ISLAMABAD: Federal Finance Minister Ishaq Dar has summed up the budget debate in the National Assembly, pledging to continue the journey of economic progress.
The finance minister said that foreign exchange reserves have reached $21 billion and will soon cross $22 billion whereas the inflation rate has been restricted to 3% in the current year.
He said that the current government is not responsible for the 400% addition in the country’s debt in the previous years. He said that the total debt during 2008-13 was Rs 14,318 billion and stood at Rs 19,168 billion on May 31, 2016. He said in the three years of the PML-N government, the debt increased by Rs 4850 billion while in the Pakistan People Party’s (PPP) government it increased by around Rs 9000 billion.
He said that the government got $15.23 billion loans in two and a half years and retired $ 10 billion of debt of previous governments. Therefore the present government borrowed $ 5.23 billion.
The finance minister said that the government does not discriminate between provinces as the whole country is equal. He told the House that the government has given special attention to direct taxes.
He said that the federal government employees would get a 10% ad hoc increase in their salaries after merger of three ad hoc increases to their salaries from next month. Merger of two ad hoc increases was announced in the budget speech and on Friday the minister also announced a merger of 7.5% ad hoc increase of last year in the salary. He said with this the overall increase in the salaries of the federal government employees would be around 13%.
Rates of compensation allowance in lieu of residential quarters for personnel of armed forces have also been increased. Allowance of Rs 592 has been increased to Rs 800; Rs 900 to Rs 1215; Rs 1142 to Rs 1,542 and Rs 1,704 to Rs 2,300.
The finance minister told the National Assembly that a decision about the increase in salary and allowances for parliamentarians would be taken after consultations with the prime minister once he returns.
Ishaq Dar also announced more incentives and relief for agriculture, dairy, IT and telecom sectors. Sales tax on imported and local tractors has been reduced from the existing 10% to 5%. Customs Duty on harvesters and planters has been waived off in addition to abolishing sales tax on laser land levelers.
Pesticides have been exempted from sales tax while a General Sales Tax (GST) on Urea fertilizer is being lowered from the existing 17% to 5%.
The finance minister announced that relief and incentives being offered on fertilizer and other machinery related to agriculture would become effective as soon as the president gives his assent to the Finance Bill. He said that the President is expected to do so on the 22nd of this month.
Rate of sales tax on import of machinery and equipment for dairy sector has also been reduced from 17% to 5%.
With a view to promoting high tech industry, customs duty on SIM cards and smart card manufacturers is being lowered from the existing 20% to 5%.
Shariah compliant companies, approved by the State Bank, would get a 2% rebate on income tax in order to encourage Islamic banking in the country.
The finance minister said that the rate of withholding tax on cable operators in rural areas would be reduced.
Finance Minister Ishaq Dar said that these and other measures announced earlier would make the budgetary proposals pro-growth.
The minister said that except High Speed Diesel, GST on other POL product was less than what it was in March 2013.
He said that the government was laying due emphasis on hydel power generation and allocated Rs 32 billion for the Diamer Bhasha Dam; Rs 61 billion for Neelum Jhelum project; Rs 42 billion for Dassu and Rs 16.5 billion for Tarbela Extension fourth project in the next budget. He said necessary focus is also being laid on CPEC especially its Western route.
The minister said that out of 139 recommendations of the Senate, 86 have been accepted totally, partially or in principle.
The minister said Rs 100 billion have been allocated for rehabilitation of Temporarily Dislocated Persons (TDPs).
He also dispelled the impression that the budget focuses on projects for one province and pointed out that huge allocations have been made for infrastructure development and power generation in Sindh, a network of roads and development of Gwadar in Balochistan, health and infrastructure facilities in KPK and projects in different spheres of life in Azad Kashmir and Gilgit-Baltistan.
He told the National Assembly that due to the government’s prudent policies and good performance over the last three years, inflation has come down to less than 3% and the prices are stable. He said that the opposition’s criticism that there is price hike is contrary to the facts. He said fiscal deficit has brought been down to 4.3% from 8.2% during the last three years and it will be decreased to 3.8% in the next financial year.
