Tuesday, 16 July 2024, 01:58:22 pm

Federal Budget 2024-25 worth Rs18877b unveiled
June 12, 2024

The federal budget 2024-25 with a total outlay of 18877 billion rupees has been announced with focus on fiscal consolidation, support for productive sectors and relief measures for the common man.   

Presenting the budgetary proposals in the National Assembly this afternoon, Finance Minister Muhammad Aurangzeb said the gross revenue receipts have been estimated at 17815 billion rupees. These include FBR's revenue collection of 12970 billion rupees and non-tax revenue 4845 billion rupees. The share of provinces in the federal receipts will be 7438 billion rupees.    

The Finance Minister said the growth rate is expected to be 3.6 percent during the next fiscal year. Inflation is expected to be 12 percent, budget deficit 5.9 percent of GDP and primary surplus will be one percent of GDP. He said that 9775 billion rupees will be paid for interest payment.   

Unveiling relief measures, the Finance Minister announced 25 percent increase in the salaries of government employees from Grade-1 to 16 and 20 percent from Grade-17 to 22.  He also proposed 15 percent raise in the pension of retired government employees. The minimum wages are being increased from 32,000 to 37,000 rupees.

The Finance Minister said that the coalition government is committed to extend maximum support to the vulnerable segments of the society. He said that support to the deserving families will be continued under the BISP during the next financial year. He said that the budget of BISP is being enhanced by 27 percent to 593 billion rupees. 

Muhammad Aurangzeb said that recipients under Kafalat program will be enhanced from 9.3 million to 10 million. He said the cash transfer to these families will be enhanced to protect them from impacts of price hike.  He said another one million children will be registered in the education stipend program. This will bring the number of total scholarships 10.4 million.  He said that five hundred thousand more families will be included in the Nashonama program in the next fiscal year.

The Finance Minister said that the government will launch poverty graduation and skills development program under the BISP to promote economic inclusion and well-being of the people. In addition, he said a hybrid social protection program will also be introduced through the BISP to ensure financial independents of the beneficiaries.

Expressing the government's firm resolve to bolster exports, The Finance Minister said there is a proposal to enhance the export refinance scheme from 3.8 billion rupees to 13.8 billion rupees. He said that export credit facility of 539 billion rupees will be provided through State Bank of Pakistan.

He said the Prime Minister has given the direction that this facility is available to at least forty-percent SME sector. He said under the SMEs strategy, the credit for small and medium enterprises will be enhanced from 540 billion rupees to 1100 billion rupees, and the addition of 100 billion rupees will be made in the next fiscal year.

He said this step will prove to be a lifeline for the export sector in future.  He said the government will also ensure phased payment of pending DLTL claims. He said a risk sharing scheme is also being worked out for the exporters.

Regarding agriculture sector, the Finance Minister announced that five billion rupees have been proposed for the Markup and Risk Sharing Scheme for Farm Mechanization under the Kissan Package announced by Prime Minister Shehbaz Sharif in 2022.  He said under the scheme, financing will be available to procure planters, tractors, thrashers, harvesters, and mobile grain dryers.   

As regards the construction of water reservoirs, the Finance Minister said 206 billion rupees have been earmarked for water resources in which 45 billion rupees have been set aside for Mohmand dam, 40 billion for Diamer Bhasha dam, 18 billion rupees for Chashma Right Bank Canal and 10 billion rupees for Pat Feeder Canal.    

Announcing allocations for the energy sector, the Finance Minister said 253 billion rupees have been set aside in this regard.

For the IT sector, he said 79 billion rupees have been earmarked under which seven billion rupees will be for digitalization and reforms in the FBR. This amount will help expand tax base and address loopholes by using state of the art IT system. An IT park will be established in Karachi at a cost of 8 billion rupees while 11 billion rupees will be set aside for Technology Park Development Project in Islamabad.

Highlighting the importance of remittances sent by overseas Pakistanis to their families, the Finance Minister said over 86.9 billion rupees have been proposed in the budget to facilitate the Pakistani diaspora. This amount will be spent on re-imbursement of TT charges.

He said immigration landscape will be digitized to simplify the immigration procedure for facilitation of overseas Pakistanis.

Muhammad Aurangzeb said Mohsin-e-Pakistan award is being introduced for overseas Pakistanis to recognize their extraordinary services for the country.             

Highlighting the importance of human development, Muhammad Aurangzeb said a substantial amount has been proposed to improve infrastructure and educational facilities in 167 government schools in the federal capital.

He said government is going to introduce a school meal program for physical and mental nourishment of students under which balanced and nutritious food will be provided to students of 200 primary schools of Islamabad.

He said pink buses will be plied from rural to urban areas for female students. Besides, Danish schools are being expanded to Islamabad, Balochistan, Azad Kashmir and Gilgit-Baltistan as per directions of the Prime Minister.   

Referring to the challenge posed by climate change, the Finance Minister said the government is undertaking several steps to give impetus to climate mitigation efforts. For this purpose, he said that Pakistan Climate Change Authority will be made functional. He said that national Climate Finance strategy will be prepared by October this year with the aim to bring global climate finance to Pakistan which will help implement projects to reduce carbon emission.  He said that National Digital Climate Finance Monitoring dashboard will be established to maintain data of the foreign assistance.  He said that Gender and climate budget tagging has been done in the budgeting and accounting of the government. 

Muhammad Aurangzeb said the government is allocating four billion rupees for E-bikes and two billion rupees for energy efficient fans.

The Finance Minister said that the privatization of PIA, Roosevelt Hotel, House Building Finance Corporation and First Women Bank will be accelerated. He said a concrete plan is also being worked out to offer other State Owned enterprises for investment to the private sector. 

As regards the privatization of PIA, Muhammad Aurangzeb said twelve companies had evinced interest in the national flag carrier.  He said six companies have been pre-qualified by the board of privatization commission. He said bids will be invited from the investors by the first week of August this year.

The Minister said the country's big airport will be outsourced as per the best international practices.  He said this will provide best facilities to the passengers as well as help generate additional revenue from the airports. He said Islamabad International Airport will be outsourced in the first place and the international competitive bidding by the 15th of next month. He said this will follow the outsourcing of Lahore and Karachi airports.   

Muhammad Aurangzeb said 1400 billion rupees have been earmarked for the PSDP. An additional one hundred billion rupees have been allocated through public-private partnership. He said the development budget will be at the historic level of 1500 billion rupees. He added that 2122 billion rupees will be provided for defence requirement.

The Finance Minister said that 839 billion rupees have been reserved for the expenditure of civil administration. 1014 billion rupees have been set aside for pension expenditure and 1363 billion rupees have allocated as subsidy on electricity, gas and other sectors.

Muhammad Aurangzeb said grants worth 1777 billion rupees have been earmarked for Benazir Income Support Programme, AJK, Gilgit-Baltistan, merged districts, Higher Education Commission, Pakistan Railways and IT sector.

The Finance Minister said the big volume of development budget manifests the government's resolve to develop infrastructure, transportation, energy and IT sectors as well as address the challenges in the management of water resources.

Muhammad Aurangzeb that completion of ongoing projects will be given priority in the PSDP 2024-25.  He pointed out that eighty-one percent resources have been allocated for the ongoing projects and nineteen percent for the new projects. He said development of basic infrastructure is the basic responsibility of the government and for this purpose it has been proposed to allocate fifty-nine percent of the amount. For the social sector, it is proposed to spend twenty percent of the development budget.

The Finance Minister said ensuring balanced regional development is a constitutional responsibility. Hence, ten percent resources have been earmarked for AJK, Gilgit Baltistan and the Tribal districts about eleven point two percent resources have been set aside for other sectors such as IT and telecom, Science and Technology, Governance and production.

The Finance Minister said that 824 billion rupees have been proposed to be allocated in the next PSDP for the infrastructure. These includes 253 billion rupees for energy sector, 279 billion rupees for transport and communication sectors, 206 billion rupees for water sector and 86 billion rupees for planning and housing.

280 billion rupees have been earmarked for the social sector as compared to 244 billion rupees of the outgoing fiscal year.  75 billion rupees have been set aside for special areas including AJK and Gilgit-Baltistan, 64 billion rupees for tribal district and 79 billion rupees for Science and IT. Similarly, he said that fifty billion rupees are being set aside for production sector including agriculture.

The Finance Minister said priority will be given to the projects which were approved in accordance with the guidelines of National Economic Council. He said strategic and core projects including water resources, transportation, communication and energy sectors will b given special importance. He said timely completion of foreign funded projects will be ensured in addition to the projects on whom eighty percent resources have already been spent.

Muhammad Aurangzeb said that new projects, aimed at promoting exports such as enhancing competitiveness of products and digital infrastructure, industrial development, agro-industry and seed development, blue economy, science and technology and research and development, will be encouraged. He said the annual development plan also envisages measures to promote sustainable development and balanced development.

The Finance Minister said that the government will lay greater emphasis on upgradation infrastructure including improving the network of highways and develop linkages amongst big cities and areas. In addition, steps are being taken to expand the energy infrastructure on modern lines which include construction of hydro-power dams and installation of solar power plants as well as transmission lines in order to ensure efficient power distribution system and meet the growing energy demand.

Muhammad Aurangzeb said steps will also be taken for better water management in order to cope with floods as well as to ensure water availability for domestic and agriculture.

The Finance Minister said the development budget also involves measures for the skills development in order to equip the youth with the modern knowledge and training so that they can secure employment and play their full part in the country's development.

Highlighting the significance of Karachi in the country's Economic Development, Muhammad Aurangzeb said there is proposal for a comprehensive project for the city in addition to the projects for Hyderabad, Mirpur Khas, Sukkur and Benazirabad. He said K-IV project will be taken to towards completion and in order to improve the water supply in Karachi. 

The Finance Minister said that a comprehensive plan will be developed on the instruction of Prime Minister for the modernization of hospitals in Islamabad. He said that a new project titled "Quaid-e-Azam Health Tower" will be initiated in Pakistan Institute of Medical Sciences.

The Minister said the government is implementing the principles of equality and justice in tax laws. He said the exemptions and concessions in taxes not only lessens government's revenue, but also affect socio- economic development.

The Minister said after reviewing the concessions and exemptions in the Sales Tax, the government has proposed waiving off certain concessions and exemptions. He said some of the goods would be taxed on reduced rate while other would be taxed on standard rate.

The government has also proposed to increase GST on Tier-1 Retailers of textile and leather products from fifteen to eighteen percent.

It has also been proposed to impose standard rate of eighteen percent tax on Mobile Phones.

It has also been suggested to impose withholding tax on scrape of copper, coal, paper and plastic, while exemption from sales tax on iron and steel scrap has also been proposed in the budget to discourage tendency of fake or flying invoices.

The Minister said that exemption in taxes for five years was given to newly merged districts, erstwhile FATA and PATA, in 2018. This exemption ended in 2023, which was later extended for one more year. However, now this exemption is being withdrawn gradually to bring these areas into national mainstream.

Similarly, the exemption in income tax given to residents of erstwhile FATA and PATA has been extended for one more year.

The Minister said a fixed tax of 12 percent annually is currently enforced on unpaid sales taxes and FED, which is being increased by KIBOR+3 percent in order to harmonize it according to policy rate of the State Bank of Pakistan.

The Minister said taxes on vehicles' registration and purchase up to 2000 CC were taken on the basis of engine capacity. However, it has been proposed in the budget that tax on all the vehicles would be taken on prices of vehicles instead of its engine capacity as it was enforced earlier.

Touching upon the austerity measures, the Finance Minister said reducing government's expenditures is an important pillar of the government strategy to reduce fiscal deficit. He said we are bringing down unnecessary expenditures. He said abolishing all vacant seats is being considered which will help forty-five billion rupees. 

Announcing three pronged strategy to reduce pension bill, Muhammad Aurangzeb said reforms will be introduced in the existing pension scheme as per international best practices that would considerably decrease pension liability for the next three decades.      

He said contributory pension scheme has been introduced for new employees which will be supported by monthly government contribution to ensure fully funded pension for future employees since the very beginning of their service.  A pension fund will be established to manage pension liability.

Muhammad Aurangzeb said the government is negotiating an extend fund facilities with the IMF while taking forward its home grown reforms agenda.  He said our new programs include; macroeconomic and fiscal stabilization, enhancing foreign exchange reserve, better management of debt and reforms in the power sector and State owned enterprises.   He was confident that Pakistan will return to inclusive and sustainable growth path through implementation of its home grown reforms agenda.  He emphasized for structural reforms to come out of low growth cycle. He said we have to transform ourselves from a government-determined economy to a market driven economy.  He said our economic development should be based on savings and investment.

The Finance Minister said the country is heading in the right direction as a result of consistent efforts of the government. He said inflation rate came down to twelve percent in the May and essential commodities are within the reach of people. He was confident that the inflation will further comedown in the coming days. He said the benefit of sustainable development will reach the common man.

The House has now been adjourned to meet again on 20th of this month at 5 p.m.