An infected budget

ISLAMABAD: Govt ramps up health spending • 2.1pc growth target set.

The government has presented 'Corona' budget for the next fiscal year with an outlay of Rs 7132 billion and ambitious revenue collection of Rs 4963 the federal board of revenue to contain the deficit at 7 percent of the GDP, amid protests by the opposition members, following approval of a special meeting of the cabinet.

Continue with the International Monetary Fund (IMF) programme, sizeable allocation for development spending to create employment opportunities and special importance to the defence have been guiding principles for next fiscal year budget, stated Minister for Industries and Production Hammad Azhar while presenting second budget. No increase in salaries and pensions was announced for the employees for the federal government during his budget.

The Minister added that the budget for next fiscal year has been designed to mitigate the impact of coronavirus on the various sectors of the economy and no new tax has been imposed to provide relief to the people. "We have allocated resources for the AJK, Gilgit-Baltistan, the merged areas of FATA, Kamyab Pakistan and decided to provide targeted subsidies," added the minister.

Total outlay for the next fiscal year has been projected at Rs 7132 billion and total revenue at Rs 6573 billion with federal board of revenue share of Rs 4963 billion as opposed to Rs 3900 billion for the current fiscal year.

The GDP growth for the next fiscal year has been targeted at 2.1 percent with 6.5 percent inflation and current account deficit of 4.4 percent as well as to increase foreign direct investment (FDI) 25 percent.

The government has estimated non tax revenue of Rs 1610 billion for the next fiscal year and provinces share of 2874 billion from the divisble tax collection, leaving net resources of Rs 3700 billion for the federal government. Budget deficit has been projected at Rs 3437 billion for the next fiscal year or 7 percent of the GDP and primary deficit of negative 0.5 percent.

The size of Federal Public Sector Development Programme (PSDP) has been announced at Rs 650 billion with the Ministry stating that owing to fiscal crisis following coronavirus, a decision has been taken that 73 percent of allocated funds would be utilized for the ongoing projects and 27 percent for the new projects. The Minister said that Rs 70 billion has been allocated for corona-specific projects. Total development outlay of federal and provinces has been set at Rs 1324 billion for the next fiscal year. The government allocated Rs 189 billion for energy sector, Rs 70 billion for water sector, Rs 24 billion for ML-! Railways, Rs 118 billion for National Highways Authority (NHA), Rs 27 billion for communication, Rs 20 billion for preparation of equipments for viral diseases Rs 5 billion for uniform curricula, quality examination etc and Rs 30 billion for HEC, Rs20 billion for Science and Information Technology, Rs 6 billion for climate Rs 34 billion for SDGs and Rs 12 billion for food and agriculture.

The Minister further state that the government has allocated Rs 180 billion subsidies for food and energy sector, Rs 64 billion for Higher Education Commission with an increase of Rs 4 billion over current fiscal year Rs 60 billion, Rs 30 billion for construction sector and Rs 1.5 billion allocated for Akhwat Foundation for construction of low cost houses.

The Minister said that for special areas, Rs 32 billion has been allocated for Gilgit-Baltistan and Rs 56 billion for AJK whereas a special grant of Rs 18 billion for Sindh provinces and Rs 10 billion for Balochistan has been earmarked in the budget, he added.

Additionally, the minister said that grants for artists have been proposed to be increased to Rs 1 billion from Rs 250 million and Rs 10 billion has been allocated to provide relief to the agriculture sector and for locust control. He added that Rs 40 billion has been allocated in the budget for Railways, Rs 12 billion for Kamyab Jawan Pakistan and Rs 13 billion for federal hospitals in the provinces, including Shaikh Zaid, Lahore and Jinnah Hospital in Karachi as well as four other federal hospitals.

The government has decided to abolish advance tax on up to200 cc auto Rikshaw, Rikshaw and motorcycles, proposed to imposed 100 percent tax on those who are not in active tax payers lists and having more than two hundred thousands monthly. He said there would be exemption for special entities on donation with specific conditions. The Minister said that loss making entities (NPOs) would provide details on donation received during the previous year for getting 100 percent tax credit.

The Minister said that holding period on disposal of immovable properties has been reduced from 8 years to four years and each year capital gain tax is proposed to be reduced by 25 percent. Profit from disposal of assets have been exempted from tax.

The minister said the government has decided to increase federal excise duty on imported cigarettes, cigars and other tobacco items from 65 percent to 100 percent and also increased FED on e-cigarettes to 100 percent.

The Minister further stated that FED on filter rod cigarettes has been increased from Rs 0.75 to Rs 1 per kg, and FED on imported and local energy drinks to 25 percent from 13 percent. The minister said that FED has been introduced on double cabin vehicles.

Sales tax on import of potassium chloride has been proposed to be increased from Rs 70 to Rs 80 per kg in addition to 17 percent sale tax while there is 17 percent sales tax but it would not be applicable on the import by the defense organizations. The minister said to increase the tax base now the manufactures and registered suppliers have been bound to that they would not supply to the non registered persons more than Rs 10 million goods.

The Minister said that the FED on cement has been decreased from Rs 2 to Rs 1.75 per kg. Under the new mobile phone manufacturing policy, sales tax exemption has been proposed for those companies manufacturing mobile phone locally.

The government has abolished withholding tax on education fee and marriage halls and income tax on imports of raw materials has been reduced from 5.5 percent to 2 percent and on import of machinery from 5.5 percent to 1 percent and also abolished immigration certification system. He added that to encourage the local engineering industry, custom duty on hot roll coils has been reduced from 12.5 percent to 6 percent.