PTI govt fixes GDP growth at 4.8% with Rs8.48 trillion budget for FY2022

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ISLAMABAD – The PTI-led federal government on Friday unveiled what it terms as a “pro-people, business-friendly and growth-oriented” federal budget for fiscal year 2021-22 with a total outlay of Rs8,487 billion with an aim to achieve 4.8% economic growth.

Minister for Finance Shaukat Tarin while presenting the budget said the budget focuses on Prime Minister Imran Khan’s vision of a strong and sustainable growth driven Kamyab Pakistan.

He said the main objectives of the budget are to strike a balance between fiscal deficits due to COVID-19 and expanding the economy.

He said the gross revenues for the next fiscal year have been estimated at Rs7,909 billion compared to revised estimate of Rs6,395 billion for the outgoing fiscal year. This shows a handsome growth of 24 percent in gross revenues. He said the FBR revenues are projected to grow by 24 percent from Rs4,691 billion to Rs5,829 billion. Non-tax revenues are projected to grow by 22 percent.

Shaukat Tarin said the provincial share in federal taxes would increase from Rs2,704 billion last year to Rs3,411 billion. He said this should enable the provinces to spend resources on development and critical social sectors like health, education, population welfare, youth, women development, sports and labour welfare, according to Radio Pakistan.

After provincial transfers, the net federal revenues are estimated at Rs4497 billion compared to Rs3691 billion under the revised estimate for last year.

The overall deficit for 2021-22 is estimated at 6.3 percent as opposed to the revised estimate of 7.1 percent for current fiscal year, he highlighted.

Primary deficit is targeted at 0.7 percent. Despite COVID-19, the government has continued on the path of reduction of primary deficit, which he said is a great achievement, he added.

Shaukat Tarin said the federal development spendings are being increased from Rs630 billion to massive Rs900 billion, which is an increase of around 40 percent.

He said that the government had subsidies are projected at 682 billion rupees up from 430 billion rupees. These mostly comprise due payments of Independent Power Producers, tariff differential subsidies and concessions on food.

Salient features of Budget

  • Workers’ minimum wage raised to Rs20,000
  • Economic growth rate fixed at 4.8 for next fiscal year
  • Ten percent increase in salaries and pension of govt employees proposed
  • Sales tax cut from 17% to 1% for Electric Vehicles proposed
  • Rs98 billion allocated for Karachi Transformation package
  • 850CC vehicles exempted from federal excise duty
  • Rs5 billion allocated for new census in 2022
  • Rs5 billion earmarked for election of local govts
  • Rs66 billion allocated for HEC
  • Value Added Tax on vehicles being lifted
  • Locally manufactured vehicles of 850CC will be exempted from FED
  • Rs10 billion earmarked for Kamyab Jawan Program
  • Rs60 billion proposed for Azad Jammu and Kashmir
  • Rs12 billion allocated for the development of agriculture sector
  • Rs964 billion earmarked for Federal PSDP
  • Rs100 billion set aside for Covid-19 and other natural disasters
  • Rs1,370 billion allocated for Defence
  • Rs20 billion for PIA

Every Household will get Rs500,000 interest free loan

He said every household will be provided Rs500,000 interest free business loans. Every farming household will be given Rs205,000 rupees interest free farming loan and Rs200,000 for tractors and machineries.

He added that every household shall be provided with a Sehat Card and one percent from every household will be provided free technical training.

Rs260 Billion for Ehsaas Programme

The Finance Minister said the major initiative of the government for social protection and poverty alleviation is the Ehsaas Programme. For this program, Rs260 billion has been proposed in the next budget, which is by far the largest allocation and reflects the vision of the Prime Minister to help the extreme poor segments of the society.

Increase in Salaries and Pensions

He announced the grant of ten percent adhoc relief allowance for all the federal government employees and ten percent increase in pensions with effect from next month. The orderly allowance has been enhanced from 14,000 rupees to 17,500. The integrated allowance for employees in basic pay scale one to five has been doubled from 450 rupees to 900 rupees.

The Finance Minister said the minimum wage is proposed to be increased to Rs20,000 to mitigate the inflationary pressures on the low income groups.

Growth Rate Fixed at 4.8%

The Finance Minister said the government has fixed 4.8 percent growth target for the next financial year.

He said that the government intendd to undertake a series of measures to achieve six to seven percent growth over the next two to three years.

Rs12 billion for Agriculture

The Finance Minister said the government is placing highest priority to uplift the agriculture sector. He said 12 billion rupees are being allocated for various agri-related initiatives. These include one billion rupees for locust emergency and food security projects; two billion rupees for enhancing productivity of rice, wheat, cotton, sugarcane and pulses; one billion rupees for enhancing oil cultivation on commercial scale and three billion rupees for improvement of water courses.

Water Security

Shaukat Tarin said a total of 91 billion rupees are proposed in the budget for ensuring water security, excluding hydel energy generation projects. Fifty-seven billion are being allocated for Dasu Hydropower project, 23 billion rupees for Diamer-Bhasha, six billion rupees for Mohmand Dam and 14 billion rupees for Neelum-Jhelum hydropower project.

Energy Security

The Finance Minister said 118 billion rupees are being allocated in the budget to ensure energy security. He said 7.5 billion rupees are being earmarked for 1000 KVs Islamabad West and Lahore North transmission lines; 8.5 billion rupees for evacuation of 2160 MW of power from Dasu; 5.5 billion rupees for evacuation of power from Suki Kinari, Kohala, Mahal Hydropower project, and 12 billion rupees for secondary transmission lines in Hyderabad and Sukkur. He said we will invest in completing the 1200 MW of coal-fired power projects in Jamshoro for which 22 billion rupees will be allocated. 16.5 billion rupees are being proposed for K-I and K-II in Karachi and fifth extension of Tarbela Hydropower project.

The Finance Minister said the government has made social sector improvement the key priority in areas like health, education, sustainable development goals, climate change for which 118 billion rupees have been proposed in the PSDP. This includes thirty billion rupees for health, forty four billion rupees for higher education and sixty eight billion rupees for achievement of SDGs.

Vaccine Import

Shaukat Tarin said 1.1 billion dollars will be spent on importing COVID-19 vaccine besides providing funding for local production of anti Covid vaccine. He said it is estimated that over one hundred million people will be vaccinated by June next year.

One hundred billion rupees have been proposed to meet exigencies related to COVID-19.

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