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ISLAMABAD, June 9: State Minister for Finance Omar Ayub Khan presented the budget for next fiscal year 2007-08 in the parliament here on Saturday. Following is the text of his budget speech:
“Mr Speaker
1. I am grateful that I have the privilege to present the fifth budget of a democratic government, which is historically an unprecedented event.
2. As a mater of fact this is the first time that an elected government is completing its five years term and the honour of having achieved this landmark rests with Muslim League and its allied parties. Indeed it is the Muslim League that has guided the Muslims of the Sub-Continent at every critical juncture.
3. I do not have any soft corner for economic terrorists whose sole purpose is to push society into an economic abyss.
Our elders had categorically stated that some people would be over-affluent while others indigent. We will not let this happen. People who do not have the capacity to listen to criticism should abstain from criticizing others.
Our opponents are afraid that the seeds of prosperity that we have sown will bear fruit; but the nation is destined to develop and prosper.
Trials and tribulations are a part of every nation’s history. But those nations who face them with courage and fortitude come off with honour and dignity. Before the coming into power of the present government, we were cut off from the world and had actually defaulted. By the grace of God our government, in the last five years, has amply demonstrated that it is the party which not only created Pakistan but is capable of running its affairs in the best manner possible.
4. In the budgetary process, we held extensive consultations with Prime Minister Shaukat Aziz, national representatives and experts in different fields so that the budget reflects national consensus on important issues. In order to make the budget welfare-oriented we were guided by President General Pervez Musharraf at every stage.
Earthquake of October 8, 2005 devastated houses, hospitals, roads and mosques but it could not undermine our resolve which remained unflinching. We accepted it as a challenge and with the grace of God Almighty came off well. Surely, there is no substitute for the precious lives lost but it was our moral duty to provide solace to the survivors of the tragedy.
The whole world witnessed that the Pakistani nation played historic role in the rehabilitation work. Places littered with dead bodies and razed habitats have again come to life which speaks of the efforts and courage of the nation. The government has disbursed Rs66bn for house construction and Rs40bn for death/ injury compensation. Whatever the government is constructing, it is being done under the principle of “Build Better”. After the earthquake, no one died of hunger or cold.
During the previous year 1,500 schools, colleges and hospitals have been built and additional 2,500 buildings would be constructed. An amount of Rs1.5bn would be spent on agriculture and livestock which will enable people to become self supporting.
5. Due to our geographic location we had to move with extreme caution lest our enemies inflict damage affecting our future generations. But their dream did not come true.
6. Besides putting an end to a system of exploitation and misuse of powers, we have transformed the budget from its elitist stance to welfare orientation for the poor. Increase in oil prices in the international market last year posed a new challenge but the government, by giving a subsidy of Rs111bn on diesel, kerosene, fertiliser, electricity and food items, stabilised prices. The government did not leave people to the vagaries of high prices, but stood by the people.
Economic Performance
7. It is my pleasure to announce that our GDP growth rate remained at 7.02pc. We had promised the nation a growth rate of 7pc on which we delivered. Then we promised a growth rate of 5pc in agriculture which we delivered. We had resolved that the manufacturing sector will grow by 8.8pc which we achieved. We had resolved that the services sector would grow by 8pc which we delivered.
We acted as a shield against rising oil prices and did not transfer the price increase to consumers. We had promised to provide conducive economic environment where people will find jobs. As a result of these policies, during the last five years more than 10 million persons were provided livelihood.
We had promised to develop investment-friendly environment, we fulfilled this promise. Since July of last year to April this year i.e. in a 10 month period FDI in Pakistan exceeded $6bn. Foreign investors are making investment due to the development taking place in the country. Why our opponents are blind to this development?
8. In order to run the country according to the Quaid’s vision, we have to ensure that our economy and democratic culture not only flourish but are also consolidated. Continuity of policies and single-mindedness are the pre-requisites. This would be possible only when people are prosperous, they have trust in national institutions, Parliament is supreme beyond any doubt, majority is not held hostage to minority and everyone works according to the given mandate.
9. Our government would honour the promises it has made. Our priorities include transferring benefits of growth to people, promotion of people’s welfare programme, and providing education, health, justice, sewerage, gender equality and safe drinking water.
10. Our government has taken various measures to increase income of people and put an end to poverty. As a result, there is substantial reduction in rural poverty. The government policies aiming at allocation of greater resources for poverty alleviation and creating employment opportunities have resulted in reduction of incidence of poverty from 34.4pc in 2001 to 23.9pc in 2005. In this way 12,700,000 people came out of poverty.
We have decided to further reduce poverty from the country. Our future plans envisage employment opportunities for youth. The amount of money spent on poverty reduction and employment generation during last 5 years is Rs1,441bn which is commendable especially in comparison with all previous governments.
11. By the grace of God the budget that I am going to announce has an overall size exceeding Rs1,874bn. The federal government expenditure is estimated at Rs1,353bn. This is a record budget in the history of Pakistan, especially in terms of expenditures on welfare of people. Expenditure of this magnitude was made possible through greater revenue collection especially by CBR which will exceed Rs1,025bn.
In view of this, the size of total revenue has been set at Rs1,475bn. Hence the overall fiscal deficit is estimated at Rs398bn which is 4pc of GDP. During 2006-07 our budget deficit was 4.2pc of GDP which was according to the target even though we had to bear the brunt of rising international oil prices and earthquake expenditure. It was not an easy task neither did we have any magic wand. It was because of God’s blessing, guidance of the President, farsightedness of the prime minister, untiring efforts of government machinery, and prayers of the nation that we emerged successful.
12. Our government has allocated Rs520bn under the PSDP which will be spent on development and welfare of people. This is a huge sum which is unprecedented in the history of Pakistan. This is a record. Out of this, 52pc will be spent on infrastructure development and 48pc on welfare of people and on social sector. On whom will this amount be spent? It will be spent on welfare of people.
If we compare the hefty amount being allocated this year for welfare of people, with earlier periods the latter would not be even 18pc of it. A question arises as to what was the reason that those governments did not spend on development work despite their large fiscal deficit? Their budget deficit used to be more than 7pc of GDP. Had they not filled their pockets, there would have been more benefits for the people. They spent insignificant amount on development. As against our PSDP size of Rs520bn theirs was only Rs96bn.
About 96pc of the PSDP would be utilised during 2006-07. This proves that our government honours the promises that it has made with people unlike the previous governments. This is in contrast to the low utilisation of PSDP by the previous governments which was due to their misdeeds and wrong policies. This made the people hostage and the country in fact had defaulted. People want to ask as to why they were not fairly treated during the period of earlier regimes. They demand that they should not be pushed back to those dark periods. But now, by the grace of Allah, we can move proudly holding our heads high and are also in a position to help our brethren.
13. Pakistan is a federation and provinces are its federating units. Based on provincial chief ministers and finance ministers assent to Presidential Orders amending NFC award, 45pc of provincial share has been transferred to provinces. During 2006-07 an amount of Rs418bn has been transferred while Rs497bn would be transferred during 2007-08 which would be 46pc of the total amount. Under the directions of the President, transfer from divisible pool would reach 46.25pc by the year 2010-11.
If subventions are added, transfer of provinces would get 50pc of the total amount. This would be a golden period of equitable sharing of resources with provinces. Why did not the previous government pay the provinces their due share? It was our government that has paid these hefty amounts to the provinces.
14. It is the national leadership that determines the direction that the country has to take. If the leadership is true and has a vision it can change the destiny of the nation. But if the perspective is narrow and limited to self aggrandizement, the nation gets stranded in quagmire and succeeding generations pay the penalty. In our recent history many such governments were in power who used borrowed money for non-productive purposes, thereby mortgaging the future.
15. In the last budget, I paid tribute to the present Parliament for having unanimously passed the Fiscal Responsibility and Debt Limitation Act. This law provided a sound basis for our economic development and for world’s confidence in our policies. The credit for this goes to the prime minister who was the exponent of this law.
It is through promulgation of this law that the executive is accountable to the House. It cannot exceed the borrowing limit of 60pc of GDP without seeking your approval. It gives me a great pleasure to announce that the debt-to-GDP ratio has not been allowed to cross 53pc as against a target of 60pc set to be attained by the year 2009. Moreover, the loans that we raised were meant for development of the country.
16. We raised 10 years Eurobond in the international market which was over subscribed by more than seven and half times. We raised $750 million through this bond. This was despite the fact that the rate of interest offered was lower than that of previous periods. Last year this government launched 10 and 30 years bonds in the international market which elicited good response.
This is a reflection of confidence of international investors in our policies. Prior to this no one was ready to invest even for 2 to 3 years in Pakistan. But now they are keen to invest for 10 to 30 years. Investment for a period of 30 years is not child’s play. It is the time span of a whole generation. Why this huge difference between yesterday and today? The difference is that of the intention, policies and good governance.
I would like to ask these people whether they have forgotten those days when they tried to issue bonds in New York but there was no buyer. The reason was that due to wrong policies of the rulers at that time the country had become bankrupt, its economy was weak and international community knew that. Those were embarrassing moments for us. Who would put money in a weak economy. The same international community is now keen to invest in our bonds. They know that our economy is strong and people are prosperous. Today we move proudly holding our heads high. The entire amount would be spent on development and no one would be allowed to misuse it.
17. Is it not a proof of our economic development and prosperity that the world is not only acknowledging it, but is ready to invest in the country. By the grace of Allah, Pakistan has emerged a prosperous country through dedication and sincere efforts of the government. It is only a small minority that refuses to acknowledge the fact of our development.
18. It would not be out of place to mention here that the previous government during 1996 to 1999 raised the rate of interest on National Savings Schemes as high as 18pc because of which our government now has to pay a huge accumulated liability of Rs163bn which is more than four times of the principal.
This proved to be a heavy burden for the nation and due to imprudent policies of previous government the nation was pushed to a dead end. By taking these expensive loans they tried to hide the fact of the country’s bankruptcy. But the present leadership not only paid off this heavy debt but put the nation on the road to development. Had the previous government cared for future of the nation and exercised prudence in raising debt, the resultant saving could have been used for more development and welfare of people. But they did not want to do that. The present government adopted such policies that have opened new avenues of development.
19. Impregnable defence is indispensable for a nation who wants to live with honour and dignity. Our nation is ready to give any sacrifice for defence of their country. Today Pakistan and its geographic and ideological boundaries are invincible due to its independent foreign policies and economic development. In order to ensure protection of its ideology and economic independence Pakistan must have a credible deterrence and invincible defence.
Pakistan is a nuclear power. If any one looks at us with bad motive we will respond with full force. This year an allocation of Rs275bn is being made for defence of the country. Armed forces are ever ready to lay down their lives for defence of the country. Whenever any natural calamity has befallen the country, Armed forces have dealt with it with determination. Peace can be had only through making defence invincible.
Relief Measures
20. Now I am going to present a list of relief measures. My request would be that my those colleagues who are not amenable to any reasoning or logic should listen with patience. I understand their unease and anxiety. They could not provide relief but did create problems for the people. We have provided relief and shall continue doing so.
21. The government servants are our asset and it is duty of the government to take care of their needs. It goes to the credit of the government, who is the first to have completed its five year term, that salaries of the government servants have been raised substantially four times, which is unprecedented.
The government is fully conscious of welfare of its employees. Salaries of government employees are being increased by 15pc in the present budget. This budget has been prepared keeping in view needs of workers, labourers, and government employees. But we cannot forget the role of pensioners in national development. They deserve respect and we feel that it is our moral obligation to take care of their needs. The government has, therefore, decided to increase pension of government pensioners by 15 to 20 per cent. Increase in pension is being given in two tiers: old pensioners will get 20 per cent raise while new pensioners will get 15 per cent raise.
22. Upgradation of posts was a long standing demand of the clerical staff. It gives me pleasure to announce that government has accepted this demand and employees in BPS 5, BPS 7 and BPS 11 are being promoted to BPS 7, BPS 9 and BPS 14 respectively. A total of 87,500 federal employees will benefit from this measure.
23. Residential accommodation is a major problem for employees in Islamabad. Government has decided to solve this problem. Prime Minister Shaukat Aziz has directed the Ministry of Housing and Works to immediately construct 37,000 houses for the low-paid employees and give it to them on ownership basis. In phase-I, work on the construction of 5,000 units will immediately start for which land will be provided by CDA at official rate. Government employees will have the facility to get loan for construction of house.
24. House is a need of every one. I ask whether any government thought of providing this facility or they were only concerned with amassing wealth. Did they not know that constructing a house is a back breaking experience. Our government realised this need of low income people. Low-cost housing scheme would be started in collaboration with provincial and district governments. Loan from HBFC will be available. Under this scheme an estimated number of 250,000 units would be constructed in the next 5 years.
25. Railway is an economical means of public transport. It is the duty of Railways to take passengers to their destinations safely. Welfare of Railway employees is responsibility of the government. Government has decided upgradation of Basic Scale by one step for the remaining 62,482 staff excluding Secretarial Staff. Long standing demand of Railway employees regarding upgradation of posts has already been accepted along with increase in their allowances. A total of 12,510 employees have benefited from this increase. In this way, our government has provided relief to 74,992 Railway employees and their long awaited demand has been met.
26. It is our religious obligation to pay a labourer his wage before his sweat dries. It was the government of Muslim League and its allied parties which fixed minimum wage of Rs4,000 per month in the last year’s budget. Workers are the backbone of a society. Not taking good care of their needs would tantamount to weakening the economy. You ask workers as to whether they did not benefit from the increase in their minimum wage. These who are not ready to acknowledge this fact are people who did not themselves work in their life neither do they know what really hard work is. I would like to give good news to my working class brothers :-
1. Minimum wage of unskilled workers is being increased from Rs4,000 per month to Rs4,600 per month.
2. Old Age pension, old and new both, has been increased by 15pc. Minimum pension has been increased from Rs1,300 to Rs1,500 per month.
3. Worker’s widow shall now get pension of her deceased husband as per entitlement. Earlier she used to get minimum pension.
4. Earlier husband or wife, both contributing to Old Age Benefit, would not get pension of the deceased partner. Now the surviving partner shall get the pension of the deceased spouse.
5. Under the Workmen Compensation Act 1923 workers receiving more than Rs6,000 per month were not entitled to compensation on account of disability. This restriction has been removed and now all the workers regardless of their wage level would be entitled to compensation on account of disability caused during the course or as a result of performance of duty.
6. Contract employees have been made entitled to receive companies profit under the Companies Profit (Workers Participation) Act 1968. The limit of profit has been enhanced from Rs12,000 to Rs20,000.
7. Workers Welfare Fund Ordinance 1971 is being amended to allow industrial workers to get medical, education, housing and death grant from Worker Welfare Fund. This facility shall apply to those units having an annual income in excess of Rs500,000.
8. Workers Welfare Fund Ordinance 1971 amended to increase the limit of death grant from Rs200,000 to Rs300,000.
27. The government is determined to protect people from price hike and considers extending benefits to poor segments of society its mission. The government allocated funds in last year’s budget for food subsidy which was given to people through Utility Stores. People even in far flung areas benefited from it. Under this and under the prime minister’s Ramzan and Eid package, relief of about Rs5bn was provided to people by Utility Stores Corporation. In addition, government has allocated subsidy worth billions of rupees in 2007-08.
28. I want to ask why previous governments did not give the relief that our government has announced and the one I shall soon announce. The difference is that of the intentions, policies and way of governance. Pakistani nation had to pay a heavy price for plundering of wealth by rulers of that time. We did not fill our pockets but fill national treasury.
29. Daal Chana, Moong and Mash which is being sold in market at Rs38 per kg, Rs56 per kg and Rs72 per kg would be sold in Utility Stores at Rs29, Rs47 and Rs57 respectively. From tomorrow there would be a per kg relief of Rs10, Rs5 and Rs5 on tea, sugar and rice respectively. At present the price of cooking oil is increasing rapidly in the international market. On the direction of the Prime Minister it will sell at the utility Stores at Rs.67 as against the market price of Rs.80/- per kg. 30. People with low income will get this relief which is being given on the directive of the prime minister. I will ask my brothers and sisters through this House to go to Utility Stores tomorrow to get the items at lower price.
31. In view of wishes of the people our government has decided to give relief to people and continue giving it. People wanted that prices of their kitchen items should be reduced. We have done that. With this relief, people would be able to adjust their budget. We have lightened the burden of people by giving subsidy worth billions of rupees. I ask as to why did not the previous governments take these measures. They plundered national wealth and emptied the treasury. We used the national resources for benefit of people so that they get essential items at reduced rates.
32. Our government has decided to extend the relief measures to every nook and corner of the country. In order to enable all the citizens to benefit from the relief measures it has been decided to increase the number of Utility Stores by additional 5000 and provide a utility store at every Union Council in the next 4 months. It will also result in creation of employment opportunities. In these stores necessities of life like daals, rice, sugar, ghee and basic medicines would be available and due to their close proximity people will save time and money by not going to the distantly located markets.
33. My question whether some one before has thought of people living in far off areas? They had to travel long distances to get basic medicines. In Pakistan for the first time people will get medicines at reduced rates. People would not have to travel for miles but would get the facility at their door steps.
34. Housing in Islamabad for low income people has become quite a complex issue. Taking notice of this situation, Prime Minister Shaukat Aziz has directed CDA to allocate a sector for 3 to 5 marla plots. In sector I-15 a total of 5500 plats and 8,500 apartments have been reserved for low income people who will have the facility of loans from Banks. This will solve the problem of low income people. Moreover, work in 4 sectors of Islamabad has started after 17 years due to the efforts of the prime minister. With this prices of land in Islamabad, which were soaring sky high, went down and got stabilised.
35. A question arises as to the source from where the money has come to make the relief measures possible. It is the leadership of President Pervez Musharraf and farsighted policies of the prime minister that made this happen. Funds became available for the welfare expenditures. We did not follow the example of previous rulers who amassed national wealth for personal gains. Our relief measures have unnerved our political adversaries who are trying to create chaos but they would not be able to withstand public scrutiny.
36. Rich people do not go to wholesale markets for purchases. It is the low-income people who benefit from such places. Therefore, we are setting up farmer markets at federal, provincial and district level. With this, farmers would be able to bring items directly to the market, thereby circumventing hoarders, middlemen and profiteers. People will be able to buy goods at cheaper price. Moreover, daily bazaars would be set up, besides farmer markets. First daily bazaar would be set up at Islamabad. In addition, first wholesale bazaar is being immediately set up in Islamabad.
37. It is quite evident that if price of an item increases it never goes down. But we, being public representatives, broke this myth. When sugar prices skyrocketed we took immediate action and brought them down. When cement prices increased we not only arrested the increase but also brought down their prices considerably. Prices of pulses were brought down as well as that of ghee and flour.
We did not do this as a matter of favour to anyone but did it as a part of our duty. We have changed the tendency of government of being a spectator in the event of a profiteer fleecing the public. We would not let it happen again and come to the rescue of people by keeping our eyes and ears open. This is despite the fact that check on prices is the responsibility of the Provincial and District governments.
38. It gives me great pleasure to state that the recent production of wheat has broken all records. When wheat and flour prices started skyrocketing in the international market there was a sudden acceleration in their export. The prime minister ordered immediate ban on export of wheat and flour to keep their prices at affordable level. Timely action saved the people from any price increase but due to the existing stocks decline in price is expected. Now Pakistan is the only country in the region where rates of flour and wheat are the lowest. That is what common man needs.
39. In addition to catering to the daily needs of the nation, it is the duty of the government to promote national self-esteem. Most poor live in small towns and villages and often face hardship. It is the moral responsibility of the government to look after them. For this purpose an allocation of Rs7.5bn has been made for Pakistan Bait-ul-Maal which is Rs2.5bn more than the allocation for last year.
I would also like to say that between 1992 and 1999 the annual budget of Pakistan Bait-ul-Maal was no more than Rs35 crore. It is only this government which has exponentially increased resources spent for the welfare of the people. This large allocation will benefit those who are most deserving and its benefits will reach more and more people. Pakistan Bait Mal is at present helping 1,500,000 households through its food support programme. This year 700,000 more households will benefit thus bringing the number of beneficiaries to a total of 2,200,000.
40. Some of my colleagues in this House have today been hearing the words subsidy, relief, help again and again. They are perhaps tired of this repetition for which I apologise. But the fact remains that our mission is to serve the nation. They may rest assured that I will announce further relief measures. I would like to ask them what promises did they fulfill during their time in government; they increased the budget deficit to 7pc of GDP and made the country bankrupt.
41. For the hardworking farmers of this nation, I today announce a subsidy of 25pc payable on electricity charges for tubewells. This subsidy will be shared by the centre and provinces equally; with the federal government contributing one half and the provinces the other half. Pakistan is an agricultural country. The fertile land of this country yields bountiful fruits of the farmer’s labour. It is our duty to look after their interest because they produce not only for themselves but to feed the whole country. Their biggest need is water. As a result of this relief, this country will become prosperous, food production will increase and inflation will be controlled and farmers will have to pay lesser bills for tubewells that operate with electricity. This is a historic decision.
42. I wish to announce this good news to our farmers that we are providing further subsidy under DAP. The subsidy will increase from Rs400 per bag to Rs470 per bag. As a result of this, the price of each bag of DAP will be reduced by Rs70. This is a subsidy of billions of rupees which will directly benefit the farmers. Agriculture produce will increase through use of DAP; incomes of farmers will further increase; it will bring prosperity to their doorstep. I wish to ask as to which government provided its farmers with so much benefit. The previous governments in fact believed in taking money away from the nation.
43. The government wishes that the dreams of its youth come true. We know that the future of the nation is dependent on its youth. If we want to encash the demographic dividend, we will have to use our youth as a powerful force. For this purpose, we have prepared and launched several robust programmes, the results of which will be better than expectation. We feel that our youth are patriotic Pakistanis and our asset.
44. President General Pervez Musharraf announced the Rozgar Scheme in the last financial year which has been very successful. The small amounts advanced at low rate of markup of 6pc enabled the youth to start their own businesses, thereby providing succour to many families. These small businesses also generated employment for other unemployed youth. Under the scheme, 1.8 million youth will be able to stand on their feet, and provide support to their families.
In the last financial year 10,321 applications were approved under this scheme and Rs.1 billion disbursed. The youth set up PCOs, established transport businesses, utility stores, mobile general stores and tele-centres. A sum of Rs104.7 billion will be disbursed under this scheme in the next 5 years. I appeal to my young brothers and sisters that they should apply for assistance under the Rozgar Sche
