ISLAMABAD:
The Nawaz Sharif government is going to present a Rs3.9 trillion federal
budget for 2014-15 on Tuesday, which is based on foreign inflows and an
ambitious revenue target of Rs2.8 trillion.
A source close to the finance minister said the budget would be of 3.9 trillion rupees.The revenue generation will depend mainly on withdrawal of many SROs, tax exemptions and over Rs530 billion new taxes and administrative measures.
The tight budget deficit target of 4.8 percent will not provide the government enough fiscal space to stimulate the economy and achieve the GDP growth target of 5.1 percent.of SROs, so that the industrial growth could not be impacted.
For the common man and the poor, the federal budgets in Pakistan have now become irrelevant as oil, gas and electricity prices, which have instant impact on inflation and kitchen items, have been linked to international prices and are regulated by the regulatory authorities.
However, one thing in every budget affects the masses and that is the increasing incidence of indirect taxation.And according to the vibes emanating from the corridors of power for the coming budget, the volume of indirect taxation is also feared to further increase, thereby, making the lives of masses more miserable as the government is not inclined to take solid steps to increase the volume of direct taxes.
This time the government will have to spend a mammoth amount of Rs1.347 trillion on debt servicing alone.The government has decided to come up with the defence budget of over Rs700 billion, which is feared to increase keeping in view the developments taking place in neighbouring countries.
The federal government, which will this time give a hefty amount Rs1.73 trillion to provincial governments from the divisible pool under the NFC Award, should seek financial share from the federating units to cope with the expected increase in defence expenditure as all the provinces are bordering units.
Under the expenditure side, the government is likely to allocate Rs215 billion for pensions and Rs285 billion for the federal government employees. The government has incredibly reduced the subsidies to Rs229 billion, meaning that power tariff will increase and masses will not be able to get solace in the next budgetary year.
But in view of the expected campaign by the main political parties against the government, which may gain momentum after the holy month of Ramazan, the government will be left with no option but to increase the subsidy to appease the masses.
So the exercise to drastically cut the subsidy may end up going nowhere. The government has also decided not to allocate any amount in the next budgetary year to cope with the circular debt. This shows that the government will not spare any one who will be responsible for the emergence of the circular debt, but what about the current circular debt that has increased to Rs350 billion.
Coming to the uphill task of revenue target of Rs2.8 trillion, the government seems to be trapped under the NFC Award.
The previous governments, including the Nawaz government, have never achieved any revenue target so far and this year the sitting government has revised downward its revenue target for the outgoing financial year and has reportedly halted Rs100 billion refunds of many business establishments just to perk up the stats.
However, the target for the next budgetary year is Rs2.8 trillion and independent economists are of the view that the government even with utmost efforts will be able to collect not more than Rs2.6 trillion.
The government has already approved a whopping Rs1.310 trillion development budget for 2014-15 against Rs1.150 trillion allocated for the current financial year. Out of Rs1.150 trillion, about Rs660 billion is likely to be spent by the end of the current fiscal. The provinces could not spend on their development schemes mainly because of their inability to spend and late release of funds.
On top of that when an ambitious development budget is announced, the slippages start appearing from that particular day owing to which the whole development budget gets compromised and the governments find it easy to cut these budgets to achieve the deficit target.The Nawaz government, in the ongoing financial year, has already slashed the development budget by Rs100 billion.
A source close to the finance minister said the budget would be of 3.9 trillion rupees.The revenue generation will depend mainly on withdrawal of many SROs, tax exemptions and over Rs530 billion new taxes and administrative measures.
The tight budget deficit target of 4.8 percent will not provide the government enough fiscal space to stimulate the economy and achieve the GDP growth target of 5.1 percent.of SROs, so that the industrial growth could not be impacted.
For the common man and the poor, the federal budgets in Pakistan have now become irrelevant as oil, gas and electricity prices, which have instant impact on inflation and kitchen items, have been linked to international prices and are regulated by the regulatory authorities.
However, one thing in every budget affects the masses and that is the increasing incidence of indirect taxation.And according to the vibes emanating from the corridors of power for the coming budget, the volume of indirect taxation is also feared to further increase, thereby, making the lives of masses more miserable as the government is not inclined to take solid steps to increase the volume of direct taxes.
This time the government will have to spend a mammoth amount of Rs1.347 trillion on debt servicing alone.The government has decided to come up with the defence budget of over Rs700 billion, which is feared to increase keeping in view the developments taking place in neighbouring countries.
The federal government, which will this time give a hefty amount Rs1.73 trillion to provincial governments from the divisible pool under the NFC Award, should seek financial share from the federating units to cope with the expected increase in defence expenditure as all the provinces are bordering units.
Under the expenditure side, the government is likely to allocate Rs215 billion for pensions and Rs285 billion for the federal government employees. The government has incredibly reduced the subsidies to Rs229 billion, meaning that power tariff will increase and masses will not be able to get solace in the next budgetary year.
But in view of the expected campaign by the main political parties against the government, which may gain momentum after the holy month of Ramazan, the government will be left with no option but to increase the subsidy to appease the masses.
So the exercise to drastically cut the subsidy may end up going nowhere. The government has also decided not to allocate any amount in the next budgetary year to cope with the circular debt. This shows that the government will not spare any one who will be responsible for the emergence of the circular debt, but what about the current circular debt that has increased to Rs350 billion.
Coming to the uphill task of revenue target of Rs2.8 trillion, the government seems to be trapped under the NFC Award.
The previous governments, including the Nawaz government, have never achieved any revenue target so far and this year the sitting government has revised downward its revenue target for the outgoing financial year and has reportedly halted Rs100 billion refunds of many business establishments just to perk up the stats.
However, the target for the next budgetary year is Rs2.8 trillion and independent economists are of the view that the government even with utmost efforts will be able to collect not more than Rs2.6 trillion.
The government has already approved a whopping Rs1.310 trillion development budget for 2014-15 against Rs1.150 trillion allocated for the current financial year. Out of Rs1.150 trillion, about Rs660 billion is likely to be spent by the end of the current fiscal. The provinces could not spend on their development schemes mainly because of their inability to spend and late release of funds.
On top of that when an ambitious development budget is announced, the slippages start appearing from that particular day owing to which the whole development budget gets compromised and the governments find it easy to cut these budgets to achieve the deficit target.The Nawaz government, in the ongoing financial year, has already slashed the development budget by Rs100 billion.
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