Federal Finance Minister Ishaq Dar presented the budget 2013-14 in the National Assembly with a total outlay of 3420 billion rupees on Wednesday.
Presenting the budget in the house, Finance Minister Ishaq Dar said that as per Prime Minister Nawaz Sharif’s vision, the budget has been designed to ensure a progressive way to revive and strengthen the national economy.
This involves stability in all fields, creation of new employment opportunities and development of infrastructure to give a boost to economic activities.
He said every effort will be made to transform the country into a real progressive and welfare state and regain the lost glory.
Ishaq Dar said we inherited ruined economy but we have the resolve to change the course and make the country self-reliant in all fields.He said new budget is based on the PML-N’s election manifesto.
The Finance Minister said private sector will be converted into real engine of economy as it is not possible for the government to take responsibility of market economy. He said private sector will be provided all possible facilities to give a boost to economic growth. He said the top most priority of the government will be to improve education, health, population welfare, development of infrastrcuture and construction of mega projects. He said overcome power loadshedding is also top most priority of the government as no progress and economic growth could be made without electricity. He said the government will not rely on subsidies.
He said the government will prepare a comprehensive plan to improve the condition of poor and deprived segments of society and involve them in the national development programmes.
Ishaque Dar said the government will take strict measures to bring down fiscal deficit which will definitely lead to control inflation. He said fiscal deficit which is 8.8 percent of the GDP will be brought down to 4 percent in the next three years.
He said new national savings schemes will be introduced besides obtaining cheap foreign debts to control fiscal deficit also.
Referring to the measures to overcome power loadshedding the Finance Minister said on the directive of the Prime Minister circular debt will be settled down within sixty days which will help improve electricity supply. He said the Prime Minister will also announced a comprehensive energy policy shortly to improve power generation and supply situation. He said formalities to install 425 MW Nandipur hydel power project are in final stage and it will be made operational within next eighteen months.
The Finance Minister said subsidies on gas, electricity, food, fertilizers will be reviewed and will be rationalised. He said subsidies will be ensured only to protect the under-privileged segments of the society.
He said the government will make a new policy to re-enter into international investment market besides relaunhcing privatisation programme in transparent way. He said measures will also be taken to generate maximum employment opportunities and private sector will be involved in this regard. He said for this purpose development programme has been expanded despite meagre resources.
He said social protection programme Income Support Fund will continue for the poor people and its allocation are being enhanced from forty billion this year to seventy-five billion rupees for the next year, which is an unprecedented increase of 87.5%. He said a strategy will be devised to enable the deserving people benefitted from this programme to stand on their own feet through establising their own businesses.
Ishaque Dar said reformation of national institutions including financial enterperizes will be made besides bringing administrative and financial changes in them.
He said the government will implement a three year Medium Term Macro Economic Development Programme aimed at reviving the economy. Under the programme, GDP growth rate will gradually be enhanced to seven percent while inflation will be contained into single digit. Similarly, investment will be increased by 20 percent of the GDP and fiscal deficit till be brought down to 4 percent. Foreign exchange reserves which stands at present at eleven billion dollars will be increased upto twenty billion dollars by 2015-16.
Ishaque Dar said energy crisis has badly affected life of common man and economy. He said the government has decided to launch new hydel, nuclear and coal power projects besides shifting the hydel projects on coal. He said measures will also be taken to reduce line losses and improve transmission system which will help overcome energy crisis.
He said to give a boost to economic activities it has been decided to expand road network and link it to Gwadar port. He said work on three sections of Motorway including Faisalabad-Khanewal, Karachi-Hyderabad and Gwadar-Ratodero will be expedited. He said the Motorway network will be completed by the government in its tenure which will help give new dimension to the economic growth.
He said the Prime Minister has estbalished initial contact with China for construction of a modern express way from Gwadar to Kashgar which will be modern version of Karakoram highway. It will open a new era of development in the region.
The Finance Minister said Railways which will the most reliable mode of transportation was also destroyed but the new government has decided to rehabilitate and upgrade railway network and its infrastructure. He said a comprehensive plan is being chalked out under which railway will be made a independent corporation which will be governed by a board of governors.
He said under this plan all railway assets will be utilised through public-private partnership. He said signalling system of railway will also be modernised. He said feasibility study to link Pakistan with Afghanistan and China through rail will worked out. He said similarly Karachi circular railway project will be launched through Japanese technical and financial assistance.
The Finance Minister said 18 billion rupees have been allocated in the next budget for development programmes of universities through Higher Education Commission. this would help raise the number of higher education students by fourteen percent. The number of foreign scholarships would increase from 4249 to 6249 next year.
Announcing measures aimed at revival of the industrial sector, the Finance Minister said more incentives would be offered for Export Processing Zones and new Export Processing Zones would be set up in the country with the support of the provinces where all basic facilities would be ensure.
Under a comprehensive plan, Gawadar Special Economic Zone would be created which would prove not only a mile stone in the development of Balochistan but also for the economy of the country.
Ishaq Dar said Ministry of Housing and Works has initiated work on a new housing plan aimed at launching of three marla housing schemes on state land to allot plots to the shelterless free of cost.
Under Public Private Partnership, one thousand colonies consisting of 500-homes per colony would be established for allotment amongst low income families through a transparent system.
He said 3.5 billion rupees have been allocated in the budget to share part of the mark up for provision of loans for housing building.
Housing schemes on the pattern of successful Aashiana Housing Scheme of Punjab would be launched in other provinces as well.
Referring to tax proposals, the Finance Minister said being a nation we will have to take decisions to help make Pakistan self-reliant through off-loading debt and concentration of national economic priorities.
He said the government has decided to not to impose any new tax on those who are already paying their share of tax. However, those who are not paying tax will be brought into tax net and for this purpose new tax reforms will be introduced. He said capacity of tax machinery will be enhanced by making tax system easy and expand its scope. Steps will also be taken to overcome corruption and facilitate tax payers.
Ishaque Dar said it has been proposed in the next budget to decrease corporate tax by one percent each year and bring it to thirty percent in the next five years from the existing thirty-five percent. Tax exemption in speical economic zones will be extended upto ten years.
He said two percent adjustable withholding tax has been proposed on functions held in hotels, clubs, marriage halls and restuarants. He said minimum tax rate is being enhanced from 0.5 percent to one percent of the annual income.
He said tax system for salaried persons is being rationalised according to the salaries they receive. He said to rationalise tax on the business persons two slabs are being created under which tax rate from 25 percent will be increased upto 35 percent on the income of six million rupees.
To ensure payment of agriculture tax, it has been proposed that agriculture credit will only be issued to those growers who pay provincial agriculture tax.
He said five percent additional sales tax is proposed to be imposed on unregistered industrial and commercial electricity connections.
Ishaque Dar said to overcome revenue shortage it is proposed to increase strandered rate of sales tax from sixteen to seventeen percent.
He said to overcome energy shortage various measures are being proposed in the next budget to provide tax exemption on the import of equipment and machinery for generating solar and hydel energy. Similarly customs duty on the import of water filtration plant is being reduced. He said to reduce expensitures on fuel and energy in vehicles, it has been decided to promote use of hybrid electric vehicles. Therefore it is suggested that the import of 1200 cc hybrid electrict vehicle to exempt from duty and tax.
However, fifty percent duty and tax relaxation will be allowed to the vehicles from 1200 to 1800 cc vehicles in this category while reducing duty and tax by 25 percent.
Ishaque Dar said Prime Minister Youth Training programme is being launched on the directive of Mian Nawaz Sharif to equip educate youth with sufficient experience and training so that they could get good jobs. He said the youth upto 25 years having sixteen years eductional degree will benefit from this scheme. He said they will earn ten thousand rupees scholarship per month during the training.
He said on the directive of the Prime Minister youth skills development programme is also being launched for the youth having middle standard education which will benefit twenty-five thousand youth throughout the country which will help them earn their livelihood.
The Finance Minister said under another business loan scheme will be launched under which loans up to two million rupees will be provided to the youth on a mark rate of eight percent to run their own business. He said fifty thousand youth will benefit from this scheme.
The Finance Minister said it has been decided to launch a new scheme to provide laptops to the students pursuing degree program from one of the HEC recognized universities or institutions.
Ishaq Dar said the scheme for reimbursement of tuition fee at Masters and doctorate levels which is available for the students of Balochistan, FATA and Gilgit Baltistan is being expanded to Interior Sindh, Multan, Bahawalpur and D. G Khan divisions which are equally less developed.
He said it has been decided to allocate five billion rupees to launch a scheme of “Qarz-e-Hasna” so that young people could establish their own businesses.Fifty percent of the beneficaries of this scheme will be women.
Referring to the programmes for good governance, the Finance Minister said Parliamentarians Works Program-1 will continue and an amount of five billion rupees is being allocated for this programme to ensure development activities at the grassroots level, while the Public Works Programmes-II of the Prime Minister’s discretionary scheme is being stopped forthwith.
Ishaq Dar said the ministry of finance has issued necessary instructions for immediate ceasing of secret service expenditures and return of unspent balances. Similarly, the proposed allocations for next year are being cancelled. However, such secret service expenditures will be made available only to the agencies connected with the national security.
The finance minister said Prime Minister Nawaz Sharif had withdrawn exemption on tax free imports of luxury vehicles for VVIPs. However, the previous governments allowed such vehicles without duty. He said the new government has again decided to withdraw exemption on the import of these luxury vehicles.
Coming to austerity measures, the finance minister said the prime minister has decided not to use the full strength of forty nine ministers allowed under the constitution as a measure of austerity. A program has also been started to reduce allocations for various offices and in this regard expenditures of the prime minister office have been reduced from 725 million rupees in the outgoing year to 396 million rupees in the new fiscal year.
He said other than obligatory expenditures of debt servicing, defense, pay and allowances of civil servants and grants, there will be a thirty percent cut on all other expenditures in accordance with the announcement of the prime minister which will help save forty billion rupees.
Similarly, he said, no car except operational vehicles of law enforcing agencies and critical development projects will be purchased. He said the discretionary grant of all federal ministers is being removed.
He said as a relief measure to mitigate the sufferings of retired government employees, it has been decided to increase pension by ten percent. The minimum pension is being raised from the existing three thousand rupees to five thousand rupees per month.
He said under Ramazan package, the government is designing a comprehensive plan to provide relief to the people by reducing the prices of essential commodities through utility stores corporation. An amount of two billion rupees has been allocated in the budget for this purpose besides other addtional efforts.
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