Budget 2021-22: Government sets 4.8% growth target for next year

ISLAMABAD – Minister for Finance and Revenue Shaukat Tarin on Friday presented the Federal Budget 2021-22 in the National Assembly with a total outlay of Rs 8,487 billion amid rumpus created by the opposition parties.

His speech was marred by the chaotic environment as opposition members chant slogans to interrupt his speech.

Presenting the budget, the finance minister said that many challenges came our way this year but we tackled them all under the leadership of PM Imran Khan.

“When the Pakistan Tehreek-e-Insaf (PTI) came into power, the previous governments had taken many loans,” he said and added no government had faced such a situation before. The current account deficit was $20 billion.


Negligence


Shedding a light on the negligence of the previous governments, Tarin said Pakistan has become a food-deficit country due to years of negligence, adding that inflation has created troubles for low income peoples. He has said that sugar prices increased by 18 percent.

“We need to make Pakistan food sufficient and for this purpose, we need to focus agriculture,” said Tarin, vowing to bring reforms for the agriculture sectors.

He says that Covid-19 caused huge trouble for the government and now the governments  debts have fallen down. “4.8 is the target of our future growth,” he has explained.

The minister went on to say that the previous government kept dollar at 104 rupees at artificial levels, adding that this level led to increase in heavy borrowing. He said, “During the tenure of previous government, domestic borrowing had increased substantially, adding at least Rs 14 trillion worth fresh loans were taken.”


PTI government


The finance minister further said that the government faced the biggest challenge of saving the country from bankruptcy. “We adopted the policy of reducing the expenditures and increasing the income,” he said.

Tarin said the government faced waves of coronavirus. “During the coronavirus pandemic, 12 million families had been provided financial assistance through Ehsaas Emergency Cash Program,” he added.

He claimed that the per capita increased by 15 percent despite the coronavirus pandemic. “We have overcome the current account deficit. A record increase of 25% has been made in remittances. We face the challenge of inflation,” he declared.

The minister said that exports witnessed a 14 percent increase.

The finance minister said the main objectives of the budget are to strike a balance between fiscal deficits due to COVID-19 and boosting growth of economy besides keeping a primary balance at a sustainable level.

He said the gross revenues for the next fiscal year have been estimated at Rs 7909 billion compared to revised estimate of Rs 6395 billion for the outgoing fiscal year. This shows a handsome growth of 24 percent in gross revenues. The Minister said the FBR revenues are projected to grow by 24 percent from Rs 4691 billion to Rs 5829 billion. Non-tax revenues are projected to grow by 22 percent.

Shaukat Tarin said the provincial share in federal taxes would increase from Rs 2704 billion last year to Rs 3411 billion. This means an additional Rs 707 billion or 25 percent increase. 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.

After provincial transfers, the net federal revenues are estimated at Rs 4497 billion compared to Rs 3691 billion under the revised estimate for last year. This shows a growth of about 22 percent. 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. 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.

Tarin said the federal development spendings are being increased from Rs 630 billion to Rs 900 billion, which is an increase of around 40 percent.

He said it is imperative that government expenditures are minimized and their utility is ensured. Therefore, he said, we will continue to be austere throughout the government. He said subsidies are projected at Rs 682 billion up from Rs 430 billion. These mostly comprise due payments of Independent Power Producers, tariff differential subsidies and concessions on food.

The minister said PM Imran Khan wants to change the course of the history by uplifting four to six million low income households through bottom-up approach from next year. He said every household will be provided Rs 500,000 interest free business loans. Every farming household will be given Rs 2050,000 interest free farming loan and Rs 200,000 for tractors and machineries. These families will be provided with low interest housing loans up to two million rupees so that they can build their houses. Every household shall be provided with a Sehat Card and one percent from every household will be provided free technical training. Through this action we are giving a comprehensive package to the low-income group people; slogan of which was raised by many leaders in the past but nothing was delivered. He said this is an essential requirement of Imran Khan s promise of Riasat-e-Madina.

He said the major initiative of the government for social protection and poverty alleviation is the Ehsaas Programme. For this program, Rs 260 billion are being 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.


Remittances 


Tarin said remittances had increased in Pakistan to record levels, adding that these are expected to rise to $29 billion by the end of this month. “This is proof of the love that overseas Pakistanis harbour for Prime Minister Imran Khan,” he said.


Growth


He said, “The Budget 2020-21 seeks inclusive and sustainable growth. We hope to increase our growth rate to 4.8 per cent.” “We want to make sure of a growth rate of 6% to 7% in the next two to three years,” Pakistani Finance Minister Shaukat Tarin said as he addressed the budget session in parliament.

“We want to focus on the poorer segments of society,” he said and added we want them to be able to fulfill their dreams.

The minister said the government will provide Rs500,000 loans to the poor, and Rs150,000 loans to farmers, adding that under the low-cost housing scheme, the government will give Rs2 million loans to them so that they are able to build their houses. They will be given Sehat cards and technical training.


Funds allocated


  • The government has allocated Rs260 billion for the Ehsaas programme.
  • The government has allocated Rs900 billion for public sector development programmes. 
  • The government has allocated Rs12billion for agriculture.
  • The government has allocated Rs23 billion for Diamer and Bhasha dams.
  • The government has allocated Rs14 billion for Neelum-Jhelum hydro-power plant.
  • The government has allocated Rs 489.393 million Narcotics Division
  • The govermemnt has allocated Rs 6,027.351 million for Law and Justice Division schemes.
  • The government has allocated Rs 4461.911 million for Maritime Affairs.
  • The government has allocated Rs244 billion for Gwadar airport and highway.
  • The government has allocated Rs25 billion for small dams in Sindh.
  • The government has allocated Rs118 billion for energy and power projects.
  • The government has allocated Rs22 billion for Jamshoro coal power plant.
  • The government has allocated Rs16 billion for KI, KII projects in Karachi and Tarbela power plant.
  • The government has allocated Rs100billion for special development packages for the development of poorer cities.
  • The government has allocated Rs54 billion for the development of KP’s merged districts.
  • The government has allocated Rs14 billion for tree plantation programmes and combatting climate change.
  • The government has allocated Rs739 for Karachi transformation plan.
  • The government has allocated Rs100 billion for covid-19 emergency fund.
  • The government has allocated Rs1.1 billion for the procurement of coronavirus vaccines.
  • The government has allocated Rs12 billion for SME support programmes.
  • The government has allocated Rs10b for Kamyab Naujawan programme.
  • The government has allocated Rs66 billion for HEC and education programmes.
  • The government has allocated Rs60 billion for Azad Jammu and Kashmir.
  • The government has allocated Rs47 billion for Gilgit-Baltistan.
  • The government has allocated Rs1,370 billion for Defence Services.

Taxes


Continuing his budget speech, Tarin said that the government had set the tax collection target at Rs5,829 billion. He said the tax collection had grown by 18%, adding that critics had no response to the government s impressive performance in this regard.

The minister said there was no new tax being imposed on the salaried class.

He said the government was slashing withholding taxes on mobile phones, and it will be reduced to 8 percent.

The finance minister announced that the government has also cut down sales tax on locally manufactured cars from 17 percent to 12.5 percent and has also exempted Federal Excise Duty (FED) on 850cc cars and will slash duty on electric cars.

He said the track-and-trace systems will be strengthened so that undocumented trade does not flourish in the country.

Tarin announced a tax exemption on  Auto Disable Syringes  with an aim to minimise the impact of deadly diseases like Covid-19, while FED on telecommunication has been reduced from 17pc to 16pc.


Complete text of budget