In Pakistan, every federal budget has been announced by Pakistani federal government. Every Pakistani hopes that federal budget should be friendly and provides economic relief to them. Similarly, this year again Federal Budget 2012-2013 will be presenting by Federal Finance minister. On 1st June 2012, the Federal Minister of State for Finance Mr.Abdul Hafeez Sheikh presented the federal budget for the year 2012-2013. We first discuss the schedule representation of this budget, and then its salient features will be discussed.
BUDGET AT A GLANCE FOR THE YEAR 2012-2013
|Total Outlay||Rs: 2.96 trillion|
|Fiscal deficit||4.7 percent|
|Targeted GDP||4.2 percent|
|Inflation Rate||11-12 percent|
|Defense affairs and Services||Rs: 545 billion|
|National Development Budget Allocation||Rs: 873 billion|
|Energy crisis Budget Allocation||Rs: 183 billion|
|Increase in pay and pension for government servants||20 percent|
SALIENT FEATURES OF THE BUDGET 2012-2013
- The total size of the budget is Rs.2.96 trillion. The running or current expenditures are Rs.826.502 billion. Out of such expenditures Rs.530.114 billion have been specified for general public services. Rs.545 billion is for defense services.
- The size of the developmental budget is Rs.873 billion out of such amount Rs.536 billion will be spent by Federal government and Rs.337 billion by Provincial government.
- The government will raise its resources from tax and non-tax sources. Their detail is as: Rs.206 billion through Income and Wealth Tax; Rs.474 billion through indirect taxes like Sales tax, Excise duty and Custom duty. The non-tax receipts will be of Rs.194.762 billion. The custom duties will be yield Rs.121 billion out of Rs.474 billion. While the Excise duties will give rise to Rs.53 billion and sales tax will be Rs.294 billion.
- The CBR tax will be raise to Rs.690 billion whereas the non-CBR tax sources will be raise Rs.42.638 billion. The non-tax revenue resources will yield Rs.194.762 billion. Thus the CBR, non-CBR taxes and non-taxes sources will be amount Rs.927.400. After giving the share of provinces which is Rs.284.319 billion, the net revenue receipts of the government will be Rs.643.081 billion.
- The net capital receipts of the government will be Rs.50.556 billion while the government will get Rs.212.371 billion from external sources.
- For public sector development program, the provinces will raise Rs.337 billion from their own sources. The government will get Rs.30.652 billion from provinces against the amount lent Rs.20 billion will be raised through privatization. Thus the total revenue raised by the Federal government will be Rs.1098.502 billion. The detail of such revenues is as: Net Federal receipts is Rs.643.081 billion, Net Capital receipts is Rs.50.5569 billion , External sources is Rs.212.371 billion, Self Financing of PSDP by provinces is Rs.43.801 billion, Recovery from provinces is Rs.30.652 billion , Bank borrowing is Rs.98.040 billion and privatization is Rs.20 billion.
- In the budget Rs.301 billion has been unmarked for the payment of loan and interest charges, both for the payment of domestic loans and interest charges as well as foreign loans and interest charges. The defense expenditures are of Rs.223.501 billion, the general public services and expenditures are Rs.503.114 billion. Thus the total sum of non-developmental expenditures is Rs.826.502 billion.
- In the budget it has been decided to remove sales tax on stationary items. It means that the GST refund system in textile sector has been done away with. It is a big way for freeing the export sector from the sales tax regime. This will help the textile exporters to compete with other countries in the WTO era. It will also eliminate corruption in the form of fraudulent refunds obtained on bogus exports.
- Government employees would get 20% increase in salaries from 1st July 2012. Likewise, the pensioners would get 20% increase in pensions. The increase in pay and pensions would cost the government additional Rs.25.5 billion. The total increase in salaries will be from 23% to 29%, while the pay scale increase will be 20%. The government servant pay scales have been revised in the light of the pay and pension committee. The previous dearness allowances have been frozen.
- The upper limit of income tax for senior citizens has been enhanced to Rs.400000. The teachers and researchers tax exemption limit has been enhanced from 50% to 75%. The banking, public and private companies’ corporate tax rates have been reduced to 38%, 35% and 37% respectively. The reduction of 1% tax is allowed to the companies for the enlistment of companies on the stock exchanges. This step has been taken to encourage enlistment of the companies on the stock exchanges. The profit on investment up to Rs.150000 in national saving schemes is exempt from withholding tax. However, government has imposed 0.1% withholding tax on the withdrawals of above Rs.25000 from the banks. The insurance sector has been exempt from capital value tax.
- In federal budget 2012-2013, it has been proposed to reduce the Tariff lines on Agricultural sector. But along with this it has also been kept in view that it should not have any impact on the protection given to the fisheries, poultry and diary. Moreover, the custom duty on phosphate fertilizer has been reduced. On the other hand, 5 percent duty on Urea fertilizers will also be removed because of increasing demand. Because of agricultural development, the demand and requirement of tractors is also increasing but the domestic production is not sufficient. Therefore, it has been decided to reduce the custom duty on imports of tractors from 20 percent to 15 percent.
- Lastly, this federal budget provides 20 percent increase in basic salary of government servants. Moreover, some finance part of budget also allocated to Benazir Income support program. This budget allocation of Benazir Income Support program for those people who use the card of Benazir Income Support program.
CRITICAL ANALYSIS OF THE BUDGET 2012-2013
- Abolition of sales tax and refunding of the duty draw backs is a good step. It will not only remove the corruption but will make our exports more competitive in the world market.
- Most of the excise and custom duties have been removed in the respect of stationary items. This will have the effect of increasing the level of investment as well as growth in the country. Thus it is a business friendly budget.
- The salaries and pensions of government employees have been increased. This will give enough relief though not satisfactory. Again, the income tax rates have been lowered. This will also benefit the employees, teachers, researchers and senior citizens. But we talk about the pensions, and then there is little increase in pensions such as 30 percent to 36 percent. In this recession period, 30 percent increase in pension is not affordable and satisfactory.
- The budget is also accorded a budget of the rich, as it done nothing to change the lot of the poor. It still depends upon the Tricked Down economics. Again, the real estate sector has not been brought in tax net. Accordingly, the rich will go on getting rich and the poor will get poor making the issue inequalities more acute.
On the whole federal government who play a special role in the formulation of economic budget is not just confined to preparation of the budget but they are also responsible to devise economic policies which could provide favorable atmosphere for the operation of the plan. As, economic budget plays an important role in economic planning, they provide fuel to the engine of the economic development.
Therefore, such budgets should be put forward which would make the citizens feel that they are fully bale to pave a path for them for a better future and should work much harder for the welfare and development of the country. In the final conclusion, we hope that this federal budget 2012-2013 will surely bring economic relief to Pakistani people. If we review the federal budget we come to conclude that this budget only provide economic relief to Pakistani government employees and civil servants.
The prices of all commodities still same and middle class person still face the problem of energy crisis, electricity bills and inflation. We hope that one day sincere and devoted Pakistani federal government who will surely bring friendly federal budget for Pakistani people. Because, today it is very important for every Pakistani especially middle class person to get economic relief. The reason is that price of every product gets rapidly high and increase.