Delivering a budget while living through an uncertain and a deadly pandemic like COVID-19 is an extremely difficult task for any government. It is not only the case where government offices are either closed or running on essential staff but a scenario where choices have to be made against complex tradeoffs and challenges. Lives being lost, rapidly increasing spread of the virus, locust attack, untimely monsoons, economic lock down and resultant decline in growth, ravaging unemployment, disrupted supply and value chains, falling public sector revenues and existing public investments and commitments are just a few of many such challenges that the Punjab’s provincial budget making team had to address in a little under two months to present a pandemic budget. A careful read of the Punjab’s budget documents and its associated strategies clearly suggests a job well done!

For a start, Punjab took an inclusive approach to building the prime blocks of its budget and socio-economic recovery strategy. For the first time the Finance Department of Punjab opened up to citizens and solicited proposals directly to identify key areas of priority public investments and these responses have been documented and published openly. In addition, the government reached out to all major chambers across the province to identify critical policy reforms and areas requiring government support to help the private sector recover losses due to COVID-19, including women chambers for an inclusive process and policy making. The Budget Team led by the Finance Minister Punjab deserve appreciation for this citizen centric and inclusive approach.

Now speaking of priorities and numbers, Punjab’s budget for the next financial year presents a responsive, equitable and a balanced approach. Even with a declining fiscal space, with budget estimates of Rs. 2,240.70 being 2.6% lower than the budget estimate of 2019-20, the government has been bold enough to increase the development budget by 32% from last years revised allocations. This brave step of fueling the development budget was required to support the declining economic condition and support creation of new jobs and to ensure that health capabilities are provided with enough financial space to fight the battle against the pandemic. This has been achieved with a disciplined management of the current budget, for example, the salary expense of the government has remained constant for this year. Punjab was the first province that predicted as early as March, that the economic growth rate in the province will fall to zero or just below that, and over 4 million people in the province may become temporarily unemployed. Moreover, to counter this economic and social impact, the government early on in the pandemic launched the RISE Punjab Strategy – a comprehensive response to COVID-19.

It is the Rise Strategy the underpins the strategic thrust of the budget. The RISE Strategy which underlays the government’s response to fighting COVID-19 comprehensively covers the health response. The total allocation to healthcare sector has increased from Rs. 278.2 billion to Rs 284.6 billion with Rs. 3 billion allocation kept specifically for COVID-19 prevention and control and an additional billion has been allocated for implementing the infection control programme and Rs. 200 million for the integrated programme for communicable diseases. Rs. 37.7 billion will be spent for the provision of free medicines at primary, secondary and tertiary levels and over 5.3 million families will be covered under the health insurance programme.

The second prominent area in Punjab’s budget is social protection and supporting the most vulnerable. Rs. 10 billion has been kept for the Chief Minister Insaf Imdad Programme 2020 to support the most vulnerable and those impacted by COVID-19. Rs 5.36 billion and Rs. 1.15 billion to implement the Human Capital Investment Project and Women’s Income Growth Progarmme respectively to support the most vulnerable and marginalized. An additional Rs. 5 billion has been kept for the Zevar-e-Taleem Programme to support girls to remain in school.

Another unique feature of the budget is its ‘private sector’ friendly approach. Punjab was the first province that responded to COVID-19 by giving a tax relief in provincial taxes of Rs. 18 billion to the private sector for three months to June 2020. The government realizing that the pandemic and its associated economic impact is likely to carry over to the next financial year has extended the exemptions for key sectors impacted such as entertainment, hospitality, medical professionals and other related businesses increasing the relief to Rs. 56 billion. COVID-19 and resulting economic lock down has impacted the liquidity of all businesses, whereas, the larger businesses have been able to benefit from State Bank Schemes, the MSME sector are facing strong financial hardships. The government through PSIC has announced loan facilitation scheme through collateral and credit guarantee worth Rs. 9 billion that will result in multiplied credit as large as 3 times this amount. Additionally, the government has clearly articulated that it does not have enough financial resources to directly bail out the private sector, however, it does control certain policy levers that can help private sector reduce cost and increase ease of doing business. 

The government strategy provides a comprehensive approach on unlocking the land assets through PPPs and long term lease systems to reduce cost of accessing land, considerable investment (Over Rs. 6 billion) is being made in the skills sector to offer industry led courses for enhancing productivity, a regulatory reform is being designed across all sector value chains to eliminate cumbersome and non-friendly processes and procedures and move towards a model with minimum human contact. The government is looking at all provincial aspects including contract enforcement, labor regulations, social security, environment and other local government level licenses and permissions.

Punjab’s economy and food safety is dependent upon the agriculture sector which in addition to COVID-19 has been facing the locust threat. The government has been smartly responsive and to ensure continuous production will be spending Rs. 4 billion on reducing prices of inputs, Rs. 1.86 billion as interest free loans and support for mechanization on cost sharing basis. Additionally, the policy stance by the government is to ensure enhanced productivity by readdressing the cropping pattern based on new climatic zones, enhance research and production of better quality seeds and strengthen the linkage between research universities and agriculture extension.

One would assume that the discussion above would exhaust all the budget allocations, but as one reads through the citizens budget prepared by the government, pleasant surprises such as Rs. 350.1 billion allocation for School Education keep appearing. Punjab will be spending Rs. 22.575 per child in the next year and include quality enhancing initiatives such as engagement of private sector players and strengthening the fiscal space to support schools management costs. 

The list goes on, however, realizing the unemployment situation due to COVID-19 substantial focus has also been increased in sectors where labour intensive public works schemes can be launched. To achieve this development spending has considerable allocations to irrigation, housing and infrastructure sectors. Other sectors with key projects include youth affairs, tourism, law & order, local governance, energy, transport and the list goes on. In short, it is difficult to capture the depth of areas covered in the budget and readers are encouraged to download and read the “Punjab Citizens Budget” or listen to the “Bolta Budget” on the website of finance Department – a great step towards an inclusive, transparent and private sector friendly Punjab!