ISLAMABAD - The PPP-led government presented its fourth federal budget on Friday without a single concrete measure to overcome energy crisis, price hike or unemployment the major problems facing the country. A routine set of figures were unveiled in the National Assembly amid persistent noises by the opposition, including some erstwhile allies, who chided the government for being devoid of any future vision to better the economy or reduce the countrys dependence on foreign assistance, which many say should have been the top priority at a time when donors are reluctant to open their purses because of the poor credibility of the rulers. Amid intense sloganeering, a trusted aide of former military ruler Pervez Musharraf, bespectacled Finance Minister Dr Hafeez Sheikh unveiled the federal budget for the fiscal year 2011-12 with an outlay of Rs 2.76 trillion (up 14.2 percent) and a deficit of Rs 850 billion that makes 4 percent of the GDP. The actual deficit during the next financial year would amount to Rs 975 billion whereas the government anticipates a surplus of Rs 125 billion from the provinces to limit the deficit to Rs 850 billion. In a step likely to affect the common people the most, the federal government has decided to cut subsidies, or the relief for the masses, on various items to Rs 166.5 billion for 2011/12, compared to Rs 395.8 billion last year (down Rs 229.3b). In the budget document, the government included grants and transfers of Rs 295 billion under the subsidies head, which could at best be called a deliberate error to cover the cut in subsidies. Analysts believe this step alone would cause another wave of hike in the prices of edibles and other essential commodities, providing ample political ammunition to the impatient opposition to mount pressure on the government to quit. On the other hand, the minister announced an increase in the pays and perks of state employees and pensioners. He said government employees would get a pay raise of 15 percent while pensions would also go up by 15 to 20 percent. This measure would cost the government Rs 25 billion of the current expenditures. Hafeez announced that the government also proposed a 25 percent increase in conveyance allowance for government employees up to grade 15, including armed forces employees. He said that there is also a proposal to increase all allowances of the government employees up to grade 15 by merging their 50 percent ad-hoc relief into pay scales granted last year. He announced that the current expenditures during the financial year starting July 1, 2011 would amount to Rs 2.315 trillion, which with the addition of development budget of Rs 452 billion would make the total federal outlay of Rs 2.767 trillion. A hefty amount of Rs 1.034 trillion has been earmarked for debt servicing, with Rs 791 billion for interest payments and Rs 243 billion for repayment of foreign loan. Allocation for the defence affairs and services is Rs 495 billion (compared to Rs 442 billion last year) while another sizable amount of Rs 96 billion goes to the pensions for the retired employees of the armed forces. An amount of Rs 203 billion has been earmarked for running of the civil administration, with lions share going to the security sub-head. The finance minister claimed that the government has proposed no new tax except for the withdrawal of all exemptions given on the General Sales Tax. He also sought to boast about one percent downward revision of GST from 17 percent to 16 percent that was enhanced last year for flood relief. This step would cause a loss of Rs 35 billion to the FBR. Value-added tax on commercial importers has however been increased. With downward revision of one percent in GST, the minister announced the government would do away with all the special excise duties in the next couple of years as it has abolished 395 of them in addition to abolishing the flood tax. Similarly, he announced that the government has also increased the taxable income threshold from Rs 300,000 to Rs 350,000 in order to provide relief to the low-income people. This would cause a loss of Rs 800 million to the FBR. In the federal development budget, the Public Sector Development Programme (PSDP) allocations amount to Rs 300 billion while the provinces share in the PSDP stands at Rs 420 billion. Combined with Rs 10 billion of ERRA, it makes the total PSDP Rs 730 billion. The government has allocated Rs 152 billion for development loans and grants to the provinces in addition to other development expenditures to the tune of Rs 97 billion. The total federal gross receipts have been estimated at Rs 2.732 trillion, of which Rs 1.203 trillion would be transferred to the provinces, leaving net revenue receipts of Rs 1.529 trillion. Of the total tax revenue of Rs 2.074 trillion, the Federal Board of Revenue (FBR) has been tasked to collect Rs 1.952 trillion during the year ending June 30, 2012. The finance minister pointed out that the government has identified 2.3 million people who would be brought into the tax net, adding that 750,000 out of them would be issued notices within three months. 71,000 of them have already been issued notices that would help generate Rs 3 billion. FBR officials informed the media that the Tax Department focussed on administrative reforms in the upcoming financial year in order to reach the target of Rs 1.952 trillion against the revised target of Rs 1.588 trillion of the outgoing fiscal year. They were of the view that Rs 254 billion would volume through nominal growth rate, including GDP growth and inflation rate, while Rs 70 billion would generate through administrative reforms and new taxation measures. The revenue measures in sales tax would generate Rs 31.250 billion, as the government has eliminated several tax exemptions and zero ratings as put earlier. The government has eliminated exemption of sales tax on defence stores at import and local supply, and this would generate Rs 10 billion. Similarly, revision in the upward limits of duty slab to enhance the burden of Federal Excise Duty on locally produced cigarettes, would generate Rs 9 billion. The FED on cement has been reduced by Rs 200 per metric ton while the government has not withdrawn duty on luxury vehicles, firearms, chaliya, sanitary ware and tiles. Similarly, withholding tax on debits from bank accounts has been reduced to 0.2 percent from 0.3 percent. Another report said that for defence employees the pay increase of 17 percent has been proposed. The minister said the government has not imposed agri tax, which was one of the most crucial subjects in the run-up to the budget. He said that for the state employees of grade 20 to 22, the government has proposed compulsory monetisation of their transport facility. He vowed to bring inflation down to single digit and enhance resources to meet development requirements for the socio-economic development of the country. The minister said the Federal Excise Duty (FED) on soft drinks has been reduced to 6%. We will use Utility Stores to bring relief to the people. The PSDP will focus on completing existing programmes and working on new programmes. He said Rs 50 billion has been allocated for the transport sector. We have set aside Rs 28 billion for Gilgit-Baltistan, Azad Jammu and Kashmir. The minister said the federal government has set aside Rs 40 billion for health and education, despite these being provincial subjects. It is learnt that Rs 14 billion have been allocated for the Higher Education Commission (HEC) while Rs 40 billion have been allocated for the National Highway Authority (NHA). Hafeez congratulates the prime minister and the opposition leader amid slogans from the opposition. Today, Pakistan is one where democracy has flourished, he said. When the minister said forex reserves were more than $17 billion and the government would try to maintain growth at 7% for a steady period, sloganeering by opposition members intensified. The speech was barely audible due to booing by the opposition, who shifted between slogans to random shouting. Members of the opposition shouted: Jhoot bolna band karo; Load shedding band karo; and Amreeki ghulami naa manzoor. In the PSDP break-up, the government has earmarked a sum of Rs 36.13 billion for 57 ongoing and 13 new schemes for Water Sector. An amount of Rs 32.86 billion has been proposed for ongoing projects and Rs 3.27 billion for new schemes. Rs 6 billion has been allocated for Raising of Mangla Dam including resettlement and Rs 1 billion each for Satpara, Gomal Zam, Winder, Ghabir, Naulong and Darwat dams, Lower Indus Right Bank irrigation and Drainage Sindh and Balochistan Effluent Disposal into RBOD. An amount of Rs 1.5 billion each has been specified for Kachhi Canal (Phase-I) and Rainee Canal (Phase-I). A sum of Rs 1 billion has been earmarked for new schemes, including Nai Gag Dam, Rs 700 million for Hingol Dam and Rs 500 million for 100 small dams in Balochistan. Under the PSDP, no new projects for the Ministry of Petroleum and Natural Resources have been announced. The ministry has been allocated only Rs 149.723 million for its seven ongoing projects. According to the PSDP, the allocations for the ongoing schemes include total of Rs 43.340 million for the construction of Petroleum House, G-5 Islamabad, Rs 12 million for strengthening and capacity building of Mineral Wing, Rs 38.676 million for upgradation and strengthening of Geosciences Advance Research Laboratories, GSP Islamabad, Rs 47.457 million for Accelerated Geological Mapping and Geochemical Exploration of the Outcrop Area of Pakistan, Rs 0.75 million for review and upgrade of National Mineral Policy, Rs 5 million for National Coal Policy and Rs 2.5 million for Tharcoal Gasification District Tharparkar, Sindh. The Ministry of Foreign Affairs has secured an allocation of Rs 285 million in the PSDP for the completion of on-going schemes. These include Rs 145 million for the construction of High Security Block at Ministry of Foreign Affairs and Rs 140 million for its furnishing. The above-mentioned two projects will be completed at a cost of Rs 800 million, with Rs 605 million for the construction and Rs 195 million for furnishing of the High Security Block. The expenditures incurred on the construction of Security Block as well as its furnishing till June 2011 were Rs 459.136 million and Rs 6.627 million respectively. The government has allocated Rs 744.34 million for various projects of the Ministry of Ports and Shipping in the PSDP 2011-12. The allocated amount will be spent on the three ongoing projects. Rs 27 million have been earmarked for Gwadar Port Civic Centre, Gwadar, Rs 700 million for the construction of Eastbay Expressway to link Gwadar Port with the national road link and Rs 17.343 million for the stock assessment survey programme in EEZ of Pakistan through chartering of fisheries research vessel and capacity building of MFD, Karachi (Ports and Shipping). The government has earmarked Rs 1.45 billion under PSDP for the ongoing schemes of Defence Production Division for the year 2011-12. According to details, Rs 1.08 billion have been allocated for installation of ship lift and transfer system, associated machinery and equipment to provide docking and repair facilities to surface ships, submarines and commercial vessels. The estimated cost of the scheme is Rs 3 billion out of which Rs 1.6 billion is expenditure up to June 2011 while Rs 1.3 billion will be thrown forwarded from July 01. Moreover, Rs 365.3 million have been allocated for civil works for upgradation of Karachi Shipyard and Engineering Works Limited. The estimated cost of the project was Rs 816.3 million out of which Rs 451 million is the expenditure up to June 2011 while Rs 365.3 million has been allocated for the fiscal year 2011-12. Another report based on the budget document said that due to the different measures proposed by the government in the budget, the prices of medicines, sugar, cement, shampoo, beverages and audio cassettes would go down. The government has also given an incentive to the firms joining the tax net. Such firms would be given a tax concession (or credit) of 15 percent, up 10 percent, in the year joining the tax net.