LAHORE – The budget for the year 2012-13 must be focused on energy sector as the country’s economic revival hinges on availability of cheaper and uninterrupted power and gas supply.

This was the crux of the pre-budget seminar held at Aiwan-e-Waqt here on Friday. Almost all speakers called for immediate measures to bridge electricity demand and supply gap. The speakers included LCCI former SVP Abdul Basit, noted economist Dr Qais Aslam, Basmati Growers Association chairman Hamid Malhi and All Pakistan Anjuman-e-Tajiran’ president of his own faction Ashraf Bhatti.

The speakers said that government should focus on collection of direct taxes, substantial allocation of resources for mega hydel power projects, adopt austerity measures to cut down its expenditures and increase in revenue generation in the budget.

Dr Qais Aslam said that austerity should be the theme of budget document and for this purpose government should have to cut off unnecessary expenditures as excessive government borrowing was not only resulting in higher interest rates but also restricting availability of cheaper liquidity for the private sector.

He urged the government to broaden tax net by bringing agriculture and services sectors into the tax net. Public Sector Enterprises (PSEs) like Pakistan International Airlines (PIA), Pakistan Railways and Pakistan Steel Mills, generating a loss of Rs 400 billion annually should be managed professionally or be privatised to avoid the huge loss to national exchequer.

Abdul Basit, former LCCI SVP, recommended that sales tax on agricultural diesel engine shall be reduced in the same manner as it has been reduced on agricultural tractors from 16 percent to 5 percent. He strongly recommended that there should be absolute exemption of sales tax and custom duties on import of industrial raw material and plant and equipment to promote industrialisation and employment generation.

He said that government should also declare next year ‘energy generation year’ and focus on it in the federal budget.  He said the economic reforms were not possible in the coming budget due to election year. He said government might achieve revenue generation target due to massive increase in petroleum product prices. He said that due to this attitude, the stakeholders were not having trust in the government.

He called for restricting commercial as well as investment banks to enhance lending to manufacturing sector at least by 50 percent instead of loaning other sectors. In this way the manufacturing sector will have more chances to avail loans for setting up industry, he added. He demanded of the government to avoid double taxation in corporate sector to attract foreign investment in the country.

Hamid Malhi said that deduction continued in Rs800 billion Public Sector Development Programme (PSDP), announced in the budget 2011-12, which exposed the priorities of the government. He suggested the public-private partnership for infrastructure development. He said the GDP growth was declined due to the energy crisis. He demanded the government to allocate resources for energy generation projects, including mega dams, Iran-Pakistan gas pipelines and LNG projects. 

He said sales tax rate should be reduced adding that the budget deficit was 5.7 percent while government was increasing the tax rates to broaden the tax net.

He said economic realties should be considered in budget making. He said economic emergency should be declared as nothing would be achieved by keeping the public unaware of the issues. He said that 80 percent small farmers were always ignored in the budget. He said ground realties of the agriculture should be highlighted in the budget and policies would be evolved in accordance with that.

He said political parties should not do politics on economic issues and policies, rather work for the betterment of the public before the next election.

He said that Kalabagh Dam and Iran Pakistan gas pipeline projects were politicised due to which country was facing an energy crisis. He said industrialisation was also stopped. He said the debt burden was doubled during the last five years. He said the US and China also borrowed huge loans but spent on development of the country.

Ashraf Bhatti said that government should prefer economic revival and improvement in the law and order situation. He said the government should form a high-powered commission to identify the genuine reasons behind acute power shortage resulting in 15 hours power outages in the urban and 20 hours in the rural areas ruining the economy and pushing the industrial sector towards bankruptcy.

He said that new investment is very important for the economy of any country. “In a situation where local investors are unwilling to invest a single rupee—foreign investment is out of the question,” he said.