ISLAMABAD-The federal government transferred Rs2.5 trillion to four provinces as their share under the National Finance Commission (NFC) Award in last fiscal year, falling short to the annual projections due to a steep shortfall in tax collection.
In previous fiscal year, the share of provinces in the federal divisible pool was projected at Rs3.2tr, subject to the collection of Rs5.55tr in taxes by the Federal Board of Revenue (FBR).
However, the government had missed the tax collection target of Rs5.55 trillion by Rs1.647 trillion during ongoing financial year. Therefore, the provinces had not received entire budgeted amount from the center and got Rs2.5 trillion from the center.
According to the seventh NFC Award, the provinces get 57.5 percent of the federal divisible pool. The provincial governments get shares from the federal government under NFC award as per the said formula. Punjab gets 51.74 percent, Sindh 24.55 percent, Khyber-Pakhtunkhwa 14.62 percent and Balochistan 9.09 percent.
According to the fiscal operation of ministry of finance, the provinces overall revenues were recorded at Rs3.24 trillion in last fiscal year. The provinces had received major share of Rs2.5 trillion from the federal government under NFC award.
The provinces expenditures had remained at Rs3.163 trillion in year 2019-20. Four provinces had jointly generated surplus budget of Rs77.060 billion. Provinces surplus budget had helped in restricting Pakistan’s fiscal deficit at 8.1 percent of GDP in 2019-20. The country’s total budget deficit at Rs3.376 trillion in fiscal year ending June 30, 2020 or 8.1 pc of GDP.
Punjab province had recorded budget deficit of Rs8.34 billion during last fiscal year. The expenditures registered at Rs1467.7 billion as compared to the revenues of Rs1459.3 billion. However, the major chunk of the revenues came from the federal government under divisible pool. The Punjab government had received Rs1197.4 billion from the federal government during 2019-20. Meanwhile, the province had generated only Rs189.8 billion from its own sources.
The province had shown budget surplus of Rs63.4 billion, as it expenditures recorded at Rs779.1 billion compared to the revenues of Rs842.5 billion. Sindh government received Rs614 billion from the federal government during the year 2019-20. The Sindh government collected Rs182.6 billion during previous financial year.
The KP government had recorded budget deficit of Rs2.2 billion. Expenditures of this province were registered at Rs597.2 billion as compared to the revenues of Rs595 billion. The KP’s tax collection was recorded at Rs25.1 billion in the last fiscal year. The province received Rs401.2 billion from the federal government under NFC during last fiscal year.
This province had also recorded budget surplus of Rs24.2 billion. Balochistan expenditures had remained at Rs320 billion as compared to the revenues of Rs291.4 billion. Balochistan’s tax collection was recorded at Rs16.2 billion.