ISLAMABAD: Finance Minister Shaukat Tarin has presented the federal budget for the fiscal year 2021-22 in a special session of the National Assembly on Friday.
The total size of the budget or the total expenditure budget for the next year is Rs8,487 billion — almost 19 percent higher than last year’s budgeted expenditure of Rs7,136 billion. The government has increased 10 percent in salaries and pensions for federal employees. Minimum wage has also been increased to Rs20,000.
In order to prevent the spread of COVID-19 pandemic, a social distancing policy was being followed. Prime Minister Imran Khan was also present in the lower house of Parliament. Opposition leader Shehbaz Sharif and PPP Chairman Bilawal Bhutto Zardari are in the house, witnessing budget proceedings.
During the budget presentation, opposition members chant slogans and bang desks to interrupt the federal minister. Opposition lawmakers chanted slogans against the government and Prime Minister Imran Khan.
Tarin began his speech by saying it was an honour for him to present the PTI’s third budget. He strongly criticized the previous governments, saying that a mountain of circular debt amounting to Rs1 trillion was inherited by the incumbent government due to the botched policies of its predecessor.
He recalled that when the PTI came into power, the economy had gone almost bankrupt. “Everyone knows we were under the burden of so many loans,” he said, adding that the current account deficit was at a historic high of $20 billion.
“We made the capacity payments otherwise the country would have defaulted,” he said. “I am presenting you the real picture of the nation and to highlight our performance,” added the minister.
He also paid tribute to the PTI government for stemming the spread of the coronavirus pandemic and taking steps to ensure businesses did not suffer massive losses in the country due to the lockdowns. “The government, through the Ehsaas Emergency Cash Programme, provided cash to 12mn people across the country,” he added.
Tarin said remittances had increased in Pakistan to record levels, adding that these are expected to rise to $29bn by the end of this month. “This is proof of the love that overseas Pakistanis harbour for Prime Minister Imran Khan,” he said.
The finance minister announced that for FY22, the government had set GDP growth target at 4.8pc. “We hope growth will be even higher due to the measures we have taken in this budget,” he said, adding that in the next couple of years, the government wants to increase growth to 6-7 percent.
Referring to the taxes, the finance minister announced that there was no new tax being imposed on the salaried class in the budget. “The rich will be asked to pay taxes in accordance with their wealth,” he said, adding that the salaries class will not be burdened with additional taxes.
He added that in order to support small businesses, the annual turnover tax ceiling has been increased from Rs10 million to Rs100 million, while sales tax is being reduced. Tarin said the government was slashing withholding taxes on mobile phones, adding that it will be reduced to 10% at first and then 8% later.
The minister announced that the government has slashed sales tax on locally manufactured cars from 17% to 12.5%. The government has also abolished Federal Excise Duty (FED) on 850cc cars, he said.
‘Budget Key Features’
For the fiscal year 2021-22, the Imran Khan-led government aims for inclusive and sustainable growth. “With a target of 4.8% growth rate, the premier wants to turn the direction of the country,” Tarin added.
- Total outlay of the Budget is Rs8.487 trillion.
- 10% increase in salaries and pensions for federal employees.
- Minimum wage has been increased to Rs20,000.
- Rs260bn for Ehsaas Program.
- Tax collection target set at Rs5829bn.
- GDP growth target has been set at 4.8%.
- Rs30 billion earmarked for health.
- Rs 44 billion for higher education.
- Rs16 billion for sustainable growth.
- Rs900 billion allocated for federal PSDP.
- Rs12 billion allocated for agriculture sector.
- Rs118 billion for power distribution.
- Rs14 billion for Climate Change mitigation projects.
- $1.1 billion for vaccines procurement.
- Rs100 billion for Covid-19 Emergency Fund.
- Rs12 billion special grant for Sindh.
- Development budget increased from Rs630bn to Rs900bn.
- 4 to 6 million families will be given loans of upto Rs500,000.
- Rs57 billion have been fixed for the first phase of the Dasu Hyder Project.
- Rs23 billion reserved for Diamir Bhasha Dam.
- Rs6 billion earmarked for Mohmand Dam and Rs 14 billion have been proposed for Neelam Jhelum Project.
- Rs100 billion for the development of underprivileged areas.
- Rs601 billion for the development of South Balochistan through 199 uplift projects.
- Custom duty from vaccine and medicines of livestock abolished
- Federal Excise Duty imposed on telephone calls and using internet for over three minutes. The FED is also imposed on mobile messaging.
- Regulatory duty on the import of luxury items hiked.
- Sales tax rate on cars under 850 cc dropped to 12.5 pc
- Turnover tax for traders dropped to 1.25 pc
- Medical supplies including Auto disable syringes and oxygen cylinders see tax cuts
- Duties on electronic vehicles for this fiscal year have been abolished
Meanwhile, the opposition has said that it will not allow an anti-people budget and will do everything to stop its approval. Prior to the budget session, PPP chairperson Bilawal Bhutto Zardari chaired a meeting of the parliamentary leaders to decide the strategy for the session.
Bilawal directed PPP MNAs to give a “tough time” to the government, saying the government had devised an “anti-poor”, “political” and “selected” budget.
Finance Minister Shaukat Tarin unveiled the Pakistan Economic Survey 2020-21 on Thursday, revealing that Pakistan achieved remarkable GDP growth of 3.94 percent in the first 9 months of the fiscal year (July to March), significantly higher than the target of 2.1pc.
According to the survey document, this came about largely due to growth in the industrial and services sectors, both of which surpassed the government’s expectations.
Addressing the press conference, the minister said that there were 2.1 percent growth projections for the current fiscal year, while the world financial institutions including World Bank and International Monetary Fund (IMF) had forecasted even lower growth.
“However due to the timely interventions and prudent policies by the ruling Tehreek-e-Insaaf (PTI) government, the GDP witnessed a remarkable growth of 3.8 percent,” the minister added.