The Finance Minister said that his government would set ambitious targets for the revival of the national economy by reducing the fiscal deficit to 4 percent of GDP from the current level of 8.8 percent, increase GDP growth to 15 percent, besides increasing the investment-to-GDP ratio to 20 per cent in the medium term. The federal government''s gross revenue is estimated at Rs 3,420 billion with FBR taxes at Rs 2,470 billion and fiscal deficit at 6.3 percent, or Rs 1,651 billion, of GDP for the next fiscal year.
The provinces'' share is projected at Rs 1,502 billion from the federal divisible pool, up 23 percent over Rs 1,221 billion for the current fiscal year. The government''s primary focus would be to increase the tax revenue, arrest inflationary pressure by relying on public savings and foreign borrowings to finance the deficit and elimination of borrowing from the State Bank of Pakistan would be vigorously pursued.
The government also promised to eliminate circular debt in 60 days to resolve the energy crisis causing about 2 per cent loss to GDP annually, besides deciding to reduce untargeted subsidies, improving balance of payment and reforming public sector corporations by appointing professional managers as well as pursuing profitable privatisation in a transparent manner. The Minister said that the Prime Minister had decided to continue the Income Support Programme for the protection of poor and raise the monthly payment to each family to Rs 1200 from Rs 1000 for which an amount of Rs 75 billion had been allocated in next fiscal year''s budget.
The Minister said that Rs 225 billion would be invested in energy sector with Rs 107 billion from the PSDP and the remaining by Pepco/Wapda through government support to complete Neelum-Jhelum Hydro Power Project (1,000 megawatts), DiamirBhasha Dam and Hydropower Project (4,500MW), Tarbela Fourth Extension Project (1,410MW), Thar Coal Gasification Project (100MW), Chashma Civil Nuclear Power project (600MW), Two Karachi Nuclear Coastal Power Projects (2,200 MW) with Chinese assistance, Keyal and many others. A long-term plan has also been developed to add cheap power to the national grid and substitute the current dependence on fuel oil to cheaper alternatives. Improvements in fuel mix will mean future tariffs would not rise as fast as they have been in the recent past.
The transport sector and railways is being giving top most priority and Rs 73 billion has been allocated to connect the Gwadar Port to the north by rapidly completing various sections of Turbat-Basima Ratodero and other smaller sections of M-8 and another Rs 31 billion for initiating various projects of Pakistan Railways to completely revamp it and linking it by rail from Gwadar to Afghanistan, on one side, and Gwadar to China, on the other. Karachi Circular Railway project will be expedited with the help of the government of Japan, he added.
Another Rs 57 billion had been set aside in the Higher Education Commission (HEC) for increasing enrolment in higher education to 1.23 million students in 2013-14. The number of foreign scholarships will increase to 6,249 from 4,249 in the next fiscal year.
"The government, despite devolution, is continuing to fund a number of national health initiatives. This year we are allocating nearly Rs 26 billion for these programs." The Minister said that the development of industry and regional trade would be among priorities of the government and a number of measures have been envisaged in the budget in this regard.
He said that the government is conscious of the centrality of the manufacturing sector in the overall socio-economic development and potential to create jobs. He said that the policy of developing Export Promotion Zones with comprehensive incentive packages, which we had earlier supported with enthusiasm, will be reviewed and necessary amendments made to make it more attractive. New industrial estates will be established throughout Pakistan in collaboration with provincial governments.
The government has a comprehensive plan to develop the Gwadar Special Economic Zone, which will be a watershed for the economy of not just Balochistan, but the whole country. The Zone will be linked with major economic centres in Pakistan as well as neighbouring countries. The government would earnestly develop strong trade relationships with all our neighbours, primarily to expand markets for industries and to improve the regional terms of trade.
The Minister said that state institutions will be strengthened to provide a healthy, reliable, and conducive economic environment for the growth of trade, commerce and industry. More credit will be available for the private sector investment and revival of privatisation program will create more opportunities for the private sector to invest in the public sector.
The government also promised that a feasible, three-marla housing schemes would be developed on government lands for the homeless, to whom plots would be given free of cost. At least 1,000 clusters of 500 houses each would be developed for low-income families through public private partnerships. The Minister announced that to ensure cost-effective access to credit for housing, government would be picking up a portion of the financing cost on behalf of the borrower. A provision of Rs 3.5 billion is kept in the budget for this purpose;
New taxation measures announced by the government included Income Support Levy (ISL) on net movable assets, enhancing sales tax rate from 16 to 17 percent, withholding tax from 0.2 to 0.3 percent on cash withdrawals from banks. The existing six slabs for salaried individuals have been enhanced to 12 to increase tax rates for highest income earners. Tax rates for business individuals have also been revised to support the middle income earners. Existing five slabs for business individuals and AOPs are proposed to be increased to seven with a progressive increase in the rates of tax. The rate of tax for non-banking companies is being reduced from 35 percent to 34 percent.
Tax concessions available to Khyber Pakhtunkhwa and Fata/Pata had been withdrawn. The government also moved to impose 2 percent ''further tax'' on supplies to unregistered persons and 16 percent Federal Excise Duty (FED) on all financial services.
The government also announced programmes for youth with Prime Minister Training Programme to provide one year training to the graduate which would be entitled for stipend of Rs 10,000 per month. As many as 25,000 youth up to the age of 25 with minim qualification of middle would be given training through Prime Minister Youth Skill Development Programme. The government also announced small loans schemes for youth up to Rs 100,000 to Rs 2,000,000 with a mark-up of 8 percent and prime minister''s scheme for provision of laptops as well as reimbursement of fee schemes for less developed areas.
He also announced Prime Minister''s Micor Finance Scheme for men and women to undertake micro enterprises activities for which Rs 5 billion has been allocated in the budget. He stated that the government would also provide mortgage facility of Rs 1.5 million to Rs 5 million to 50,000 people under the Prime Minister''s Housing Finance Scheme at an 8 percent mark-up.
The Minister announced to abolish Prime Minister''s discretionary fund, service expenditure of Ministries and Divisions, ban on import of duty-free vehicles by VVIPs and austerity measures envisaging considerable reduction in Prime Minister''s office expenditure, cut in administrative expenditure by 30 per cent which would generate a saving of Rs 40 billion as well as relief measures to retired employees in pension and Rs 2 billion subsidy for Ramazan Package at Utility Stores Corporation.