ISLAMABAD – The PPP-led government Friday threw up Rs2.96 trillion federal budget before an assembly wearing the look of a battle zone as opposition lawmakers, mainly from the PML-N, shouted at and scuffled with the treasury members.
With a deficit of Rs1.185 trillion, this budget for the fiscal year 2012-13 is the fifth and final of the present term of the Pakistan People’s Party’s government, which made certain adjustments and used fiscal jugglery to make the financial plan appear benign and pro-people for strengthening its electoral position ahead of the fast-nearing general elections.
The government has apparently handed over its financial worries to the government that wins the upcoming elections, in a repeat of what it had to face in 2008 after coming to power. The future government could also play safe and use the excuse of inheriting financial problems from its predecessor, much like PPP government did when it presented its first budget of the current term.
The budget was earlier approved by federal cabinet during a meeting chaired the same day by Prime Minister Yousuf Raza Gilani. In the national assembly, Speaker Fehmida Mirza chaired the budget meeting.
With his ears plugged, Finance Minister Dr Abdul Hafeez Shaikh presented the financial outlay saying that it “was a historic moment and the nation should be proud of it”, and “the world must watch that democracy was flourishing in the country”.
Shaikh 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 Rs2,504 billion.
The rate of inflation is expected to remain in the range of 11-12 percent in FY 2012-13 while the GDP rate has been fixed at 4.2 percent. Total tax revenue collection has been set at Rs2.381 trillion and non-tax revenue at Rs730 billion.
The budget brings Rs20 billion increase for the defence sector, with an allocation of Rs264 billion for the Army. The Navy has been allocated Rs52.7 billion, which is around Rs230 million lesser than the previous budget. The Air Force has been allocated Rs114 billion.
Under the news budget the prices of CNG, Urea fertiliser, steel and cigarettes will be increased while the prices of cement, tea, medicines, stationery, paper, books, Banola Hybrid Ghee, vehicles, cosmetics and beverages will go down. Tax has been imposed on the sale of immovable property.
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 income tax slab has been increased to Rs400,000.
According to the budget, the government will open up to 2,000 new utility stores, in an effort to provide relief to around 300,000 families. The government has set Rs10 billion for the export development fund.
During the speech, the finance minister announced that no new taxes will be introduced, and the income tax slabs have been brought down from 17 to 5. Salaries of government employees have also been increased by 20 per cent but on ad hoc basis, meaning it could be withdrawn anytime.
The salaries of Grade 1 officials has been increased by Rs1,800, raising their salary from Rs4,600 to Rs 6,400. The respective increase in the salaries of Grade 2 to Grade 22 officials is Rs5,800, Rs7,100, Rs7,400, Rs7,800, Rs8,200, Rs8,600, Rs9,000, Rs9,400, Rs9,800, Rs10,200, Rs11,000, Rs 11,000, Rs 12,000, Rs 13,200, Rs 14,600, Rs 18,000, Rs 26,400, Rs 34,000, Rs 49,300, Rs 64,000, Rs 70,000 and Rs 80,000. The medical allowance of Grade 1 to Grade 15 has been doubled.
Shaikh, who was nearly besieged by the PML-N members raising slogans including ‘Shame Shame’, ‘Bijli Chor’, said that Rs183 billion has been allocated to deal with the energy crisis. “For the progress and development of solar tube-wells, subsidy will be given to farmers, so that the energy crisis can be curbed… No matter how much money is needed to end the energy crisis, we will provide it,” the minister added. Amid the deafening noise, he also announced that the Prime Minister House will be converted into an institute for advanced studies, and the premier will live in a small house.
MNAs from PML-N, the party that kept its budget day plan secret till the last moment, continued to ignore National Assembly Speaker Dr Fehmida Mirza’s call for order in the house. The scuffle between PPP and PML-N parliamentarians during the budget speech made the house appear as a wrestling ring, as the MPs were punching, slapping and thrashing each other.
The finance minister said that for all items which have a GST tax of more than 16%, efforts are being done to bring their tax down to 16%. “We have decided to lessen the customs duty… All customs item which were in the maximum range of 35% will be brought down to 30%.”
Shaikh said the income tax limit has been raised from Rs300,000 to 400,000. “For the ease of taxpayers, the slabs have been brought down from 17 to 5. This will bring relief to taxpayers.” He added: “The government made a sacrifice of Rs70 billion to relieve people from the rising petroleum prices,” Shaikh points out.
The minister started his speech by congratulating Gilani for being prime minister for the longest time in the history of the country. He lauded the efforts of the president, prime minister, national assembly speaker, senate chairman as well the parliament for making historic legislations and also acknowledged contribution of the opposition parties who helped make the democracy flourish. He said that rule of law, election of president, active judiciary, free media, empowerment of institutions and 18th amendment were the outcome of the journey which Pakistani nation started in 2008.
Enumerating the achievements of the government, the finance minister said that the growth rate has reached up to 3.4%, adding that the country maintained economic stability without taking any loans from the IMF in those two years. “We returned $1.2 billion to IMF.” “Power was delegated to provinces after the 18th amendment. Around 70% of the budget was allocated to them,” he said.
The finance ministry Thursday released the Economic Survey of Pakistan 2011-2012 – a pre-budget document highlighting the overall performance of the economy in the outgoing fiscal year. According to the survey, Pakistan had achieved an estimated GDP growth of 3.7 per cent in the outgoing fiscal year, falling short of its targeted growth of 4.2 per cent.
According to budgetary documents, Rs22,877 million has been allocated for 37 development projects of the Pakistan Railways. Rs 2,000 million has been allocated for procurement/manufacture of 50 D.E locomotives, Rs 5,739 for procurement/manufacture of 202 new Design Passenger Carriage (revised) (China), Rs2,500 million for replacement of old and obsolete signal gear from Lodhran Khanewal-Shahdara Bagh mailine section, Rs 1,000 million for rehabilitation of 27 Diesel Electric Locomotives, Rs1,000 million for special repair of 150 locomotives. Rs 1,041 million have been put aside for the replacement of metal sleepers and track renewal on Lodhran-Shahdara section, Rs 8,00 for replacement of three brake down/rescue cranes and procurement of five sets of relief train equipment.