Pakistan’s Finance Minister (FM) Dr Abdul Hafeez Sheikh unfolded Rs2.96 trillion ($31.58 billion) new tax-free federal budget for 2012-13 fiscal in the National Assembly on Friday with Rs545.386 billion for defence. Last year, an amount of Rs510.179 billion was spent on defence. No new tax was imposed.
Tax exemption ceiling was raised to Rs400,000 from Rs350,000. Law abiding tax payers would be issued income tax payers honour cards. For taxpayers’ facility, the tax slabs have been brought down from 17 to 5.
The salaries of the government servants and pensions of retired employees were raised by 20 per cent. An amount of Rs70 billion was allocated for Benazir Income Support Programme (BISP).
Dr Hafeez Sheikh told the parliament that the government has set an inflation target of 9.5 per cent, fiscal deficit of 4.7 per cent, national development outlay of Rs873 billion with a federal Public Sector Development Programme (PSDP) of Rs360 billion, and a revenue target of Rs2504 billion.
Duty on raw material for 88 medicines has been reduced from 10 to 5 per cent. Moreover, sales tax on imports has been standardised at 16 per cent from 22 per cent to 19.5 per cent, while the minimum tax slab has been increased to Rs 400,000.
On Thursday, the finance minister was forced to announce that the economy had missed its target growth rate of 4.2 per cent to grow by only 3.7 per cent in the current fiscal year, which ends June 30.
Some legislators of the opposition and treasury exchanged blows and slaps while their colleagues tried to calm them down. Throughout the 23 minutes speech of the finance minister, the opposition kept raising slogans of “shame, shame” against the government.
The finance minister said the remittances sent by Pakistani expatriates stood at $13 billion, which was a record. A total of 10,000 utility stores would be opened across Pakistan. Technical training and internships programme is being initiated.
He said that the Prime Minister’s House would be converted into an institute for advanced studies and the premier will live in a small house. For the progress and development of solar tube-wells, subsidy will be given so that the energy crisis can be curbed. He said he would spare any amount of money required to curb the energy crisis.
Efforts are being done to bring GST down to 16 per cent on all items, which have more GST than this. “We have decided to lessen the customs duty. All customs items which were in the maximum range of 35 per cent will be brought down to 30 per cent.
The finance minister said an amount of Rs183 billion has been allocated to deal with the energy crisis. He said the government provided Rs70 billion to relieve people from the rising petroleum prices.
Sheikh said the growth rate reached up to 3.4 per cent, adding that Pakistan maintained economic stability without taking any loans from the IMF in those two years. “We returned $12 billion to IMF.”
The Pakistan Atomic Energy Commission (PAEC) budget was increased by a whopping 78 per cent to Rs39.2 billion in the upcoming financial year in a bid to up the ante on nuclear power plants for cheaper electricity.
The allocation for PAEC is almost 11 per cent of the total federal development budget estimated at Rs360 billion for the financial year 2012-13.
A major chunk of the PAEC budget has been allocated to two nuclear power plants. An amount of Rs34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs190 billion which will be partially funded by Rs136 billion Chinese loan.
The government has so far spent Rs62.4 billion on the mega project having 660 megawatts generation capacity. With Rs34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013.
To meet the growing energy deficit, the PAEC has been assigned an ambitious target of 8,800 megawatts nuclear power generation by 2030. Pakistan is keen to seek assistance from China and France to meet the goal.
The size of the total outlay of the budget is 15.8 per cent higher than the last year.
The resource availability for the new year was estimated at Rs2,719 billion against Rs2,463 of last time.
The revenue receipt were estimated at Rs1,775 billion indicating an increase of indicating an increase of 16.1 per cent over the last budget.
The provincial share in federal revenue receipts was estimated at Rs1,459 billion, which was 21.2 per cent higher than before.
The net capital receipt have been estimated at Rs478 billion. The external receipts are estimated at Rs387 billion, showing a decrease of 6.5 per cent over the last budget.
On the same day, the rupee sank to its lowest level to 93.8350 against the dollar as Pakistan’s central bank was forced to deny it would have to return to the International Monetary Fund (IMF) for assistance.
The currency slid 0.9 percent after The Wall Street Journal quoted the central bank governor as saying that failure to control the deficit could make it hard to meet the more than $4 billion in IMF loans due in the coming fiscal year.
External forecasts predict the deficit will nudge seven percent of GDP for the fiscal year and analysts warn the government is running out of ways to fund it.
From / Gulf Today