LAHORE: President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Irfan Iqbal Sheikh on Saturday said that coalition government’s GDP growth rate target of 3.5% is an unrealistic.
While addressing the post budget press conference on federal budget 2023-24 Irfan Iqbal Sheikh said that it is difficult for the government to achieve 3.5% growth target because economy is already under pressure due to floods, Ukraine-Russian war. It looks also difficult that government will achieve growth target because of increase in oil and gas prices globally as well increase in international food prices and trade deficit.
Sheikh also said that achieving Rs 9.2 trillion tax target is a big challenge for the coalition government.
He further said interest payments account for 50.5% of total expenditure in the federal budget 2023-24, a year-on-year increase of 32%.
Interest payments are more than federal net revenue, these payments have reached 106% of federal net revenues. The main reason for the increase in this interest payment is the increase in policy rate and depreciation of Rupee against USD.
The government will have to depend on more funding for all other expenses including pension, defence, government expenses etc.
In the budget 2023-24, the government has taken many such measures which will boost the development of IT, SME and agriculture sector. In this budget, agriculture, which is the backbone of the government, has allocated five billion rupees for the provision of subsidized loans to the agri industry. The government has allocated six billion rupees for the next year for the concession on imported urea fertilizer. Taxes and duties on import of quality seeds have been abolished. FPCCI appreciates these initiatives.
Agro industry has the potential to revolutionize the rural economy. The SMEs are key to any industry. In this budget, the coalition government has implemented a super tax on income above Rs 150 million. This step being taken is a violation of this promise. Also, the government has increased the tax rate of 0.5% on commercial importers. The FPCCI had suggested that a similar tax structure should be kept for commercial importers or industrial to save tax revenue as a result of under-invoicing.
The FPCCI appreciates government’s announcement of 50,000 solar panels for the tube wells that run on diesel.
The FPCCI urged the government to announce such type of scheme for the industry. The industries in both urban and rural areas will benefit from it and it will show positive results on the economy. This will also help full in resolving the issue of circular debt.
SAARC Chambers of Commerce and Industries newly-elected Vice President and FPCCI’s Businessmen Panel (BMP) Chairman Mian Anjum Nisar while addressing the post-budget press conference said federal budget 2023-24 lacks long-term direction to economy.
This budget can be termed as a short-term, ad-hoc and an expansionary budget in an unusual time of economic emergency, looking like an interim budget, with short-term policies, lacking solid measures to stabilize the economy, having no focus on changing economic priorities.
The FPCCI former president and BMP chairman said that the present budget lacks major objective of giving a long-term direction to economy, as no visible reduction in cost of doing business or cut in taxes in budget has been announced to speed up the growth or create new jobs in the country.
He said that Pakistan needed millions of jobs annually but the government had not taken any concrete step in federal budget for job creations for the unemployed youth. Although details are still to come out, the budget vibes seem positive, he said.
Mian Anjum Nisar stated in this budget too, the government attempted to squeeze the neck of old taxpayers instead of taking efforts to bring new taxpayers into tax net. Budget FY24 is an attempt to satisfy IMF on key matters relating to revenue collection, subsidy reductions, and attainment of fiscal discipline, he stated.
He said Rs 1,150 total outlay of Public Sector Development Programme (PSDP) is appreciable. He said government has announced some good steps towards agriculture sector. Agriculture is the backbone of the country for food security. The announcement of conversion of 50,000 tube wells into solar, duty reduction on the import of raw material of solar panels, batteries, and inverters are right steps towards energy mix in the country. Announcements related to education and youth skill development programme, etc, are the goods steps the government is taking.
However, he said that it was not an export-oriented budget. The finance minister did not announce any concrete steps towards exports enhancement. Our cost of doing business is going up due to high electricity rates and unfriendly business environment in the country.
He said that except agriculture, nothing was there in the budget speech for the rest of sectors. He proposed that agriculture sector should also come under the tax net. He termed the budget as election budget, and it is not going to be the final budget.
The BMP chairman commended the government for removing duty from solar panels import by agreeing to the demand of industry. The FPCCI former president said that the government has announced some measures for the agriculture sector but it has failed to introduce a well-thought-out strategy for enhancing production of key crops including cotton, wheat and oilseeds in addition to reducing cost of production of farmers in federal budget 2023-24.
He expressed dismay that on one hand the government was rightly distressed over rising inflation, but on the other hand it fell short of addressing the root cause of this alarming trend, which was continuous downward trend in farm productivity. He also called for reducing the input cost of farmers that was increasing particularly due to upsurge in power tariff and increase in rates of fuel.
Mian Anjum said that the government gave a big miss to the local as well as the export industry, the backbone of the national economy while announcing budget 2023-24. He said that input cost of farmers increased many times, but the government did not announce any tangible step for reducing it.
Amid unprecedented water shortage, the electricity tariff multiplied along with spiraling petrol and diesel prices, making industry as well as agriculture one of the costliest affairs.
He said that amid reports of pressure from the International Monetary Fund (IMF), the government has earmarked Rs 1.074 trillion in subsidies in its budget for fiscal 2023-24, about 2.6 percent lower compared to last year’s allocation. According to the budget document, significant cuts have been made to subsidies for three different sectors, including power, petroleum, and additional flood relief arrangements. He said that subsidies for the petroleum sector have been slashed by 47.4 percent to Rs 53.6 billion for fiscal 2023-24.
He said that the subsidies for the power sector have been slashed 14.5pc, with Rs 579 billion earmarked for fiscal 2023-24. Under this head, Rs 150 billion have been proposed for inter-Disco tariff differentials. The government has earmarked Rs 310 billion in the budget for IPPs against Rs 180 billion in FY23. Significantly, no specific amount has been set aside for FCA spillovers, the Kissan package, flood water management, industrial support package, and zero-rated industrial subsidy.
All Pakistan Anjuman Tajran, Chairman Supreme Council Naeem Mir said in a post-budget press conference that constitution gives provincial autonomy but the eighteenth Amendment financially weakened the federation in the name of provincial autonomy.
We demand revision of only that part of the 18th Amendment which is related to allocation of resources through NFC Award.
Today, the Federation has no money, all the savings and money are with the provinces. Defense and foreign debt is only the responsibility of the federal government. Provinces should also pay their share for defense.
Copyright Business Recorder, 2023
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