KP struggles with a substantial Rs608 billion deficit in FY24

Khyber Pakhtunkhwa is grappling with a significant deficit of Rs608.18 billion in the ongoing fiscal year, primarily attributed to a shortfall in grants from the federal government. This includes funds allocated for tribal district development, the net profit of hydroelectric power, counter-terrorism efforts, current expenditures, and other grants.

The provincial government had initially projected total revenue from federal and provincial sources at Rs1,579.65 billion for the current fiscal year, with Rs971.46 billion received thus far. The budget estimates for the settled districts were Rs 1,366.76 billion, and for tribal districts, Rs 212.89 billion. However, the anticipated federal grant of Rs764.61 billion will be lower, around Rs504 billion. In the war against terrorism, the disbursement of Rs 60.55 billion of the estimated Rs 91.87 billion is pending.

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Regarding straight transfers, Rs 26.05 billion has been received against the estimated Rs 38.66 billion. The remainder is pending. In the current year, the federal government paid Rs20.52 billion out of the projected Rs31.51 billion for the net profit of hydel power. Additionally, KP has received Rs 37.13 billion out of the outstanding Rs 56.39 billion in net profit from hydroelectric power. The provincial government has also encountered a revenue shortfall from its sources during the current year.

Against the target of Rs28.51 billion, KP has collected only Rs19.60 billion in provincial excise (non-tax). Similarly, Rs 37.65 billion has been collected in provincial excise (tax) against the target of Rs 56.48 billion. Collectors have also gathered Rs24.21 billion out of the anticipated Rs72.64 billion from other sources. The provincial government received Rs11.42 billion in operational shortfalls and savings against the estimated Rs34.26 billion.

Additionally, for foreign aid-funded projects, the government expects to receive Rs83.17 billion of the estimated Rs138.92 billion. Out of the Rs11.31 billion allocated for the Public Sector Development Program (PSDP), the provincial government has received Rs7.54 billion. The additional demand of Rs 86.10 billion for tribal districts has only received Rs 28.70 billion.

In the Annual Development Program (ADP), there is utilization of Rs 17.33 billion out of the estimated Rs 26 billion. For the accelerated ADP, KP government will gather Rs 23.23 billion of the Rs 31 billion allocation. The estimated Rs3.79 billion for foreign aid-funded development projects in the tribal districts will receive Rs2.52 billion.

The deficit in grants from the federal government is straining the provincial finances. This is leading to cutbacks in development projects and essential services. The provincial government is urging the federal government to release the outstanding funds to ensure the completion of development initiatives and the provision of essential services to the people of Khyber Pakhtunkhwa.