Finance Minister Ishaq Dar presented the budget for the upcoming fiscal year 2016-17, with an outlay of Rs4.394 trillion – a 7.3 per cent increase over the previous year – and a growth target set at 5.7pc.
With Dar’s concession that the agriculture sector’s negative growth of -0.19pc dragged the economy down, there were expectations that today’s budget would come up with new measures to spur growth in the sector.
Below are major targets for FY16-17:
Announcing the budgeted expenditure for the next fiscal year at Rs 4.39 trillion, Dar pointed out that it translated into a rise of over 7pc compared to last year.
Finance Minister Ishaq Dar, while outlining the economy’s performance in the past two years said: “In the past two years progress went over 4pc and reached 4.7pc – the highest in eight years.”
“This would have been better if the cotton crop hadn’t suffered a fall in growth of 28pc.”
To counter the collapse in the agriculture sector, Dar announced a decline of Rs400 in Urea prices to Rs1,400 per packet. “We need to take out-of-the-box measures to boost the agriculture sector,” Dar said after announcing the following allocations for agriculture:
- Rs700bn allocated for agricultural loans
- Markup for these loans brought down to 2pc (NBP, ADB)
- Electricity tariff for tubewells will be brought down to Rs5.35 per unit, with the govt bearing Rs27bn.
- Duty abolished on fish feed
- 10pc custom duty revoked for export of small fish
- 7pc tax on pesticides revoked
“This house has never seen such a hefty package announced for farmers. I congratulate the agricultural community,” Dar said after announcing the reforms.
He went on to say that the government had targeted growth of 5.7pc for fiscal 2016-17, with an even more ambitious target of 7pc growth for fiscal year 2017-18.
Finance Minister Ishaq Dar Friday said per capita income had risen to $1,561 per head, while inflation was down to 2.82pc, the lowest in ten years.
The finance minister said the government is targeting to restrict the fiscal deficit at 3.8pc of the GDP next year, which he said will be further narrowed to 3.5pc of the GDP by 2017-18.
Talking about the budgeted tax revenue, Dar said: “Tax collection has increased 7pc which is historic. We will reach our target of Rs3.96tr and we want to push the tax-to-GDP ratio to over 10pc next year.”
In the longer run, Dar said the government wants to push this ratio up to 14pc.
Announcing development expenditure plans for next year, the minister announced a 20pc increase in the PSDP allocation with Rs1.675tr set aside for FY16-17, of which the Federal PSDP makes up Rs800bn.
These funds, Dar said, would be utilised for various ongoing and new development schemes.
A total of Rs2bn has been set aside for the construction of a State Guest House, while Rs1.02bn has been allocated to the Climate Change Division under the PSDP.
This year, Rs115bn will be allocated to the Benazir Income Support Programme for the benefit of 350 million families until June 2016. About 300,000 more families will be inducted in the programme, with each family getting Rs18,500 monthly, he said.
Loadshedding has been regulated, Dar claimed, adding that an additional 10,000 megawatts would be inducted into the national grid by March 2018.
Rs11.94bn will be spent for development of IT infrastructure in rural areas, Dar said, and Rs1.9bn will be spent in IT development in all four provinces.
The minister said Pakistan Railways engines, bogies, tracks and signal systems will be improved. Rs14bn, he said, has been set aside for purchase of new bogies for railways.
Talking about projects under the China-Pakistan Economic Corridor, Dar said Gwadar will play an important role in Pakistan’s development in the future. “So we have allocated a special amount for its development in our budgets.”
A total of Rs57bn has been set aside for public sector salaries and pensions in the FY16-17 budget, Dar said.
Starting July 1, there will be a 10pc ad-hoc increase in salaries for all federal government employees, he said. The finance minister announced an increase in the monthly minimum wage, bringing it to Rs14,000.
A monthly conveyance allowance of Rs1,000 has been set aside for disabled employees in this budget, he said.
Dar proposed 10pc increase in pension for federal employees, with those above 85 years of age receiving a 25pc increase. Family members of deceased pensioners will receive Rs4,000 monthly as compared to the previous budget’s monthly allowance of Rs1,000.
The Pakistan Economic Survey on Thursday showed that the government had missed last year’s budgeted GDP growth target by a wide margin, mostly owing to a dismal performance by the agricultural sector.
But this was compensated by the industrial sector as the construction and electricity sectors outperformed expectations.
The services sector grew at par with the set target, bolstered by an increase in salaries of government employees and defence servicing.