Rule 18 of Pakistan Petroleum (Production) Rules 1949, royalty on a gas field is calculated by using annual gas production and a fixed price for the well-head. The royalty is 12.5 percent of the total annual gas production, using a well-head price determined at the time of the concession, and can be paid in both cash and kind. Copper, gold, silver, and iron are a few of the more well-known and important minerals present in Balochistan. All four are found in large quantities in Chagai District. In fact one very large deposit of copper and gold found in the small town of RekoDiq in Chagai District has recently been the source of a great deal of controversy and a court case. Natural gas, currently the second largest energy source in Pakistan, was accidently discovered in 1952 near the town of Sui, Balochistan. Natural gas has become almost synonymous with the name Sui, and though Balochistan`s production has increased over time, its percentage share in Pakistan`s total production has decreased. In 1995, Balochistan was contributing nearly 56% to Pakistan`s total output of natural gas, but by 2007 its shares had dropped to 22.7%, and that same year it consumed only 5.81% of the country`s total output. Currently, Balochistan is the second largest producer of gas in Pakistan after Sindh. But consumption of natural gas is greatest in Punjab followed by Sindh, whereas Balochistan and KPK consume much less. Majority of the natural gas is produced in one geographical region comprising of East Central Balochistan and Upper Sindh. The oldest and largest natural gas field in Pakistan is the Sui Gas

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Field located at the foot of the Marri-Bugti Hills in Balochistan. The second largest gas field, Marri Gas Field, is located in Upper Sindh. Despite the extraction of gas since the 1950s, approximately only 14 urban townships receive gas supply, including Quetta, Kalat, Mastung, and Pishin. There are still a large number of rural areas in Balochistan, including those near to the gas field, that do not have access to gas. This issue and the distribution of income from the natural gas to Balochistan has been a source of great tension within the province. These tensions have come to a head in the last decade with numerous bombings of the gas pipelines by Baloch nationalists. Pakistan is believed to have 186 billion tonnes of coal reserves as of 2013, but is mostly of poor quality. Sindh has the largest coal reserves of 185.5 billion tones, followed by Balochistan, which is believed to have 0.459 billion tonnes of coal reserves (less than 1% of Pakistan`s total reserves). Despite this it contributes more than 50% to Pakistan`s total coal production annually. The majority of the coal is used in brick kilns and a small amount is used as an energy source.

The number of developed coalfields in Balochistan is 6 . There is the Mach-Abegum coalfield found in Bolan district approximately 70 km southeast of Quetta. Sor Range- Sinjidi-Deghari coalfield is situated 28 km east of Quetta and is considered the deepest coalmine in Pakistan. Pir Ismail Ziarat-Margar-Narwar coalfield is situated 60 km east of Quetta, and the Duki-Anambar coalfield is located in Loralai District. The Khost-Sharig-Harnai coalfield is located in Sibi District about 160 km from Quetta and the Chamalang coalfield is found in Loralai District.

Balochistan has a considerable potential of wind energy in the coastal belt .Balochistan lies between 24°55` and 32°14` latitude and 61°00` and 70°15` longitude and is the largest province of Pakistan in terms of area, covering 347.19 thousand km2. The province has about 800 km long coastline whose continental shelf extends to a distance of 1540 km. The province has a population of around 8 million, of which about 76% lives in rural areas. Majority of the Balochistan`s rural population still have no access to electricity and mostly use kerosene for lighting purpose. Balochistan consumes about 4.1 TWh/ year of electricity, which is only 5.6% of the total electricity consumption in the country. Per capita yearly electricity consumption in the province is only 490 kWh. The technical potential of wind power has been estimated as 41.6 GW, which is about 2 times the current power generation installed capacity in Pakistan. About 42.5 TWh of electricity could be generated annually from CGC on-shore wind farms, which is about half of the current total conventional electricity generation in Pakistan and 10 times the annual electricity consumption in the province of Balochistan. The province of Balochistan is ideal for utilization of solar energy. Balochistan province is particularly rich in solar energy. It has an average daily global insulation of 19 to 20 MJ/m2 per day with annual mean sunshine duration of 8 to 8.5 hours a day and these values are among the

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highest in the world. For daily global radiation up to 23MJ/m2, 24 (80%) consecutive days are available in this area. Such conditions are ideal for PV and other solar energy applications. We can make use of this freely available and widely distributed solar energy for improving the socio- economic conditions of the people. If 0.25% of Balochistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand. Balochistan is located at an important geo-strategic position. Opposite Straits of Hormuz, it is on the cultural and geographical crossroads of South Asia, Central Asia and the Middle East. The Straits of Hormuz marks an entry into the Persian Gulf and is an important route for oil trade.Nearly 17 million barrels of oil passes through the Straits of Hurmoz daily. Straddled by the 900 km western border with Iran, and around 1200 km north-western border with Afghanistan, Balochistan opens access to these mineral-rich and strategically import nt areas42. It also marks an entry point into the resource-rich landlocked provinces of Punjab and KPK. Its geographical proximity to the oil and gas deposits of Central Asian regions adds to its strategic importance. The coast of Balochistan extends for 770 km, making up 70 percent of Pakistan`s coastline. The coast is scenic and houses various types of marine life forms, which presents an opportunity for both tourism development and marine fishing. Along with development of mineral resources, promoting Balochistan as a tourist attraction and developing coastal and marine resources. Balochistan also accounts for almost thirty percent of Pakistan`s landed catch. Balochistan`s fisheries sector contributed to 9 percent of the national fisheries sector. In the last decade, the production of fish and domestic and export distribution has remained almost unchanged. The fisheries sector is also a source of employment for many in the coastal areas. Nearly 70 percent of the total employed persons in the coastal distr cts are associated with the sector. economic development potential of the province is largely pegged to sectors and activities that will require the exploitation of natural resources minerals, marine resources and strategic location.

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CHAPTER 1: ESTIMATES OF RECEIPTS

Provincial Government receipts are categorized, according to Annual Budget Statement, under the following headings:

General Revenue Receipts

Development Revenue Receipts

Capital Receipts

Development Capital Receipts

The following flow diagram provides different sub-categories of the receipts under the four main categories mentioned above:

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For the purpose of this chapter and the budget, Development Revenue

Receipts have been included as a part of Non-Tax Receipts.

In FY 2014-15, total receipts were estimated as.176,772.000 Million. For FY2015-16, total receipts have been estimated to the tune of Rs. 188,557.00 Million Against the Revised Estimate of Rs.177.917 Million. In this way, Budget Estimate2015-16 of total receipts reflect a growth of 5.98 % over Revised Estimates of FY2014-15. BE2015-16 of Provincial Tax Receipts have been fixed at Rs.3,599.749 Million in compare is on with revised estimates of Rs.2 , 8 3 6 . 6 7 9 Million for FY2014-15 showing a growth of 26.90%. For Non-tax receipts, an estimate of Rs .4,244.930 Million has been fixed in FY2015-16 against revised estimates of Rs. 4,973.870 Million in FY2014-15.

Table below summaries the estimates of total provincial receipts of the government

Table1.1 – Total Provincial Receipts
(Rs .In Million)
RECEIPTS Budget Revised Budget
Estimate Estimate Estimate
2014-15 2014-15 2015-16

General Revenue Receipts 176,771.767 177,917.477 188,556.862

Federal Receipt 167,801.283 170,106.928 180,712.182
Divisible Pool 141,212.835 141,212.835 155,992.825
Straight Transfers 16,588.448 13,023.828 14,719.357
Other Grants from Federal Govt. 10,000.00 15,313.566 10,000.00
Previous year`s arrears. – 556.699
Provincial Own Receipt 8,970.484 7,810.549 7,844.679
Provincial Tax Revenue (Including 3,508.676 2,836.679 3,599.749
GST on Services)

Provincial Non-Tax Revenue 5,461.808 4,973.870 4,244.930
Current Capital Receipts 20,488.686 24,013.654 25,578.206
Recoveries of Loans and Advances 842.124 157.920 5,848.300
Debt 12,845.244 15,711.828 11,600.000
State Trading – (A/c. No.II) 6,801.300 8,143.906 8,129.906
Development Capital Receipts 2,791.712 3,676.830 3,391.400
Total Provincial Receipts 200,050.903 215,889.170 217,526.467

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The definitions, composition and analysis of different types of receipts are given below:-

GENERAL REVENUE RECEIPTS.

Main elements of General Revenue Receipts are as follows: Federal Transfers: Share of Federal Divisible Pool of Taxes under the 7th NFC Award. Straight Transfers on account of constitutional provisions: royalties on oil and gas Federal Grants Provincial Own Revenue: Provincial Tax Revenue including Sales Tax on Services Provincial Non-Tax Revenue Extraordinary Receipts

Table1.2 shows theestimatesforGeneralRevenueReceiptsforFY2015-16incomparisonwithRE2014- 15 and BE2014-15.For the purpose of clarity, Federal Grants and Straight Transfers, which are part of the provincial non-tax receipt sin the Annual Budget Statement, have been shown
separately to give a clear picture of the provincial non-tax revenues under the control of the Provincial Government.

As depicted inTable1.2 below, General Revenue Receipts were estimated at Rs. 200,050.903 Million. In FY2015-16, budget estimate of General Revenue Receipts has been pitched at Rs.217,526.467 Million against revised estimate of Rs.215,889.170 Millions, an increase of approximately 0.75 % over revised estimates of these receipts in FY 2014-15. Moreover, increase in the estimates of Provincial Tax Revenue in FY 2015-16 against the revised estimates of these receipts for FY 2014-15 is not encouraging.

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Table 1.2- General Revenue Receipts
(Rs. In Million)
RECEIPTS Budget Revised Budget
Estimate Estimate Estimate
2014-15 2014-15 2015-16
Federal Divisible Pool Taxes 141,212.835
Taxes on Income 59,017.280 59,017.280 67,283.708
Capital Value Tax 34.783 34.783 68.031
Custom Duty 14,053.309 14,053.309 15,001.732
Tax on Sales 59,627.437 59,627.437 63,876.031
Federal Excise 8,480.026 8,480.026 9,763.323
Provincial Tax Revenue 3,508.676 2,836.679 3,599.749
Total Non-Tax Revenue (Excluding 26,793.362 29,249.324 31,049.616
Straight Transfer and Grants)
Income from Property and Enterprise 6,801.300 8,143.906 8,129.906
Capital Receipt 13,688.130 15,973.628 12,826.480
Receipts from Civil Administration and 5,396.801 4,627.746 4,162.167
Other Functions
Capital Own Provincial Receipt 842.124 157.920 5,848.300
Miscellaneous Receipts 65.008 346.124 82.763
Straight Transfers 16,588.448 13,023.828
14,719.357
Net Proceeds of Royalty on Crude Oil 16.023 4.224 8.291
assigned to Provinces
Net Proceeds of Excise Duty on Natural 1,662.080 1,861.020 1,910.020
Gas assigned to Provinces
Net Proceeds of Royalty on Natural Gas 10,640.330 6,234.103 6,414.374
assigned to Provinces
Surcharge on Natural Gas-share of net 4,270.015 4,924.481 6,386.672
proceeds assigned to provinces
Arrears – 556.699 –
Federal Grants 11,947.582 29,009.806 12,164.920
Development Grants from the Federal Govt – 1,0281.210 –
Foreign Grants – Dev. Grants from Foreign 1,947.582 3,415.030 2,164.920
Govts.
Non-Dev. Grants from the Federal Govt. 10,000.000 15,313.566 10,000.00
Total Non-Tax 196,542.227 213,052.491 213,926.718
Total General Revenue Receipts (A+B) 200,050.903 215,889.170 217,526.467

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The above pie chart depicts the dependence of Provincial Government on FederalTransfers. The combined share of Federal Divisible Pool Taxes is more than 60%. Therefore,even a small percentage variation in Federal Transfer warrants a major adjustment in provincial expenditure. Following is the analysis of major components of General Revenue Receipts.
Federal Transfers
Federal Divisible Pool Taxes

The tax revenue collected by the Federal Government is distributed between the Federation and the Provinces and amongst the Provinces on the basis of NFC Award. This share of the province under the NFC Award is known as Federal Divisible Pool Transfer. Table1.4 below reflects the BE2014-15, revised estimate of FY2014-15 along with estimated FBR receipts for FY2015-16.

Table 1.3 – Federal Divisible Pool Taxes

(Rs.In Millions)
Budget Revised Budget
PARTICULARS Estimate Estimate Estimate
2014-15 2014-15 2015-16

i. Direct Taxes Income Tax 59,017.280 59,017.280 67,283.708
ii. Indirect Taxes 82,195.555 82,195.555 88,709.117
Federal Excise 8,480.026 8,480.026 9,763.323
Custom Duty 14,053.309 14,053.309 15,001.732
Sales Tax 59,627.437 59,627.437 63,876.031
Capital Value Tax 34.783 34.783 68.031

Under the 7th National Finance Commission Award, the percentage share of the provinces in the Divisible Poolis57.5%w.e.f.FY2011-12. Due to increase in the nominal size of the Federal Divisible Pool, transfers to Balochistan are expected to increase. Under the7th NFC Award, the Divisible Pool now comprises Taxes on Income, Customs Duties, Sales Tax, Federal Excise excluding Excise Duty on Gas charged at well head, and any other tax levied by the Federal Government. With the exception of Federal Excise Duty on gas, the taxes listed above are distributed between the province sand the Federal Government in the ratios given below:
Table 1.4- Vertical Distribution of Resources

Provincial share Federal share

57.50% 42.50%

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The provincial share is divided amongst the provinces in the ratios given below. This share was decided on the basis of a multiple criteria based on population inverse population density, revenue and poverty.
Table 1.5- Horizontal Distribution of Resources (%)

Punjab Sindh KPK Balochistan

51.74 24.55 14.62 9.09

The major increase in the Divisible Pool Taxes is expected from theIncomeTaxandSalesTax.Thesetwotaxescollectivelycontributeto67%ofBalochistan`ssharefromt heFederal Divisible Pool. Straight Transfers Under Article 161 of the Constitution and the NFCA ward, Straight Transfers to the provinces include: The net proceeds of the Federal excise duty on natural gas Netproceedsofroyaltyoncrudeoilandnaturalgasassignedtotheprovinces under the Constitution.
Royalton Gas: Sui gas field has sustained the energy economy of Pakistan for about 50 years. Thefield is now fast depleting and its production has declined from 80 to approximately 20%. Earliest the well-head price of the gas was amongst the lowest in the country. With the efforts of the government, however, the wellhead price of the gas had been enhanced to Rs.163.13 MMBTU during year 2009-10. This help edtoraise the non-tax receipts in the relevant head from Rs3,006.776 (2008-09) to Rs.4,443.718 Million (2009-10).
Gas Development Surcharge (GDS) GDS isthe difference between consumer price and prescribed price. While consumer price is paid by the end-user, prescribed price is comprised of the elements including cost of gas, Excise Duty of Rs. 5.09 per MMBTU, transmission and distribution expenditure, depreciation on fixed assets, minimum return to gas companies etc.

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GDS has been collected by gas companies under Natural Gas (Development Surcharge) Rules, 1967 famed under recommendation of the NFC, net proceeds of GDS are being distributed to the provinces from 1990, the net proceeds of GDS (after 2% collection charges) have been distributed to the provinces in accordance with their percentage share in total production of gas. Prior the announcement of NFCA ward in 1991, the GDS was generated only from gas resources emanating from Balochistan. The surcharge was, however not paid to the Provincial Government but utilized form development of other Gas Fields in the country. The act deprived the province of Rs. 29,000 Million. Subsequently, the GDS was announced as it saved the interests of the new gas fields because of their larger share in production. Government of Balochistan always pleaded that the province should be compensated for its depleted resources and the amount utilized for exploration of new gas fields be paid with interest which by June 2009-10 came to Rs.178, 97.000 Million.

The revised Estimates of GDS production from all systems in 2004-05 was Rs.16, 471.85Million.of which the SNGPL and SSGCL, main resources from Balochistan (sharing approximately 20% of the gas injecting in national energy outlay) are produced a GDS of only Rs. 2,006.3Million. Due to the mechanism of mixing Balochistan gas (having low well-head price) in the past with high price gas of Punjab and Sind hand taking the weighted average cost of gas as input cost of gas for determining the prescribed price, Balochistan has been providing gas subsidy of approximately Rs.14.6billionperannumtothe consumers of the other three provinces, the province should be compensated for the subsidy paid and amount may be provided by Federal Government/ companies I the form of arrears.

The Straight Transfers less Excise duty on Natural Gas are being paid on the close of each Financial Year. The delayed payments of ten result on to accumulation of over draft the SBP. More fiscal space can be acquired for the province if these dues are paid on accrual or monthly basis directly in to Provinces account by the Gas Campaign making it timelier and saving nearly2% collection charges paid by Balochistan. Under straight transfers, the provinces are entitled to receive net proceeds on Federal Excise Duty on natural gas, power, Royalty on crude oil and Surcharge on natural gas. Straight Transfers to Balochistan during 2015-16 has been pitched at Rs— Million..

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The Financial Year 2010-11, besides considerable increase in the Divisible Pool Taxes, also has positive interventions with regard to receipts in the shape of Straight Transfers, the estimates of transfer form Royalty on Natural Gas and Gas Development Surcharge for the Current Financial Year reflect the same trend but the volume of Straight Transfer due to an enormous increase in the estimates of GST on Services from Rs 301.870 Million to Rs.4,557.248 Million.

Excise duty on gas` Royalty on gas and Surcharge on gas are of the most important revenues included in Straight Transfers. The revenues somehow were on a decline till 2003-04, which started taking an upward trend mainly due to increasing well- Head price and payment of arrears. The straight transfers to the Provincial Government are reflected below in figure.

Table 1.6 – Straight Transfers for FY 2014-15 and FY 2015-16
(Rs. In Millions)
Budget Revised Budget
Straight Transfers Estimate Estimate Estimate
2014-15 2014-15 2015-16

Net Proceeds of Royalty on Crude Oil 16.023 4.224 8.291
assigned to Provinces
Net Proceeds of Excise Duty on Natural 1,662.080 1,861.020 1,910.020
Gas assigned to Provinces
Arrears of Excise Duty on Natural Gas – 556.699 –
assigned to Provinces
Net Proceeds of Royalty on Natural Gas 10,640.330 6,234.103 6,414.374
assigned to Provinces
Surcharge on Natural Gas-share of net 4,270.015 4,924.481 6,386.672
proceeds assigned to provinces
Total 16,588.448 13,580.527 14,719.357

Importance of natural gas for Balochistan should be understood. The gas resources in Balochistan- Loti, Pirkoh and Sui- have been harnessed for last 68 years now to the fullest extent and resources are near to dry. Natural gas from these gas fields of Balochistan contributed to national economy at a rate of three billion a year. If this amount gas was not available from Balochistan the country had to import oil as substitute spending at least three billion dollar per annum. This gas was used for development of economy, outside Balochistan. But it was alsosquandered by millions of street vendors for their cheap and worthless products all over the country except Balochistan. Hence the contribution of Balochistan to national economy is of 180 billion dollars.

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Provincial Own Receipts The Provincial Own Receipts consist of the following:

Tax Receipts

Receipts from Direct Taxes(Agricultural Income Tax, Property
Tax, Land

Revenue, Professional Tax, Capital Value Tax etc.)

Receipts from Indirect Taxes (Sales Tax on Services, Provincial Excise, Stamp Duties, Motor Vehicle Taxes, Electricity Duty etc.)

Non-Tax Receipts

Income from property and enterprises

Receipts from civil administration and other functions

Miscellaneous Receipts (other receipts excluding Grants and Federal; Development Surcharges and Royalties

Extra ordinary Receipts

The estimates of Provincial Own Receipts are provided in Table1.7 below. The table shows that during FY2014-15, the actual collection of Provincial Own Receipts. The estimates of Provincial Own Receipts are provided in Table 1.7.

Table 1.7- Provincial Own Receipts
(Rs. in Million)
Budget Revised Budget
RECEIPTS Estimate Estimate Estimate
2014-15 2014-15 2015-16

Tax Receipts 3,508.676 2,836.679 3,599.749
Direct Taxes 3,428.435 2,753.749 3,514.616
Indirect Taxes 80.240 82.930 85.133
Non-Tax Receipts 5,461.808 4,973.870 4,244.931
Income from Property and Enterprises 953.025 443.869 474.525
Receipts from Civil Administration and 814.785 609.464 715.602
other Functions
iii. Miscellaneous Receipts 3,693.998 3,920.538 3,054.804
Total Provincial Own Receipts 8,970.484 7,810.549 7,844.680

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Table 1.8 shows department wise collection of provincial Tax receipts

Table 1.8- Provincial Tax Receipts
(Rs. in Million)
Budget Revised Budget
TAX RECEIPTS Estimate Estimate Estimate
2014-15 2014-15 2015-16

Board of Revenue 453.720 585.864 748.300
Agricultural Income Tax 0.500 1.000 10.000
Registration 95.000 25.000 95.000
Land Revenue 114.220 189.827 237.800
Stamps 244.000 370.037 405.500
Excise and Taxation 2949.314 2115.280 2710.914
Urban Immovable Property Tax 87.720 60.000 87.720
Tax on Professions, Trades and Callings 2.700 1.350 2.700
Receipts under Motor Vehicle Acts 521.138 521.200 551.500
Sales Tax on Services 1912.630 1031.580 1500.000
Capital Gains Tax 3.500 3.500 3.500
Provincial Excise 417.028 495.254 560.896
Other Indirect Taxes 4.598 2.396 4.598
Transport 30.000 55.000 60.000
Motor Vehicles fitness certificate and permit fee 30.000 55.000 60.000
Energy 75.642 80.535 80.535
Electricity Duty 75.642 80.535 80.535
TOTAL 3508.676 2836.679 3599.749

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The target for the next financial year 2015-16 for (AIT) has been set at Rs.—-Million. It is very easy to say that like other sectors, income from agriculture should also be taxed but its assessment and collection is very difficult because of many reasons.

Agriculture Land Ownership in Balochistan

(As per Agriculture Statistics 2000)

Less than 5 acre (%) 5 to 25 acres (%) 25 to 50 acres (%) 50 acres and plus (%)

GST on Services
The Government levied GST on services on following services w.e.f.

01.07.2010 as the right of provinces to collect GST on Services was recognized by the
th
Federal Government during deliberations on 7 NFC Award:-

Telecommunication Banking Shipping Agents Insurance and other financial services Stock Brokers Advertisements on Cable TV and similar services Collection of General Sales Tax on Services in FY 2011-12 was assigned to Federal Board of Revenue in conformity with Record Note signed between Federal Government and Provincial Governments. Presently the Federal Government is collecting the GST on behalf of provincial Government, but the present provincial Government has decided to establish it own Balochistan Revenue Authority to collect the tax in the near future. The Government of Balochistan has decided to go for legislation in this regard in the FY 2013-14. Three federating units — Sindh, Punjab and KP — have their own revenue collecting arms, whereas Balochistan has yet to set up its own revenue authority. The federation iscollecting the tax on its behalf.

Excise and Taxation Department

The following bar chart shows the comparison of budgeted and collected taxes by Excise and Taxation Department. The shows the Department achieved its targets in the FY2014-15.

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Table 1.9 shows a comparison of the Provincial Non-Tax receipts between FY 2014-15 and FY 2015-16.

Table 1.9- Provincial Non Tax Revenue

(Excluding Federal Grants and Development Surcharges and Royalties)
(Rs. In Million)
Budget Revised Budget
NON TAX REVENUE Estimate Estimate Estimate
2014-15 2014-15 2015-16

Income from Property and Enterprises 953.025 443.869 474.525
Interest on Loans to Financial Institutions 880.000 416.000 400.000
Interest on Loans to Non-Financial 46.525 – 46.525
Dividends 26.500 27.869 28.000
Civil Administration and other Functions 42.085 38.074 57.002
General Administration 42.085 38.074 57.002
Law and Order 247.300 246.100 293.900
Justice Department 123.200 88.900 102.400
Police 112.100 147.200 179.500
Jail 12.000 10.000 12.000
Community Services 231.000 137.000 147.500
Communications and Works 170.000 60.000 62.500
Urban Planning andDevelopment 34.000 50.000 55.000
Public Health 27.000 27.000 30.000
Social Services 294.400 188.290 217.200
Education 170.000 56.700 67.950
Health 75.000 82.550 96.600
Miscellaneous Labour 47.300 0.940 1.050
Mines Inspectorate Mines and Mineral 46.500 49.000
Social Welfare 2.100 1.600 2.600
Miscellaneous Receipts 3628.990 3574.414 3054.804
Food 3.000 0.050 0.100
Agriculture 324.645 191.003 342.650
Fisheries 13.645 12.965 15.291
Animal Husbandry 79.300 72.600 80.100
Forest 55.000 59.225 83.650
Irrigation 87.900 91.900 100.900
Stationery and Printing 13.500 16.000 16.500
Industries 45.000 56.450 57.850
Mines and Minerals 75.000 147.221 150.000
Development Surcharge and Royalties 2917.000 2917.000 2110.000
Extra Ordinary Receipt (Sale of Land) 15.000 10.000 15.000
Misc: 65.008 346.124 82.763
TOTAL NON-TAX RECEIPTS 5461.808 4973.871 4244.931

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TTTT
Table 1.10 – Development Revenue Receipt
(Rs. In Million)
Budget Revised Budget
Particulars Estimate Estimate Estimate
2014-15 2014-15 2015-16

Foreign Grants from Federal Govt: 1,947.582 3,415.030 2,164.920

Other Development Grant – 10,281.210 –

Total Development Grants 1,947.582 13,696.240 2,164.920

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CURRENTCAPITALRECEIPTS Current Capital Receipts mainly accrue from new loans borrowed or raised by the Provincial Government and recoveries of loans granted to provincial establishments or their employees. Current Capital Receipts may be credited either to the Provincial Government`s Account No. I (Non-Food Account) or Account No. II (Food Account), depending on the nature of the receipt. Money rose through loans, budgetary support programme of multi laterals, recoveries of principal amount of loans advanced by the Government to its employees and autonomous bodies are credited to Current Capital Receipts (Account No. I).On the other hand, receipts from sale of wheat and financing for procurement of wheat accrue to Account No. II.

Table1.11 -Current Capital Receipts

(Rs. in Millions)
Budget Revised Budget
RECEIPTS Estimate Estimate Estimate
2014-15 2014-15 2015-16
Loans and Advances/Recoveries of
Loans and Advances 842.124 157.920 5848.300
From Financial Institutions 200.000 – 5,200.00
From Non-Financial Institutions 465.250 – 465.250
From Government Servants 176.874 157.920 183.050
Debt 844.130 261.800 1,226.480
Permanent Debt-Domestic – – –
Permanent Debt-Direct (Access to Justice – – –
Programme)
Recovery of Investment – – –
Permanent Debt-Foreign 844.130 261.800 1,226.480
Account No. I (a) + (b) 1686.254 419.720 7074.780
State Trading Schemes 6,801.300 8,143.906 8,129.906
Cash Credit Accord; Account No.II 8,344.000 8,314.828 7,100.000
Cash Credit Accound; Account No.II 4,500.000 7,397.000 4,500.000
Total Current Capital Receipts (I and II) 21,331.554 24,275.454 26,804.686

Permanent Debt – Account No. I

Direct debt and loans borrowed from or through the Federal Government i.e. domestic and foreign loans comprise the permanent debt of the provincial government. Government of Balochistan has not been borrowing from any domestic source.

Public Debt Account No. II (Food Account)
Account No. II, like Account No. I, is also maintained with the State Bank of Pakistan. The distinction, however, is that this account is meant exclusively for transactions relating to state trading in food commodities by the Food Department. Finances for food commodity purchases are raised through what is known as Cash Credit Accommodation.

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DEVELOPMENT CAPITAL RECEIPTS

Development Capital Receipts comprise loans borrowed from multilateral on or agencies through the Federal Government for specific foreign-assisted development projects. Combined with the Development Revenue Receipts and surpluses from the General Revenue Account and Capital Account, Development Capital Receipts finance the Annual Development Programme of the province. The Budget Estimates 2015-16 for Development Capital Receipts is Rs.—— Million compared to Budget Estimates 2014-15 of Rs.844.130 Million and RE 2014-15 of Rs. – Million.

Table 1.12 -Current Capital Receipts
(Rs. in Millions)
Budget Revised Budget
Development Capital Estimate Estimate Estimate
2014-15 2014-15 2015-16
Domestic Debt —
Foreign Debt 844.130 261.800 1,226.480
261.800 1,228.480
Total 844.130

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CHAPTER 2: ESTIMATES OF EXPENDITURE.

Under Article 118 of the Constitution of Islamic Republic of Pakistan 1973, General Public Service Over all expenditures of the government is classified under Provincial Consolidated Fund and Public Account of the province. Components and streams of financing items of Provincial Consolidated Fund and Public Account are represented in the Figure2.2.

Figure 2.2: Expenditure Classification

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Transactions on receipt and expenditure side which are not part of the Provincial Consolidated Fund are explained separately in the Chapter of the White Paper on Public Account. As regards the expenditures from the Provincial Consolidated Fund, the same are classified in to following categories:

Current
Current Revenue Expenditure
Current Capital Expenditure
Development
Revenue Expenditure
Capital Expenditure.

Current Revenue Expenditure

Current Revenue Expenditure includes the expenditures on the regulatory functions of the government and provision of social and economic services. According to the Chart of Accounts under the New Accounting Model adopted through PIFRA, World Bank`s funded project, computerized disbursement budgetary mechanism which has become functional almost in all districts in Balochistan, following are the main functional heads of expenditure in Current Revenue Expenditure: Public Order and Safety Affairs Economic Affairs Environment Protection Housing and Community Amenities Health Affairs and Services Recreational, Culture and Religion Education Affairs and Services Social Protection

Current Capital Expenditure

Current Capital Expenditure like current capital receipt figures both in the Account No. I and Account No. II of the Provincial Government maintained with the State Bank of Pakistan. Expenditure items under Current Capital

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Expenditure in Account No. I include the following:

Principal Repayment of Domestic and Foreign and Market Debt. Expenditure on repayment on account of Ways and Means Advances availed by the Government of the Balochistan from the State Bank of Pakistan is also included in this category;

Loans and advances to corporate bodies of the Government of Balochistan or associated with the Government of Balochistan.

Expenditure in Account No.II, are mainly incurred on state trading operations of the government in food grains especially procurement of wheat and repayment of loans taken from banks for trading operations of Food Department.

Development Revenue Expenditure

He expenditure under this grant pertains to most of the expenses other than the brick and mortar expense. Employees related expense, purchase of transport, machinery and equipment, operating expenses, research and development, training etc. provided under the projects during the execution of the projects are all part of the development revenue expenditures.

Development Capital Expenditure

Development capital expenditure is the capital investment under the development programs for roads, buildings, irrigation sectors etc.

OVER VIEW OF EXPENDITURE

In Financial Year 2015-16, total financial outlay of the government has been estimated at Rs. 243.528 Billion. In FY-2015-16, size of the Provincial Development Budget has been pitched at Rs. 54.505 Billion including Provincial PSDP Rs. 51.077 Billion and Foreign Project Assistance Loan of Rs. 3.429 Billion. An allocation of Rs.168.548 Billion has been proposed for current expenditure in FY 2015-16, against revised budget estimates 2014-15 of Rs.138.487 Billion representing an increase of approximately 21%. Despite persistent in factionary trends, Increase in salaries, allowances and pensions of employees of the government, allocations of development expenditure have been protected by adopting a considerable increase in development budget. This is in conform it with the development vision of the in cum bent government where allocations of development budget are protected through austerity measures, curbing wasteful expenditure, improving budgetary efficiency, monitoring out comes against budgetary allocations and bringing efficiency, effectiveness and economy in government operation

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Table 2.1 reflects the allocations for Current Revenue Expenditure and Development Expenditure of Balochistan Got; for the year 2014-15 and 2015-16.

Table: 2.1 Current and Development Expenditure
(Rs. in Millions)
Budget Revised Budget
Classification Estimates 2014-15 Estimates 2014-16 Estimates 2015-15

General Administration 24,762.649 25,647.562 28,751.447
Law and Order 20,280.510 21,561.228 26,957.714
Community Services 11,250.261 12,523.091 11,681.755
Current
Social Services 48,674.147 48,657.769 60,571.351
Economic Services 28,260.928 28,721.970 39,044.394
Debt Servicing 1,821.699 1,376.368 1,542.050
PSDP 48,019.000 41,521.000 48,309.000
Outside PSDP (Federal) 0.000 150,000.000 0.000
Development Foreign Project 2,723.000 3,677.000 3,391.000
Assistance Loans/ Grants
Total Expenditures A+ B 185,792.195 333,685.989 220,248.710

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After FY 2009-10, subsequent financial years witnessed a palpable increase in size of provincial development allocation but with each passing year allocation for development is not increasing by an impressive quantum.

Table 2.2 shows the outlay of development budget of Balochistan Government including assistance loans and grant etc. for last five years and allocation for FY2015-16.

Table: 2.2 Development Budget
(Rs. in Millions)
Budget Revised
Fiscal %
Year Estimates Estimates
2009-10 18,536.322 25,441.294 27.14
2010-11 26,753.566 34,664.043 22.82
2011-12 31,367.845 33,988.848 7.71
2012-13 35,818.855 35,302.352 -1.46
2013-14 43,912.875 37,003.119 -18.67
2014-15 50,741.681 45,198.387 -12.26
2015-16 51,076.643

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In this regard, it would be pertinent to add that in last three years despite substantial increase in salary and allowances of government employees, allocations for development program of the province has registered a significant increase. But the entire available resources were sent on brick and mortar without any improvement in service delivery.

CURRENT REVENUE EXPENDITURE

Table 2.3 summarizes the Budget Estimates and Revised Estimates of Current Revenue Expenditure for FY2014-15 along with Budget Estimates for FY2015-16.

Table: 2.3Current Revenue Expenditure
(Resin Million)
CLASSIFICATION BE 2014-15 RE 2014-15 BE 2015-16

Current 133,228.496 137,111.621 167,006.660
General Administration 24,762.649 25,647.562 28,751.447
Law and Order 20,280.510 21,561.228 26,957.714
Community Services 11,250.261 12,523.091 11,681.755
Social Services 48,674.147 48,657.769 60,571.351
Economic Services 28,260.928 28,721.970 39,044.394
B.DEVELOPMENT 50,742.00 45,198.000 51,700.000
ADP including operational
shortfall
TOTAL EXPENDITURE (A+B) 183,970.496 182,309.621 218,706.66

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Salient Feature o f the Allocations for different Departments/ Functions for FY
2015-16. Outlay of current expenditure for FY 2015-16 is estimated at Rs 51,700.000 Million against Revised Budget Estimates of Rs. 45,198.000 Million for FY2014-15 which shows an increase of approximately 14.38%. The allocations in the current budget for FY2015-16 have been made on the parameters of incremental formula under contingent expenditures of permanent budget 2014-15 in view of inflation rate and requirements of the departments. This year like previous year emphasis has been to cater needs of police department which is glaringly evident from revised estimates of FY 2014-15.

10% increase in pay and pension for civil employees of Government of Balochistan.

Recurring cost of transfer of development programs to non- development budget after the completion of schemes. Owing to persistent in factionary trends, prices of POL and Utilities like electricity have been revised upwards frequently in last two y e a r s . To absorb this increase, allocations in current FY have been made commensurate with this

Increase

Huge Allocation for provision of free medicines in public sector hospitals Inclusion of new Initiatives programs in Education and Health sectors Huge allocations for distribution of free books

Public Order and Safety Affairs

Under this head expenditures included are:

Administration of justice,

Administration of Law and order

police,

levies,

Balochistan constabulary,

prisons, prosecution and

civil defense

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Allocation for Police has been increased from Budget Estimates-2014-15, Rs 9,265.181 to Rs13,608.265 in 2015-16.Whereas, Revised Estimates of 2014-15 was Rs. 9,993.450 Million. In this way, an additional allocation of Rs. 3614.815 Million has been provided to Police which represents an increase over Budget Estimates2014-15 despite revival of B area in the province.

It is very pertinent to mention here Police in Balochistan is only to look after five per cent of its geographical area,17,359.5 sqKm. Police as elsewhere in Pakistan is top heavy with a huge number of officers. Balochistan Constabulary is a part and parcel of Police, detail of strength is:

IGP=1, Addl:IG=4, DIG=16, SSP=90, ASP=5, DSP=289, PDSP=39, IP=565, MM- IP=5PI=48, SI=1686, ASI=2673, HC=7902, Constable=22212 and Ministerial Staff=3080

TOTAL=3861538615

Whereas, total strength of levies Forces for reaming, 95% geographic area of Balochistan, 329830.5 Sq Km, ia14831(BPS 18-16= 212 and remaining 14619).

Area of Total
LEA BE 2014-15
responsibility Strength
SQ Km
Police 17,359.5 38,615 12,197.705

Levies 329830.5 14831 5,053.413

Conversion of B into A (CBA) Project in 2003 converting Balochistan in to police controlled area phase-wise by 2008. Traditional Levies Force was merged in police. The former government restored B area and revived Levies Force on consistent demand of the people in the province. Separation of Levies from police raised a great challenge for Finance Department on issue of missing posts due to repatriation of Levies Force officials/personal who got one step promotion in police. Any further merry go round with B to A and A to B area conversion will add more on expenditure side without any salubrious effect.

Table 2.4 below gives the break-up of this allocations for different departments classified under public order and safety affairs

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Table:2.4Public Orderand Safety Affairs

(Rs.inMillion)
BE RE BE
Public Order and Safety Affairs 2014-15 2014-15 2015-16

Administration of Justice(Charged) 770.016 773.876 875.946
Administration of Justice(Voted) 1,341.154 1,197.939 1,497.195
Prosecution 178.180 196.586 238.992
Police 9,265.181 9,993.450 13,608.265
Balochistan Constabulary 2,932.524 2,993.555 4,090.939
Levies 5,053.413 5,463.154 5,786.616
Jails and Detention 670.670 864.220 760.276
Civil Defense 69.372 78.448 99.485
Total:- 20,280.510 21,561.228 26,957.714

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Economic Affairs Expenditures on sectors/ departments contributing in economic development of the province viz. Food, Agriculture, Land Revenue, Animal Husbandry, Forestry, Fisheries, Cooperative, Irrigation, Rural Development, Industries, Printing, Mineral Resources, Transport, Energy, Information Technology and Environment etc. are included under this classification. Current Revenue Expenditure in these sectors also includes allocations for research, extension and field services to farmers, maintenance and repair of the agriculture and irrigation networks. All major economic infrastructure departments and departments involved primarily in activities relating to economic affairs are included under this functional classification.

Table 2.5 shows the break-up of this expenditure across major departments.

Table: 2.5Economic Affairs
(Rs.inMillion)
BE RE BE
Economic Services 2014-15 2014-15 2014-15

Food 363.313 317.019 403.724
Agriculture 6,351.426 5,883.478 6,807.249
Land Revenue 146.555 123.770 157.553
Animal Husbandry 2,568.997 2,184.248 2,812.549
Forestry 758.193 1,157.765 945.143
Fisheries 549.925 549.903 619.611
Cooperation 113.986 97.240 121.917
Irrigation 2,081.698 1,668.369 1,838.655
Rural Development 7,028.159 7,885.201 7,461.339
Industries 971.280 836.208 1,113.344
Stationery and Printing 103.664 60.532 106.645
Mineral resources (Scientific Deptt:) 1,005.555 1,795.192 1,594.718
Transport Department 50.256 47.689 66.157
Women Development Department 75.332 62.277 94.892
Energy Department 5,497.719 5,641.064 14,334.153
Information Technology Department 384.297 209.354 325.876
Environment Control Department 210.573 202.662 240.868
Total:- 28,260.928 28,721.971 39,044.393

Housing and Community Amenities
This head comprises of Civil works, PHE and Q – WASA. Details of expenditure on
Housing and Community Amenities are provided in Table below:

Table: 2.6Community Services
(Rs.inMillion)
BE RE BE
Community Services 2014-15 2014-15 2015-16
Civil Works including Establishment
7,917.986 8,158.679 7,898.393
Charges
Public Health Engineering 2,680.000 3,050.501 2,968.019
Works Urban B-WASA 652.275 1,113.911 815.344
Total 11,250.261 12,323.091 11,681.755

Recreational, Culture, Religion and Other Social Services Table 2.9 shows the breakup of different services under this functional classification and their allocations for FY 2014-15 alongwith Budget Estimates 2015-16 and Revised Estimates 2014-15. However, Education Service is also discussed separately.

Table:2.9 Social Services
(Rs. in Million)
BE RE BE
Social Services 2014-15 2014-15 2015-16
Education 28937.226 28,955.241 38,327.207
Archives 27.908 12.877 42.022
Health 14148.792 14011.528 15482.100
Population Welfare 27.100 37.783 744.351
Man power and Labour Management 852.534 811.204 952.122
Admin: Sport and Recreation Facilities 234.149 449.461 397.407
Culture Services 101.528 180.126 121.060
Social Security and Social Welfare 725.069 660.380 831.417
Natural Calamities and Others Disasters 3049.500 3027.150 3055.000
Religious and Minorities Affairs 570.341 512.019 618.665
Total:- 48674.147 48,657.769 60,571.351

Education Affairs and Services

Education sector h a s b e e n t h e m o s t f avored sector by the present Government. Accordingly, for FY 2014-15 allocations for this sector was Rs 28,937.226 Million, the estimates for financial year 2015-16 are pitched at Rs 38,327.000 representing an increase of 32.44%. Moreover, in line with the education sector vision of Chief Minister Balochistan and to achieve the targets envisaged in Education Sector road map, substantial resources allocation has also been made in the development budget of financial year 2014-15 and also in 2015-16.

Table:2.10 Education Affairs and Services

(Rs. in Million)
BE RE BE
Education Affairs and Services 2014-15 2014-15 2015-16
Education (Colleges Side) Higher Edu: 21,444.804 27,869.243 13,209.400
Education (Secondary) 7,492.422 1,085.998 25,117.807
Total Education 28,937.226 27,869.243 38,327.207

There as on in increase in the budget under Education Sector are as under:-

i. Increase in volume of budget is due to admissibility of time scale to teaching cadre.

ii. Main increase in budget is due to increase in Pay and Allowances

iii. Entitlement of conveyance allowance to all Government servants which was previously allowed to Government servants posted at District Quetta and Divisional Headquarter.

iv. Inclusion of Adhoc Relief Allowance 2012 @ 20% of the basic pay.

v. For students of BMC the previous allocation was Rs.8.00 Million, but now the same has been rationalized. As per actual allocation of scholarship previously reflected as 8.0Million has now been enhanced to Rs.33.00Million in view of existing strength of students.

vi. Funds for provision of missing facilities have been allocated for Schools and Colleges of the Province for the next financial year-2013/14.

vii. Allocations have been made in the current financial year under the following heads in Schools Directorate :
a) Starting of higher secondary classes Rs.5.00m Million
b) Establishment of PTSMCs Rs.50Million

viii. Current allocation of 150 Million for free distribution of Text Books has been enhanced to Rs.250 Million. Rs.180 Million @ Rs.0.6 Million per District for establishment of two Class room based Libraries one each in boys and the same Girls School of each District.

ix. Allocation of funds as grant-in-Aid in respect of the following Cadet Colleges of the province has been enhanced.

x. During FY 2014-15, the Chamalang Coal project stopped payments of their share of expenditure for students studying in various educational institutes of Punjab. Government of Balochistan paid that amount from its kitty.

Health Services

Health services include Hospital Services, Public Health Services (laboratories and health related population welfare activities), and Health Administration. Details of current expenditure on the Health sector are shown inTable2.10.Major allocations are for Hospital Services which include current expenditures hospitals, public health services like medical institutions and health administration. Allocation for major tertiary care hospitals and grant-in-aid to autonomous hospitals has been granted and reflected for the first in Revised Estimates – 2014-15 of Rs.375.00 Million. Budget Estimates – 2015 – 6 is Rs.515.00 against RE 2014-15 Rs.604.885 Million, with an increase 37 %.

Table: 2.7 Health Services (Rs. in Millions)

BE RE BE
Health Service 2014-15 2014-15 2015-16
Hospital Services 9,770.766 11622.183 10740.800
Public Health Services 381.551 502.016 407.960
Health Administration 3,996.475 1887.329 4333.610
Total:- 14,148.792 14,011.528 15,482.100

Table: 2.8 Other Allocations

(Rs. in Millions)
BudgetEstim
Other Allocations ates2015-16
Purchase of Medical Equipment 1,000.000
Grant-in-Aid for SNGB Raisani Memorial Hospital, Mustang 200.000
Grant-in-Aid for Children Hospital, Quetta 15.000
Grant-in-Aid for GDA Hospital 150.000
New Policy Initiatives and Implementation 500.000
Grant-in-Aid for Mission Hospital, Quetta 5.000
Grant-in-Aid for lady Duffer in Hospital, Quetta 5.000
Total: 1,875.000

ALLOCATIONS DEBT MANAGEMENTAND PENSIONS

The amazed allocations on this account are shown in Table 2.13.

Table: 2.13Debt Management
(Rs in Million)
BE RE BE
Debt Management 2014-15 2014-15 2015-16
Debt Servicing 1,821.699 1,376.368 1,542.050
Public Debt Discharged 17,119.822 19,927.284 16,114.984

Table: 2.14Pension
(Rs. in Millions)
BE RE BE
Pension 2014-15 2014-15 2015-16
Pension 10,000.000 9,410.000 12,000.000

CHAPTER 3: PUBLIC ACCOUNT

INTRODUCTION

The Constitution of Islamic Republic of Pakistan Article 118 defines Public Account as, all moneys which do not form the part of the Provincial Consolidated Fund but are :(a) received by or on behalf of the Provincial Government or (b)received by or deposited with the High Court or any other Court established under the authority of the Province.

The set transactions are outside the Provincial Consolidated Fund on both the receipt and expenditure side, and are categorized as:

a) Un funded Debt( deferred liabilities);
b) Deposits and reserves;
c) Remittances.

Public Account consists of those moneys for which the Provincial Government has statutory or other such obligation. These are in the form of trust money for which the Government has a fiduciary responsibility. Public Account consists of series of accounts, each of which is separately governed under specific rules framed for the said purpose.

Main elements of the Public Account in the Annual Budget Statement are summarized as follows:

a) Assets
Cash and Bank Balances
Receivable
b) Deposits and Reserves/ Liabilities
Control Account
Trust Account-Fund
Trust Accounts-Others
Special Deposit-Investments
Special Deposit Fund

Following table summarizes the Budget Estimates, Revised Estimates for FY 2014-15 and Budget Estimates for FY 2015-16 of the Public Account`s inflows and outflows and their net effect

Table: 3.1 PUBLICACCOUNTS PROVINCE UNFUNDED FUND (RECEIPTS)

PUBLIC ACCOUNTS OF THE PROVINCE UNFUNDED FUND (RECEIPTS) G06103 State Provident Funds TOTAL-UNFUNDEDDEBT G06214 Balochistan Government Servants Benevolent Fund G06408 Provincial Govt Employees Group Insurance Fund G10304 Zakat Fund G11216 Departmental and Judicial Deposits G12160 CM Earthquake Rehabilitation G10134 Cheques and Bills G061 State Provident Funds TOTAL-UNFUNDEDDEBT G103 DEPOSITSANDADVANCES
A-Bearing Interest
G06214 Balochistan Govt; Servants BF G06408 Provincial Govt; Employees Group IF G11216 Departmental and Judicial Deposits G12160 CM Earthquake Fund G10304 Zakat Fund G10134 Cheques and Bills TOTAL -DEPOSITSANDADVANCES
G10407 P.W. Remittances G05107 Adjusting Accounts between Federal and Provincial Govts;
G10414 Cash Remittances between Treasuries G10402 Forest Remittances G08123 Other Remittances TOTAL-REMITTANCES F01101 Deposits with State Bank TOTAL- PUBLIC ACCOUNTS OF
THE PROVINCE
TOTAL-PROVINCIAL RECEIPTS PUBLIC ACCOUNTS OF THE
PROVINCEREMITTANCES(DISBURSE
MENTS)
Cash remittances between offices same Accountant General.
G10407 P.W. Remittances G10415 State Bank of Pakistan Remittances G05107 Adjusting Accounts between Federal and Provincial Governments
G8123 Other Misc l Remittances TOTAL-REMITTANCES TOTAL-PUBLIC ACCOUNTS
RE-IMBURSEMENTS
F01101 Deposits with State Bank TOTAL -PUBLICACCTS OF THEPROVINCE
TOTAL -PROVINCIALDISBURSEMENTS (Rs. in Million)
BE RE BE
2014-15 2014-15 2015-16
2,263.54 2,342.067 2,438.847
2,263.54 2,342.067 2,438.847
1,000.99 998.764 1,040.35
– – –
693.43 750.016 781.008
– – –
45.320 273.330 284.625
84.008 116.634 121.454
1.560
47,304.298 55,087.226 57,363.558
1,312.30 1,540.014 1,603.650
2
1,312.30 1,540.014 1,603.650
2
1,122.1 1,034.37 1,077.115
46 2
773.05 62.617 794.130
9
93.895 64.162 66.814
0.211 – –
641.96 270.553 218.733
9
50,840 55,380.9 57,669.45
206 87 8
2.732 4.955 5.160
0.0246 0.973 1.013
20.710 32.160 33.489
0.567 0.371 0.386
– – –
24.034
148,831.232 – –
–
and adjustments
rendering accounts to the
5.551 1.053 1.097
3.684
0.575 – –
2.430 – –
12.240
183,778.483 – –

RECEIPTS ASSETS

Assets as Public Account receipts include cash and bank balances, investments, loans and advances, imprest monies, advances to departments and returns from investments and loans

DEPOSITSANDRESERVES

Deposits and Reserves constitute a major part of receipts of the PublicAccount. Deposits and reserves include inter governmental adjustments, remittances, suspense funds, special deposit fund, welfare fund, development fund, education and training fund, Income Tax deductions from salaries, Personal Ledger Accounts (PLAs) and most importantly, Trust Account Fund, comprising the Provident, Benevolent and Insurance Fund receipts.Table3.2 details the Trust Account Fund.

DISBURSEMENTS CURRENT ASSETS

Out flows from Assets are included under the category of Current Assets which includes cash, bank balances and receivables.

LIABILITY

Disbursements from Deposits and Reserves are indicated as liabilities. This is a contra item to the deposits and reserves indicated on the receipt side. In FY2015-16, the Public Account is expected to exhibit a positive balance.

CHAPTER 4: OVERVIEW OF THE PSDP 2014-15

Public Sector Development Program (PSDP) is a manifestation of government`s planning a culminant that of its consistency in planning pattern over the years. The erotically, it is an execution of medium and long term plans of the governments, both at federal and provincial levels. Practically, it includes programs and projects that may not conform to medium or long term plans.

The PSDP is for emulated according to provisions of Chapter IV of the Budget

Manual, briefly stated as follows:

Prescribed Procedure
Action By Action Time Period
P andD Department Circulate BM 13 form to Early in December
Administrative departments for
identification of schemes

Admin: Departments Return BM 13 Form to P andD Ist January

P andD Department Consolidation of information 1st half of January
relating to ongoing schemes from
data supplied by Administrative
departments

schemes are included in PSDP only when fulfilling either of the following two conditions:
Cleared by the competent Authority (defined under Section 4(4) a of the Balochistan
Budget Manual 2007).

If a scheme is not approved by the competent Authority then tentatively included in
PSDP in anticipation of the approval. For the purpose the Secretary of the department
concerned takes up the matter with the secretary Finance and the PandD Department and
explains the circumstances which necessitate its inclusion. If Finance Secretary and the
PandD Department agree then scheme is included in PSDP (defined under Section 4(4) g
of the Balochistan Budget Manual 2007).

P andD Department First Edition of PSDP in two 15TH January
volumes, one each for new and
old/ongoing schemes

P andD Department Circulate 1st edition to Departments 15 January_10 February
Admin: Department Meeting in PandD with Finance and
the Department concerned to make
tentative allocation for individual
scheme.

P andD Department Intimate provisions approved for By 15 February
each scheme as a result of scrutiny
carried out in above referred meeting
with Departments and the Finance
Department.

P andD Department Preparation of Second Edition of February
PSDP

Finance Department Indicate to Federal Government After 7 NFC and 18th
resources required Amendment no more required

Ministry of Finance Indicate final estimates of resources By the end of April
Government of Pakistan expected to be made, both from
divisible pool and straight transfers

P andD Department Fix size of PSDP in consultation By the end of April
with the Finance Department

P andD Department Cabinet meeting convened for May
consideration of proposed PSDP
Printing of PSDP.

The Development budget comprises development receipts and expenditures, which form a part of the Provincial Consolidated Fund in Account NO.1 (Non Food). These are further divided into categories ofRevenue andcapitalas follows:

(i) Development Revenue Receipts
(ii) Development Capital Receipts
(iii) Development Revenue Expenditure.
(iv) Development Capital Expenditure

For all development activities in Balochistan, the provincial government spends annual allocations of funds as reflected in provincial PSDP, gets financial resources in the shape of development grants (both from federal and donor agencies) and the federal government also spends through federal PSDP. Scope of this analysis is limited to the last ten years provincial PSDP only and that too Government of Balochistans funds and not those provided by the donor agencies though referral will be made to both donors fund sand federal PSDP at some points in the analysis. There as on for not including foreign project assistance (donor agencies` funds) in analysis is that the record available not contains accurate figures of expenditure.

FUNDS DISTRIBUTION TO SCHEMES

Funds distribution to development schemes requires careful consideration of size of the scheme, annual financial phasing in PC-I, total number of schemes in PSDP, number of schemes in a particular sector, relative importance of schemes, percentage of allocation fixed for various sectors/sub-sectors.

TRENDSINTHEPSDPSINCE2004

PSDP funding comprises of two parts:

Government of Balochistans (Government of Balochistans) resource and

Foreign project assistance (FPA) i.e. funds provided by the donor agencies.

Since FY 2010-11, resources available for Development budget are communicated on estimating Current Revenue expenditures and debt servicing charges. The Government of Balochistans size has fluctuated steeply S IN C E 1 9 7 0 – 7 1 .

Table 4.1: Abstract of Public Sector Development Programme (PSDP) /SAP/Non SAP SINCE 1970-71

(Rs .in Million)
S.No FY Revised Allocation
BOB GOB(SAP) FPA Total
1 1970-71 67.050 Nil Nil 67.050
2 1971-72 43.817 Nil 4.004 47.821
3 1972-73 139.474 Nil 8.084 147.558
4 1973-74 249.138 Nil 30.869 280.007
5 1974-75 310.135 Nil 9.312 319.447
6 1975-76 300.000 Nil 1.700 310.700
7 1976-77 357.917 Nil 83.582 441.499
8 1977-78 339.591 Nil 36.548 376.139
9 1978-79 413.660 Nil 86.758 500.418
10 1979-80 426.878 Nil 54.797 481.675
11 1980-81 409.642 Nil 64.819 474.461
12 1981-82 481.746 Nil 63.452 545.198
13 1982-83 650.000 Nil 69.222 719.222
14 1983-84 710.000 Nil 39.000 749.000
15 1984-85 758.654 Nil 64.643 823.297
16 1985-86 945.573 Nil 5.050 950.623
17 1986-87 1,280.000 Nil 80.207 1,360.207
18 1987-88 497.082 Nil 87.342 584.424
19 1988-89 1,286.468 Nil 0.00 1,286.468
20 1989-90 1,589.787 Nil 44.863 1,634.650
21 1990-91 1,442.594 Nil 7.588 1,450.182
22 1991-92 4,469.452 Nil 812.680 5,282.132
23 1992-93 2,952.188 40.798 983.970 3,976.956
24 1993-94 1,495.132 902.108 1,773.760 4,171.000
25 1994-95 1,697.810 905.096 1,942.951 4,545.857
26 1995-96 2,359.850 969.064 2,085.265 5,414.179
27 1996-97 1,181.820 779.035 2,495.236 4,456.091
28 1997-98 1,285.551 592.271 1,627.425 3,505.247
29 1998-99 1,412.380 540.211 2,271.608 4,224.199
30 1999-00 1,632.087 389.550 3,531.227 5,552.864
31 2000-01 3,954.643 342.954 2,293.535 6,591.132
32 2001-02 3,093.605 279.336 722.990 4,095.931
33 2002-03 4,896.058 255.487 1,315.543 6,467.088
34 2003-04 8,395.192 Nil 644.123 9,039.315
35 2004-05 8,642.974 Nil 1,401.957 10,044.931
36 2005-06 8,989.009 Nil 2,401.518 11,390.527
37 2006-07 9,444.002 Nil 3,741.420 13,185.422
38 2007-08 10,810.651 Nil 3,323.418 14,134.069
39 2008-09 13,358.762 Nil 1,804.559 15,163.231
40 2009-10 13,474.147 Nil 1,649.492 15,123.639
41 2010-11 25,585.663 Nil 1,477.747 27,063.380
42 2011-12 31,458.084 Nil 2,015.881 33,473.965
43 2012-13 31,799.424 Nil 2,980.643 34,780.067
44 2013-14 34,964.877 Nil 2,038.242 3,700.119
45 2014-15 41,521.000 Nil 3,677.000 45,198.000
Total 317,042.324 53,844.424 376,378.271

ANNUALSECTORALALLOCATIONS:

The sectors have been grouped into the following three main categories (sub-sectors are clubbed under these three sectors):

SOCIAL

a. Education
b. Health
c. Social welfare
d. Water supply and sewerage
e. Labor and manpower
f. Culture
g. Sports, tourism and youth
h. Information Technology
i. Women Development

PRODUCTIVE

a) Agriculture
b) Forestry
c) Fisheries
d) Livestock and dairy development
e) Industries andcommerce
f) Minerals

INFRASTRUCTURE

a) Transport andcommunication
b) Energy(fuel andpower)
c) PPandH
d) Irrigation
e) Local Government
f) UPandD

ALLOCATED RESOURCES TO VARIOUS DEPARTMENTS

INFRASTRUCTURE -SECTOR DEPARTMENTS’ ALLOCATIONS

The infrastructure sector was markedly dominated by the roads sub-sector. This also evident from analysis of number of schemes kept in previous years PSDPs and the allocations made.

SOCIAL -SECTOR DEPARTMETS’ ALLOCATIONS

In a financial year, public money is spent on a number of schemes, ongoing and new (varying in scope and size).Generally, development schemes are grouped under different sectors and sub-sectors in the PSDP. Exact amount of allocation is very difficult to calculate as the database of PandD department does not take into account details of grouped schemes and of schemes that are implemented under a single big allocation of funds. Due to exigency of circumstances, there had been block allocations bearing different names. These block allocations contained almost every type of schemes, It is believed that Planning and Development Department is trying hard to avoid the unpalatable practice of block allocation.

There are also regular special allocations appearing in the PSDP: CMs Special Fund and Governors Special Fund

Among Social sector, Education has always received due attention brief is asunder:

Period Allocation Rs in % of Remarks
Million Total
PSDP
1990-91 1,540.900 5 Rs 7,204.396
TO during 1990 to
1999-2000 2000 and Rs
2000-2001 14,800.79 11.95 2,068.172
during 2000 to
To
2003 were also
2009-10 received from
Social Action
2010-11 27,260.335 13.45 Programme.
To This shows a
growing trend
2014-15 in allocation
for
construction of
schools and
provision of
missing
facilities

The schemes of the department of Educations received the highest allocations with 35.0 % of the total Social Sector allocation. This allocation gets divided in the
following four major categories of education:

i. Primary
ii. Middle
iii. Secondary
iv. College
v. Technical Education
vi. University Education
vii. General Education

The construction work involves academic blocks and other structures such as teachers and students hostels and boundary walls etc. In2014-15 funds allocated to primary, middle and secondary education were 7 per cent, 1.75 per cent and 91.25 per cent of total allocation Rs. 1,0154.729 Million respectively.

The figure shows number of schools in Balochistan:

Table 4.2: Number of Schools
School Level Male Female Total
Primary 7807 2778 10585
Middle 670 495 1165
High 550 233 783
Higher Secondary 26 17 43
Total 9053 3523 12576

College Level Male Female Total
Degree 24 11 35
Inter 40 22 62
Total 64 33 97

Development Strategy for Education Sector:

The Government of Balochistan intends to adopt following development strategy for education sector to overcome lapses:

i. To decrease Infrastructure gaps in Education Sector e.g. on the physical infrastructure side Government of Balochistan requires a minimum of 7500 additional rooms to enroll 300,000 children in next few years. To achieve this target the Government of Balochistan intends to establish 750 new schools of 13 classes room each through a proper mapping of population to build grade-1 to10 schools where there are big gaps.

ii. The Government of Balochistan is also working Teacher Development Program, according to which teachers would be given training as per specialization if the field. For this purpose donors are also invited for funding in the program. For in service teachers they would be base line study for evaluation of teacher`s competency.

iii. The Government of Balochistan is also working with private sector for uplift of education in the Province, for this purpose different donor agencies are also interested to invest.

HEALTH SECTOR:

The Health Sector displays a very dismal state in Balochistan. Whether it is Doctor to Patient Ratio (1:1000) or Nurse to Patient Ratios (1:50) in Pakistan, it reflects a dim and grave situation. In case of Balochistan these ratios are worse than the said figures. Talking of Balochistan, 11 million kids died before reaching the age of five. Maternal Mortality Rate (MMR) is alarming with 785/100,000 live births while Infant Mortality Rate (IMR) is 97/1000 live births. In rural areas of Balochistan health services are at lower ebb and the state of hospitals, RHCs, BHUs are never encouraging as Health Management Information System backs this statement.

The Government has been successful in its commitment regarding enhancing health sector share in PSDP from3.57%to6.0%. This year share of health sector in PSDP has been 8.64 %. For Strengthening Primary HealthCare through PPHI arrangements have been made to ensure facilities and take care of mother`s health and also improve abysmally low EPI coverage.

Health sub sector has been second priority of the Balochistan over the past ten years. In Public Sector Development Program (PSDP), development schemes in health sub-sector are generally represented by Curative side and Primary Health Care or preventive side of the Health care, but both groupings contain schemes that could have better been represented under a separate heading. This makes it difficult to actually work out the exact amounts spent on both the group.

Table 4.3:Health Infrastructure in Balochistan

Primary level Health Facilities
1 RHC 89
2 BHU 553
3 Dispensaries 567
4 MCH Centres 89
5 TB Clinic 23
6 Healthy Auxiliary 23
7 Sub Health Centre 11
8 Mobile Dispensary 22
9 Leprosy Centers 13
Secondary level Health Facilities
10 District HQs Hospitals 23
11 Div HQ Hospitals 05
Tertiary level Health Facilities
12 Bolan Medical Complex Hospital 01
13 Sandeman (Provincial) Hospital 01
14 Fatima J. CG Hospital 01
15 Helper`s Eye Hospital 01
16 SKBZ Hospital 01

Public Health Engineering

Public Health Engineering (PHE) department primarily deals with construction, extension, improvement and / or rehabilitation of waters up plies. Balochistan Development Authority also implemented water supply schemes from time of time. Similarly, water supply schemes have also been taken up frequently under block allocations. Allocation to PHE department is percent of the total allocation.9.01per cent.

4.6.1 PRODUCTIVE-SECTOR DEPARTMENTS’ALLOCATIONS

Allocation figures show that the productive sector is the third priority of the Balochistan government since 2004. This sector received an allocation of Rs. 4,688.531Million. Agriculture and Mines and Minerals departments received almost equal amount of funds while Livestock and forestry departments rank third and fourth. Keeping insight the span of over ten years and looking at these figures does not draw a matching line: even total allocation to the productive sector suggests that nothing significant has been done to support Balochistan` s economy.

A REVIEW OF PSDP 2014-15

Table 4.5: Size of Provincial PSDP 2014-15

PSDP Local Component FPA Total
Provincial 48018.756 2722.925 50741.681

Table4.6:Number of Schemes in Provincial PSDP2014-15

PSDP Total
New Schemes 1077
On-going Schemes 616

Table 4.7: Share of Priority Sectors in Provincial PSDP 2014-15

Priority Investment Sectors %age
Communication 19.62
Water 6.96
Public Health Engineering 9.01
Education 23.11
Power 6.57
Health 8.64
Others 3.96
PP and H 5.50
Production sector 16.63

Table 4.8: Financial Progress of Development Schemes
(Rs. in Million)
No. of
Projects Schemes Allocation Releases
Ongoing 616 17,427.374 17,211.117
New 1077 30,591.382 23,428.971
Provincial PSDP 1693 48,018.756 40,640.088

Federal PSDP Schemes 2014-15
(Rs in Million)
Number of Schemes Amount Received Amount Released by FD

OVERVIEW OF THE PSDP2015-16

The PSDP 2015-16 is formulated with the visionary approach of the present government. A new approach has been adopted to have a comprehensive development in the province. The main objectives of the development program would be to:

Ensure peace with justice for all communities. Enhance the physical infrastructure and services to cater to a growing economy and trade.

Meet the energy needs of a growing economy with minimum environmental cost.

Establish the infrastructure for regionally balanced development.

Achieve high productivity and profitability in agriculture.

Develop human capital for a knowledge based society.

Build a healthy society with equitable access to healthcare services Provide the required utility services in urban centers in compliance with environmental and health standards.

The size of development program 2015-16 is pitched at Rs.51,700.000 Billion This will have a local share of Rs 48,309.000 Billion and FPA of Rs 3,391.00 Billion. Similarly sufficient amount is being allocated for District Development Program so that achieve equitable grow that all regions and districts of the province.

The important features and new initiatives included in the PSDP2015-16 are:

Identification of schemes will in accordance with development facts and figures on Millennium Development Goals (MDGs) reports, identified infrastructure gaps in District Profiles, situation analysis n key sectors such as Education, Health, PHE, Agriculture and others conducted by PandDD.

Allocation of funds for ongoing and new schemes has been more rationalized to get near completion chemes functional soon.

For ongoing projects, adequate allocation shall be made so as to complete maximum number of chemes during the financial year.

Sectoral allocations shall be decided on the indicative limits prepared by PandD Department

Repair/Purchase schemes shall not be included as it is part of Non-Development budget
Schemes size be kept rational so that they may be completed in a period not more than two years Only institutions having general public interest shall be financed from PSDP

Schemes shall only be executed by the relevant department as per their specialized functions assigned to the min the rules of business Schemes of individual nature shall be avoided and preferences shall be given to schemes of collective nature

Those long gestation projects, particularly which are in the PSDP for last four years or more, are capped after rationalization.

Table 4.11: Sectoral Allocation

S.No Sector composition %
1 Production Agriculture 9.24
Livestock
Forestry
Fisheries
Industries
Minerals
2 Social Sector Sports 50.39
Culture
Information Technology
Education
PHE
Health
Manpower
Environment
Social Welfare
Women Development
3 Infrastructure Sector PPandH 40.37
Communication
Water
Energy
Local Government
UP andD

CHAPTER 5: OVERVIEW OF FISCAL MANAGEMENT REFORMS

The provincial government continued to meet our financial obligations during the financial year. We also very successfully maintained the prescribed level of minimum balance by Council of Common Interest. among the entire social, economic or political factors that together indicate the capacity of the governmentto perform its expected functions, developmental or otherwise, the status of its public finance commands utmost importance. Moreover, to provide adequate resources for economic development and growth, it is important that there venue generation capacity of the government is optimized. Province has struggling to improve its own tax revenue. But the tax base is narrow which makes he task gigantic, particularly real estate and agriculture sector. However there are certain reasons for low tax generation

Provincial tax collection machinery lacks administrative kills

Weaknesses in tax policy framework.

Lack of justification to increase taxes due to not up to mark public service delivery.

Besides tax evasion, a wide regime of tax exemption is also prevalent. Notwithstanding the limitations of current economic distress, The Balochistan Government is working on certain structural reforms in its tax management framework.

In view of the organizational weaknesses, Balochistan Revenue Authority is proposed. This Authorit y is yet to be made functional.

OVERVIEW OF THE PENSION COMPONENT

A part from a step towards better financial management of the provincial financial resources to provide are life to the pensioners was also the preferences of the Finance Department. In order to clean and computerized the pensioners records finance department has planned to enrolled all the genuine pensioners into a Bio- metric database for verification on permanent bases and bring all its pensioners to E- disbursement. This will be a molest one for all the provinces and change in the history of financial reforms. Above all financed department is bearing the expenses on its own even after all financial constraints.

Initially four districts were enrolled and successfully completed in the 2nd phase eleven more districts have been enrolled. Following is the detail initially following four districts were enrolled and successfully completed

i. Quetta
ii. Pishin
iii. Ziarat
iv. Mastung

The universe of the pensioners in the four districts of pilot was 16272, following is the district wise detail and breakup Table: 5.1-

District Total Active Ceased/death Transferred
S. No Pensioners Pensioners cases cases
1. Quetta 13194 9811 2349 1034
2. Pishin 1180 903 218 59
3. Ziarat 355 258 97 –
4. Mastung 1546 1439 106 1
Total 16275 12411 2770 1094

Data collection, refining and computerization of above mentioned districts have been completed; the pensioner records have been systematically distributed. Out of 16275 pensioners the 12411 active pensioners will be registered in to Finance Department owned Bio-metric database and will be brought to e- disbursement.

CHAPTER 6: PENSION AND GENERAL PROVIDENT FUND LIABILITIES

Pension Liability
The estimated accrued pension iability of active employees and pensioners (combined) as of June, 2014 is as below:

No of employees
Accrued Liability
/pensioners
Active Employees 244,863 Not yet calculated
Pensioners 38797 -do-
Total :- 281,791

The Government of Balochistan has promulgated Balochistan Pension Fund Authority, 2009 for management of pension fund and to discharge the pension liabilities of the Government of Balochistan.

At present the Government of Balochistan has invested Rs.10.000 Billion in various banks and financial institutions for the purpose.

Due to gradual increase in number of pensioners the allocation for payment of pension and pension gratuity is increasing drastically. Therefore at this stage it is imperative to point out that some mechanism should be evolved to credit sufficient amount in the pension funds on regular basis in order to increase its size upto50.000 billion within as pan of fifteen years so that out of the profit earned major portion of amount required for the pension payments could be met.

The following table shows rise of number of pensioners in the province and estimates of financial accrual on the part of provincial Government.

New
Total
S.NO. retirement Revised
Fiscal Year Number of
during the Estimates
Pensioner
year
1. 2005-2006 25774 1026 942,776,580
2. 2006-2007 26800 1025 1,181,065,900
3. 2007-2008 27825 473 1,506,475,530
4. 2008-2009 28298 1660 2,172,117,100
5. 2009-2010 29958 1053 2,880,602,200
6. 2010-2011 31011 1086 3,679,916,700
7. 2011-2012 32098 1474 5,934,946,000
8. 2012-2013 33571 1554 8,500,000,000
9. 2013-2014 35125 1824 9,763,240,750
10. 2014-2015 36949 1956 10,000,000,000
11 2015-2016 38797 2098 12,000,000,00

General Provident Fund Liability

The Government of Balochistan has promulgated Balochistan General provident Investment Fund Act,2007 forest abolishment of General Provident Investment Fund in the Province of Balochistan for investment of GPF contributions in financial institutes for discharge of the GPF liability of the Government. During the year, 2011-2012 GPF liability was Rs.45.000Billion.

The Government of Balochistan has invested Rs.10.500 Billion in financial institutions for the purpose.

Due to gradual increase in liability against the GPF at this stage it is imperative to point out that some mechanism should be evolved to credit sufficient amount in the said funds on regular basis in order to increase its size upto50.000 billion within as pan of fifteen years so that out of the profit of the fund major portion of payments against the GPF could be made

Balochistan Development Forum

The Balochistan Development Forum 2015, a two-day conference was held on 19 January-focused on dialogue between the Balochistan government and development partners.

It provided a proper forum to bring together political and elected leadership of Balochistan, key policy makers of the federal government and development partners like international donors on one platform to discuss the development agenda for the province. Representatives from UNDP, World Bank, Asian Development bank and different international development agencies in Pakistan will also be attending the forum.

Government of Balochistan`s shared its development vision and framework which will help in creation of a policy, planning and implementation interface by engaging stakeholders for effective service delivery and will facilitate development partners to achieve aid-effectiveness and harmonization in the province

BDF will help to make the development stakeholders of the province to appreciate that indigenous, representative and consensus-based vision and strategy for inclusive development of Balochistan is the way forward for the province as well for the Federation of Pakistan.

The Forum also took an in-depth for consideration the multi faceted challenges faced and proposed to pursue fast paced and result oriented development in Balochistan. Various perspectives like fiscal imperatives, the current status of different social and infrastructure projects, role of technology in mapping the rural settlements to eradicate poverty and the proposed vision and strategy for the province were discussed in detail.

GLOSSARY
Ad Valorem
Taxes
Taxes levied as a percentage of the price of a good or service.
Bridge It is a method of financing used to maintain liquidity while waiting for an
Financing anticipated in flow of cash.

Budget A financial statement of government`s estimated revenues and expenditures
for the fiscal year.

Budget Total estimate of receipts and expenditures from the sources and for the
Outlay purposes indicated in the budget.

Budget Excess of government expenditures over revenues raised by taxes, fees and
Deficit charges levied by governmental authorities.

Cash The CDLs were raised by the Federal Government to cover its foreign
Development currency deficits on very high mark up rates in most of the cases and
Loans transferred to provincial governments from time to time.

Capital Gains Increases in the value of assets over a given accounting period.

Current Current Capital Expenditure like current capital receipt figures both in the
Capital Account No.I and Account No.II of the Provincial Government maintained
Expenditure with the State Bank of Pakistan. The expenditures under this head in Account
No.I consist of the following:
I. Principal Repayment of Domestic, Foreign and Market Debt. It also
includes payment on account of Ways and Means Advances availed by the
Government of the Punjab from the State Bank of Pakistan during the financial
year.

II. Loans and advances to corporate bodies of the Government of Punjab or
associated with the Government of Punjab.
Expenditures in Account No. II are mainly in cured on state trading operations
of the government in food grains especially procurement of wheat and
repayment of loans taken from the commercial banks for trading operations of
Food Department.

Current Current Revenue Expenditure includes expenditures on government`s
Revenue regulatory, administrative and other such functions including provision of
Expenditure social and economic services.

Debt Finance Use of borrowed funds to finance government expenditures.

Development As per the classification in the Annual Budget Statement, development Expenditure expenditure is divided into two distinct parts:

a) Revenue Expenditure) Capital Expenditure Development revenue expenditure is classified under grant PC 22036 (036) DevelopmentRevenue. The expenditure under this grant pertains to most of the expenses other than the brick and mortar expense. Employees related expense, purchase of transport, machinery and equipment, operating expenses, research and development, training etc. provided under the projects during the execution of the projects are all part of the development revenue expenditures. Development capital expenditure is the capital investment under the development programs in roads, buildings, irrigation sectors etc.

Direct Tax Direct tax is a tax the burden of which is born entirely by the individual or the entity that pays it and it cannot be passed elsewhere; for example corporate tax, income tax etc.

Dividends Direct payments by a corporation to its share holders.

Domestic Deb to wed to the creditors residing in the same country as the debtor
Debt

Entity The organizational unit within the government responsible for management and control of particular resources. In a budgetary framework, each entity shall receive an allocation of funds and the entity mangers would be responsible for the expenditure incurred.

External Debt Portion of a government`s debt owed to the foreigners / external governments and institutions.

Extraordinary Extraordinary receipts were previously reflected as a part of capital receipt but Receipts now are classified as General Revenue Receipts. A significant portion of these receipts accrue from privatization / disinvestment of government owned assets, and sale of land etc.

Federal
Divisible The biggest source of revenue for the Provincial Government is its share from Pool the Federal Divisible Pool of Taxes. The Divisible Pool comprises of taxes on income, wealth tax, capital value tax, taxes on sales and purchases, export duty on cotton, customs duties, GST(CE Mode) and federal excise duties excluding the excise duty on gas charged at well-head, and any other tax which may be levied by the Federal Government. With the exception of federal excise duty on gas, the taxes mentioned above are distributed between the Provinces and the Federal Government.

Federal A payment made by the Federal Government to the province either out of the Federal Divisible Pool or for other social benefit programs.
Transfers

Fiscal Fiscal capacity is a measure of the ability of a jurisdiction/government to finance government services.
Capacity

Fiscal Use of grants to adjust for differences in the capacity to finance basic government services amongst states/ governments.
Equalization

Fiscal Division of taxing and expenditure functions amongst different levels of government.
Federalism

Foreign Debt The money one country owes to another country as a result of loan and / or a negative balance of trade

Function The economic function relating to provision of a particular service, activity or a program

Fund The pool of money from where the budget allocation is made e.g.consolidated fund.

General General Revenue Receipts include the following:
Revenue I) Federal Transfers:
Receipt
Share of Federal Divisible Pool of Taxes under the NFC Award,2009

Straight Transfers on account of constitutional provisions, royalties on oil and gas Federal Grants

II) Provincial Own Revenue:

Provincial Tax Revenue including Provincial GST on Services collected by the Federal Board of Revenue

Provincial Non-Tax Revenue (As per the classification used in ABS, the Provincial Non-Tax Revenue includes Federal Grants and Straight Transfers)

Extraordinary Receipts

Incremental
Budgeting Budgetary approach that uses the previous period`s budget or actual performance as a base with incremental amounts added for the new period.

Inflation In economic terms, inflation is a

Indirect Tax A charge levied by the state on consumption, expenditure, privilege or right but not on income or property. Custom duties levied on imports, excise duties on production, sales tax or value added tax at some stage in production distribution process are few examples of Indirect Tax.

Historical Acquisition price of the asset general increase in prices and fall in the purchasing value of money.
Cost

Land Land Revenue means all sums and payments in money received or legally Claimable by or on behalf of the Government from any per son on account of any form of land.
Revenue

Matching Grants containing the requirement that the recipient government/jurisdiction will match the money through it sown revenues.
Grants

MTBF Medium Term Budgetary Frame work (MTBF)is a multi year approach to budgeting which links the spending plans of the government to its policy objectives in medium term (usually three years).

Nominal Nominal value refers to a value expressed in money of the day (year etc.) as opposed to real value which adjusts for the effect to inflation on the nominal value.
Value

Object Accounting classification describing the it me of expenditure, receipt, asset or liability.

Overdraft An over draft is a state where the withdrawals exceed the available balance. A government levy based on the market value as assessed by assessing agency or based on certain formulas/parameters. It is a capital tax on property calculated on the estimated value of the property.
Property Tax

Provincial The Fund which comprises all revenues received and all and raised by the provincial averment and all monies received by it in repayment of any loan.
Consolidated
Fund

Public Public Account consists of those moneys for which the Provincial Government has a statutory or other such obligation to account for but these are not available for appropriation for the general operations of the Government.
Account

Public Debt Public Debt is the total liability arising from the borrowings of the government including both domestic loans and foreign (or external) loans.

Public Field of economics that studies government activities, alternative means of financing government expenditures and their effects up on the economies in general.
Finance

State Trading State Trading operations of the provincial government relate to procurement and sale of food grains especially wheat. Transactions pertaining to state trading are kept separately and their receipts and expenditures are credited and debited to the provincial government`s food account i.e. Account No. II with the State Bank of Pakistan. It is carried out with the borrowing from commercial banks as per cash credit facility extended by these banks

Straight The expression Straight Transfers used in the White Paper means the transfers on account of surcharge and royalties on oil and gas made by the Federal Government in pursuance of the relevant constitutional provisions.
Transfers

Tax Revenue It is a compulsory financial contribution imposed by the Government to raise revenue. It is levied on a specified rate on income or property, prices of good sand services etc.

Transfer Government expenditures that redistribute purchasing power amongst citizens.
Payments

Unconditional Sharing revenues among governments with no string attached to the use.
Grants

For more information, contact:
Finance Department
Minister (Finance)
Tell: 9201586- 6031
Provincial Minister’s Balochistan

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