7% deficit laden Rs.7.137t pandemic hit budget unveiled amid Opp outcry

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-No new tax imposed as Hammad announces Budget 2020-21
-Next year’s budget 11% lower than the size of budget estimates 2019-20
-Provincial share in federal taxes estimated at Rs. 2,873.7 billion
-Public Sector Development Programme (PSDP) for 2020-21 kept at Rs. 1,324 billion
-Defence affairs and services to get Rs 1,289 billion
-Growth target projected 2.1% despite as economy reels from pandemic

By Uzma Zafar

ISLAMABAD: Amid negative effects of the coronavirus pandemic on economy, the Pakistan Tehreek-i-Insaf (PTI) government on Friday presented its second federal budget for the year 2020-21, with total outlay of Rs 7.137 trillion focusing on facilitation of businesses, relief to the vulnerable segments of society, fiscal consolidation, revenue mobilization and austerity measures.
“No new taxes have been introduced in the budget for the upcoming fiscal year, which will not only provide relief to the common people but also boost economic activities across the country,” Federal Minister for Industries and Production Hammad Azhar said while presenting the budget in the National Assembly. The minister highlighted the importance of striking a balance between mitigating the coronavirus effects and continuation of economic activities to keep the cycle of economy running. He also underlined the importance of fixing primary balance at an appropriate level, stressing the need for continuation of Ehsaas Programme to help the vulnerable segments of society. The government would continue providing relief to the corona-hit people during the upcoming fiscal year, he said.
Hammad said the government wanted to continue the Extended Fund Facility (EFF) programme with the International Monetary Fund. He said the development budget would be maintained at an appropriate level to help achieve the GDP (gross domestic product) growth, with giving priority to the defence and internal security.
The minister said during the fiscal year 2020-21, the government had set the revenue collection target of Rs 6,573, including Rs 4,963 tax revenues and Rs1,610 non-tax revenues. The minister said against the total Rs 7.137 trillion federal expenditures, the budget deficit would be recorded at Rs 3.437 trillion during the fiscal year 2020-21, which was 7 percent of the gross domestic product (GDP) while the primary balance would remain at 0.5 percent. He said the provision of relief to the vulnerable and deserving segments of the society was the government’s priority. The funds for Ehsaas Programme had been increased from Rs 187 billion last year to Rs 208 billion for the current year.
Likewise, he said, the government set aside Rs 179 billion for provision of subsidies on energy, food and others to ensure relief was given to low income people. The targeted subsidy would be provided to the deserving segment of the society, he added. Hammad Azhar said the government also intended to review the National Finance Commission and fulfill its commitment that were made at the merger of erstwhile FATA (Federally Administered Tribal Areas) areas in the Khyber Pakhtunkhwa province.
He said effective measures had also been taken to enhance remittances, improve railway infrastructure, promote e-governance, and provide funds for the welfare of artists.
The minister said the allocations for Higher Education Commission had also been increased from Rs 59 billion to Rs 64 billion, while the government allocated Rs 55 billion for Azad Jammu and Kashmir, Rs 32 billion for Gilgit Baltistan, and Rs 56 billion for the merged districts of KP. In addition, the Sindh and Balochistan provinces would be given Rs 19 billion and Rs 10 billion respectively.
He said the government would try to enhance revenue collection without any change in the existing taxes. For providing relief to the construction industry, he said, the government would provide resources for the New Pakistan Housing Project.
The minister said the special programmes launched on the special directives of Prime Minister Imran Khan, including Kamyab Jawan Programme, Sehat Card and Billion Tree Tsunami Programme would continue while the government would take austerity measures and reduce its expenditures.
Minster for Industries Hammad Azhar presented on Friday the federal budget for the fiscal year 2020 -21— referred to as the ‘corona-budget’ by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh a day earlier while unveiling the economic survey for fiscal 2019-20.
Among the major figures he revealed on the floor of the National Assembly, the Federal Board of Revenue (FBR) revenue target was kept at Rs4.95 trillion for next year while defence allocations amounted to around Rs1.3 trillion. The federal development programme was budgeted at Rs650 billion to support growth prospects.
Prime Minister Imran Khan also attended the session. Azhar started the session by saying it was an honour for him to be presenting the second budget of the PTI government under the leadership of PM Imran.
He then went on to highlight some of the major achievements of the government in the outgoing fiscal year, pointing to a 73 per cent decline in the current account deficit, which is now under $3 billion, he said. “There is also a primary surplus which we achieved in the past nine months,” he said.
Opposition held placards and chanted slogans against the PTI govt as the budget was being presented. — Amir Wasim
In the background of Azhar’s speech, loud slogans against the premier and table-thumping by the opposition benches could be heard as the minister highlighted the PTI-led government’s efforts to streamline the economy. Later, the opposition walked out of the House in protest.
Azhar said “our budget deficit shrank from 5pc to 3.8pc while IMF gave us an extended facility of Rs6 billion and remittances increased from Rs16b to Rs17b”. He noted that Bloomberg had called PSX the top performing market in Dec 2019.
Presenting details of the new budget, the minister emphasised that “no new tax was introduced in this budget”. He said the need of the hour was an expansionary fiscal policy which the government was implementing.
Total expenditure
He said the total size of the budget or the total expenditure budget for the next year stood at Rs7,136 billion — slightly higher than the budgeted figure for the previous year.
Current expenditure
Of this total, current expenditure for the next fiscal year was budgeted at Rs6,345 billion, up from the Rs6,193b budgeted last year, Azhar said. Of this, Defence Affairs make up Rs1,289 billion, up 11pc from the previous year, with interest payments making up Rs2,946 billion.
Allocations for education have been budgeted at Rs83.3 billion, up 7.9pc from last year’s Rs77.2 billion. Health allocations for the next year have more than doubled (130pc rise) to Rs25.5 billion from last year’s Rs11 billion. During his speech, Azhar explained that the funds would be used to improve health services and digitise the framework.
PSDP
Hammad Azhar revealed that the total expenditure for public sector development projects (PSDP) for the next fiscal year had been budgeted at Rs1,324 billion, which is 18pc below last year’s budget.
Of this, federal PSDP has been allocated Rs650 billion, while Rs676 billion has been allocated to provinces.
Fiscal deficit
The fiscal deficit, he said, would be 7pc of the GDP and has been budgeted at Rs3,195 billion for FY2021. The minister lamented that the deficit had been increased manifold during regimes of the previous governments but said this government will try to keep it in check.
Growth rate
Azhar said the government will pull out the economy from a 0.4pc contraction and is aiming for a 2.1pc growth in GDP for fiscal year 2021.
Inflation
Consumer Price Index (CPI) inflation for fiscal year 2021 has been budgeted at 6.5pc, down from a projection of 13pc last year.
Total revenue
Total revenue, he said is budgeted at Rs6,573 billion, of which net federal revenue will be Rs3,700 billion.
FBR tax revenue
Azhar went on to reveal that FBR tax collection has been budgeted at Rs4,963 billion, which is lower than last year’s original budgeted amount of Rs5,555 billion. The minister stressed during his speech that the government wants this to be a “relief budget” due to the crises brought on by the pandemic and the government is imposing no new taxes for the new year.
This year’s budget session is being seen as a formality as both PPP and PML-N, the major opposition parties, have agreed not to press for voting on cut motions and not to point out quorum till the passage of the budget by June 30.
‘Corona budget’
The budget comes as the country tackles the ongoing health crisis caused by the outbreak of the novel coronavirus, which has shaken the economy. It was finalised after talks with the International Monetary Fund (IMF) and it was agreed that the federal government would freeze the size of its expenditures.
Presenting the Economic Survey of Pakistan 2019-20 at a press conference on Thursday, Shaikh spent a large part of his speech building narrative around inheriting a troubled economy and putting it on road to recovery before the Covid-19 pandemic hit economies of the world and Pakistan.
Dr Shaikh said it was still very difficult to quantify the accurate impact of Covid-19 on the economy, but there was no doubt that it had been really hit hard and different institutions were making different projections based on quantum, severity and duration of the pandemic.
The adviser said the government had no intention to go for aggressive taxation but this did not mean that those who were rich would not be made to pay their due taxes.
SOPs in place
In order to ensure that the social distancing policy to prevent the spread of Covid-19 pandemic is followed, the opposition and government have agreed that only a maximum of 86 members (one-fourth of the total 342-member house), 46 from the treasury and 40 from the opposition, will be present in the house at one time.
The terms of the agreement, which were called guidelines for ensuring implementation of the standard operating procedures, were read out on the floor of the house by none other than by PPP’s Syed Naveed Qamar on the directive of Speaker Asad Qaiser at the outset of the sitting on Wednesday.
According to the accord, the members and the staff of National Assembly Secretariat who have not got themselves tested for Covid-19 would not be allowed to enter the hall. The proceedings of the house will continue for maximum of three hours daily until June 30. The opposition will not point out quorum, except on the day the budget would be voted upon.
Qamar further said that chief whips of the parties would be responsible for providing the lists of the attending members on a particular day and only those members would be allowed to come to the house whose names were present in the lists.
Explaining further points, the PPP leader said there would be no need for the members to come to the assembly hall for attendance as they could mark their attendance at the main entrance, known as Gate No 1.
The Jamiat Ulema-i-Islam-Fazl (JUI-F), however, not only rejected the agreement, terming it “unconstitutional and illegal”, its members also staged a sit-in in front of the dais of the speaker to protest removal of their chairs from the house as only 86 chairs were placed in the house after the agreement.