Hafeez announces budget of 2011-12 with total outlay of Rs 2767b

Islamabad: The new federal budget was presented in the National Assembly on Friday evening with a total outlay of 2767 billion rupees which is 14.2 percent higher than the budget estimates of the outgoing financial year. The new budget is relief and investment oriented, focusing on socio-economic development.

The budget, presented by Finance Minister Dr. Abdul Hafeez Sheikh in the National Assembly , estimates resource availability at 2463 billion rupees as against 2256 billion rupees during current year, showing a budget deficit of 304 billion rupees.

Revenue receipts are estimated at 1529 billion rupees during next year which are eleven percent higher than estimates of the outgoing year.

Provincial share in federal revenue receipts is estimated at 1203 billion rupees which is 16.4 percent higher than the current year. Capital receipts are estimated at 396 billion rupees as against 325 billion rupees during current year, showing an eleven percent increase.

The Minister said external receipts are expected to be 414 billion rupees which would be 7.1 percent higher than current year.

Out of total expenditure of 2767 billion rupees, 2315 billion rupees have been allocated for current expenditure and 452 billion rupees for developmental expenditure. There is an increase of 64.4 percent in the Development expenditure for the next year as compare to revised allocations for the current year.

Current expenditure constitutes 83.7 percent of the total outlay of the new budget as compared to 89.7 percent of the revised estimates of the outgoing year.

The expenditure on Public sector services including loans, transfer payments and superannuation allowances is estimated at 1660 billion rupees which translates into 71.1 percent of the current expenditure.

The volume of public sector development programme during next year would be 730 billion rupees while 97 billion rupees have been allocated for other developmental expenditures. Ten billion rupees have been allocated for ERRA for rehabilitation and reconstruction work in flood affected areas.

The size of the provincial public sector development programme would be 430 billion rupees as against 373 billion rupees during current year.

The Minister for Finance said infrastructure, education and health would be focus of the federal public sector development programme next year. Infrastructure would get 155 billion rupees, social sector 122 billion rupees and others 23 billion rupees.

Dr. Hafeez Sheikh said water has been given priority in the infrastructure for which 33.2 billion rupees have been allocated in the PSDP. Second priority is electricity for which 32.5 billion rupees have been allocated.

In addition WAPDA and PEPCO would make investments worth 83 billion rupees from their own resources which would help overcome the crisis of loadshedding.
Eighteen billion rupees have been earmarked for Diamir Bhasha Dam, 10.8 billion rupees for one thousand megawatt Neelum-Jhelum Hydel project, 14.6 billion rupees for Guddu Combine Cycle Power Project and 13.9 billion rupees for Chichukimalian Thermal Power Project.

He said 15.5 billion rupees have been allocated in the budget for Chashma Nuclear power plants three and four which would generate six hundred megawatts of electricity.

Transport and communication would get fifteen billion rupees out of which 35 billion rupees have been earmarked for National Highway Authority and fifteen billion rupees for Railways.

The Minister pointed out that although Health and Education have been devolved to the province, but the federal government has taken upon itself some of the important responsibilities in this sector like EPI, Lady Health Workers and Mother-China Healthcare programmes. Fifteen billion rupees have been allocated for these programmes.

Higher Education Commission would continue to be the fiscal responsibility of the federal government and it will get forty billion rupees in the next budget. Four billion rupees have been allocated for Population Welfare programme of the federal government.

The budget has allocation worth 28 billion rupees for development of FATA, Gilgit Baltistan and Azad Jammu and Kashmir.

Thirty-three billion rupees have been allocated for small infrastructure schemes under Peoples Works Programmes to be implemented on recommendations of the members of the parliament.

Defence allocations for the next year have proposed at 495.2 billion rupees while 166.4 billion rupees have been allocated for subsidies. The new budget allocates 790.9 billion rupees for payment of interest on loans.

The Minister for Finance announced fifteen percent increase in the salaries of the Government employees with effect from 1st of July.

There is also proposal to increase the conveyance allowance of employees in grade-1 to 15 and their counterparts in armed forces by 25%. All government employees and members of the armed forces would get conveyance allowance at specified rates irrespective of their place of postings.

Similarly, there is also proposal to increase other allowances for employees from grade one to fifteen.

Dr. Abdul Hafeez Sheikh said the adhoc relief allowances allowed upto first of July 2009 would be merged with pay scales of 2008 and new pay scales would be introduced.

He said there was also proposal for compulsory monetization transport facility of federal employees from grade twenty to twenty-two.

In view of the difficulties of the pensioners, he announced 15% increase in the pensions of those who retired on or after 1st of July 2002 and twenty percent increase in pensions of those who retired on or before 30th of June 2002.

He said the next year’s budget is directed at sustaining economic stability and reducing the fiscal deficit further. Inflation would be brought to single digit and we would move towards elimination of un-targeted subsidies.

Some institutions will have to be privatized and there will more investment on infrastructure and human resource development.

The Finance Minister said in order to broaden the tax base, 2.3 million have been identified who are not paying taxes. Of these seven hundred thousand people have been selected in the first phase who will be given notices in three months time . A sum of around three billion rupees recovery is possible from the first ten thousand people.

He said the General Sales Tax rate has been reduced from seventeen percent to sixteen percent which will benefit millions of people.

In order to bring reforms into the system of duties, it is proposed to abolish all special excise duties. He said out of three hundred ninety-seven regularities duties, three hundred and ninety-two are being abolished.

He said there is duty on forty-six items, of which fifteen items are being withdrawn from the list. He said duty on rest of the items will be abolished in the next two years.

Dr. Abdul Hafeez Sheikh said the exemption limit on income tax has been raised from three hundred thousand rupees to three hundred and fifty thousand rupees.

He said withholding tax on withdrawal of cash from banks is being reduced from 0.3 percent to 0.2 percent.

There is also proposal to lower federal excise duty on cement from seven hundred rupees per metric ton to five hundred rupee per metric ton. Federal excise duty on soft drinks has been reduced from twelve to six percent.
The Minister said a number of other steps are also being taken that would promote investment, help improve capital market and generate more employment opportunities.

The Finance Minister said it was an honour to present fourth budget of the present democratic government. He pointed out that after Shaheed Zulfikar Ali Bhutto and Liaquat Ali Khan, Syed Yusuf Raza Gilani has become the longest serving Prime Minster of the country.

He said the PPP government inherited weak economy, crisis of balance of payment and fiscal pressure when it assumed power in March 2008.

However, it initiated prudent policies and took difficult decisions to rectify the situation. It concluded 11.1 billion dollars programme with IMF and adopted poor friendly policies.

Despite difficulties, it raised salaries of the government employees by fifty percent besides increasing exemption on taxable limit to three hundred thousand rupees benefiting 1.2 million employees. It did not increase customs duty and instead reduced it on 29 items to provide relief to the people.

Dr. Hafeez Sheikh said as we are about to enter new financial year, there are signs of improvement and economic difficulties are decreasing. Exports during this year grew by twenty-six percent and are set to achieve the target 24 billion dollars.

Home remittances would cross 12 billion dollar mark while foreign exchange reserves stand at the historic level of 17.3 billion dollars.

Later, the Finance Minister laid the Finance Bill 2011-12 before the House.

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