Miftah Ismail says 3950 billion rupees will be spent on debt servicing.
ISLAMABAD: (UrduPoint/Pakistan Point News-June 10th, 2022) The Federal Budget 2022-23 with a total outlay of 9502 billion rupees has been announced, encompassing measures for sustainable economic growth, industrial and agriculture development and relief for the poor people.
Presenting the budgetary proposals for the next fiscal year in the National Assembly on Friday, Finance Minister Miftah Ismail said 3950 billion rupees will be spent on debt servicing. He said that a budget of 800 billion rupees has been earmarked for the next year's PSDP. He said 1523 billion rupees has been set aside for country's defence and 550 billion rupees for civil administration's expenditure. Besides, 530 billion rupees have been allocated for pension, while 699 billion rupees for targeted subsidies for the benefit of the poor people. An amount of 1242 billion rupees has been proposed for grants, which include the grants of Benazir Income Support Programme, Bait-ul-Mal and other departments.
The Minister said that FBR revenue has been estimated at 7004 billion rupees for the next fiscal year. This includes 4100 billion rupees share of provinces. The net revenue with the Federal Government will be 4904 billion rupees. The non-tax revenue will be 2000 billion rupees.
The Finance Minister said the budget of BISP has been increased to 364 billion rupees for the next fiscal year. In addition, 12 billion rupees have been allocated for provision of subsidy on essential commodities through Utility Stores Corporation. An additional amount of five billion rupees has been set aside for Ramadan Package.
The Finance Minister said the facility of Benazir Kafalat Cash Transfer Programme will be available to nine million deserving families under BISP in the next fiscal year. For this, 266 billion rupees have been reserved.
Miftah Ismail said that the scope of Benazir Education Stipend Programme will be expanded to ten million children. Over 35 billion rupees have been proposed for this programme. Ten thousand more students will be given Benazir Undergraduate Scholarship at a cost of nine billion rupees. The network of Benazir Nashonuma Programme will be expanded to all the districts, which will cost about 21.5 billion rupees. Besides, six billion rupees have been set aside for Pakistan Bait-ul-Mal for the medical treatment and assistance of deserving families.
For this purpose, the government has taken several steps to provide subsidy and assistance. He, however, said that the continuation of this will require more resources.
To achieve this, there is a need to impose special tax on higher income earnings in order to divert the resources to the poor people.
Miftah Ismail said our budget philosophy is to enhance agriculture production, especially the edible oil in order to reduce agricultural imports, separately. We need to promote industries to bolster exports and earn valuable foreign exchange. This, he said, will help address the issue of balance of payments on permanent basis.
The Finance Minister said that the energy sector has pivotal importance for the people as well as the industries and trade. For these sectors and the people we gave an additional subsidy of 214 billion rupees. He said 573 billion rupees have been earmarked in the next financial year so that the people could afford the electricity in the harsh weather of summer. He said we released 248 billion rupees for the payment of outstanding amounts in the petroleum sector and 71 billion rupees will be provided in the next fiscal year. He said we will soon announce the new gas tariffs which will be aimed at providing gas to the industries at competitive rates which will help in bolster exports.
The Finance Minister said we have earmarked 65 billion rupees in the current budget for Higher Education Commission. In addition 44 billion rupees have been allocated for the development schemes of the HEC which is 67 percent higher than the previous year. He said this is manifestation of our commitment towards the youth. He said we are encouraging the provinces to fully fulfill their responsibilities regarding promotion of higher education in the coming years. The HEC budget envisages five thousand scholarships for the students of Balochistan and tribal districts. He said a separate scholarship scheme has also been included for the coastal areas of Balochistan.
The Finance Minister announced to provide one hundred thousand laptops on easy installments to the students across the country. Funds have also been allocated for provision of state of the art equipment to upgrade education of engineering and technology.
The Finance Minister announced fifteen percent increase in the salary of government employees along with merger of the adhoc allowances.
He said the tax exemption slab for salaried class has also been increased from 600,000 rupees to 1.2 million rupees. This step will be benefit the salaried people and enhance business activities. The slab for business individuals and associations of persons has been increased from 400,000 rupees to 600,000 rupees.
The Minister said a new fixed income and sales tax system is being introduced for small retailers. Under this system, tax ranging from 3,000 rupees to 10,000 rupees will be collected through electricity bills. This will be a final settlement and FBR will not be entitled to ask any questions about this tax.
Miftah Ismail said there is a proposal to increase initial depreciation charges for industries and other businesses from 50 percent to 100 percent in the first year.
Finance Minister Miftah Ismail said an industrial policy is being introduced in collaboration of Asian Development Bank to strengthen industrial base of the country. He said the Prime Minister has directed to immediately clear all claims of exporters. At present, an amount of 40.5 billion rupees is payable to them and we will pay this amount forthwith. Despite, financial difficulties sales tax refunds are also being released immediately. He said that Industrial feeders have been exempted from load-shedding to ensure uninterrupted power supply to the industrial sector.
Miftah Ismail said a new strategy is being evolved for the promotion of investment in the country. He said the policy is aimed at providing an enabling environment to the investors by doing away with the complex procedure. He said that our government will bring reforms in dispute resolution mechanism to facilitate domestic and foreign investors. He said that it will be ensured that this mechanism is simple and effective. For this purpose, best international practices will be adopted. He said these reforms will be introduced in consultation with judiciary so that these could be implemented immediately.
Miftah Ismail said that 21 billion rupees have been earmarked to enhance production of crops and livestock. He said that Ministry for food Security has prepared a three year growth strategy in collaboration with Planning Commission and provinces. This strategy is aimed at enhancing agri-production, making the farmers prosperous, promoting smart agriculture and self-reliance.
The Finance Minister announced formation of National Youth Commission in order to exploit the potential of the youth. He said various schemes have been proposed for the youth. He said a coordinated system is being introduced to enhance the role of educated youth in the country's development. He said more than two million job opportunities will be provided to the youth through youth employment policy. He said a scheme will also be started to promote youth entrepreneurship under which interest free loans of up to five hundred thousand rupees and loans up to twenty-five million rupees will be provided on easy installments. He said that twenty-five percent quota has been fixed for women in this loans scheme. He said that women will be given training on priority basis in hi-tech in order to ensure the economic empowerment. He said youth development centres will be established across the country.
The Finance Minister said that a green youth movement will be started in order to engage the youth in activities aimed at environment protection. Funds will be set aside to provide laptops on merit and on installments besides 250 mini-sports stadium will be constructed in the country. He said that an innovation league will be introduced in order to enhance the capabilities of the youth. He said a talent hunt and sports drive programme will be framed for the youth in the age bracket of eleven and twenty-five years.
The Finance Minister said austerity is the top priority of the present government. Reducing government's expenditure is part of this budget and we are taking concrete steps in this regard. He said there will be complete ban on purchase of vehicles. Except, development projects, there will also be a ban on procurement of furniture and other items. The petrol quota of cabinet members and government officials will be reduced by 40 percent. There will also be ban on foreign tours under government expense, except the important ones.
According to the vision of Prime Minister, the Finance Minister said a medium term macro economic framework has been prepared to put the economy on the path of development. He expressed the confidence that we will be able to put the economy in the right direction through this framework. He said our biggest challenge is to achieve growth without Current Account Deficit. Therefore at least five percent will be achieved without disturbing the balance.
Miftah Ismail said the GDP will be enhanced from 67 trillion rupees to 78.3 trillion rupees during the next financial year.
He said we are trying to reduce inflation by better fiscal and monetary policies. The inflation will be reduced 11.5 percent during the next fiscal year.
He said the tax to GDP ratio is estimated to the increase to 9.2 percent from the current 8.6 percent during the next financial year. He recalled that we had left this ratio at 11.1 percent in the year 2017-18. He said the overall deficit which currently stands at 8.6 percent will be gradually brought down. This will be brought down to 4.9 percent in the next fiscal year. Similarly, the overall Primary balance which is currently -2.4 percent of the GDP will be improved to 0.19 percent.
The Finance Minister said the imports, which are expected to be 76 billion Dollars during the current fiscal year will be reduced to 70 billion dollars in the next financial year. At present, exports are 31.3 billion dollars, which will be enhanced to 35 billion dollars in the next fiscal year. The current account balance will be reduced to -2.2 percent of the GDP from the current -4.1 percent.