RESPONDING to a popular demand of the construction sector, Prime Minister Imran Khan, on Thursday, announced extension of fixed-tax regime for builders by another year till Dec 2021 and the facility of non-disclosure of source of income while making investment till June 2021. Terming it a New Year Gift, he also gave a one-year extension to construction projects which were supposed to be completed in 2022 and now they can be completed by 2023.
The extension was understandable as intended benefits of the scheme were not expected in a few months for which it was originally announced and that is why there were genuine demands by those associated with the construction industry to extend deadlines under the programme. The Government has apparently taken care of all aspects of the scheme as the PM also announced that small houses would be subsidized and the bank would not charge more than 5 and 7 per cent interest on 5 and 10 marla houses for the next five years, a decision which is expected to give boost to construction of small and medium-sized houses. That the package already announced by the government has started paying dividends is confirmed by the fact that the Federal Board of Revenue (FBR) has approved projects worth Rs. 186 billion under the concessions for the construction sector. Punjab is also in the process of approval of projects worth 136 billion rupees and in all about 2.5 million jobs are expected to be created in the province.
It is also encouraging that similar projects are also being undertaken in other provinces and approval of foreclosure law means removal of a hurdle in the way of construction of low-value houses for salaried class. The Government has also earmarked Rs 30 billion for subsidy to be given for low-cost houses so that their cost is reduced by at least three hundred thousand rupees, which is not a big relief given the overall cost of construction that has shot up tremendously in recent months due to inflation, additional taxation and mafia-like behavior by some sectors like cement, iron and brick-kilns. While lauding the steps announced by the Prime Minister, which are likely to give not only a boost to the construction industry but also to the overall economy as well, one might draw his attention towards other factors that lead to substantial increase in cost of construction and, of course, cost of doing business. It has happened in the past as well and is happening now again that the relief announced by the government is being pocketed by some vested interests and there is no trickle down effect. Similarly, on the one hand, the government is announcing relief but it turns out to be a zero-sum game due to unrealistic increase in prices of gas, electricity and petroleum products.
As the Prime Minister was announcing the relief package, the government increased prices of POL products, which will have a spiraling effect. There are also reports that the Government is preparing to hike the electricity tariff anytime during January 2021 under its commitment with the International Monetary Fund (IMF) besides increase in taxes, which is being dubbed as the mini-budget. These measures run contrary to the avowed objective of the government to stimulate the economy especially in the backdrop of Covid-19. The Prime Minister has also drawn attention to a crucially important issue – the need for new master plans of cities to stop their haphazard spread as agricultural land was declining and the country was moving towards a food crisis. Un-planning and low quality construction activities by a mushroom of housing societies are adding to the civic problems of the urban areas but the question arises what the civic bodies responsible to oversee such activities are doing. The Premier has talked about digitization of land records of Karachi, Lahore and Islamabad by August this year but there is something seriously wrong with the entire process as similar exercise carried out in most of the cities of Punjab years back has not resulted into elimination of exploitative role of revenue staff and as a result corruption is as rampant today as before. We hope that drawbacks in the system would be removed to make it genuinely transparent and fair. It is also important that the extended deadlines for the construction sector are met so that houses are completed on a fast-track basis and shelter-less are able to own homes.
