ISLAMABAD, Pakistan: The Federal Minister for Finance Senator Ishaq Dar on Friday presented the Federal Budget for Fiscal Year 2016-17 with a total outlay of Rs4395 billion before the Lower House of the Parliament.
It is the fourth consecutive budget being unveiled by Ishaq Dar in the National Assembly since Pakistan Muslim League-Nawaz (PML-N) led by Prime Minister Nawaz Sharif began ruling the country in June 2013.
“I am thankful to Allah that we are given an opportunity to present budget for fourth time. Our each budget was better than the previous ones,” the finance minister said while presenting the budgetary proposals before the National Assembly on Friday.
“Economic indicators reflect our performance,” Ishaq Dar said. “We have successfully managed to put Pakistan on the right track.”
Explaining budget strategy for the next financial year in the House, the minister said that the country achieved gross domestic product (GDP) growth rate of 4.7 percent during the outgoing financial year. But for the next financial year, the federal government has set the GDP growth rate target of 5.7 percent.
The finance minister said that fiscal deficit would be brought down from the existing 4.3 percent to 3.8 percent next year.
The minister said that there would be continued focus on energy sector and more than 10,000 MW of additional electricity would be added to the national grid by March 2018. He added that after 2018, work would continue on several projects including Dassu, Diamer Bhasha dam and projects under the China Pakistan Economic Corridor (CPEC) to generate 21500 MW of electricity.
Senator Ishaq Dar announced an increase in allocations for Benazir Income Support Programme (BISP) from the existing Rs102 billion to Rs115 billion for the next financial year. He said that 5.3 million families would be benefitting from the programme by the close of the current financial year and the number of these families would increase to 5.6 million during next year.
Ishaq Dar said that allocations for Pakistan Baitul Mal (PBM) have been doubled to Rs4 billion as its annual funds has been increased from Rs2 billion to Rs4 billion. He said that the government is committed to provide maximum facilities to the needy so that they could lead their lives in a respectable way.
Enumerating the salient features of media term micro framework 2016-19, the finance minister said that that GDP growth rate will be enhanced to seven percent in the next three years.
The minister said that inflation rate will be kept at single digit while investment to GDP ratio will be enhanced to 21 percent. He said that fiscal deficit will be brought down to 3.5 percent while tax to GDP ratio will be enhanced to 14 percent.
Ishaq Dar said that foreign exchange reserves will be pushed up $30 billion. He said that given the economic performance last three years, this micro-economic framework is very much implementable.
The minister said that the government has also chalked out a comprehensive plan to encourage private investment in different sectors including transport and infrastructure. He said similarly, Foreign Direct Investment (FDI) will be facilitated which will help enhance the economic activity in the country. He said our plan also envisages establishment special economic zones which will create job opportunities for youths.
Ishaq Dar said that promotion of health and education as well as poverty alleviation and women empowerment are the main targets of the Public Sector Development Programme (PSDP). He said that the government is also giving priority to the construction of Small dams especially in Balochistan and Khyber Pakhtunkhwa province.
The finance minister also announced a series of measures for the provision of telecommunication and internet facilities in the far flung areas of the country.
The finance minister announced tax relief and growth measures for different sectors of the economy.
The minister announced 10 percent adhoc relief allowance on running basic pay to all federal government employees with effect from first of next month. He said that adhoc increases of 2013 and 2014 will be merged in the pay scales.
There will be 10 percent increase in net pension to all pensioners of the federal government while 25 percent increase in net pension to all pensioners of the federal government above 28 years of age will be given.
Likewise, special area compensatory allowance at the uniform rate of Rs300 per month will be given to civil armed forces posted in border areas while special conveyance allowance to disabled employees would be given at the rate of Rs1000 per month.
There is also an increase in integrated allowance to naib qasids and daftaries, revision of outfit allowance to Pakistan army officers, revision of late sitting conveyance charges, washing allowance , M.Phil allowance, additional charge allowance and current charge special pay.
The finance minister announced upgradation of the post of Lower Division Clerk (LDC) from basic scale seven to nine; Upper Divisional Clerk (UDC) from nine to eleven; assistant from 14 to 16 and assistant incharge from BS-15 to 16. Posts of Khateebs have been upgraded from BS-12 to fifteen, Moazzan from 5 to seven and Khadim BS-5 to 6.
On the pattern of increase in the pay of government employees, the minimum wage of labour has also been increased from Rs13000 to Rs14000 per month.
The finance minister said that the government would be spending additional Rs57 billion on account of pay and pensions relief.
The minister announced a special package for development of agriculture sector. It envisages continuation of tax and duty concessions announced in the last budget amounting to Rs15 billion to promote agriculture sector development.
Ishaq Dar said that the government has decided that the price of urea would be further reduced to Rs1400 per bag for which federal and provincial governments will share a subsidy of Rs36 billion. Similarly, the government has decided that the price per bag of DAP will be Rs2500 from July 1. The federal and provincial governments will be sharing a subsidy of Rs10 billion on this account.
Dar said that the volume of agriculture credit is being increased from the existing Rs600 billion to Rs700 billion for next year.
The government has developed a framework to reduce markup rates of Zarai Taraqiati Bank Limited (ZTBL), National Bank, Bank of Punjab and Punjab Cooperative by 2 percent. From July 1, current rate of off peak rate of Rs8.85 per unit for agriculture tube wells is being reduced to Rs5.35 per unit for which the government will bear expenses of Rs27 billion
The finance minister also announced concession of customs duty for dairy, livestock and poultry sectors as well as fish farming. The existing 7 percent sale tax on pesticides is being proposed to be abolished.
Concessions for industrial development include enhancing tax credit on employment generation and tax credit for making sales to registered persons; balancing modernization and replacement of plant and machinery; establishing new industry and expansion of existing plant or new project.
The budget envisages reduction of customs duty on import of parts of LED lights from existing 20 percent to 5 percent.
In order to further enhance the export competitiveness of textile sector, the new budget envisages extension of the existing scheme on drawback of local taxes for the next year. Technology upgradation fund scheme for the textile sector has been formulated to benefit SMEs to invest in new technologies to make Pakistan’s exports globally competitive.
The mark up rates on export refinance facility, which was 9.5 percent in June 2013 will be brought down to 3 percent from July 1.
Textile, leather, sports goods, surgical goods and carpets would be made part of zero rated tax regime from next year.
