Budget prioritizes agriculture, exports development to promote growth: Dar

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ISLAMABAD, June 4 (APP): After achieving economic stability, the focus of Budget 2016-17 would be on improving economic growth by prioritizing agriculture sector development and promotion of exports, said Finance Minister Senator Muhammad Ishaq Dar on Saturday.

The Finance Minister stated this while addressing a crowded post-budget press here at “P” Block Auditorium. He was flanked by  Advisor to the Prime Minister on Revenues, Haroon Akhhtar, Special Secretary to Finance Ministry Dr. Shuja Ali, Secretary Finance Dr. Waqar Masood Khan, Chairman Federal Board of Revenue (FBR) Nisar Muhammad Khan Additional Secretary Finance Tariq Mehmood Pasha and senior officials of the Ministry of Finance.

Ishaq Dar said that the two sectors which needed boost for the promotion of country’s Gross Domestic Product (GDP) were agriculture and exports.

He said agriculture provides employment to 45 percent labour forces, and 70 percent population is dependent on it while its share in national GDP is about 21 percent adding negative growth of 0.19 in this sector and 28% reduction in cotton production did affect overall growth rate.

He said that provision of relief to agriculture sector was the top most priority of the government, so in the budget 206-17, the prices of Urea fertilizers have been reduced by Rs. 400 per bag from Rs.1800 to Rs.1400 while the prices of DAP has also been cut from 2800 to 2500, providing 300 relief to farmers.

He said the agriculture package announced in the federal budget, was devised in consultations with farmers’ representatives, chambers of commerce and other stakeholders.

He said that sales tax on pesticides have also been zero rated while the per unit electricity charges for tube-wells has been reduced from Rs. 8.85 plus sales tax to Rs.5.35, adding that the provinces have been requested to adjust sales tax keeping in consideration to provide relief to farmers.

The Minister said that the second priority sector for boosting growth was to promotion of exports.

He said that due to fall in commodity prices in the international market, the exports from the county witnessed decline in terms of cost, however, the exports of different commodities increased in terms of quantity.

He said that Pakistan aimed at enhancing ratio of exports to GDP which is about 15 percent or US $45 billion in emerging economies.

He said that five exports sectors have been zero-rated while the refunds upto April would be cleared off by 31 August 2016.

He said that the exports refinancing has also been reduced to as low as 3 percent to facilitate exporters.

Ishaq Dar said that the investment-to-GDP has increased from 12.6 percent of GDP to 15.6 percent, which would be further enhanced to 21-22 percent, to ensure 7 percent growth.

He said that the industrial sector has performed well adding the government also provided incentives for this sector.

The duty on capital goods and machinery has been reduced by percent, he added.

Highlighting the mediaum term goals for 2016-19, the Finance Minister said that under the plan GDP growth would gradually rise to 7 percent by FY,2018-19; Inflation would be contained to single digit, investment to GDP ratio would rise to 21 percent at the end of medium term, fiscal deficit would be brought down to 3.5 percent of GDP, Tax-to-GDP ratio would be increased to 13.9 percent while Foreign exchange reserves would reach to US $ 30 billion.

Services sector and promotion of IT and Agriculture credit was also the focus of the government, he added.

Ishaq Dar said FBR revenues had recorded an increase of merely 3.38 percent in Financial year 2012-13 when collections stood at Rs.1,946 billion adding said for the current financial year 2015-16 the target of Rs.3,104 billion has been fixed and considering the collections to date, this target would be achieved.

“This way, tax revenues would be increased by 60 percent which would be a historic increase”, he remarked.

He said that Tax-to-GDP ratio of FBR taxes that was 8.5 percent of the GDP in FY 2012-13, has now been increased to 10.5 percent in FY 2015-16.

Fiscal deficit, he said was 8.2 percent of GDP in FY 2012-13 was being brought down to 4.3 percent of the GDP in FY 2015-16.

He said that revenues have also witness record growth adding that the government has rolled back the concessionary SROs, however concessions for the charity organization would be maintained.

He said the Public Sector Development Programme (PSDP) of Rs 800 for federal component and 875 for provincial component would help promote development in the country.

He said 7 percent GDP growth, enhancement in per capita income, creating job opportunities, enhancing average life expectancy, poverty alleviation and reducing inflation to single digit, was the ultimate target of the government.

Ishaq Dar said the country had to bear $ 118 billion loss due to war on terror, going on in Pakistan since 9/11.

“We are now in final phase of operation Zarb-e-Azb and it is hoped that soon we would get rid of terrorism which would help in further increase of Foreign Direct Investment (FDI) in the country”, he said.

During the current year, less than $6 billion loss was incurred to the country due to war on terror, compared to the loss of $10 billion last year, he added.

He informed that in the budget 2016-17, there was 7 per cent increase in non-development expenditure.

Regarding raise in salaries of the federal employees, the minister clarified that two ad-hoc allowances of 2013 and 2014 would be merged first in the basic pay and then a further 10 per cent of the total basic pay would be given as ad-hoc relief allowance.

Thus, there would be a net impact of approximately 13-14 per cent increase, he added.

He hoped that the budget 2016-17 would help increase in overall economic growth of the country and would give relief to the common people, besides creating job opportunities and helping poverty reduction.

During question-answer session, the finance minister said that prime minister this year had announced Rs.341 billion Kishan package.

He said a number of relief has been given to farmers in the budget 2016-17, adding said that volume of agriculture credit target has been increased from Rs.600 billion to Rs.700 billion, thus increasing Rs.100 billion agriculture credit in the FY 2016-17.

He said the total impact of reduction in prices of urea and DAP fertilizers would be Rs 45 billion while the reduction in electricity price for agriculture tubewells would impact Rs 6 billion.

To a question, Ishaq Dar said despite increase of petroleum prices in the international market, the government announced to keep the prices unchanged for June and for this purpose, a huge cut in sales tax was made in all products, he added.

He informed that now the sales tax of 4 out of 5 products was under 17 per cent and the government had to bear additional cost of Rs 8.5 billion in this regard.

Regarding question of total foreign debt, the minister clarified that the current government had received total debt of $15.5 billion, out of which an amount of $10 billion was paid back, so net amount of debt received by the current government was $5.5 billion.

He informed that in July this year, Pakistan Stock Exchange was likely to be accepted by the international stock market as a frontier market.

To a question, Dar said “the exports would be increased to $35 billion which would not only help in reducing dependency on foreign institutions but current account deficit would also be reduced to zero or would go in surplus.

He hoped due to measurers taken be the government, “we would be able to produce 20 million cotton bales which would give a boom to agriculture sector in the country”.

He said the government was all set to launch Pakistan Microfinance Company which would have potential of providing microfinance facility to 25 million people and would also help in creation of 300,000 new jobs.

Moreover, he said when the country’s economic growth would cross 7 per cent, a huge number of new jobs would also be created due to increase in economic activities in the country.

To another question, the finance minister said due to the new tax measurers proposed by the government for the Fiscal Year 2017, there would be a net impact of Rs 148 billion.