ISLAMABAD (APP): The Pakistan Tehreek-i-Insaf (PTI) led government Friday unveiled Rs 8.4 trillion pro-people and business-friendly federal budget for the fiscal year 2021-22, with major focus on pursuing all-inclusive, sustained and robust economic growth through comprehensive planning and development.
Despite the severity of 3rd wave of COVID-19 pandemic, the incumbent government in its third budget made remarkable allocations to carry out out massive development projects and welfare activities for the downtrodden segments of society, besides promoting the agriculture sector to ensure food security and reduce dependence on imports.
Presenting the budgetary proposals in the National Assembly, Minister for Finance and Revenue Shaukat Tarin said the government steered the economy out of crisis and put it on the growth trajectory by pursuing prudent policies under the dynamic leadership of Prime Minister Imran Khan.
He said the country was now out of dangerous situation as the government took initiatives for its economic sustainability as evident from 3.94 percent Gross Domestic Product (GDP) growth rate during the current fiscal year.
The minister said it was for the first time that any government had to face a critical situation and it successfully put the economy on sustainable growth path.
He said the Current Account was now $800 million in surplus, as compared to deficit of $20 billion at the end of last government.
He said the previous governments had also manipulated exchange rate, which had adversely affected the economy, resulting into depletion of foreign reserves to $10 billion. However, they increased the reserves by taking loans, which were now being repaid by the incumbent government, he added.
Tarin said the government had successfully fulfilled all the international commitments, besides putting the economy on growth trajectory. For the purpose, it had to take tough decisions, such as reducing public expenditures and enhancing revenues, he added.
He said during the current year, the agriculture sector did perform well despite locusts attacks and all the major crops, except cotton, witnessed positive growth.
Likewise, the services and the large scale manufacturing sectors also had considerable growth despite COVID-19 factor, he added.
The minister said one of the top priorities of incumbent government was to uplift the downtrodden segments, and for the purpose 40% of the total population was given cash transfers, besides providing relief to 15 million households across the country.
The finance minister said the government would focus on inclusive growth of economy next year and it had set a target of 4.8 percent.
He said the downtrodden segments would be fully taken care of as the government would adopt a ‘bottom-up approach’ to help upto six million households and saving them from ‘trickle-down effect’.
He said urban households would be provided up to Rs 0.5 million interest free loan each for businesses, while farmer households would be given Rs 150,000 interest-free loan for each crop, in addition to Rs 200,000 interest free loan on for buying tractors and agriculture implements.
Moreover, up to Rs 2 million loan each would be provided for low cost housing while every household would be provided health card, with one person of such unit imparted technical training, he added.
Tarin said the government would have to ensure 6 to 7 percent growth to accommodate the youth, as 65 percent of the population was below 30.
He said the government was evolving a comprehensive strategy, under which the farmers would be provided seeds, fertilizers, loans, tractors and machinery, besides setting up cold storages and commodity warehousing to help increase their income.
The minister said the country’s imports had gone down to 8 percent of the GDP, which were around 12 percent 15 years back. Efforts were afoot to enhance the exports for which special economic zones were being established for value addition, he added
He said the housing and construction sector was also on priority as around 10 million houses were required. Due to the government’s focus, the sector had already witnessed increased activity.
The minister said for bringing improvement in the energy sector, the government had devised a comprehensive strategy, including the circular debt management plan and restructuring with the private power producers, incentives provided to the industry for increased use of excess electricity and necessary investment in power transmission and distribution to reduce system losses, announcement of electric vehicle policy, and induction of cheap power through hydro renewable energy to reduce overall cost.
In addition, he said, the government was working on finalizing short, medium and long-term plans in different sectors, including finance and banking, budget and debt sustainability, price stability, industry and exports, public sector enterprises and privatization policy, information technology, and domestic commerce.
The minister said the development budget was enhanced from Rs 630 to Rs 900 billion, which was an increase of around 40%. Its focus would be on developing food and water security, energy sector, improving critical road infrastructure, advancing implementation of CPEC, establishment of operations in Special Economic Zones, sustainable development goals, combating climate change, technology-driven knowledge economy, and removing regional disparities.
He said the government had announced the National Agriculture Emergency Programme to uplift agriculture and livestock sectors on modern lines covering crops, livestock, fisheries and water sector.
He said during the next fiscal year, Rs 1 billion would be spent on the Locust Emergency and Food Security project, Rs 2 billion for enhancing productivity of rice, wheat, cotton, sugarcane and pulses, Rs 1 billion for enhancing olive cultivation on commercial scale, and Rs 3 billion for improvement of water-courses.
The minister said for ensuring water security, the government was building water reservoirs, including small, medium and large dams, so that future water needs were safeguarded.
He said the thee larger dams – Dasu, Diamer Bhasha, and Mohmand dams – were the priority in the budget. Some Rs 91 billion had been proposed in the budget for ensuring water security, including Rs 57 billion for Dasu hyrdopower project, Rs 23 billion for Diamer Bhasha Dam, Rs 6 billion for Mohmand Dam, and Rs 14 billion for Neelum-Jhelum hydropower project.
The minister said the government was committed to fast tracking implementation of CPEC as to date 17 projects worth $13 billion had been completed and another 21 of $21 billion were underway, while additional 26 strategic projects of $28 billion were in pipeline. Most of the projects were being completed on a timely basis, he added.
He said in the budget 2021-22, the key priorities were completion of Karachi-Lahore Motorway, near-completion of 120 km Phase-1 of Havelian Thakot and advancement work on 118 km Phase-II f Karakorum Highway, advancement of work on 118 km Phase-II of Karakorum Highway, advancement of work on Zhoa Kuchlak Road, and other projects.
Shaukat Tarin said that tax Incentives for promoting electric vehicles are also proposed to address environmental issues, reduce reliance on gasoline and provide cheaper source of transportation to public.
The government is encouraging the manufacture and use of electric vehicles and for this purpose, various tax exemptions and concessions are being proposed, which include tax exemption on import of CKD kits for local manufacturing of electric vehicles, reduction in sales tax rate on locally manufactured electric vehicles from 17% to 1%, he added.
Withdrawal of value addition tax on import of electric vehicles and CKD kits and withdrawal of federal excise duty on 4-wheelers electric vehicles were also proposed, he added.
Regarding the Sales tax exemption to auto disable syringes and oxygen cylinders, he said that COVID-19 has badly damaged entire human race and global economy. To mitigate adverse effects of this killer virus and debilitating diseases such as Hepatitis, we have been taking several measures, which include tax exemption on import of auto disable syringes and their raw material and exemption on oxygen cylinders.
Exemption to Special Technology Zones (STZ) as technological revolution would bring sustainable economic growth and reduce poverty, he said adding that for this purpose, STZ are being established throughout the country. To encourage investment in these IT zones, tax exemption on import of plant, machinery, equipment, and raw materials is being proposed.
Food security is a major challenge for our government despite being agricultural country, he said that accordingly, to facilitate the farmer and encourage storage of grain and agricultural activity and improve shelf lives of commodities, in the rural areas, it is proposed to grant exemption on locally produced silos. This initiative is part of the Prime Minister’s comprehensive Agriculture Transformation Plan.
To facilitate businesses and provide relief to the general masses, rate of federal excise duty on telecommunication is proposed to be reduced from 17% to 16%, he added.
He said that major initiative taken by the government is the introduction of concept of Tier-1 retailers and their integration with FBR. On this front, the government have received encouraging results and substantial revenues, adding that this year, we foresee speedy integration of remaining retailers by way of offering more facilitation and concessions.
All POS holders will be included in Tier-1. In addition, we are proposing new prize scheme for the customers making purchases from Tier-1 retailers integrated with FBR. The monthly prizes of Rs 250 million will be disbursed to customers holding system generated invoices issued by Tier-1 retailers integrated with FBR through computer random balloting, he added.
Bringing 0-commerce transactions in sales tax not: We have seen extraordinary sales through online marketplaces especially due to Covid-19 lockdowns. However, contribution made by these e-commerce digital platforms in national exchequer is negligible. Accordingly, it is proposed to bring third party sales made through established online marketplaces within the purview of sales tax.
One of the major concerns of our times is the availability of counterfeit goods especially cigarettes in the market. Although we have already introduced the mechanism of Trace & Track system, which is in the process of implementation; however, to enforce more stringent measures, legal requirement of registration of brand licenses is being introduced, he added.
He said that through this measure, all the manufacturers of specified goods will be legally required to get registered their brands with FBR and accordingly unregistered brands will be treated as counterfeit goods liable for outright confiscation and destruction.
Telecommunication in the country witnessed robust growth over period of time, he said adding that to reap reasonable level, Federal Excise on mobile phone calls exceeding 03 Minutes, Internet data usage and SMS messages is being proposed this will result into mild taxation of a broad spectrum of population. Sugar is although not a staple food, is still a source of daily caloric intake for millions of people in Pakistan, he said adding that recently, an unprecedented increase in the prices of sugar has been witnessed.
However, this increase has not resulted in corresponding increase in revenue due to that fact that for the purposes of sales tax the value of sugar is not ad-valorem but specific that is Rs.60 per kg. which is considerably below the actual market price of the commodity.
To address this anomaly, sugar is proposed to be included in the Third Schedule to the Sales Tax Act so that tax is charged on actual retail price of the product, he said adding that this measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism.
The finance minister said in order to increase exports for moving out of recurrent balance of payment crisis and repeatedly opting for the International Monetary Fund (IMF) programmes, the government was investing in establishment of special economic zones, supporting new exports in IT (information sector) sector and agro-based industries, and endeavouring make CPEC the platform where industries would be relocated, employment opportunities created and exports were made possible.
He said efforts would be made to promote foreign direct investment in the export sector.
The government, he said, was also involving the private sector in the development projects. Currently the Public Private Partnership Authority had 50 infrastructure projects of around Rs 2,000 billion at various stages of processing.
Six projects of Rs 710 billion would be processed in the next fiscal year, he added.
The minister also mentioned the flagship Billion Tree Tsunami project for which the government had earmarked Rs 14 billion in the next budget.
The minister said the social sector development was also the priority of the government. Health, education, attaining sustainable development goals and climate change were some key areas of focus for which an amount of Rs 118 billion was proposed in the PSDP.
Talking about the budget’s salient features, the minister said the gross revenues for the next year had been estimated at Rs 7,909 billion against revised estimates of Rs 6,395 billion for 2020-21, showing growth of 24 percent.
He said the revenues of Federal Board of Revenue (FBR) were projected to grow by 24 percent from Rs 4,691 billion to Rs 5,829 billion. The non-tax revenues were expected to grow by 22 percent.
The minister said the provincial share in federal taxes would increase from Rs 2,704 billion last year to Rs 3,411 billion. It meant that additional Rs 707 billion or 25 percent as compared to the revised estimates, would be made available to the provinces, he added.
Tarin said after provincial transfers, net federal revenues were estimated at Rs 4,497 billion as compared to Rs 3,691 billion under the revised estimates for the last year, showing growth of 22 percent.
He said the federal expenditures were budgeted at Rs 8,487 billion for next year as compared to the revised ones of Rs 7,341 billion for 2020-21, showing an increase of 15 percent.
Shaukat Tarin said the current expenditure was projected at Rs 7,523 billion for next year against Rs 6,561 billion for last year, reflecting an increase of 14 percent.
Excluding interest and non-off expenditure on Covid-19 and settlement of IPP (Independent Power Producers) dues, the current expenditure was projected to increase by 12 percent, he added.