ISLAMABAD, Pakistan: The Pakistan Muslim League-Nawaz (PML-N) led Federal government on Friday presented its third budget for the fiscal year 2015-2016 in the National assembly with a total outlay of Rs4,313 billion.
While laying budgetary proposals before the House, the Federal Finance Minister Ishaq Dar said that today the economy is stable and heading towards sustainability.
The minister said that it is the result of the policies of Prime Minister Nawaz Sharif that inflation level has come down at 8 years lowest level of 6 percent.
The finance minister said that foreign exchange reserves have surged to $17 billion which will further grow to $19 billion during the next financial year. He said that Karachi Stock market which was 19,916 points has crossed the level of 34000 points which shows 70 percent increase in the stock market business with similar increase in market capitalization.
Ishaq Dar said that fiscal deficit which was 5 percent during the outgoing financial year will be brought down to 4.3 percent in the next financial year. He said that this achievement was made through increase in revenue collection and decrease in expenditures.
Energy Sector
Dar said that the government has prioritized the energy sector and has launched several projects in this regard. He said that work is in progress to add 7000 megawatts to the national grid besides another 3600 megawatts through Liquefied natural gas (LNG) based power plants by December 2017. He said in addition projects like Dasu, Diamer Bhasha Dam and Karachi nuclear power plants are also being executed to address the energy crisis.
Ishaq Dar said that Rs248 billion are being allocated for energy sector with an objective to generate additional cheap electricity and overcome load shedding by 2017.
The minister said that work on ongoing projects will be expedited during the current fiscal year and a huge amount has been allocated for this purpose. He said that work on various projects for the small dams and link canals will not only continue during the next fiscal year but it will be expedited in all the four provinces. Similarly, he said that the projects to overcome wastage of flood water will also be continued with focus to complete them in the shortest possible time.
BISP & Bait-ul-Mal
The finance minister said that under the Benazir Income Support Program (BISP) allocations are being enhanced up Rs102 billion which will cater to 31 million people of 5.3 million deserving families. He said that similarly budget of Bait-ul-Mal is being doubled from Rs2 billion to Rs4 billion
Telecom Sector
Dar said that under Universal Telecenters program, Rs12 billion are being allocated to set up 217 telecenters all over the country in the first phase. He said that work is underway to connect 128 tehsils of the country especially under developed areas with fiber optic. He said that another program in telecommunication sector is being launched at a cost of Rs3.6 billion which will connect rural areas with the rest of the country.
Medium Term Macro-Economic Framework
The minister also announced a three-year medium term macro-economic framework spanning over financial year 2015-16 to 2017-18.
GDP Growth Rate
Under the framework, the target for the gross domestic product (GDP) growth rate for the next fiscal year has been kept at 5.5 percent which would be taken to 7 percent by 2017-18.
The finance minister said that inflation would be kept to single digit, investment to GDP ratio at 21 percent, fiscal deficit 3.5 percent and tax to GDP ratio 13 percent.
The minister said that foreign exchange reserves would be maintained at the minimum of $20 billion.
The finance minister said that the GDP growth of 5.5 percent for the next year will be achieved through 3.9 percent growth target for agriculture, 6.4 percent for industries and 5.7 percent for services.
Infrastructure Projects
On the infrastructure projects, Ishaq Dar said that Lahore-Karachi motorway is the priority of the government which will change the destiny of the nation. He said that this project will generate many job opportunities. He said that amount is also being allocated for the construction of Abdul Hakeem Multan section, Sukkur-Multan and Karachi- Hyderabad sections of the motorway.
Ishaq Dar said that Rs185 billion have been allocated for the construction of bridges.
The minister said that the China-Pakistan Economic Corridor (CPEC) project which will prove to be a game changer is a priority of the government and for this purpose work on Raikot-Islamabad road will be launched during the next fiscal year. He said that for this purpose Rs29 billion are being allocated. Similarly, he said that Rs10 billion are being allocated for construction of Islamabad-Dera Ismail Khan Road.
About the revival of Pakistan Railways, the minister said that a comprehensive plan has been devised in this regard which include dualization of railway track from Raiwind to Khanewal and Shaddra to Lala Musa. He said that rehabilitation of Karachi-Khanpur track will be completed during the next fiscal year. He said that 159 weak railway bridges will be rehabilitated by 2017. He said that 170 new locomotives will be inducted into the system besides repairing 100 locomotives and purchasing of 1500 new passenger coaches. He said that a program is also being launched to renovate railway stations throughout the country besides improving signaling system between Lodhran and Kotri.
Public Sector Development Programme
The finance minister also announced Public Sector Development Programme (PSDP) amounting to over Rs1513 billion. Out of this, Rs700 billion have been earmarked for the development projects to be carried by the federal government while Rs814 billion will be disbursed amongst the federating units for their development programs.
Ishaq Dar said that Rs184 billion are being allocated for the construction of highways while Rs72 billion are being earmarked for the power related projects.
The finance minister said that Rs62 billion are being allocated for the CPEC project. In the first phase, western alignment of the corridor will be completed on priority so that economic benefits reach the people.
The federal minister for finance said that the government plans to initiate new programmes to improve productivity in industrial and agricultural sectors and achieve food security and enhance exports.
Ishaq Dar said that special emphasis will also be laid on the construction of motorways including Gojra-Multan, Sukkur-Hyderabad and Sukkur -Multan sections.
Under the development program, Rs20 billion are being earmarked for the promotion of higher education and Rs20 billion for health sector projects. He said that it has also been decided to launch prime minister’s health insurance scheme during the next financial year.
Ishaq Dar said that heavy investment is being made on the development projects in the water sector to ensure maximum water conservation for irrigation and power generation purpose.
Dar said that Diamer Bhasha dam is most significant in this regard which is very important for the future of Pakistan. He said that this dam will have the capacity of 4.7 million acre feet water reservoir besides generation 4500 megawatts of cheap electricity. He said that Rs15 billion are being allocated for the procurement of land for the dam while Rs6 billion have been earmarked for construction of first phase of this dam.
The minister said that special attention is also being laid on ensuring provision of water in Balochistan province. For this purpose, delay action dams, flood dispersal structures, canals and small dams will be constructed in the province which will be completed during the next two years. He said that work on Basool Dam in Gwadar will be launched during the next fiscal year.
Similarly, he said that attention will be laid on the completion of ongoing irrigation projects including Raini Canal, right bank outfall drain and Darwat dam.
The finance minister said that work on Makhi Farash canal will be launched during the next fiscal year. In Punjab, he said work will be launched on Ghabbi Dam in Chakwal and Nala Dek in Sialkot.
Ishaq Dar said that work on Kurram Tungi dam in North Waziristan and Gomal Zam Dam in South Waziristan will be continued with an objective to complete them at the earliest.
Funds for Higher Education
Coming to the education sector, the finance minister said that the government believes in the promotion of education and ensure raising its standard. For this purpose, Rs20 billion are being allocated for 143 projects of higher education commission besides allocating Rs51 billion for the Higher Education Commission (HEC) for current expenditures.
Ishaq Dar said that the federal government stands by its commitment to increase expenditures on education sector equal to 4 percent of GDP during its tenure. However, he said that after the 18th amendment, major portion of the education has gone to the provinces and both federal and the provincial governments will have to take visible steps to achieve their targets.
Expenditures
The finance minister said that estimate for the current expenditures during the next fiscal year is Rs3128 billion while the revised estimates for the outgoing fiscal year are Rs3151 billion. He said that the figure shows that the current expenditures are being reduced gradually.
The minister said that the defence budget is being increased by 11 percent as Rs780 billion have been allocated for next financial year.
The finance minister said that Rs100 billion are being allocated in the next budget for future security arrangements and return of internally displaced persons (IDPs) of North Waziristan.
Tax
Ishaq Dar presenting new tax proposals said that the country needs ample financial resources to ensure socio economic development and betterment of the people. He said that the government considers significant increase in the taxes to ensure sustainable economic development of the country.
Dar said that all-out effort has been made to save the poor segments of the society from imposing new taxes and measures will be taken to bring the rich segments of the society in the tax net.
The minister said that measures will be taken to broaden the tax base and reduce the slabs and duty on custom tariff during the next fiscal year.
The finance minister said that to discourage undocumented economy, it has been decided that 0.6percent withholding tax may would be imposed on the fund transfers and banking instruments. However, the tax payers who file their returns will be exempted from this tax.
The finance minister said that tax rate on dividend is being increased from 10 to 12.5 percent. However, the tax rate on mutual funds will remain 10 percent. He said that 10 percent advance income tax which was being received on the bills more than Rs1000 will now be imposed on the bills up to Rs75000 due to decrease in power tariff.
Ishaq Dar said that it is proposed that onetime tax on rich persons and companies which have the income of more than Rs500 million per annum at a rate of 4 percent to ensure raising of funds for IDPs which is estimated up to Rs80 billion.
Tax Relief
The finance minister also announced several tax relief measures to promote corporate culture and documentation of the economy. Under the policy, the rate of tax on companies which was 33 percent this year is being brought down to 32 percent for the next financial year.
Profit on transmission line projects is being exempted from income tax for 10 years to incentivise the private sector to invest in electricity transmission projects. The facility would be available to all those projects that would be launched by June 2018.
Ishaq Dar said that presently salaried taxpayers with taxable income between Rs400,000 and Rs500,000 pay 5 per cent tax. This rate is being reduced to 2 percent to provide relief to this segment of salaried taxpayers. The rate for non-salaried individuals and association of persons of the same category would be seven percent as against 10 percent during current financial year.
Incentives to Boost to Construction SectorÂ
Ishaq Dar said that various incentives are being announced in the budget to give boost to the construction sector. He said that incentives will also be given to the industrialists so that they could provide more employment opportunities. He said that under the green field industrial package of the prime minister, tax exemption is being extended up to June 30, 2017. Similarly, he said that exemption in sales tax and custom duty on the import of solar panels is being extended up to June 30, 2016.
The minister said that exemption in income tax on the equipment being used for the production of solar and wind energy plants are also being extended for the next five years.
Ishaq Dar said that the companies in the business of Halal meat will be exempted from income tax for 4 years.
The finance minister said that various tax rebates and exemptions are being announced in the budget for the promotion of fish business, import of agriculture machinery and equipments and production of these equipments besides installation of solar tube wells.
The minister said that to facilitate the people of far flung and under developed areas, exemption of federal excise duty and withholding tax is being given in the civil aviation sector.
The finance minister said that the government has decided to provide various incentives and tax exemptions in Khyber Pakhtunkhwa to flourish business and industries to overcome the losses incurred due to terrorism and extremism.
Incentives to Exporters
The finance minister announced various steps to give incentives to the exporters for giving a boost to the exports in the coming years. He said that special incentives will be given in various sectors of exports including product diversification, value addition, trade facilitation, enhanced market access and institutional strengthening.
For this purpose, Rs6 billion are being allocated in the budget besides taking steps for reconstitution of export development fund. He said that significant measures will be taken to enhance textile exports of the country.
Coming to agriculture sector, the finance minister said that with the approval of the prime minister, it has been decided to issue interest free loans for the installation of solar tubewells and convert the existing tubewells to solar ones.
The finance minister said that the government is focusing on expanding the volume of small agriculture loans for the benefit of growers and loans worth Rs600 billion will be disbursed during the next financial year.
Sales Tax
The minister said that the rate of federal excise duty on cigarettes is proposed to be increased from the existing 58 percent to 63 percent to discourage smoking. Sales tax on import of different varieties of mobile phones is proposed to be increased by 100 percent.
The finance minister said that exemptions worth Rs120 billion given under different SROs in the realms of customs, sales tax and income tax are being withdrawn.
Dar announced that the power of the Federal Bureau of Revenue (FBR) to issue SROs is being withdrawn and now this power would be used by the federal government in special circumstances.
In addition, he also announced a package of incentives for construction sector. Bricks and crush is being exempted from sales tax for three years up to June 30, 2018 so as to bring down the cost of construction.
PM’s Health Insurance Scheme
Ishaq Dar announced to launch Prime Minister’s Health Insurance Scheme at a cost of Rs9 billion to provide insurance to the patients suffering from serious and contagious diseases.
The minister said that initially the scheme is being launched in 23 districts which will be expanded during the next three years to facilitate 60 percent poorest segments of the society. He said that under this scheme, secondary medical coverage will also be provided in the tribal areas, Islamabad, Gilgit Baltistan and Azad Kashmir.
PM Youth Business Loan Scheme
Moreover, he said that under the PM Youth Business Loan Scheme, 15,000 loan applications have been approved while 20,000 applications are under consideration. He said that under this scheme, rate of markup is being reduced from 8 to 6 percent in the next fiscal year.
Ishaq Dar announced to provide internship to 50,000 unemployed graduates having education of 16 years during the next fiscal year. He said that under this scheme, Rs12,000 will be given as stipend to the internees.
The minister said that under the PM laptop scheme, 70,000 laptops have been disbursed among the outstanding students which will continue in the next fiscal year. He said that for all these schemes, Rs20 billion are being allocated.
Earlier, the Federal Cabinet at its meeting presided over by the prime minister in Islamabad on Friday approved the budgetary proposals for the next fiscal year.
The federal minister for finance briefed the cabinet regarding budget proposals, including targets set for the next financial year, both development and non-development activities.
