Pragmatism and concern for the poor are the salient features of the Federal Budget 2014-15 announced the other day by Finance Minister Ishaq Dar. At no point in the budget speech, the Minister has tried to draw a rosy picture of ‘all okay on all fronts’ as has been usual with many of our finance ministers of the past.
Even at the first, cursory look, the budget gives the impression of a realistic outlay of incomes and receipts of a country where the government has taken it upon itself to try in dead earnest to fulfill all the state obligations towards its citizens. That means the protection of the masses against impoverishment, food insecurity and against homelessness and despondency. Finance Minister Ishaq Dar has himself pinpointed in his post-budget press conference that 90 million people live in this country below the poverty line. “They are our target.” He aimed to reach to the poorest of the poor.
His declaration explains that the government is fully determined to take up this formidable challenge that will require running of the national economic engine at full throttle. The captain of the team, Prime Minister Nawaz Sharif and his deputy, Finance Minister Ishaq Dar, seem to have made all the calculations and drawn all the maps for this journey, come what may. It is like a package of well crafted action plans that are based on untiring efforts for tapping of national and international resources, both financial and technical and working daily on contemplating plans to put in place the projects that aim at enhancing productivity and energy resources besides increasing job opportunities.
The second budget presented by PML-N government is clearly understandable to even to a man with ordinary prudence because the targets are exactly in accordance with the people’s needs, although lot of resources and hard work are required to meet these targets, given the abysmal economic legacy inherited from the former governments. Take into consideration the increase in assistance under Income Support Programme (that has been known as BISP). Half a million families will benefit from BISP, the allocation of which is being enhanced to Rs.118 billion, representing approximately 200% increase since 2012-13; In the new budget, assistance under BISP has been increased by 50%. Another pro-poor plan is PM’s Low Income Housing Scheme. Provision of Rs.6 billion has been kept in the budget for this scheme and a programme titled Low Cost Housing Guarantee Scheme has been specially designed by the government to enable the poor to have their own houses. Banks and financial institutions will provide loans of up to Rs.1 million. Pensioners, whose vast majority belongs to the poor segments, have been given additional relief as the minimum limit of Rs. 5,000 per month has been enhanced to Rs. 6,000 per month. Likewise, labour class has been taken care of by way of increase from minimum wage of Rs. 10,000 to Rs. 11,000.
Small farmers whose number comes to millions, belonging to the low-income class, have also been considered for the first time as the government is introducing Credit Guarantee Scheme in order to encourage banks for financing the unbanked small farmers. Government, through the State Bank of Pakistan, will provide guarantee to commercial, specialized and micro finance banks for up to 50% loss sharing. This scheme, combined with the Reimbursement of Crop Loan Insurance Scheme (CLIS) Premium will bring about a big economic turnaround in the lives of the farmers. In the initial stages, 0.7 million farmers/households will benefit from this scheme whose total budget cost is Rs.2.5 billion. Among others, these pro-poor relief measures will also help the suffering lot to a great extent. Examples: reduction in the tax liability of disabled persons having income up to Rs.1 million by 50%, assistance to under-privileged students, provision of funds from Bait-ul-Mal for the destitute, discouragement of artificial price hike and governmental action against hoarders. Even majority of government servants either belong to middle class or lower middle class. By providing them 10% ad-hoc relief, the government has taken care of the welfare of the working class. Side by side with these socio-economic protection programmes, the government has taken practical steps in the direction of mega development and energy projects including water sector projects. And, as PM Nawaz Sharif exuded determination during his Nandipur plant’s inauguration speech, the two giant projects of hydel power generation, namely Diamir Bhasha Dam and Dasu Dams of (total capacity: 9,000 MW of cheap electricity) would have completed several phases of their construction during the incumbency of present PML-N government. This is a major breakthrough. Bhasha Dam will also store 4.7 MAF of water. During the current year a sum of Rs.205 billion will be invested in water storage and energy sector that, inter alia, include projects like Neelum-Jehlum Hydro Power Project, Diamir-Bhasha Dam and Hydropower Project, Tarbela Fourth Extension Project , Thar Coal Gasification Project, Chashma Civil Nuclear Power project, Two Karachi Nuclear Coastal Power Projects with Chinese assistance, Combined Cycle Power Projects at Nandipur and Chichoki Malian, transmission network to evacuate power from Wind Power Projects in Jhimpir and Gharo etc, etc.
And yet another dream that is coming true is the mega infrastructure project i.e Karachi-Lahore motorway that would usher in immense development and prosperity because of its wide scope in linking not only the highly industrialized cities of the country but also giving fast track access to different cities to other parts of the world through Karachi, Lahore and Pindi-Islamabad-Peshawar (ultimately the motorway will extend from Karachi to Peshawar and then to CARs and from Karachi onward to other seaports). PM is absolutely right in his assertion that an Economic Corridor is in the process of being built that would transform this region into a hub of growth and prosperity. In focus are some other measures that are highly appreciable. One such measure is making the policies business friendly. As has been repeatedly explained by the government, while it is seriously concerned over the dismal figure of merely 0.8 million tax payers in the population of 180 million, it has decided that tax collections are not to be made with harassment under any circumstances. Already the government has achieved over 16% increase in tax collections as compared with the previous collections.
In all, the budget is a combination of ground realities, determination to fight all odds coming in the way and pragmatism. The projected aims and objectives, as envisioned in this budget, which are equally encouraging are: vigorous promotion of agriculture sector, special incentives in textile and agriculture sector, gradual abolition of SRO culture, establishment of EXIM Bank of Pakistan with authorized capital of Rs.100 billion to enhance export credit and to reduce cost of borrowing for exporting sectors on long term basis and help reduce their risks, 74 projects of motorways, highways, bridges, tunnels, and regional roads for which a sum of about Rs.113 billion has been kept in the budget, Islamabad-Murree-Muzaffarabad Rail Link, sizeable allocation of Rs.20 billion for 188 projects of the Higher Education Commission, reduction in sales taxes on tractors from 16 % to 10 %, promotion of tunnel farming, gradual rise of GDP growth to 7.1% by FY 2016-17, ensuring the single digit status of inflation, rise to 20% of investment to GDP ratio, reduction in fiscal deficit to 4% of GDP by 2015-16 and increase in Tax to GDP ratio to 13% by the year 2016-17.
One of the best news in this whole scenario is that Pakistan’s foreign exchange reserves will be increased to more than $22 billion at the end of 2016-17. And people are also happy that Prime Minister’s Health Insurance Scheme will at least enable the downtrodden class to get themselves medically treated with honor and comfort even without adequate resources at their disposal.
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