Federal budget has ignored energy crisis: Businessmen
RE The manufacturers and the trade bodies representatives, unanimously showing their grave concern over inadequate funding for power generation in budget, have said the federal budget 2011-12 has altogether ignored the energy crisis, which is crippling the economy.
They said that despite having knowledge of the gravity of the situation, the federal government has allocated meagre amount of Rs18 billion for new dams and water reservoirs while no plan has been given for ensuring supply of gas to the industrial sector which will ultimately bring down the production. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), an apex body of chambers in the country, Saturday termed the federal annual budget 2011-12 balanced in the prevailing circumstances. President FPCCI Senator Haji Ghulam Ali, VP SAARC CCI Iftikhar Ali Malik, all federation VPs commenting on the budget said that country was facing heavy expenditures due to war on terror and facing security threats coupled with instability hovering around the region, acute shortage of water, gas and power were the key factors responsible for low growth.
The Lahore Chamber of Commerce & Industry has said that the government has failed to give any economic revival plan in the budget, while mainly focusing the international monetary agencies instructions and ignoring the proposals of the local trade bodies and other stakeholders.
Addressing a media briefing soon after the presentation of the federal budget, the LCCI Senior Vice President Sheikh Mohammad Arshad said that the budget can in no way help achieve the proposed GDP growth target of 4.2 percent as it seemed that the document is prepared in haste.
The LCCI Senior Vice President said that despite having knowledge of the gravity of the situation, the federal government has allocated meagre amount of Rs18 billion for new dams and water reservoirs. While pointing out the discriminatory approach, he said that out of all the eight Power distribution Companies (DISCOs) three major Punjab-based DICOs including LESCO, FESCO and GEPCO will not receive even a single penny relief from total subsidy of Rs122 billion while the KESC alone would be enjoying a subsidy of Rs24 billion.
While no plan has been given for ensuring supply of gas to the industrial sector which will ultimately bring down production, he added. He said that total revenue collection is set at Rs2.86 trillion which is rather ambitious given the economic environment in the country.
The chairman of the FPCCI standing committee on electronics and Executive Director of the Cool Industries Pervez A Butt said that the government would have to make heavy borrowing to bridge budget deficit that would lead to increase in inflation rate from 15 per cent to 25 percent thus rendering all Pakistani merchandise uncompetitive in the global marketplace due to high input cost. He urged all the parliamentarians to play the role for cut in non-development expenditure. Financing of the deficit will heavily rely on borrowing from banks estimated to be around Rs.561 billion and around Rs250 billion from national saving schemes. As a result of the persistence of borrowing binge of the government, around Rs1 trillion will be paid in debt servicing which is more than 50 percent of the tax revenue target of Rs1.952 trillion.
The Pakistan Mutahid Kisan Mahaz President Ayub Mayo was disappointed with the Budget 2011-12 and termed it mediocre coming from an economist like Dr Abdul Hafeez Shaikh. The Mahaz expected a budget that could stimulate investment and growth offering incentives and motivating entrepreneurship for self employment and poverty alleviation. He said that no incentive was given for agriculture which contributes 21 percent to the GDP. He said that agriculture subsidies were cut by around 300 percent during last 3 years though the sector over contributes over 50 percent in total export.
Asif Baig Mirza, the Chief Executive ABM Securities said that no relief was announced in the budget for the retail investors, which result into less growth due to lack of confidence.
He said that the Oil & Gas sector will gain as the Ministry of Petroleum partially deregulated the local prices of key petroleum products. This will allow companies to determine the monthly product prices. In the same way refineries are to be the key beneficiaries. The All Pakistan Cement Manufacturers Association (APCMA) Chairman Aizaz Sheikh appreciated the reduction in FED on cement.