ISLAMABAD, June 1: The government set the GDP growth target at 4.3 per cent under the Annual Plan for 2012-13 with contribution of agriculture at 4.0 per cent, manufacturing 4.1 per cent and services sector at 4.6 per cent.
In the budget announced on Friday, according to the Finance Minister, main focus will be on growth.
The growth during the next fiscal year will largely depend upon recovery in the large-scale manufacturing (LSM) sector to capitalise its existing idle capacity. Stemming from the ‘Framework of Economic Growth’, the strategy of the Annual Plan seeks acceleration of growth through improvement in productivity and competitiveness.
The government expects higher growth prospects in 2012-13 even without injecting fresh investment because industry is running at below 50 per cent of capacity. This idle capacity could be used for boosting growth in the short-run but in the long-run key reforms need to be pursued.
Energy: In the energy sector, the annual plan seeks to increase the installed power generating capacity from 23,718MW in June 2012 to 24,822MW in June 2013 through addition of 1,104MW in Pepco system. An allocation of Rs192 billion has been made for the energy sector for 2012-13 against expected utilisation of Rs147 billion.
Agriculture: An allocation of Rs405 million for 2012-13 has been made for projects in the areas of bio-technology, hybrid seed production for enhanced crop production, agriculture research and development, saline agriculture programme and animal and plant health services.
Water: In the water resource development, an allocation of Rs38.2 billion has been earmarked for irrigation projects including small and medium dams, check and delay action dams, canals and improvement of existing irrigation system while for lining of irrigation channels in saline zones in Punjab, Sindh and Khyber-Pakhtunkhwa Rs3 billion has been allocated.
Thar coal: Apart from ongoing geological and geo-physical mapping exercise, focus would be on putting in use 175 billion tons of lignite coal in Thar under coal gasification project for power generation during 2012-13.
Savings and investment: The investment is targeted to improve from current level of 12.5 per cent to 13.1 per cent. Both public and private investments are likely to contribute to this improvement. Fixed investment will inch up from 10.9 to 11.5 per cent of GDP. National savings are likely to improve slightly from 10.8 per cent of GDP in 2011-12 to 11.2 per cent in 2012-13.
Fiscal development: The government will expedite ongoing restructuring work to make an impact on budget 2012-13 while phasing out of un-targeted subsidies will be fast tracked.
On the expenditure side, fiscal bailouts to public sector enterprises are no more sustainable and their restructuring became unavoidable.
Monetary development: Monetary expansion for 2012-13 will be determined by emerging domestic and external demand. The outlook for balance of payments is not supportive of considerable improvement in the next foreign assets and thus monetary expansion will come from net domestic assets. The government will release more resources for the private sector by lowering its financial needs.
Inflation: The target of CPI inflation is set at 9.5 per cent for 2012-13 as against expected inflation of 11 per cent for 2011-12.
The price stability will remain overarching goal of economic policy making in 2012-13.
Manufacturing: Strategic focus of manufacturing sector would be on innovation and efficiency; capacity building, technological upgradation; infrastructure development and research and development activities. An amount of Rs2 billion has been allocated to manufacturing sector.
Urban development: Urban challenge fund will be created to make cities creative. Priority will be given to the reconstruction and rehabilitation of infrastructure damaged by the floods of 2011.
Environment: An amount of Rs150 million has been allocated for the ministry of climate change for capacity building of the environment related institutions and human resource development.
Poverty reduction: Pro-poor budgetary expenditures in 2012-13 are expected to increase to Rs1,615 billion, 8 per cent of GDP.
Transport: An allocation of Rs75.2 billion has been earmarked for transport, and logistics, including Rs27.2 billion for the budgetary programme and Rs48 billion for NHA under the budgetary corporations programme.
Railways will continue to focus on track rehabilitation, doubling of track from Khanewal to Raiwind, procurement of 150 locomotives, up-gradation of 602 passenger coaches, and replacement of old signalling gear system from Lodhran to Shahdra section.
Better governance: An overall framework for restructuring of PIA, PSM, PEPCO, Railways, NHA, PASSCO, TCP and USCs has been devised, for which an amount of Rs4.8 billion has been allocated.