Using the occasion for self-congratulation, Finance Minister Ishaq Dar presented budgetary proposals for financial year 2016-17 before the National Assembly on Friday.
Approved by the federal cabinet, the new budget of Rs4.42 trillion appears to strike a balance between fiscal consolidation, imposed by the International Monetary Fund (IMF), and some incentives for the industrial sector.
Federal PSDP budget Rs100b higher
The federal government unveiled Rs800 billion development budget, an amount that is Rs100 billion higher than last year but still comes across as less given the huge financing requirements of about 866 projects including the pressing needs of the China Pakistan Economic Corridor (CPEC).
Economic growth in the past two years has increased by 4.7 per cent, hitting an eight-year high.
“This would have been better if the cotton crop hadn’t suffered a fall in growth of 28 per cent,” he said.
However, analysts as well as economists feel the growth rate is low and not enough to meet the growing job demand.
To promote the corporate sector, tax rate for it will be brought down to 31%.
Referring to tax revenue, Dar took pride in announcing that tax collection has increased by a historic margin of 8 per cent. “We will reach our target of Rs3.96t and wish to push the tax-to-GDP ratio to over 10% next year.”
The increase has come on the back of higher tax rates. Meanwhile, the tax net has fallen with the number of returns filers going below the 1-million mark.
The government’s aim is to restrict the fiscal deficit at 4.3% of the GDP, said the finance minister
Pakistan Stock Exchange
Market capitalisation has increased over the last four years, while the pending merger of all three stock exchanges was also settled.
The PSX is also going to be added to the MSCI Emerging Markets Index.
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Minimum wage set at Rs14,000
Minimum wage increased to Rs14,000. Last year, the amount went up from Rs12,000 to Rs13,000.
Federal budget deficit
The federal budget deficit – excluding provincial surpluses – will be brought down to 4% by 2017, and 3.5% by 2018.
Rate of inflation
The rate of inflation, which was recorded at 2.82 per cent, is the lowest in the past 10 years, claimed Dar.
A total of Rs11.4 billion allocated for the telecom sector.
Benazir Income Support Programme
The government has allocated a total of Rs115 billion for the BISP. Last year the set amount was Rs102 billion.
Keeping the health sector in mind, the government has allocated Rs22.4 billion to the health sector for the coming year.
Government salaries, pensions
The government increased the basic salary for federal government employees by 10%.
Pensioners older than 85 years will see a 25 per cent increase in compensation.
Behbud and pensioners’ saving scheme
The upper limit for each will be increased from Rs4 million to Rs5 million.
Tax on foreign drama serials
Withholding tax imposed on all media houses airing foreign drama serials.
Foreign exchange reserves
Foreign exchange reserves target has been set at $30 billion, the finance minister said.
The government has decided to zero-rate the local supplies of textile, leather, carpets, surgical and sports sectors from July.
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The import of textile machinery will continue to be exempted from customs duty.
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Adhoc allowances will be made part of basic salary
In case of pensions, the minister said, adhoc allowances will be made a part of basic salary.
Announcing the budget for the education sector, Dar said, Rs21.5 billion has been set aside for the Higher Education Commission projects.
Over Rs79.5b has been set for higher education only, said Dar, adding, this is 11% higher than last year and highest ever in Pakistan’s history.
The agriculture sector has suffered due to floods and depressed prices. The PM announced a Rs341-billion Kisan package in September 2015 to help farmers.
For the coming year, fertiliser price will go down to Rs1,400 per bag, going down from Rs1,850.
The price of DAP fertiliser will be reduced from Rs2,800 to Rs2,500 from July 1.
Beginning from July 1, off-peak tariff for agriculture tubewells will go down from Rs8.85 per unit to Rs5,35 per unit. The government will bear a burden of Rs27 billion due to this measure.
Courtesy : Express Tribune