Daily Times
The Pakistan People’s Party-led coalition government in the Centre unveiled its fourth budget with an outlay of Rs 2.767 trillion for the next fiscal year, 2011-12, in parliament on Friday. The budget outlay is some 14.2 percent higher than the last financial year’s budget.
The federal budget contains less relief measures against the additional burden of around Rs 600 billion on the general populace, specially consumers, say independent economists.
They say that the government has slashed the amount of subsidies from Rs 395.801 billion in 2010-11 to Rs 166.448 billion in 2011-12, a decrease of Rs 229.353 billion, which would force a hike in prices of electricity and essential items.
They are of the view that the additional tax revenue to the tune of Rs 365 billion, which would be generated in the next fiscal year, 2011-12, with a total tax collection at Rs 1.952 trillion, would result in inflation as the business community would pass on this tax burden to the consumers.
The federal government has estimated that in case the provinces helped it by saving Rs 125 billion or creating budget surplus then the budget deficit will remain at Rs 850 billion.
But, if grants from foreign donors are not received, then the budget deficit will reach Rs 974 billion in 2011-12.
The deficit would be met through local and external financing.
Federal Minister for Finance Dr Hafeez Sheikh presented the federal budget and outlined its salient features during his speech in the National Assembly.
Gross revenues of the federal government have been estimated at Rs 2.732 trillion, which include Rs 2.074 trillion from tax revenues and Rs 658 billion from non-tax revenues.
After payment of Rs 1.203 trillion to the provinces, revenue share in federal taxes under the 7th National Finance Commission Award, the federal government’s next revenue receipts would come down to Rs 1.529 trillion in 2011-12.
Net capital receipts of the federal government have been estimated at Rs 369 billion, external receipts Rs 414 billion while provinces will create a budget surplus of Rs 125 billion for keeping the budget deficit at 4 percent of the GDP. The federal government would borrow Rs 304 billion from banks to finance the deficit.
Current expenditures of Rs 2.315 trillion of the federal government during 2011-12 would include Rs 791 billion for repayment of interest on domestic and foreign loans and Rs 243 billion on repayment of foreign loans.
Some Rs 96 billion would be spent on payment of pension to retired employees of the federal government. A sum of Rs 495 billion would go to the armed forces. Rs 295 billion would be spent on grants and transfers to the provinces.
Some Rs 166 billion have been earmarked for subsidising the goods and services for the population of the country. Provision for increase in salaries and pension has been made at Rs 25 billion for 2011-12.
Development expenditures of the federal government will be Rs 452 billion which include Rs 300 billion for federal public sector development programmes and Rs 55 billion for development loans while grants to the provinces and other development expenditures have been estimated at Rs 97 billion.
The government has decided to increase its employees’ salaries by 15 percent and pension by 15 to 20 percent.
The government has increased the income tax exemption limit from Rs 300,000 to 350,000 to facilitate low-salaried class. Fifty percent tax exemption on income over and above of basic exempt income of Rs 350,000 for senior citizens have also been announced.
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