ISLAMABAD: Finance Minister Ishaq Dar on Friday proposed an expansionary budget of Rs 14.46 trillion for the fiscal year 2023-24 amid relentless pressure from the International Monetary Fund.
In the wake of unusually high inflation, the coalition government led by Prime Minister Shehbaz Sharif on Friday increased the salaries and pensions of federal government employees in its second budget to meet rising prices. The budget document proposes an ad-hoc hike of 35 per cent in basic pay for federal government employees in BPS 1 to 16 and 30 per cent for BPS 17 and above. Pensioners will also get 17.5% increase. The minimum wage has been increased from Rs 25,000 to Rs 32,000 per month while the EOBI pension has been increased from Rs 8,500 to Rs 10,000. Dar announced the increase in salaries after the cabinet approved it after a tough debate. He said that the mileage allowance of federal government employees has been increased by 50%, while the additional charge/current charge/deputation allowance has been increased from Rs.12,000 to Rs.18,000. The orderly allowance has been increased from Rs 17,500 to Rs 25,000 and the special conveyance allowance for disabled persons will be increased by 100 per cent, from Rs 2,000 to Rs 4,000. The Finance Minister said that the permanent attendant allowance of soldiers has been increased from Rs 7000 to Rs 14000. In the budget for the financial year 2023-24, it was also announced that the House Building Finance Corporation scheme for indebted widows is being introduced. Under the scheme, the government will disburse HBFC loans worth Rs 10 lakh to widows. Ishaq Dar announced that the deposit limit in martyrs’ accounts in CDNS has been increased from Rs 50 lakh to Rs 75 lakh, while the deposit limit on welfare savings certificates has also been increased to Rs 75 lakh. .
Dar told the National Assembly that the government has set its sights on achieving a GDP growth rate of 3.5 percent, while trying to keep inflation below 21 percent and limit the budget deficit to 6.5 percent of GDP. Is. Export targets have been set at $30bn, while foreign remittances are expected to reach $33bn in the coming year. 950 billion rupees have been allocated for the federal development budget known as the Public Sector Development Program (PSDP). Of the total gross revenue, the government will transfer Rs 5.27 trillion to the provinces under the National Finance Commission (NFC) arrangements. Consequently, the government will have a net revenue of Rs 6.887tr available for its expenditure. Meanwhile, the total budget expenditure is pegged at Rs 14.46 trillion. On the expenditure side, current expenditure is estimated at Rs 13.32tr. Within this, a significant portion of the 7.3tr will be allocated to debt servicing, including interest payments on domestic and foreign loans. The second largest allocation goes to defense expenditure, with Rs 1.804 trillion earmarked for this purpose. Additionally, grants and transfers to provinces will reach Rs 1.464 trillion, while expenditure on pensions will be Rs 761 billion.
The minister admitted that people are facing difficulties due to depreciation of rupee and increase in policy rate of State Bank of Pakistan. However, the government decided to prioritize improving the economy over political gains, making sacrifices in the process. At a time when inflation is rising, an expansionary budget, which aims to increase spending, can hamper the government’s efforts to control inflation. Additionally, the government has increased taxes, possibly exacerbating the price situation. The budget does not mention austerity measures in government expenditure but focuses on increasing expenditure. The budget deficit is estimated at Rs 6.924 billion, which represents a gap between revenue and expenditure that is equal to 6.5 percent of GDP. The government will try to bridge the gap by borrowing from local and international lenders, despite the fact that the IMF program has suffered setbacks in recent months and is set to expire on June 30, 2023. The government has set a target to achieve a core target. Budget surplus of 379 billion rupees for fiscal year 2024.
Interestingly, the proposal to increase the petroleum levy from the current Rs 50 to Rs 60 per liter may reduce the impact of the increase in the salaries of government employees, while the common man in the private sector may have to bear the brunt. The government has set a collection target of Rs 869 billion in the next fiscal year, as against the revised estimate of Rs 542 billion in the previous fiscal year. sources of income. Earlier, the limit was set at Rs 50 million in Pakistani rupees, but now it has been changed to dollars to help boost the country’s foreign exchange reserves.
The budget also includes the rationalization of super tax under Section 4C, which will apply to all individuals with income above Rs 150 million. Three new income slabs have been introduced with 6 percent tax on the lower slab of Rs 350 to 400 million, 8 percent on Rs 400 to 500 million and 10 percent tax on Rs 500 million and above.
The budget includes various measures to support the agriculture sector, such as increasing agricultural credit to Rs 2.25 trillion from the current Rs 1.8 trillion. In addition, 50,000 agricultural tubewells will be converted to solar systems. Combine harvester, rice dryer, planter and seeder are exempted from all taxes and duties. A concessional loan of Rs 5 billion has been earmarked for the agricultural industry, and agro-industrial units in rural areas with an annual turnover of up to Rs 800 million will be exempted from all taxes for five years. A subsidy of Rs 6 billion has been earmarked for imported urea. The IT sector and IT-enabled services will be the engine of growth in the coming years. The IT sector is classified as a small and medium enterprise to enjoy concessional rates of income tax. Withholding tax for filers has been increased from the existing 1pc to 5pc while for non-filers it has been fixed at 10pc to discourage outflow of foreign currency through debit cards, credit cards and banking channels. In 2005, the tax threshold on imported Asian make cars with engine capacity of 1800cc or above was discontinued. To protect the domestic glass industry, the regulatory duty has been increased from the existing 15 percent to 30 percent.
