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Prime Minister Imran Khan signs the Budgetary Proposals for FY2022 during a meeting of the federal cabinet in Islamabad on Friday. — PID
Finance Minister Shaukat Tarin presents the annual fiscal budget at the National Assembly in Islamabad. — Photo: National Assembly/AFP

Development in focus as PTI unveils Rs8.5 trillion FY22 budget

The PSDP has been increased to Rs2,135 billion for FY22, up 37 per cent from Rs1,324 billion last year.
Updated 12 Jun, 2021 07:59pm

Finance Minister Shaukat Tarin on Friday presented the Rs8.48 trillion federal budget for fiscal year 2021-22 (FY22) in the National Assembly, revealing that the government has allocated Rs2,135 billion under the Public Sector Development Programme (PSDP) – an increase of 37 per cent from last year's development allocations.

Leader of the Opposition in the National Assembly Shehbaz Sharif and PPP chief Bilawal Bhutto Zardari were in the house as lawmakers from their parties chanted slogans in protest during the minister's speech. Earlier, Bilawal met Sharif at his chamber in the assembly and they decided both parties would jointly oppose the PTI’s budget.

Tarin began his speech by saying it was an honour for him to present the PTI's third budget.

Read more: PTI govt's 'pro-growth' budget for FY2022

He said there were a lot of difficulties but this government had laid the ground for the economy to revive and now "it is going towards development and prosperity".


Key announcements during budget speech

  • Rs900 billion allocated for federal PSDP
  • Minimum wage has been increased to Rs20,000
  • Pensions and federal government employees' salaries will see a 10pc increase
  • Rs12 billion allocated for agriculture sector
  • Rs66 billion to be provided to the Higher Education Commission for education programmes, and Rs44 billion under the development fund
  • Rs118 billion for power distribution
  • Rs61 billion for Viability Gap Fund
  • Rs14 billion for Climate Change mitigation projects
  • $1.1 billion for vaccines procurement
  • Rs100 billion for Covid-19 Emergency Fund
  • Rs12 billion special grant for Sindh

Total expenditure

Tarin said the total expenditure budgeted for next year stood at Rs8,487 billion — almost 19pc higher than the last year's budget size of Rs7,136 billion.

Current expenditure

Current expenditure budgeted for FY22 stands at Rs7,523 billion, up from last year's Rs6,345 billion.

Of this, Rs1,370 billion will be spent on Defence Services, up 6.2pc from last year, while Rs3,060 billion will be spent on interest payments.

Expenditure on Defence Services makes up around 16pc of total expenditure budgeted for FY22, down from 18pc last year.

Fiscal deficit

Fiscal deficit for FY22 has been budgeted at Rs3,420 billion, which is around 6.3pc of the GDP, down from 7pc last year.

PSDP

Total allocations for the Public Sector Development Programme (PSDP) have been budgeted at Rs2,135 billion for FY22, up 37pc from Rs1,324 billion last year.

Under this, federal PSDP makes up Rs900 billion, up 27.7pc from last year's allocation, while provincial PSDP makes up Rs1,235 billion, registering a rise of 45pc from last year's budget.

Special development packages have been included under the regional equalisation programme for the next fiscal year to ensure the development of deprived areas and bring them at par with other developed regions of the country. The programme includes accelerated development plan for southern Balochistan, the Karachi Transformation Plan, socio-economic development of Gilgit-Baltistan, Sindh development plan for more than 14 districts, and enhanced allocation for newly merged districts of Khyber Pakhtunkhwa, according to the budget document.

The document said several projects were being launched under public-private partnership, including Sialkot-Kharian, Sukkur-Hyderabad, Kharian-Rawalpindi, Balkasar-Mianwali and Muzaffargarh-Mianwali roads, Quetta-Karachi-Chaman (N-25 highway), Karachi Circular Railway and Karachi-Pipri Freight Corridor.

Out of the total Rs900 billion federal PSDP, the government has allocated Rs628.224 billion for federal ministries, Rs183.235 billion for corporations including the National Highway Authority (Rs113.75 billion) and Pepco (Rs69.82 billion), Rs70 billion for Covid-19 response and other natural calamities programmes, and Rs61 billion for VGF for public-private partnership projects.

The government has proposed an allocation of Rs103.472 billion for the Water Resource Division, Rs3.55 billion for the Aviation Division, Rs80 million for the Board of Investment, Rs46.155 billion for the Cabinet Division, Rs14.32 billion for the Climate Change Division, Rs1.613 billion for the Commerce Division, Rs 451.32m for the Communication Division (other than NHA), Rs1.977 billion for the Defence Division, and Rs1.745 billion has been earmarked for the Defence Production Division.

Likewise, Rs800m has been allocated for the Establishment Division, Rs9.7 billion for the Federal Education and Professional Training Division, Rs123.13 billion for the Finance Division, Rs44 billion for the Higher Education Commission, Rs24.2 billion for the Housing and Works Division, Rs279m for the Human Rights Division, Rs2.9 billion for the Industries and Production Division, Rs1.899 billion for the Information and Broadcasting Division, and Rs9.36 billion for the Information Technology and Telecom Division.

The government has also earmarked Rs200m for the Pakistan Nuclear Regulatory Authority, Rs2.35 billion for the Petroleum Division, Rs19.245 billion for the Planning, Development and Reforms Division, Rs590m for the Poverty Alleviation and Social Safety Division, Rs30.025 billion for the Railways Division, Rs493m for the Religious Affairs and Interfaith Harmony Division, Rs4.025 billion for the Revenue Division, Rs8.3 billion for the Science and Technological Research Division, and Rs7.36 billion for Suparco.

During his speech, Tarin recalled that when the PTI came into power, the economy had gone almost bankrupt. "Everyone knows we were under the burden of so many loans," he said, adding that the current account deficit was at a historic high of $20 billion.

Lawmakers gather around PM Imran ahead of the budget speech. — DawnNewsTV
Lawmakers gather around PM Imran ahead of the budget speech. — DawnNewsTV

"During this time, exports were contracting and there was over a 100 per cent increase in imports," Tarin added. "Despite this context, a 5.5pc growth rate was harped on about."

Tarin said it was the PTI government that had to do all the repayments to save Pakistan from default.

"It took time to stabilise the economy due to the pandemic but we achieved our targets. The $20bn current account deficit has been turned into a surplus of $800 million while a 3.6pc primary deficit has been reduced to 1pc," Tarin said.

"After many efforts, the government has been successful in putting the economy on the path of development."

GDP growth target

The finance minister announced that for FY22, the government had set the GDP growth target at 4.8pc.

"We hope growth will be even higher than that due to the measures we have taken in this budget. Like in the past, we will not leave the weak segments of our society at mercy of the trickledown effect."

He said in the next couple of years, the government wanted to increase growth to 6-7pc.

Inflation

For the upcoming fiscal year, the government targets to keep inflation at 8.2pc, which is significantly higher than the 6.5pc targeted for FY21.

FBR tax target

The government has set the tax collection target for the Federal Board of Revenue (FBR) at Rs5,829 billion for FY22, which is 17.4pc higher than last year's Rs4,963 billion.

Taxes

The finance minister announced that there was no new tax being imposed on the salaried class in the budget.

He added that in order to support small businesses, the annual turnover tax ceiling has been increased from Rs10 million to Rs100 million, while sales tax is being reduced.

"Burgeoning prices of locally manufactured small cars is a major concern for low-earning families. It is proposed that small cars up to an engine capacity of 850cc may be exempted from value-added tax besides reducing sales tax rate on these from 17pc to 12.5pc," Tarin said.

"To support electric cars, the government of Pakistan wants to support manufacturing of electric cars for which a lot of tax relaxations are being given."

He said Pakistan witnessed an "unprecedented" rise in online market sales during the Covid-19 lockdown. "However, the contribution of these e-commerce platforms to the economy is minimal, hence it is proposed to bring e-commerce transactions into the sales tax net," he said.

The minister also announced that a tax exemption is being given on 'Auto Disable Syringes' with an aim to minimise the impact of deadly diseases like Covid-19.

Federal excise duty on telecommunication is being reduced from 17pc to 16pc, he said.

Earlier, as Prime Minister Imran Khan arrived in the parliament building for the session, he was asked by a reporter whether the budget will be people-friendly. "Everyone will be happy [with the budget]," he replied.

Prior to the budget session, PPP chairperson Bilawal-Bhutto Zardari chaired a meeting of the PPP parliamentary committee to decide the party's strategy for the session.

Bilawal directed PPP MNAs to give a "tough time" to the government, saying the government had devised an "anti-poor", "political" and "selected" budget.

According to Radio Pakistan, the federal cabinet met in Islamabad today to discuss and approve budget proposals. Prime Minister Imran presided over the meeting.


Additional input by APP.


Header image: Prime Minister Imran Khan signs the Budgetary Proposals for FY2022 during a meeting of the federal cabinet in Islamabad on Friday. — PID