Tuesday, October 26, 2021

Pakistan Unveils Rs 8.48 Trillion Budget for New Fiscal Year

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Pakistan government on Friday unveiled a Rs 8,48,700 crore budget for the new fiscal year, including a Rs 1,37,000 crore defence budget which is higher by Rs 8,100 crore than last year’s. Last year the defence budget was Rs 1,28,900 crore.

The government set a meagre 4.8 per cent GDP growth target for the next year. Presenting the budget in the National Assembly for the fiscal year 2021-22, Finance Minister Shaukat Tarin said the government had allocated Rs 2,135 billion under the Public Sector Development Programme (PSDP) an increase of 37 per cent from last year’s development allocations.

“Our GDP growth target for 2021-22 is 4.8 per cent but it will go higher due to various measures we are taking to expedite growth, he said, adding that the government aimed at achieving 6 or 7 per cent growth in coming years. The budget document showed that the estimate for the defence expenditure was Rs 1,370 billion.

Neither the minister nor the budgetary documents provided any further details about the defence expenditure, which are often kept secret. Traditionally these expenditures appear as one liner in the budget. The minister also announced to fix the minimum wage of workers at Rs 20,000. He announced to allocate USD 1.1 billion for purchase of coronavirus vaccines and another Rs 100 billion for the Covid-19 Emergency Fund. Tarin said Rs 14 billion fund has been set aside for Climate Change mitigation projects.

Giving details of development expenditures, Tarin said the development budget of the federal government was increased from Rs 630 billion to Rs 900 billion, about 40 per cent higher than the previous year. He also announced that the federal government would provide Rs 60 billion to the Pakistan-occupied Kashmir (PoK) government, which is higher than the Rs 56 billion fund provided last year. Similarly, Tarin announced to allocate Rs 47 billion for Gilgit-Baltistan, which is also higher than the Rs 32 billion allocated in the outgoing fiscal.

The minister said the gross revenues for the next fiscal year have been estimated at Rs 7,909 billion as compared to the revised estimate of Rs 6,395 billion for the outgoing fiscal year, showing a growth of 24 per cent. The deficit would be bridged by local and foreign borrowing. He said the federal tax revenues are projected to grow by 24 per cent from Rs 4,691 billion to Rs 5,829 billion, while the non-tax revenues are projected to grow by 22 per cent.

Our target is to achieve sustainable growth over a long period of time, Tarin said. Talking about the achievements of the Imran Khan-led government, he said the major achievement was to turn the USD 20 billion current account deficit in 2018-2019 to surplus in the outgoing fiscal. It happened despite the import of agricultural goods, he said.

The minister said remittance increased by 25 per cent to reach USD 29 billion during 2020-21, while the foreign exchange reserves touched USD 16 billion, enough for imports of three months. Tarin admitted that high prices of commodities was the main challenge which was due to import of key edible items, like pulses, which turned Pakistan into a food deficit nation and promised to change it.

He rejected the trickledown effect’ theory of economic growth to address the woes of the poor and announced measures to provide cash subsidies, interest free loans and free health cards to help the most downtrodden segments of the society. It was the third budget of the Pakistan Tehreek-i-Insaf: government which came to power in August 2018 and is still struggling to stabilise the economy.

Opposition parties protested vociferously against the policies of the government, creating ruckus in Parliament. But the minister continued his speech and presented the budget.

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