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Investor Presentaiton

■ " Chapter X - Breaking the Mould: Inclusive Budgeting. Framework for Rolling Expenditure and the Rest On the Revenue side, it is intended to provide a better control over cashflows by mitigating the impacts of revenue shocks. A categorization of Most Essential, Moderately Essential and Lesser Essential Expenditure Heads helps minimize the impact of revenue shocks across heads to ensure minimum disruption to service delivery. FRE involves participatory course correction. More than two Statements of Excesses and Surrenders become a possibility with the kind of visibility and predictability it offers over the rolling period. An indicative view of the FRE model output based on sample data is shown in the Figure 2 below: Expense Heads Recipts/Revenue Sensitivity Service Delivery Essential Elements Preventive & Curative Healthcare Disaster Response Financing Social Protection Economic Regeneration Budget Essential Service Delivery Support Elements POL Utilities Stationary Mac Cost of Other Stores Others-1 Others-2 Others-3 Others-4 Others-5 Budget Non-Essential ROLLING WINDOW BUDGET EXECUTION AND FORECASTING Jul-20 Quarter-1 Aug-20 Sep-20 Oct-20 FY 2020-21 Quarter-2 Quarter-3 Quarter-4 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 FY 2021-22 Quarter-1 Aug-21 Sep-21 Legend 100% or More More than than 80% and Less than 100% More than 65% and Less than 80% More than 50% and Less than 65% Less than 50% Realign Fin. Bill (if Reqd.) 1st Stmt. of ES 2nd Stmt. of ES 3rd Stmt. of ES Drivers FG and OSR Receipts COVID19 Response Expenditure Social Protection Disaster Management Snapshot of Output from the FRE Model based on Sample Data. Extends to 12-Months' Time Horizon. Finance Department, Govt. of Punjab It is worth noting the fact that input from Provincial Government Departments is of utmost significance to for such a Framework to be practicable. Finance Department has sought feedback of Administrative Departments as to which object heads and sub-object heads under their Non- Development Budget (except Pay & Allowances) matter the most towards ensuring a minimum level of service delivery. A prioritized list of object heads / sub-heads under the Non-Development Budget of the Administrative Department provides input to the FRE release plan and projections. FRE identifies the heads/sub-heads that the Departments require either to be front-loaded and back-loaded based on the requirements in specific time in the Fiscal Year and by what proportion. This input is characterized by a number of factors that are critical to service delivery. Tolerance to Expenditure and Revenue shock of every head/sub-head and any fluctuations in the Rolling Budget availability is an important consideration and shall vary from Department to Department. Similarly, there can be Department-specific seasonal variations in requirements under specific heads/sub-heads which may also need to be factored in. Essentially, Framework of Rolling Expenditure introduces a novel mechanism which is more demand-driven as compared to the traditional supply-driven. The latter has a uniform application across the board and the annual budgetary allocations are split into a strait-jacketed 4- quarterly or twice-a-year releases of Expenditure assignments; hence is insensitive to the unique needs of the Departments. FRE not only has the potential to provide more visibility and predictability into the cashflows for the Finance Department, but also helps the Administrative Departments plan their Expenditure requirements over the 12 months' time horizon more prudently and with a greater degree of formality. FRE Page 80
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