The Federal government’s growth oriented and investment friendly budget focusing on public welfare with a total outlay of 3960 billion rupees has been presented before the National Assembly for the financial year 2014-15.
Presenting budgetary proposals before the House on Tuesday, Finance Minister Ishaq Dar said economic reforms and difficult decisions taken by the Government during the last one year are now yielding positive results and these will lead to further strengthening of economy and resolving problems of the people.
Federal Finance Minister, Senator Ishaq Dar read out the budget proposals at the special session of National Assembly attended by Prime Minister Nawaz Sharif and presided over by the speaker Sardar Ayaz Sadiq.
The Minister proposed a 10 percent ad hoc relief in the salaries of government employees and the minimum monthly wage to Rs12,000 from Rs10,000. The Minimum pension is being raised from Rs5000 to Rs6000. The allocation for defence has been proposed at Rs700 billion for FY 2014-15.
Under Benazir Income Support Programme (BISP) the poor will now receive Rs1500 per month, Rs300 more compared to previous fiscal. Now 5.3 million families will be supported instead of 4.1 million. The Federal Development budget is proposed to be fixed at Rs525 billion.
The number of customs slabs are being reduced from 8 to 6. The maximum customs duty is being reduced from 30 to 25 percent.
For Diamer Bhasha dam Rs10 bn had been allocated for the acquisition of land while Rs15 billion are being earmarked for the next fiscal.
Funds for other dams in different provinces are also being allocated.
The government is allocating Rs205 billion for investment in various power projects to overcome the energy crises on priority basis.
Privatization of the state owned organizations will be undertaken and the proceeds will be spent for the development of the people.
Sindh will get Rs 464billion under National Finance Commission (NFC) Award, Khyber Pakhtunkhwa Rs283 billion and Balochistan Rs160 billion.
In the next five years 500 new locomotives will be purchased while arrangements are being made to obtain 1500 new rail cars to facilitate the passengers.
Rs 77billion are being allocated for 45 differnet schemes for Railways besides salaries and pension of its employees. For higher education Rs63 billion have been allocated which is 10percent higher than the previous year.
Through the auction of 3G and 4G technologies as many as 900,000 people will get employment opportunities. Work on Karachi-Hyderabad motorway project will soon be started. The foreign exchange reserves of the country will soon be raised to 22 billion dollars.
Revenue collection is estimated at Rs3.943 trillion for FY 2014-15, 10 percent up compared to FY 2013-14. Expenditures Rs3.937 trillion, 2 percent up compared to previous fiscal. Current expenditures are estimated at Rs3.130 trillion.
Allocation for Public Sector Development Programme (PSDP) for 2014-15 is Rs525 billion.Fiscal Deficit will be kept to 4.9 percent in 2014-15.
The rate of inflation was brought down to 6.8 percent. Exports were raised to 21 bn dollars, registering a gain of 4.24 percent while the remittances rose to 129 million dollars.
Rupee value against the dollar witnessed an unprecedented recovery and remains stable around Rs98-99, showing a rise of 11percent. Foreign exchange reserves have been increased to 13.5 bn dollar which are will be brought up to 15 billion dollars, hopefully, by this July. The launch of Euro bond received an encouraging response.
Dar said despite hurdles and tough economic conditions the Government remained committed to bring the economy back on track and now the country is on the way to economic development. He said the successes of the government are fruit of strengthening of democracy in the country and now public representatives are fully active for the development of the people. He said objectives of the reforms were to maintain price stability, create job opportunities and reconstruct the infrastructure.
The Finance Minister said by implementing a broad based economic agenda, today’s Pakistan is brighter and healthy and this bright journey will continue.
Ishaq Dar announced a ten percent ad-hoc relief for the salaried persons of the Federal Government from 1st of July this year. He said ten percent increase will be allowed to those employees upto 15 grade drawing fix medical allowance of one thousand rupees per month.
He said five percent increase will be allowed in conveyance allowance of the employees working upto fifteen grade. He said post of superintendent is being upgraded from 16 to 17 grade. Similarly one pre-mature increment will be allowed to employees of grade one to four.
He said for the welfare of the labour class, the minimum wage is also being increased from ten thousand to eleven thousand rupees per month. He said considering the difficulties by low pension employees an increase of one thousand rupees in minimum pension is being made which will raise minimum pension upto six thousand rupees.
Finance Minister while referring to relief measures contained in the new budget said the income support levy introduced last year is being abolished because of reservations of some sections of the society.
He said to ensure continued stability in stock market, it is proposed that capital gain tax rate will be 12.5 percent for securities held upto 12 months and ten percent for securities fheld for a period of twelve to 24 months. While the securities held for more than twenty-four months shall be exempted from this tax.
Ishaq Dar said to achieve the vision of an industrialised Pakistan in foreseeable future the Government wants to attract both domestic and foreign investment into manufacturing sector. He said in order to attract foreign direct investment in manufacturing, construction and housing sectors, tax rebate will be allowed upto June 2017.
To promote agriculture sector the government is proposing concessions for encouraging farming by removing customs duty on the import of plastic coverings and mulch film etc.
He said corporate tax in the next financial year will be upto 33 percent while withholding tax on marriages and functions which was ten percent is being proposed to reduce upto five percent.
The government feels that disabled persons need special consideration therefore it is being proposed to reduce tax liability of such persons having income upto one million rupees by fifty percent. He said federal excise duty and withholding tax on telecommunication are being reduced by one percent.
Ishaq Dar announced special initiatives to enhance exports of the country in general and textile in particular. He said the government has decided to set up export import bank of Pakistan to enhance export credit and reduce cost of borrowing for exporting sectors on the long term basis with authorised capital of hundred billion rupees having initial paid up capital of ten billion rupees. He said the government also decided to reduce mark up rate on exports finance from 9.4 to 7.5 percent.
He said it has also been decided to set up Pakistan Land Port Authority to transform land ports into efficient facilitators of trade. Setting up of this authority will help boost to the national exports.
He also announced various measures to strengthening textile sector to enhance its exports by increasing cotton yield through various means. He also announced various measures to improve agriculture sector including credit guarantee scheme for small and marganlised farmers and reimbursement of crops insurance scheme.
The Finance Minister said the government is introducing livestock insurance scheme for all farmers getting finance for upto ten cattle. This scheme will cover livestock insurance in case of calamity and diseases and will benefit one hundred thousand livestock farmers.
The Finance Minister said the government has specially designed a program to provide housing credit to low cost housing units for enabling the poor to have their own houses. He said the banks will provide loans upto one million rupees for the scheme while the government will gurantee forty percent of the portfolio amount. The scheme will cover all areas of Pakistan and twenty-five thousand loans worth twenty billion rupees will be provided through this innovative methods of supporting low and middle income facilities.
He said to expedite construction activities in housing sector, House building finance corporation will be rehabilitated. Ishaq Dar said to ensure prompt health care facilities to the maximum population of the country, the government has decided to introduce health insurance scheme with the involvement of provincial governments which will help protect poorest segments of the society.
Giving details of tax proposals, the Finance Minister said that it is proposed that airlines may collect advance tax of three percent on the sale of first class and Club class air tickets.
He said it is beingn proposed that advance tax of one percent may be collected on the purchase of immoveable property. However, properties with value of two millions rupees and schemes introduced by the government for the expatriate Pakistanis will be exempted from this tax.
The Finance Minister said to ensure due contribution from the rich and dicourage consumption, seven point five percent adjustable advance tax on monthly bill of one hundred thousand rupees and above on domestic electricity consumers is being proposed.
He said the government has made a conscious policy decision to enhance the contribution of taxes which are progressive taxes and gradullay reduce the burden of indirect taxes which effect the common man. Therefore, no new tax has been imposed in case of sales tax and federal execise duty. He said main objective of the government is to broaden the tax net and increase the cost of non compliance for those who remain outside the tax net, to remove distortion and anomilies and to promote automation in order to reduce interaction between tax payers and tax collector.
Ishaq Dar said to facilitate exporters it has been decided to introduce a consolidate export faciliation scheme which will be implemented after broad based consultations with exporters. He said accordingly the government has also decided to form tax reforms commission with the objective to review the entire tax policy and tax administration.
The Finance Minister said the government has established Pakistan Development Fund Limited Company with resources of 157 billion rupees. The company will provide the financing to key infrastructure projects and promote public private partnership.
He said the government has also revived its efforts to promote Islamic Banking and Financial system. A committee has been constituted for this purpose comprising ulema, bankers, economists and government officials which will finalise its recommendations by December this year.
Earlier Federal Cabinet approved budget for the fiscal year 2014-15. The cabinet meeting was presided over by Prime Minister Nawaz Sharif during which Finance Minister Ishaq Dar briefed the participants about the budget.