Despite enormous challenges and pressures, the Coalition Government, led by Prime Minister Shehbaz Sharif, has lived up to the expectations of the masses in presenting a realistic budget that takes care of not only most pressing issues facing people of Pakistan but also some chronic problems of the country. The first national budget of the Coalition Government, presented in the National Assembly by Finance Minister Muhammad Aurangzeb, envisages a number of relief measures for disadvantaged segments of the society and fixed income groups; aims at accelerating the pace of growth and development; focuses on structural reforms and privatization; and shifts burden of the taxes to those who have the capacity to pay.
Budgets are always awaited with hopes and fears but this time round the situation seemed particularly grim as the resource-constraint Government was in the midst of negotiations with the International Monetary Fund (IMF) for a new bailout package and media reports hinted at addition of more burden on the common man because of proposed conditions. However, Finance Minister Muhammad Aurangzeb deserves credit for fulfilling his oft-repeated commitment not to burden the existing tax-payers while devising plans for expansion of the tax-net, which has become a necessity due to the alarming gap in revenue and expenditure of the Government.
The budget, with an outlay of Rs. 18,877 billion, envisages a 38% increase in tax collection as compared to the outgoing year by the Federal Board of Revenue (FBR), which has been given a target of collecting Rs. 12,970 billion during next year but this is proposed to be achieved by increasing taxes on non-filers, under-filers and withdrawal of exemptions and some subsidies. The budget-makers need appreciation for having a sympathetic consideration of the sufferings of the fixed income groups, who have been forced to compromise on their standard of living in the face of inflationary trends. It is, perhaps, for the first time that a Government has decided to increase salaries of its employees proportionate to the rate of inflation in the outgoing year.
The Government itself acknowledged that inflation during 2023-24 remained at 24% and with this in view the decision to increase salaries of the low paid employees by 25% and those of officers by 20% would go a long way in mitigating their woes. Similarly, an increase of 15% in pensions and increase of minimum wages from the existing Rs.32,000 to Rs. 37,000 are also commendable moves. The formulation of a prudent strategy to manage increasing pension expenditure including introduction of a contributory pension scheme for new entrants is also a step in the right direction. There was no word from the Finance Minister about taxing pensions but a fuller picture would emerge when a staff level agreement is done with the IMF detailing measures that the Government would undertake during the timeframe of the deal. The Government has also fulfilled its commitment of reviving the insurance scheme for journalists and media workers, which would benefit 5,000 journalists and media workers in the first phase and ten thousand in the second phase.
Benazir Income Support Programme (BISP) has become a flagship initiative for poverty alleviation and with this in view its allocations have been raised to Rs. 593 billion for the next year and one expects these hefty allocations would be used judiciously and transparently to provide relief to have-nots and help them stand on their own feet ultimately.
IT and agriculture have the potential to contribute significantly to help overcome economic and financial problems of the country and with this in view the Government has done well by launching a number of schemes for development and modernization of these sectors for which proper allocations have been made. Power sector has become a source of constant concern for the general public as well as the planners and therefore, allocations worth Rs.253 billion have been made and effective measures proposed to streamline its working, improve distribution and transmission systems, increase share of electricity from alternative sources in national energy mix and contain the circular debt.
Coalition partner MQM must be happy that its demands about development and resolution of problems of urban Sindh have been given due consideration as the budget envisages a comprehensive Karachi Package besides those for Hyderabad, Mirpur, Sukkur and Benazirabad. There are, of course, some measures like increase in FED on cement and transfer of immovable property as well as increase in import duties and sales tax on various items that would surely fuel inflation. Hopefully, some adjustments would be made after thorough discussion on the budgetary proposals both in the National Assembly and the Senate.
