From austerity to growth: Govt tables Rs8.5tr budget for FY21-22

Opposition gives tough time to Tarin who fumbles with speech

ISLAMABAD: Finance Minister Shaukat Tarin on Friday presented the federal budget for the fiscal year 2021-2022 in the National Assembly with an outlay of Rs8.5 trillion amid uproar from members of the opposition aimed at interrupting the budget speech.

Tarin, the third finance minister in as many years to present the budget for the Pakistan Tehreek-e-Insaf-led government, took the floor of the National Assembly while opposition members staged a protest. Many of them chanted slogans against the government, while many held placards criticising the budget.

Despite the uproar from the opposition benches, Tarin went through his speech comfortably but kept making fumbles which reflected that he did not go through the written speech.

The budget reflected transition of the country’s economy from austerity to growth as the federal government eyes growth and development in its third year.

Though the opposition benches continued chanting slogans but they never looked poised to create problems for the treasury benches, reflecting some behind-the-scenes understanding between the two sides not to cross the red-lines.

Leader of the Opposition in the National Assembly and Pakistan Muslim League-Nawaz President Shehbaz Sharif and Pakistan People’s Party Chairman Bilawal Bhutto-Zardari remained in the house during the budget proceedings. Both had a brief meeting at Shehbaz’s chamber in the assembly hall and decided to carry out joint protest against the budget.

Tarin kept going with his speech amid whistling and anti-government sloganeering. The opposition members also carried placards inscribed with anti-government slogans.

Prime Minister Imran Khan looked confident and composed and also played his cards smartly by taking his cabinet and coalition party lawmakers into confidence.

The session, which began exactly at 4pm, provided an insight into the government’s estimated expenditures, revenues, and how it aims to allocate funds for vital sectors of the economy.

Tarin said that Prime Minister Imran does not shy away from taking difficult decisions for the sake of the country.

“The current account deficit of Rs20 billion was converted to a surplus in April 2021, thanks to PM Imran’s sound economic policies,” said the finance minister.

Criticising the previous governments, Tarin said that the PTI-led government had to inherit a “mountain of circular debt amounting to Rs1 trillion” after coming to power, adding that the debt was accumulated due to botched policies.

“We made the [capacity] payments otherwise the country would have become a defaulter,” Tarin said, adding, “I am presenting you the real picture of the nation and to highlight our performance.”

The minister paid tribute to the PTI government for controlling the spread of the coronavirus pandemic and taking steps to ensure businesses did not suffer massive losses in the country due to the lockdowns.

“The government, through the Ehsaas Emergency Cash Programme, provided cash to 12 million people across the country,” he said and added that the foreign remittances had increased in Pakistan to record levels which are expected to rise to $29 billion by the end of this month.

“This is a proof of the love that overseas Pakistanis have for Prime Minister Imran Khan. The economy has grown and as a result, more people had secured jobs over the years. The finance minister said that despite the coronavirus pandemic, the per capita income had increased by 15 percent,” he added.

Speaking about the revenue collection, Tarin said revenues have grown by 18 percent crossing Rs4,000 billion, adding that critics had no response to the government’s impressive performance in this regard.

The finance minister announced that the PTI government has steered the country towards growth, adding that almost every sector has seen a boost.

“Pakistan is witnessing a historic growth in the agricultural sector and apart from cotton, all other crops saw extraordinary increases.”

He said that growth in the services sector helped improve numbers pertaining to poverty and had also played a major part in the generation of wealth in Pakistan.

Tarin said that Pakistan had become a food deficient nation, thanks to the policies of the previous governments.

“We will have to become a food sufficient nation and for this, we will have to provide lots of incentives to farmers,” he said and added that the country will need to bring back administrative controls which were removed during the Musharraf era.

Tarin said that the government had kept the growth target at 4.8 percent for the fiscal year, adding that the government will not leave the poor and the destitute at the mercy of inflation.

“Never in our economic history, were poor people able to realise their dreams,” he said, adding that PM Imran wanted to uplift the poor. He that said the government had decided to provide interest-free loans of up to Rs500,000 to the poor.

Speaking about the importance of boosting exports so Pakistan can earn foreign exchange, the finance minister said that the government was focused on the creation of economic zones to facilitate industries, create jobs and boost exports.

The minister announced that Pakistan has introduced mortgage financing for the first time ever, adding that the passing of the foreclosure law had enabled banks to start lending to people.

He announced that the Public Sector Development Programme will be increased from Rs630 billion to Rs900 billion to counter the adverse impact of the coronavirus pandemic.

Tarin announced a development package for 14 districts in Sindh, adding that these will focus on improving education, solving the province’s water issues and carrying out development in these districts.

The minister announced that the government has slashed sales tax on locally manufactured cars from 17 percent to 12.5 percent.

He announced the government’s initiative to earmark $1.1 billion to procure coronavirus vaccines, adding that the government aimed to vaccinate 100 million people by July 2022.

Tarin said that the government was introducing third-party audits which would thwart the Federal Board of Revenue harassing any individual or business entity. He said that those who are found guilty of evading taxes or deliberately hiding their income will be fined severely.

“The rich will be asked to pay taxes in accordance with their wealth,” he said, adding that the salaries class will not be burdened with additional taxes.

The finance minister said that the track-and-trace systems will be strengthened so that undocumented trade does not flourish in the country.

Tarin said that the government was slashing withholding taxes on mobile phones, adding that it will be reduced to 10 percent at first and then 8 percent later.

He said that the government was intent on eliminating the menace of corruption, adding that Pakistan Customs was focused on curbing the sale of illegal trade.

“The western borders of the country and the coastal strips should be made safe so that these practices end,” he said.

Tarin said that the total expenditure budgeted for next year stood at Rs8,487 billion — almost 19 percent higher than the last year’s budget size of Rs7,136 billion.

He recalled that when the PTI came into power, the economy had gone almost bankrupt. “Everyone knows we were under the burden of so many loans,” he said, adding that the current account deficit was at a historic high of $20 billion.

“During this time, exports were contracting and there was over a 100 percent increase in imports,” Tarin added. “Despite this context, a 5.5 percent growth rate was harped on about.”

The finance minister said that the PTI government had to do all repayments to save Pakistan from default.

“It took time to stabilise the economy due to the pandemic but we achieved our targets. The $20 billion current account deficit has been turned into a surplus of $800 million while a 3.6 percent primary deficit reduced to 1 percent,” said the minister, adding, “After many efforts, the government has been successful in putting the economy on the path of development.”

The finance minister announced that for FY22, the government had set GDP growth target at 4.8 percent.

“We hope growth will be even higher than that due to the measures we have taken in this budget. Like in the past, we will not leave the weak segments of our society at mercy of the trickledown effect.”

He said that in the next couple of years, the government wants to increase growth to 6-7 percent.

“Burgeoning prices of locally manufactured small cars is a major concern for low-earning families. It is proposed that small cars up to an engine capacity of 850cc may be exempted from value-added tax besides reducing sales tax rate on these from 17 percent to 12.5 percent,” Tarin said.

“To support electric cars, the government of Pakistan wants to support manufacturing of electric cars for which a lot of tax relaxations are being given.”

He said that Pakistan witnessed an “unprecedented” rise in online market sales during the Covid-19 lockdown. “However, the contribution of these e-commerce platforms to the economy is minimal, hence it is proposed to bring e-commerce transactions into the sales tax net,” he added.

The minister also announced that a tax exemption is being given on ‘Auto Disable Syringes’ with an aim to minimise the impact of deadly diseases like Covid-19.

Federal excise duty on telecommunication is being reduced from 17 percent to 16 percent, he said.

Later, National Assembly Speaker Asad Qaisar adjourned the session for Monday at 4pm.

Earlier, as Prime Minister Imran arrived in the parliament building for the session, he was asked by a reporter whether the budget will be people-friendly. “Everyone will be happy (with the budget),” he replied.

Prior to the budget session, Bilawal chaired a meeting of the PPP parliamentary committee to decide the party’s strategy for the session.

The PPP chief directed his party’s lawmakers to give a “tough time” to the government, saying the government had devised an “anti-poor”, “political” and “selected” budget.

The federal cabinet also met in PM House and approve budget proposals. Prime Minister Imran presided over the meeting.

Mian Abrar
The writer heads Pakistan Today's Islamabad Bureau. He has a special focus on counter-terrorism and inter-state relations in Asia, Asia Pacific and South East Asia regions. He tweets as @mian_abrar and also can be reached at [email protected]

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