Dar presents over Rs 5 trillion budget

Manzar Naqvi :

ISLAMABAD: Finance Minister Ishaq Dar presented the Rs. 5,103.8 billion budget for the financial year 2017-2018. The budget size is 4.3 percent higher than the size of the budget estimates last year. 

The budget envisages merger of fifty percent ad hoc relief allowance granted to civil employees and ad hoc allowances of 2009 and 2010 for personnel of armed forces with the salary and ten percent ad hoc relief allowance on the basic salary after merger.  Zarb-e-Azb allowance for armed forces personnel will be in addition to this.

The finance minister announced launching of a new national saving scheme for the welfare of family members of martyrs.  Under this scheme, heirs of martyrs of Pakistan Army, police and other security institutions will get an extra profit.

Pakistan Savings will bring their branches online and introduce ATM cards and mobile and internet banking for the benefit of its customers.

The budget of Pakistan Baitul Maal would be increased from the existing 4 to 6 billion rupees.

He announced revival of the scheme launched by PML (N) government in 1999 envisaging payment of all dues of HBFC mortgage by the widows. The limit of loan for this scheme has been increased from three hundred thousand to five hundred thousand rupees. He said a one billion dollar non-convertible bond would be issued to attract investment by overseas Pakistanis in the country's infrastructure. The Capital Development Authority will also announce a separate sector to afford opportunity to overseas Pakistanis to make secured investment in real estate.

The Finance Minister said all pending refunds of sales tax would be paid in two phases. Those involving one million rupee would be cleared by 15th of July and others by 14th of August this year.

Ishaq Dar also announced relief measures relating to sales tax and federal excise duty for different sectors of economy. These include elimination of additional tax on lubricant oil by marketing companies, reduction in sales tax rates on import of hybrid electric vehicles at par with locally manufactured vehicles, automatic stay in cases related to federal excise duty till decision of appeal and elimination of withholding tax on supplies between registered individuals.

The Finance Minister said that sales tax rate has been reduced from seventeen to seven percent on several different types of machinery used in poultry sector.

Sales tax rate on multimedia projectors for use in educational institutions would be reduced from the existing seventeen to ten percent. 

Presenting the Rs 5,310 billion budget for 2017-18, the minister said the amount included proposed revenue collection by the Federal Board of Revenue of Rs 4,013 billion as 14 per cent increase in tax collection was expected during the next fiscal year.

He said the share of provincial governments in total income would be Rs 2,384 billion that was 12.4 per cent more than the corresponding period of last year and the share of the federal government would be Rs 2,926 billion.

Similarly, the minister said, total expenditure was expected to be Rs 4,753 billion, which was 11.7 per cent more than the previous year. Maximum increase in that category had been made in the development budget.

He said there was a proposal to allocate Rs 920 billion for defence as compared to the previous year's Rs 841 billion. Moreover, with 40 per cent increase in PSDP, the amount proposed was Rs 1,001 billion against Rs 715 billion last year.

Dar said the budget deficit had decreased to 4.1 per cent of the GDP against 4.2 per cent last year. He said it was an honour to present the fifth budget of this government as "we achieved different milestones during last four years, including budget deficit, inflation, foreign exchange reserves, tax collection, and GDP growth in different sectors of the economy."

The minister said fiscal deficit had been controlled, load-shedding reduced, and GDP growth rate recorded at 5.3 per cent, which was proposed to cross 6 per cent during the next fiscal year.

Ishaq Dar said today Pakistan has foreign exchange reserves worth imports of four months, as compared to reserves worth imports of two weeks in 2013, while tax collection had recorded 81% increase during the last four years. 

He said most of international rating and financial institutions have acknowledged Pakistan's progress in the economic sector and have predicted Pakistan to be part of G-20 by 2030 in the wake of measures taken by the government. "All this could be possible in the wake of the vision of Prime Minister Nawaz Sharif and decisions by the PML-N government that is being appreciated by the nation," he added.

The minister said, due to strict monetary discipline and reforms in the country, Pakistan has been able to achieve these goals and the government had been successful in meeting targets mentioned in its election manifesto.

He said this year GDP growth rate has been recorded at 5.28 percent as compared to 3.16 percent in 2013, and it will cross six percent during the next fiscal as the volume of economy has exceeded US$ 300 billion.

During the last year, agriculture sector recorded 3.46 percent growth, services sector - 5.98 percent growth while per capita income at present is US$ 1629 as compared to US$

1334 in 2013 showing an increase of 22 percent. He said the FBR tax collections had shown 81 percent increase during last four years. Its present volume is Rs 3521 billion as compared to Rs 1946 billion of 2013. Interest rate has been decreased to give incentives to agriculture and industrial sectors.

He said agriculture loans had increased to Rs 600 billion as compared to Rs 336 billion of 2013, while private sector loans volume has grown to Rs 507 billion.

The minister said, remittances had recorded an increase to the tune of US$ 19.9 billion while Pakistan Stock Exchange had surpassed 52,000 points and international rating institutions have ranked it as the best economy in Asia and 5th emerging stock market across the world.

He said market capitalization has increased from previous US$ 51 billion to US$ 97 billion while 5855 new companies had been registered during the last nine months, while 24 important laws were enacted and ten more are in the pipeline.

The Finance Minister said that economic targets for next fiscal year 2017-18 included: Gross Domestic Product (GDP) growth 6 per cent, investment to GDP 17 per cent, Rs 1,001 billion Federal Development Expenditure, lowering inflation rate below 6 per cent, budget deficit 4.1 per cent to GDP, tax to GDP 13 per cent, keeping Net Public Debt to GDP 60 per cent, foreign reserves equal to four months export and continuation of social safety measures.

He said budget strategy has been devised to achieve the said targets. The strategy included 14 per cent increase in revenue of FBR while 11 per cent enhancement in federal expenditure, controlling current expenditure.

New measures were being announced for agriculture, export, textile and social sector in order to create more jobs opportunities, he said. These steps would not only expedite economic activities but also help create new jobs opportunities besides bringing improvement in income of people, he added.

The Minister said more tax incentives were being announced for promotion of agriculture, SME and information technology sectors. He said around 10,000 MW additional electricity would be added to the national grid system before next summer season which would help end power crisis in the country.

He said a sum of Rs 121 billion has been proposed for Benazir Income Support Programme (BISP) which was only Rs 40 billion in 2013 thus registering 300 per cent increase. He said financial assistance to 5.5 million families would continue and they would be given Rs 19,338 per family per year. Financial assistance to some 1.3 million children of primary schools would also be given, he added.

Dar said the government would continue subsidies on electricity bills to the consumers using 300 units per month besides subsidy to the farmers of Balochistan on tube wells consumers. The government has allocated Rs 118 billion in the budget in this regard, he added. The minister said Rs 20 billion has been specified for the Prime Minister's Youth Schemes which include Business Loan Scheme, Interest Free Loan, and Training Scheme, Skill Development Programme, Free Reimbursement and Laptop Programme.

Ishaq Dar said the government under the guidance of Prime Minister Nawaz Sharif was committed to the welfare of poor masses and had taken measures, which resulted in decrease in number of those living below the poverty line. "In line with our previous actions, the government will impart technical training to the poor people under the BISP. This programme will benefit 250,000 families." He said an off-grid power system would be introduced to provide solar power to the people in remote areas, especially in Balochistan.

He said mark-up for agricultural loans for land owners having less than 12.5 acre was being reduced to 9.9 per cent from around 15 per cent. Under the scheme, he said, two million loans of Rs 50,000 each would be provided by ZTBL, National Bank of Pakistan and other banks as the loans volume for agriculture was being increased to Rs 1,001 billion from Rs 700 billion.

The minister said it had been decided to sell Urea fertilizer available with NFML at the rate of Rs 1,000 per bag while GST on DAP fertilizer was being reduced to Rs 100 instead of existing Rs 400. Urea fertilizer price in the open market would be Rs 1,400 as the government had proposed Rs 13.8 billion and Rs 11.6 billion subsidy in terms of DAP and urea fertilizers respectively.

Ishaq Dar said the banking system was being streamlined in accordance with Record Management Information System, new seeds would be provided to farmers and tariff subsidy to tube-wells would continue, while the government would provide Rs 27 billion for the purpose. He said the production index unit for agricultural land was being enhanced to Rs 5,000 from Rs 4,000, which would enable farmers to get more loans for agriculture.

Explaining further measures for the agriculture sector, the minister said customs duty and sales tax on new and five-year old combined harvesters was being waived off, tax ratio on import of machinery for the poultry business was being reduced to 7 per cent from existing 17 per cent, GST (general sales tax) was being waived on imported sun-flower and canola seed, and 17 per cent sales tax on three to 36 horse power diesel engines for tube-wells was also being waived off.

The proposed measures, he said, would encourage and compensate farmers to contribute more vigorously in the stability of national economy, besides enabling them to earn better living. The minister said for the textile sector interest rate on long term financing facility was being reduced to 5 per cent from 11.5 per cent, import of the textile machinery was being allowed duty free and Technology Upgradation Fund was being introduced while measures announced in the budget 2016-17 would also continue during the next fiscal year.

He said the government would start Brand Development Fund while the Textile Ministry would start for the first time in the country an 'online textile trade portal' for promoting 'business-to- business' and 'business-to-consumers' culture.

He said the mark-up rate on the Export Refinance Facility had been decreased to 3 per cent from previous 9.5 per cent while zero duty was being proposed on raw hides and stamping foil being used in producing high quality leather products.

To alleviate difficulties of the rice exporters, he said, the government had decided to allow them warehousing of rice and details of the scheme would be finalized by the Commerce Ministry, State Bank and Rice Export Association.