Govt unveils ‘business friendly’ budget for FY 2013-14

Total outlay for Federal Budget 2013-14 Rs3.5 trillion; fiscal deficit 6.3%; PSDP Rs1.155 trn; GDP growth rate projected at 4.8%; inflation 9.5%; revenue target set at Rs2.475 trn; defence allocation Rs 627 bn; Rs926 bn allocated for debt servicing; GST raised from 16 to 17 percent; Rs75 bn allocated for Income Support Programme; Pension up by 10%; minimum pension raised from Rs3000 to 5000; Rs225 bn for energy sector development.

ISLAMABAD: The newly formed government of Pakistan Muslim League-Nawaz (PML-N) Wednesday unveiled what is being termed as ‘an investment and business friendly budget’ with a total outlay of Rs3.5 trillion for the financial year 2013-14.

(Click here for full text of budget speech).

Finance Minister, Senator Ishaq Dar presented the budget speech at the special session of the National Assembly convened by President Asif Ali Zardari for presenting proposals for Federal Budget 2013-14.

The budget envisages a record allocation of Rs1.155 trillion for Public Sector Development Program (PSDP) with an aim to stimulate the economy which presently depicts a bleak picture. A big chunk of Rs 225 billion will be spent on energy sector.

The first budget of Nawaz Sharif-led government has allocated Rs627 billion for FY 2013-14 defence compared to Rs570 billion for the preceding year.

Dar proposed an increase in General Sales Tax (GST) from 16 percent to 17, a decision which is going to further raise the prices of commodities for the people already battered by the worst price hike in the country.

As an austerity measure, Ishaq Dar proposed to bring down the expenditures of Prime Minister House by 45 percent, which he claimed will result in a national saving of Rs40 billion.

There will be a complete ban on purchase of new cars for Prime Minister’s office but the ban will not be applicable for law enforcement agencies and other inevitable requirements.

An increase of 10 percent has been proposed in the pension of retired government employees and the minimum monthly pension has been raised from Rs3000 to 5000.

The budget for next fiscal earmarks an amount of Rs75 billion under Income Support Program.

The tax exemption for luxury cars is proposed to be abolished while 1200 cc hybrid cars are being exempted form import duty. A concession of 50 percent has been proposed for 1200-1800 cc cars. Rs20,000 tax will also be applicable on the purchase of 1000 CC cars.

A withholding tax on wedding cermonies being held at commercial venues has also been proposed along with taxes on foreign movies and dramas. Taxes on cigarettes, pan and chahliya have also been increased.

GDP growth rate target for FY 2013-14 has been projected at 4.8 percent and revenue target at Rs2.475 trillion. The non-tax income will be Rs800 billion

The government has allocated Rs185 billion as power subsidy.

Ishaq Dar maintained that the circular debt amounting to more than Rs500 billion will be eliminated in 60 days.

The budget proposes to abolish the ministers’ discretionary funds.

The government will initiate a Prime Minister Laptop scheme in the days to come.

Customs duty on water filtration equipment is proposed to be decreased while the people’s works program renamed as Tamir-e-Watan Pakistan program.

Dar said that the auction for 3G technology will be held soon and the borrowing from the State Bank of Pakistan (SBP) will be reduced.

The rate of inflation will be kept under single digit and its targeted rate for FY 2013-14 has been fixed at 9.5 percent.

He said the government inherited a battered economy and the average rate of inflation stood at 13 percent in last five years.