ISLAMABAD - Amid strong protest from Opposition, the PTI’s government on Friday presented its second federal budget for the fiscal year 2020-21 with total outlay of Rs 7.136 trillion by imposing no new tax but depriving government servants of annual increase in their salaries and pensions.

The incumbent government arguing reasons leading to extreme financial constraints and ongoing coronavirus triggered crisis, decided to take unpopular decision for not increasing salaries and pensions of the government servants. The decision for not increasing annual increase was taken after long time in the fiscal history of the country.

According to the main features of federal budget 2020-21, the total size of the budget for the next year is Rs7.136 trillion, with deficit of Rs3.437 trillion (7 percent of GDP).  The main strategy of present government is to provide relief to masses by not imposing any new tax, which it believes would help increasing the economic activities in the country.

The government also plans to create balance between expenditure in the head of corona crisis and budget deficit. It also decides to continue IMF program and deal with devastation of COVID-19. The government in its second budget also decides to allocate funds for ‘Naya Pakistan Housing Project’.

Rs2 billion allocated to support Afghanistan’s rehabilitation

Inflation will be brought down from 9.1pc to 6.5pc

GDP Growth target set at 2.1pc as deficit stands at 7pc of GDP

After non-stop sloganeering, Opposition walks out

Of the total, current expenditure for the next fiscal is budgeted at Rs6.345 trillion. The government has allocated Rs1.289 trillion for defence, Rs2.946 trillion for interest payment, Rs650 billion for Federal development budget, Rs470 billion for pension, Rs209 billion for subsidies and Rs476 billion for running civil government. In this budget, provinces would receive Rs2.874 trillion from center under National Finance Commission (NFC) award. The government, according to its plan, has set tax collection target at Rs4.96 trillion and non-tax collection target at Rs1.61 trillion

The opposition parties members holding colourful placards inscribed with ‘anti-people government, ‘Pakistan Steel Mills (PSM) Privatization unacceptable’, ‘Fulfil your promises, Mr Prime Minister!’ and other.

Ignoring repeated instructions of the Speaker, Opposition members kept chanting anti-government slogans including ‘Ali Baba- 40 chor’ till the middle of budget speech and later walked out from the proceedings.

Speaker National Assembly Asad Qaiser kept instructing the opposition members to avoid raising slogans and stay at their own seats.  Many of senior lawmakers form government and opposition including leader of Opposition in the national assembly Shehbaz Sharif, former prime minister/ PML-N’s MNA Shahid Khaqan Abbasi,  former speaker national assembly/ PML-N’s MNA Ayaz Sadiq, Federal Minister Sheikh Rashid and PML-N’s MNA Mariyam Orangzeb and some other did not participate in the budget session, as they were recently tested positive.

Giving the targets set for next fiscal year, Minister for Industries and Production Hammad Azhar said GDP growth target has been set at 2.1 percent, which remained negative four percent in the outgoing fiscal year. Current Account Deficit will be confined to 4.4 percent. The inflation will be brought down from 9.1 percent to 6.5 percent. The foreign direct investment will be enhanced by 25 percent.

While referring to the challenge posed by COVID-19 for the health sector, Azhar said Rs20 billion has allocated to improve the capacity of health institutions and production of health equipment with the aim to provide better health services and check diseases in the country. He said Rs5 billion has kept for reforms in education sector.

He said steps will be taken to introduce a uniform curricula and quality examination system as well as establish smart schools and bring the seminaries into the national mainstream. He said Rs30 billion has earmarked for bringing innovation in higher education sector with the aim to improve research and development in subjects such as artificial intelligence, automation and space technology.

The minister, ignoring anti-government slogans, informed the house that government increased budget of Ehsaas Programme to Rs208 billion for next fiscal year from Rs187 billion of outgoing year to help the poor segment of the society. He further informed that government has increased budget of Higher Education Commission (HEC) by Rs5 billion to Rs64 billion. Similarly, the government has allocated Rs30 billion for Naya Pakistan Housing Authority.

Federal Minister announced that government kept Rs55 billion for Azad Jammu and Kashmir, Rs32 billion for Gilgit-Baltistan and Rs56 billion for merged areas of Khyber Pakhtunkhawa. It has allocated Rs19 billion for Sindh and Rs10 billion for Balochistan, which is other than their share from NFC.

He said that government earmarked Rs25 billion for improving procedure of foreign remittances inflow.  Meanwhile, it has allocated Rs40 billion for Pakistan Railways, Rs2 billion for Kamyan Jawan programme, Rs13 billion for federal controlled hospitals in Karachi and Lahore, Rs1 billion for e-governance and increase the funds for helping artists to Rs1 billion from existing Rs250 million. The government has allocated Rs10 billion for agriculture uplift and controlling locust attack.

Azhar said that the government allocated Rs80 billion for the provision of electricity to the special economic zones and the projects to be executed with foreign funding. He said the government kept Rs69 billion for water projects to deal with severe water shortage.

The government this year will give special emphasis to the water related projects and in this connection 69 billion rupees have allocated. Ample resources have been allocated for big projects such as Diamer Bhasha dam, Mohmand and Dasu dams.

He said that government allocated Rs118 billion for the projects under National Highway Authority. In particular, sufficient resources have been earmarked for the CPEC-related projects including its western route. Similarly, Rs24 billion has earmarked for ML-1 and other projects of Pakistan Railways and additional funds of Rs37 billion for other projects of communication sector.

He said initiating e-governance, IT-based services and 5-G services will remain the focus of the government. An amount of Rs20 billion has allocated for projects in these sectors.  Around Rs6 billion kept to deal with the impacts of climate change, he said. He said Rs20 billion rupees set aside for the TDPs.

Around two billion rupees allocated to support the Afghanistan’s rehabilitation. To achieve sustainable development goals, an amount of Rs24 billion has been set aside while Rs12 billion will be spent for the development projects in agriculture sector to ensure food security.

The minister said the government is pursuing the policy of austerity in these difficult times. He said we are thankful to the Armed Forces of Pakistan for extending cooperation in the government’s austerity drive.

He said minimum tax on hotel industry has been reduced from 1.5 percent to 0.5 percent during the months for six months with effect from April. He said a mobile application had been introduced to facilitate salaried class to submit their tax returns, which resulted into an increase of 37 percent.

In relief measures, he said that upper limit for shopping without showing identity card has been increased from Rs 50,000 to Rs 100,000. The government also reduced duties on raw materials. He said import of dietetic food for medical purposes will be exempted from sales tax, while exemption on import of medical equipment has been increased for further three months.

The Federal Excise Duty (FED) on imported cigarettes and tobacco is being increased from 65 percent to 100 percent, while e-cigarettes and other substitutes of tobacco have also been included in this list.

To discourage consumption of caffeine based energy drinks, he said FED is being increased from 13 percent to 25 percent. The government also proposed to impose tax on double cabin Pick-Up vehicles as per other cars as wealthy people use these pick-ups as status symbol. It also reduced the FED on cement to Rs1.75 per kg on cement from existing Rs2 per kg.

The Minister said it was proposed that all persons and association of persons are allowed to deduct expenses from property income to provide a level playing field and to remove discrepancies.

He said it was proposed not to levy tax on cashing foreign remittances or transferring it to other banks. Azhar said it was proposed that one hundred percent additional tax is collected on school fees exceeding Rs 200,000 per year from persons who are not in Active Taxpayer List.

The Minister said as all banks do not have required system to deduct taxes on profits received by different persons, it has been proposed to collect withholding tax of 15 percent across the board on proceeds. He said it has been proposed to provide exemption to donations given to specific institutions with certain terms and conditions to ensure their monitoring. He said a proposal is to reduce duration for withholding tax on sale of immovable property to four years from existing five years.