on the horizon
While reassured in the efficacy of economic strategy,
the government is not complacent by progress achieved and formidable
challenges still remain on the horizon. These challenges include
(1) The need to push the growth
rate before we can realistically hope to have a meaningful reduction
in poverty. For this purpose, significant increase in investment
is required, especially in the private sector.
(2) The need to improve human
development indicators, which will call for significant increase
in social spending.
(3) Public sector enterprises
continue to bleed the budget and limit the fiscal space needed for
social sector spending. An accelerated restructuring to reduce their
losses is essential to contain this menace.
(4) Significant evidence is emerging
that indicates that our growth potential is being seriously undermined
by lack of adequate infrastructure of roads, water, power, gas and
telecommunications. The need for major increase in development spending
aimed at rehabilitating and expanding the economic and social infrastructure
is extremely pressing.
(5) Lack of desired capacity
in the system to fully absorb available investment resources. Implementation
and governance bottlenecks, thus, need to be removed with concerted
(6) Law and order and image are
clearly interrelated challenges. A lot to tackle these issues is
The significance of the agriculture sector in our economy is undeniable.
Apart from major contribution to GDP, the sector provides livelihood
to nearly 70% of population. More importantly, it houses the largest
number of poor people in the country. For all these reasons, development
of this sector is central to the well being of our country.
Initiatives are required to be taken in the water
sector, which is essentially related to the development of agriculture.
In addition, plans shall be taken for the following initiatives
for the agriculture sector:
1. Through elimination of taxes
and adjustment in input cost the prices of fertilizers, urea, seeds,
and pesticides shall be reduced by 50 %.
2. With a view to easing the
emerging shortages in the market for tractors and other agricultural
machinery and equipment, the import policy shall be revised to allow
imports of all equipment, which are not manufactured locally, with
no duty. There will be no GST or withholding tax on such imports.
This shall be subject to the options available under MBC System.
This will not hurt local industry.
3. To ensure cheap availability
of credit to agriculture sector, the financial institutions shall
provide loans on profit and loss sharing. The profit and loss sharing
ratio shall be determined from case to case basis and shall be applicable
for all types of new loans and financing of tractors and tube wells
4. The agricultural bank shall be restructured
with a view to providing better services to farmers.
5. The package for corporate
farming shall be formulated and shall be implemented to gain the
benefits of large scale.
6. Private sector banks shall be encouraged to
lend to the agriculture sector.
7. Special reservoirs shall be
developed on each river to store the flood water in case of floods.
8. New canals shall be made from
the flood reservoirs and lakes of the proposed 5 dams to provide
water resources to the areas which depend on rainfall.
This package will go a long way to enhance farm
productivity and incomes of farmers. Since the majority of low income
groups are living in rural areas, improved agriculture performance
will impact positively on the economic lives of such people.
The manufacturing sector has enormous scope for the growth. The
sector has not responded to the incentives that were offered by
the current government, whereby under Mutual Benefit Coupon System
the duties on all items of raw materials shall be eliminated subject
to the conditions laid down under the MBC System. The MBC System
shall abolish all duties of capital goods, raw materials and afford
due protection to final products.
Availability of credit on profit and loss sharing
basis shall be offered to the private sector. The competitive sharing
ratio is the key to the growth of industrial sector. The BEDAR Government
shall maintain the fiscal stance to keep the cost of capital lower
and ensure increased availability of credit to the private sector.
Some of the proposed measures that BEDAR government shall take to
facilitate the industrial sector are as follows:
1. Removal of intervention of
different departments and agencies and liberalizing the working
of industrial sector. The visits by any department/agency shall
be pre-announced with appropriate notice.
2. Improve the enabling climate
for private sector by removing regulatory and institutional constraints.
3. Significant relief shall be
provided to industry by removal of all types of taxes and levies,
which would be helpful in reducing the cost of production and enable
our industries to provided cheaper products to consumers.
4. To meet the challenges of
new WTO regime, liberal import of machinery, shall be allowed via
duty free option. These measures will significantly improve the
global competitiveness of our industry by reducing the cost of doing
business in Pakistan.
5. To assist the industries to
meet the international environmental standards, effluent treatment
plants shall be established in all the major industrial estates
for which funding support shall be made out MBCS resources.
6. New textile, sports goods
and medical instruments cities shall be established that would provide
a modern industrial estate with all the utilities and export processing
7. Heavy engineering institutions shall be developed
to manufacture modern and hi-tech machinery which shall be helpful
in improving quality of finished products.
8. Food processing plants shall
be encouraged to be established in areas located nearby to fields.
Loans shall be provided on softer terms to incorporate plants so
that foreign exchange can be earned by exporting processed food.
9. Incentives shall be offered to encourage the
export of sea food.
10. Water treatment plants shall
be provided to industrial sector on softer terms and conditions
to avoid water pollution.
In this budget we have proposed a number of measures
both to reduce the burden of taxes on the agriculture and industrial
sectors as well as to provide relief to the common man. A very large
number of taxes have been either abolished or reduced to provide
cheaper machinery as well as raw materials to both agriculture and
industry. The development budget has been raised significantly which
will help to accelerate the growth process and create more than
5 million new jobs for our people. We are maintaining fiscal discipline
by continuously reducing non-development expenditure. The budget
will herald a new era of investment and growth in the country.
Further incentives shall be offered to stimulate
growth of private investment in SME, housing and agriculture sectors
all of which have the potential to create new jobs.
In order to increase private sector participation in the economic
development and to gain their confidence it is suggested that government
shall cease its involvement in import of basic necessities like
wheat, sugar, petroleum products etc. and shall allow private sector
to import any thing other than weapons, ammunition, narcotics, liquor
or any other item import of which is restricted by the government.
The government shall intervene if private entities
make a cartel or pool to drive the market prices and shall make
immediate arrangements to flood the domestic market with such things
by way of imports.
The budget estimates of BEDAR under Mutual Benefit Coupon System
together with budgetary performance for the last year are as follows:
In the budget 2016-17, a budget deficit of 4 %
of GDP was projected. We are pleased to mention and are confident
that projected performance on this important benchmark of fiscal
management shall be positive for the first time in the history of
our country. In view of the high growth target for next year, which
calls for a much higher development spending, and the fact that
a high degree of budgetary discipline has been already been achieved,
it is proposed to slightly relax the fiscal constraint.
Gross expenditure under Bedar Pakistan Budget for
the year is budgeted at Rs. 20,000.00 billion. Of this, Rs. 5,657.720
billion are provided for development expenditure, which represents
a significant increase in development expenditure for the current
year. It will be seen that while containing current expenditure,
we have substantially increased development spending.
We are conscious of the needs of country’s
defence which cannot be comprised for want of resources though such
resources are utilized with utmost responsibility and economy. For
the year, defence expenditure is budgeted at Rs.3, 000 billion to
cater the requirements of the Pakistan Forces and to conduct research
and development for ultra hi tech technology.
On the revenue side, during the year, total receipts
are estimated at Rs. 20,000 billion. Pakistan Monetary Fund (PMF)
performance is estimated at Rs 11000 billion. Other revenues are
estimated at Rs.9000 billion.
These above estimates indicate that while maintaining
fiscal discipline this budget has provided for investment and growth.
It will thus serve to consolidate the economic gains already achieved
and further the process of accelerated economic development. It
will create jobs, provide for improved health, education and population
welfare services and stimulate growth investment in the country.
The Government is cognizant of the fact that some
segments of the society are in need of special relief. Accordingly,
a number of relief measures have been adopted in this budget:
The Pay and Pension Committee had given its award some time ago.
It is the time to give relief to the employees and pensioners of
federal and provincial governments. Accordingly, the salaries and
pensions of federal/provincial government employees have proposed
1. Armed forces are responsible
for the defence of our homeland. Acknowledging their services the
following pay structure of armed forces personals is proposed along