Islamabad (Web Desk): The federal budget 2024-25 with a total outlay of Rs18,877 billion has been announced with focus on fiscal consolidation and relief measures for the common man.
Finance Minister Muhammad Aurangzeb unveiled the federal budget amid a noisy protest by the opposition lawmakers belonging to Pakistan Tehreek-e-Insaf (PTI)-backed Sunni Ittehad Council (SIC), who stood on their desks, raised anti-government slogans and tore the copies of the Finance Bill 2025.
Speaker Ayaz Sadiq chaired the session with Prime Minister Shehbaz Sharif also in the attendance.
Speaking in the House in his budget speech, the minister expressed gratitude to the leadership of government’s coalition partners for their guidance.
“I am thankful to the leadership of the coalition partners in the government, including Muhammad Nawaz Sharif, Bilawal Bhutto Zardari, Khalid Maqbool Siddiqui, Chaudhry Shujaat Hussain, Abdul Aleem Khan and Khalid Hussain Magsi, for their guidance” the finance minister said.
He said that despite the financial and political challenges during the past one year, the government’s progress on the economic front has been impressive.
Presenting the budgetary proposals in the House, the finance minister said that the gross revenue receipts have been estimated at Rs17815 billion.
These include Federal Board of Revenue’s (FBR) collection of Rs12,970 billion and non-tax revenue of Rs4845 billion. The share of provinces in the federal receipts will be Rs7,438 billion.
The finance minister said the growth rate is expected to be 3.6% during the next fiscal year. Inflation is expected to be 12%, budget deficit 6.9% of Gross Domestic Product (GDP) and primary surplus will be one percent of GDP. He said that Rs9775 billion will be paid for interest payment.
Muhammad Aurangzeb said that Rs1,400 billion have been earmarked for the Public Sector Development Programme (PSDP) an additional Rs100 billion has been allocated through public-private partnership.
He said that the development budget will be at the historic level of Rs1,500 billion. The minister added that Rs2,122 billion will be provided for defence requirement.
Muhammad Aurangzeb said that Rs839 billion have been reserved for the expenditure of civil administration, while Rs1,014 billion have been set aside for pension expenditure and Rs1,363 billion have been allocated as subsidy on electricity, gas and other sectors.
The minister proposed 20-25% increase in the salaries on ad-hoc basis and 15% enhancement in the pensions of the federal government employees, realizing their financial hardships due to the increased inflation.
He said despite financial constraints, the government had decided to give 25% ad-hoc relief in the salaries of employees from Grade1-16 and 20% to Grade-17-22 employees aimed at increasing their purchase power.
The finance minister also announced to increase the minimum wages from existing Rs32,000 to Rs37000 per month.
He said that grants worth Rs1,777 billion have been earmarked for Benazir Income Support Programme (BISP), Azad Jammu and Kashmir (AJK), Gilgit-Baltistan, merged districts, Higher Education Commission (HEC), Pakistan Railways and IT sector.
The finance minister said the major volume of development budget manifests the government's resolve to develop infrastructure, transportation, energy and IT sectors as well as address the challenges in the management of water resources.
Muhammad Aurangzeb said that completion of ongoing projects will be given priority in the PSDP 2024-25.
He pointed out that 81% resources have been allocated for the ongoing projects and 19% for the new projects.
He said development of basic infrastructure is the basic responsibility of the government and for this purpose it has been proposed to allocate 59% of the amount.
For the social sector, it is proposed to spend 20% of the development budget.
The finance minister said ensuring balanced regional development is a constitutional responsibility.
Hence, 10% resources have been earmarked for AJK, Gilgit-Baltistan and the tribal districts while 11.2% resources have been set aside for other sectors such as IT and telecom, science and technology, governance and production.
The finance minister said that Rs824 billion have been proposed to be allocated in the next PSDP for the infrastructure. These includes Rs253 billion for energy sector, Rs279 billion for transport and communication sectors, Rs206 billion for water sector and Rs86 billion for planning and housing.
He said that Rs280 billion have been earmarked for the social sector as compared to Rs244 billion of the outgoing fiscal year. Rs75 billion have been set aside for special areas including AJK and Gilgit-Baltistan, Rs64 billion for tribal districts and Rs79 billion for science and IT.
Similarly, he said that Rs50 billion are being set aside for production sector including agriculture.
The minister said priority will be given to the projects which were approved in accordance with the guidelines of National Economic Council.
He said strategic and core projects including water resources, transportation, communication and energy sectors will be given special importance.
He said timely completion of foreign funded projects will be ensured in addition to the projects on whom eighty percent resources have already been spent.
Muhammad Aurangzeb said that new projects, aimed at promoting exports such as enhancing competitiveness of products and digital infrastructure, industrial development, agro-industry and seed development, blue economy, science and technology and research and development, will be encouraged.
He said the annual development plan also envisages measures to promote sustainable development and balanced development.
The finance minister said that the government will lay greater emphasis on upgradation infrastructure including improving the network of highways and develop linkages amongst big cities and areas.
In addition, steps are being taken to expand the energy infrastructure on modern lines which include construction of hydro-power dams and installation of solar power plants as well as transmission lines in order to ensure efficient power distribution system and meet the growing energy demand.
Muhammad Aurangzeb said steps will also be taken for better water management in order to cope with floods as well as to ensure water availability for domestic and agriculture.
The Finance Minister said the development budget also involves measures for the skills development in order to equip the youth with the modern knowledge and training so that they can secure employment and play their full part in the country's development.
Highlighting the significance of Karachi in the country's Economic Development, Muhammad Aurangzeb said there is proposal for a comprehensive project for the city in addition to the projects for Hyderabad, Mirpur Khas, Sukkur and Benazirabad. He said K-IV project will be taken to towards completion and in order to improve the water supply in Karachi.
The finance minister said that a comprehensive plan will be developed on the instruction of Prime Minister for the modernization of hospitals in Islamabad. He said that a new project titled "Quaid-e-Azam Health Tower" will be initiated in Pakistan Institute of Medical Sciences.
He said the government is implementing the principles of equality and justice in tax laws. He said the exemptions and concessions in taxes not only lessens government's revenue, but also affect socio- economic development.
Muhammad Aurangzeb said that after reviewing the concessions and exemptions in the Sales Tax, the government has proposed waiving off certain concessions and exemptions.
He said some of the goods would be taxed on reduced rate while other would be taxed on standard rate.
The government has also proposed to increase GST on Tier-1 Retailers of textile and leather products from fifteen to eighteen percent.
It has also been proposed to impose standard rate of eighteen percent tax on Mobile Phones.
It has also been suggested to impose withholding tax on scrape of copper, coal, paper and plastic, while exemption from sales tax on iron and steel scrap has also been proposed in the budget to discourage tendency of fake or flying invoices.
The minister said that exemption in taxes for five years was given to newly merged districts, erstwhile FATA and PATA, in 2018.
This exemption ended in 2023, which was later extended for one more year. However, now this exemption is being withdrawn gradually to bring these areas into national mainstream.
Similarly, the exemption in income tax given to residents of erstwhile FATA and PATA has been extended for one more year.
The minister said a fixed tax of 12% annually is currently enforced on unpaid sales taxes and FED, which is being increased by KIBOR+3 percent in order to harmonize it according to policy rate of the State Bank of Pakistan (SBP).
Muhammad Aurangzeb said that taxes on vehicles' registration and purchase up to 2000 CC were taken on the basis of engine capacity. However, it has been proposed in the budget that tax on all the vehicles would be taken on prices of vehicles instead of its engine capacity as it was enforced earlier.
Touching upon the austerity measures, the finance minister said reducing government's expenditures is an important pillar of the government strategy to reduce fiscal deficit. He said we are bringing down unnecessary expenditures. He said abolishing all vacant seats is being considered which will help save Rs45 billion.
Announcing three-pronged strategy to reduce pension bill, Muhammad Aurangzeb said reforms will be introduced in the existing pension scheme as per international best practices that would considerably decrease pension liability for the next three decades.
He said contributory pension scheme has been introduced for new employees which will be supported by monthly government contribution to ensure fully funded pension for future employees since the very beginning of their service. A pension fund will be established to manage pension liability.
Muhammad Aurangzeb said the government is negotiating an extend fund facilities with the International Monetary Fund (IMF) while taking forward its home grown reforms agenda.
He said our new programs include; macroeconomic and fiscal stabilization, enhancing foreign exchange reserve, better management of debt and reforms in the power sector and state-owned enterprises.
“Pakistan will return to inclusive and sustainable growth path through implementation of its home grown reforms agenda,” the finance minister expressed the confidence, emphasizing for structural reforms to come out of low growth cycle.
“We have to transform ourselves from a government-determined economy to a market driven economy,” he said, adding that economic development should be based on savings and investment.
The finance minister said the country is heading in the right direction as a result of consistent efforts of the government.
Muhammad Aurangzeb said inflation rate came down to 12% in the month of May and essential commodities are within the reach of people.
The finance minister was confident that the inflation will further comedown in the coming days. He said the benefit of sustainable development will reach the common man.