Budget for Fiscal year 2023 / 2024
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fatman17
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An unrealistic budget
THE federal budget for 2023-24 has come as a surprise. The impression conveyed in the budget speech is that the economy has already achieved a high level of stability and the coming year can be...
www.thenews.com.pk
6 Billion USD deficit will come from where?
Dalit
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Health insurance for media but Health insurance card discontinued for people of Pakistan (Punjab and KP).
What a brilliant decision
The people of Pakistan should embrace themselves. A complete economic disaster is on its way.
Borderlands
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This is a very misleading analysis and a classical example of Pakistan military establishment cooking books to make defence budget look small.
For every other country OP compared in the list, Military pensions are part of Defence budget. For example, Indian military pays pension upwards of 17 Billion and it comes from defence budget.
So more appropriate comparison should include pensions as well.
If you include pension of 563 Billion, total Pakistani defence budget is 2.363 trillion PKR. Pakistan government is expecting a revenue of 9.2 trillion PKR ( Pakistan's government almost always fail to collect projected revenue, so actual revenue would be even lower)
So the actual defence budget as percentage of revenue is
2.363/9.2*100 = 25.6 %
Again, we should also remember that Pakistan uses seperate budget for capital acquisitions. For every country listed in the Twitter thread, captial aquisition is also included in defence budget. Those are also not included in Pakistan's defence budget. So, the real defence budget is even higher than the 25.6% calculated above.
ghazi52
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True.
ghazi52
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June 11, 2023
ISLAMABAD: Finance Minister Ishaq Dar Saturday categorically said the government has not announced any amnesty scheme for overseas Pakistanis and the new law of taxing windfall gains profits would be invoked against industries that exploit consumers to make extraordinary gains.
Responding to a question on (additional tax on certain income, profits, and gains) under new Section 99D of the Income Tax Ordinance 2001 at the post-budget press conference on Saturday, Dar stated that the provision would be invoked against the sectors which would put the unnecessary financial burden on their consumers.
“We have not identified sectors, but the tax would be imposed on those sectors or segments who would exploit their customers to make extraordinary gains,” he said.
The finance minister said that it was a well thought out decision and the tax should not be more than 50 per cent after the rationalisation of the super tax. The additional taxation of super tax would generate Rs31 billion in 2023-24.
“Those segments who would unnecessarily exploit the general public to make gains would be subjected to this tax. And this amount collected from the consumers must come back to the national exchequer. This amount should be spent on the general public, Dar said.
The government would be empowered to invoke the provision of section 99D of the Income Tax Ordinance 2001 whenever required. The windfall gain tax will be imposed on those sectors earning extraordinary profits by exploiting their customers. In this regard, the FBR will have the necessary law available for enforcement.
Dar said the government has received requests from the entire business community to increase the monetary limit of foreign remittances remitted from outside Pakistan. This was a genuine and legitimate demand of the business community which should be supported.
The government has enhanced the monetary limit of foreign remittance remitted from outside Pakistan from five million rupees to rupee equivalent of US$100,000 for the purpose of section 111(4) which places a bar on asking nature and source of unexplained income/assets.
“The amendment in section 111 of the Income Tax Ordinance is not a new measure, but the section has been amended. The amendment in section 111 of the Income Tax Ordinance 2001 is not an amnesty scheme”, Dar said.
No amnesty scheme for expats: Law to be invoked against industries exploiting consumers: Dar
- Responding to a question on (additional tax on certain income, profits, and gains) under new Section 99D of the Income Tax Ordinance 2001, Dar says provision would be invoked against the sectors that would put unnecessary financial burden on consumers
June 11, 2023
ISLAMABAD: Finance Minister Ishaq Dar Saturday categorically said the government has not announced any amnesty scheme for overseas Pakistanis and the new law of taxing windfall gains profits would be invoked against industries that exploit consumers to make extraordinary gains.
Responding to a question on (additional tax on certain income, profits, and gains) under new Section 99D of the Income Tax Ordinance 2001 at the post-budget press conference on Saturday, Dar stated that the provision would be invoked against the sectors which would put the unnecessary financial burden on their consumers.
“We have not identified sectors, but the tax would be imposed on those sectors or segments who would exploit their customers to make extraordinary gains,” he said.
The finance minister said that it was a well thought out decision and the tax should not be more than 50 per cent after the rationalisation of the super tax. The additional taxation of super tax would generate Rs31 billion in 2023-24.
“Those segments who would unnecessarily exploit the general public to make gains would be subjected to this tax. And this amount collected from the consumers must come back to the national exchequer. This amount should be spent on the general public, Dar said.
The government would be empowered to invoke the provision of section 99D of the Income Tax Ordinance 2001 whenever required. The windfall gain tax will be imposed on those sectors earning extraordinary profits by exploiting their customers. In this regard, the FBR will have the necessary law available for enforcement.
Dar said the government has received requests from the entire business community to increase the monetary limit of foreign remittances remitted from outside Pakistan. This was a genuine and legitimate demand of the business community which should be supported.
The government has enhanced the monetary limit of foreign remittance remitted from outside Pakistan from five million rupees to rupee equivalent of US$100,000 for the purpose of section 111(4) which places a bar on asking nature and source of unexplained income/assets.
“The amendment in section 111 of the Income Tax Ordinance is not a new measure, but the section has been amended. The amendment in section 111 of the Income Tax Ordinance 2001 is not an amnesty scheme”, Dar said.
ghazi52
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The finance minister stated that the FBR would be able to achieve the assigned revenue collection target of Rs9.2 trillion for 2023-24. The taxation measure of Rs200 billion has been taken to encourage documentation and put extra burden on non-filers and those operating in the informal economy.
Out of total taxation measures of Rs200 billion, the net income tax measures stood at Rs175 billion. Most of the measures would encourage documentation of the economy and removal of anomalies in the taxation system. The restoration of 0.6 percent withholding tax on banking transactions of non-filers is also a documentation measure.
He said that the government has not imposed nine per cent sales tax on processed milk in budget (2023-24). It was an old proposal which was not approved by the government.
Similarly, he dispelled reports that the sales tax has been imposed on the import of edible oil. The sales tax on the import of edible oil has not been abolished.
Dar stated that there was a customary practice of forming two committees within the Federal Board of Revenue (FBR) — one for business-related issues and the other for technical matters.
He said that the FBR chairman will obtain his approval on the matter, and the committees will be formed by Monday. “The purpose of these committees is to address any missed aspects and provide an opportunity for individuals with complaints or genuine recommendations to be heard and considered by the government.”
He said that the government would accept the viable recommendations of the Senate Standing Committee on Finance during the review of the Finance Bill 2023. The budget proposals would also be reviewed at the level of the National Assembly Standing Committee on Finance.
The Senate Standing Committee on Finance viable recommendations would be incorporated in the budget. As far as anomalies of the business community is concerned, the same would be removed on the suggestions of the business and trade, he added.
Dar said that there is a discussion going on about the reason behind the extension in tax exemptions to the units located in the erstwhile tribal areas. The Prime Minister had visited Peshawar and held a meeting with the business community and politicians in KP.
There was a strong demand for an extension in the income tax exemption for FATA/PATA residents until June 30, 2024. Under the Finance Bill 2023, the government has announced an extension in exemption on machinery and equipment imported by erstwhile tribal areas till June, 2024. Moreover, there is also an extension in the exemption of sales tax/income tax to merged districts of tribal areas for another one year ending June 30, 2024.
The finance minister stated that the FBR would be able to achieve the assigned revenue collection target of Rs9.2 trillion for 2023-24. The taxation measure of Rs200 billion has been taken to encourage documentation and put extra burden on non-filers and those operating in the informal economy.
Out of total taxation measures of Rs200 billion, the net income tax measures stood at Rs175 billion. Most of the measures would encourage documentation of the economy and removal of anomalies in the taxation system. The restoration of 0.6 percent withholding tax on banking transactions of non-filers is also a documentation measure.
He said that the government has not imposed nine per cent sales tax on processed milk in budget (2023-24). It was an old proposal which was not approved by the government.
Similarly, he dispelled reports that the sales tax has been imposed on the import of edible oil. The sales tax on the import of edible oil has not been abolished.
Dar stated that there was a customary practice of forming two committees within the Federal Board of Revenue (FBR) — one for business-related issues and the other for technical matters.
He said that the FBR chairman will obtain his approval on the matter, and the committees will be formed by Monday. “The purpose of these committees is to address any missed aspects and provide an opportunity for individuals with complaints or genuine recommendations to be heard and considered by the government.”
He said that the government would accept the viable recommendations of the Senate Standing Committee on Finance during the review of the Finance Bill 2023. The budget proposals would also be reviewed at the level of the National Assembly Standing Committee on Finance.
The Senate Standing Committee on Finance viable recommendations would be incorporated in the budget. As far as anomalies of the business community is concerned, the same would be removed on the suggestions of the business and trade, he added.
Dar said that there is a discussion going on about the reason behind the extension in tax exemptions to the units located in the erstwhile tribal areas. The Prime Minister had visited Peshawar and held a meeting with the business community and politicians in KP.
There was a strong demand for an extension in the income tax exemption for FATA/PATA residents until June 30, 2024. Under the Finance Bill 2023, the government has announced an extension in exemption on machinery and equipment imported by erstwhile tribal areas till June, 2024. Moreover, there is also an extension in the exemption of sales tax/income tax to merged districts of tribal areas for another one year ending June 30, 2024.
ghazi52
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June 9, 2023
It is no surprise then that the estimates of economic growth and development routinely draw flak and criticism from across the political spectrum, be if estimates of inflation, GDP, or population census.
GDP estimates: a failure of ‘Planning’?
BR ResearchJune 9, 2023
It is no surprise then that the estimates of economic growth and development routinely draw flak and criticism from across the political spectrum, be if estimates of inflation, GDP, or population census.
ghazi52
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The latest budget has highest-ever current deficit (even in the form its announced), and the deficit will likely worsen.
There already exists Huge budget deficit in budget declaration (6.9 trillion PKR deficit, record high). In the revenue part of budget, Government has included unrealistically high expectations of foreign loans (cash input). So, when inevitably the cash flows turn out to be less than government's unrealistically high expectations (upon which budget is based), the deficit will further grow.
Lets do a (short) breakdown of how terrible this budget is.
(1) The huge deficit which already exists in the announced budget (6.92 trillion PKR, or 6.5% of GDP): Gross revenue of federal government = 12.16 trillion PKR. The Federal government has to transfer 5.27 trillion PKR to provinces. that will leave federal government with 6.89 trillion PKR. Expenditure will be 14.46 trillion PKR. (that's 6.92 trillion deficit that already exists, in official version of budget). Interest payments alone will be 7.3 trillion PKR (more than federal will have even before spending on defence etc.).
(point 2-4 on how government expectations of foreign loans are too high which likely wont be met, therefore worsening the deficit)
2) Government has included 2.4 billions USD loan from IMF in budget (government hasn't done much that IMF demanded for approving loan, so don't know if we will even get it)
3) Government expects to get 24 billion USD (including 2.4 billion from IMF) through foreign loans. guess how much we got last year around 11 billion USD. so, government expects to get more than the double than we got last year? (are they planning to sell nukes now??)
4) Further breakdown of point 3. government expects 5 billion USD from Saudia (they gave 2 billion USD last year). and 4 billion USD from china (china gave 2 billion last year). similarly, they have included other foreign loans. all these are too high to expect realistically and secondly, all of these loans are conditional and will be given to us only if we can get IMF loan (if we don't get 2.4 billion from IMF, we don't get anything from Saadia etc.)
5) Tax collection target by Government: Government has set tax collection target to 9.2 trillion PKR. Last year, FBR collected about 7.2 trillion PKR (government has increased pays by 30%, so naturally tax collection will increase through income tax, but i don't know if 9.2 trillion PKR tax collection target can be achieved or not) point 2-5, highlight how the government expectations of inward cash flow seem improbably high.
The deficit which already exists is highest ever, and if government misses any of its targets it has set for inward cash flow, the deficit will blow out of proportion. We have to pay 7.3 trillion PKR in just interest payments. and even before spending anything, federal government will have just 6.89 trillions PKR (after it gives share to provinces). account the spending on defence, development etc., its terrible.
The latest budget has highest-ever current deficit (even in the form its announced), and the deficit will likely worsen.
There already exists Huge budget deficit in budget declaration (6.9 trillion PKR deficit, record high). In the revenue part of budget, Government has included unrealistically high expectations of foreign loans (cash input). So, when inevitably the cash flows turn out to be less than government's unrealistically high expectations (upon which budget is based), the deficit will further grow.
Lets do a (short) breakdown of how terrible this budget is.
(1) The huge deficit which already exists in the announced budget (6.92 trillion PKR, or 6.5% of GDP): Gross revenue of federal government = 12.16 trillion PKR. The Federal government has to transfer 5.27 trillion PKR to provinces. that will leave federal government with 6.89 trillion PKR. Expenditure will be 14.46 trillion PKR. (that's 6.92 trillion deficit that already exists, in official version of budget). Interest payments alone will be 7.3 trillion PKR (more than federal will have even before spending on defence etc.).
(point 2-4 on how government expectations of foreign loans are too high which likely wont be met, therefore worsening the deficit)
2) Government has included 2.4 billions USD loan from IMF in budget (government hasn't done much that IMF demanded for approving loan, so don't know if we will even get it)
3) Government expects to get 24 billion USD (including 2.4 billion from IMF) through foreign loans. guess how much we got last year around 11 billion USD. so, government expects to get more than the double than we got last year? (are they planning to sell nukes now??)
4) Further breakdown of point 3. government expects 5 billion USD from Saudia (they gave 2 billion USD last year). and 4 billion USD from china (china gave 2 billion last year). similarly, they have included other foreign loans. all these are too high to expect realistically and secondly, all of these loans are conditional and will be given to us only if we can get IMF loan (if we don't get 2.4 billion from IMF, we don't get anything from Saadia etc.)
5) Tax collection target by Government: Government has set tax collection target to 9.2 trillion PKR. Last year, FBR collected about 7.2 trillion PKR (government has increased pays by 30%, so naturally tax collection will increase through income tax, but i don't know if 9.2 trillion PKR tax collection target can be achieved or not) point 2-5, highlight how the government expectations of inward cash flow seem improbably high.
The deficit which already exists is highest ever, and if government misses any of its targets it has set for inward cash flow, the deficit will blow out of proportion. We have to pay 7.3 trillion PKR in just interest payments. and even before spending anything, federal government will have just 6.89 trillions PKR (after it gives share to provinces). account the spending on defence, development etc., its terrible.
RoadRunner401
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Good news for over seas Pakistanis if you give the Generals 50 or 100,000dollars (Not sure about the number) You will get golden card and a licence to carry military grade guns.
I suppose next year budget will include hunting of 2 or four people per day
for million a year to the Generals.
Thanks for coming please come again!
I suppose next year budget will include hunting of 2 or four people per day
for million a year to the Generals.Thanks for coming please come again!
ghazi52
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Agriculture ....
June 12, 2023
It is hard to make sense of the agriculture budget this year: what it is for and what it will achieve next year — especially if taken in the backdrop of prime ministerial promises made a week ago in the budget (agriculture) proposal meeting.
If steps taken in the document are something to go by, one is not sure if someone tried to analyse issues that the sector is facing, leave alone trying to address them. In the absence of any such exercise, this finance bill will surely neither solve sectoral problems nor those of farmers during the next year.
First, let us recount the measures Finance Minister Ishaq Dar announced in his speech. He said the agriculture loan limit is increasing from Rs1.8 trillion to Rs2.2tr.
He also promised to shift 50,000 tubewells to solar energy and allocated Rs50 billion for it, withdrew duties on the import of seed, exempted the import of combine harvesters from duties, rice planters, seeders and dryers have been freed of duties as well, concessional loans and tax relief for the industry has also been promised, and Rs16bn have been set aside for subsiding loans and urea fertiliser.
Without belittling the benefits of these steps, now let us consider what the sector is facing and where these actions fit in. The sector suffered an exceptional rise in the cost of production in the last few years, especially in the last one when the current government came to power in April 2022.
The seed sector is chaotic, where no one knows who is selling what, why and when he would quietly exit the market after inflicting billions of rupees in losses on the farmers. Water shortages are now a permanent part of farming, interrupted by super floods sweeping everything away between severe scarcity times.
Even a cursory reality check on measures taken by the budget reveals their irrelevance to the sector and its bigger issues.
As far as increasing loan limits is concerned, all financial institutions agree that they do not benefit farmers — only a tiny part of it goes to them and the rest to industry, which is regularly recycled and restructured in the name of the farmers.
The banks prefer paying fines for failing to meet these targets because they are less than the administrative cost of giving small loans to clientele spread far around. On top of it all, can farming afford a 25 per cent markup and still survive?
Shifting tubewells to solar energy has been a hoax every government resorted to because of perceived benefits. But the experiment has not taken off because no farmer can risk leaving equipment worth Rs3 million in the field, given law and order in rural areas.
Withdrawal of duties on machines and seeds should certainly positively affect individual farmers and crops, which can only be welcomed.
The measures announced in the budget look smaller also for two reasons: high hopes given by the prime minister in a pre-budget meeting and dismal performance by the sector last year.
In a meeting at Lahore, a week before the budget, the prime minister promised “practical and permanent steps” for agriculture reforms. It immediately raised hopes, especially because previous “Kissan packages,” announced by the PML-N governments, both at the centre and province, were worth hundreds of billions of rupees.
Khalid Khokhar of Pakistan Kissan Ittehad says that farmers had a single demand: control the cost of production. Help reduce input prices and bring fertiliser within farmers’ fiscal reach. Electricity, which used to cost farmers Rs5.35 per unit until two years ago, now costs between Rs45 and Rs50 per unit. It has been left untouched. “Solarisation has been offered as an alternative. However, no one has realised it has been on the offer for the last many years without any success. The process never took off because of massive investment in it and deteriorating social conditions. It has been dusted off again.
“The biggest investment is fertiliser, and there has been no relief. The usage of phosphorus fertiliser dropped by 50pc, and the application of potash fertiliser by 40pc last year due to price factors. Urea fertiliser has three different prices in the market and is given to growers on the fourth one — the black market rate, which naturally is the highest one. All these missing steps hardly leave room for any optimism as far this finance bill is concerned,” he says.
Syed Nadeem Shah
Member of Pakistan Central Cotton Committee
“The financial allocation in the budget does not match agriculture’s contribution to GDP.
I found nothing for the cotton sector. While seed imports were incentivised through duty exemption, it won’t benefit growers owing to ‘adaptability’ and ‘acceptability’ issues.
Rather, the government should concentrate on seed research and development allocations since indigenous varieties respond to climatic conditions. But with zero allocations for research, such seeds can not be produced.
If cotton is not getting attention, how will the Pakistan Central Cotton Committee (PCCC) come up with new varieties? PCCC employees are not given salaries regularly.
The subsidy on urea will most likely benefit traders instead of farmers. We should curb urea smuggling, and for this, the subsidy should be given directly to farmers to increase its uptake.
And, given past experiences, the Rs10bn markup subsidy for small farmers to enhance per-acre productivity will be good for nothing because the provincial government won’t pitch in its share.
Dr. Iqrar A Khan
Vice-Chancellor, Agriculture University, Faisalabad
“The budget can catalyse a second green revolution. It is likely to promote investment through enhanced credit availability, solarisation of tubewells, tax waivers on seed imports, fertiliser and machinery, promotion of SMEs through business loans, and prevention of postharvest losses.
Looking back, the green revolution of the 1960s was catalysed by the introduction of a new seed of wheat (MaxiPak), which was fertiliser responsive. The yields went up manifolds, necessitating mechanisation. Ever since then, we have continued to reinvent the same recipe. The times have changed with the arrival of GM crops, precision technologies, value addition and better trade and marketing options.
While I fully endorse the budget announcements, there could be more to it. The seed imports should be clearly spelt to allow the introduction of GM seeds. There are 1.2 million tubewells, and 50,000 is a modest start. The solar subsidy should be linked with net metering to avoid unnecessary pumping. My frustration is about a lack of attention to the investment in research. The largest research sector is universities with a stagnant budget allocation of Rs65bn only when fixed expenditure is bound to rise by 30-40pc.“
Aamer Hayat Bhandara
Co-founder of think-tank Agriculture Republic
“The budget is very good if one goes by the current state of the economy and resources available with the government. But, it does not emphasise as much as it should have on research and development of indigenous high-yielding, drought and heat-resistant seed varieties and localisation of imported farm inputs to make the country food secure.
In the absence of indigenously developed good quality seed, the country will have to depend on imported sources at the cost of previous foreign exchange. At the same time, the behaviour of the kernel in the local environment will be uncertain.
The decision-makers should have thought more of climate change resilience, early warning systems and crop insurance to enable the sector to survive in the harshest time of history.
I am upbeat about the policy of setting up value-addition small industries close to villages and hope that the step will lead to four immediate benefits for the rural population: cutting the crop transportation cost to markets, eliminating supply-chain losses, creating job opportunities for the jobless rural youth, and turning the unskilled labour into a skilled one force.
Ignoring ground realities
Ahmad Fraz KhanJune 12, 2023
It is hard to make sense of the agriculture budget this year: what it is for and what it will achieve next year — especially if taken in the backdrop of prime ministerial promises made a week ago in the budget (agriculture) proposal meeting.
If steps taken in the document are something to go by, one is not sure if someone tried to analyse issues that the sector is facing, leave alone trying to address them. In the absence of any such exercise, this finance bill will surely neither solve sectoral problems nor those of farmers during the next year.
First, let us recount the measures Finance Minister Ishaq Dar announced in his speech. He said the agriculture loan limit is increasing from Rs1.8 trillion to Rs2.2tr.
He also promised to shift 50,000 tubewells to solar energy and allocated Rs50 billion for it, withdrew duties on the import of seed, exempted the import of combine harvesters from duties, rice planters, seeders and dryers have been freed of duties as well, concessional loans and tax relief for the industry has also been promised, and Rs16bn have been set aside for subsiding loans and urea fertiliser.
Without belittling the benefits of these steps, now let us consider what the sector is facing and where these actions fit in. The sector suffered an exceptional rise in the cost of production in the last few years, especially in the last one when the current government came to power in April 2022.
The seed sector is chaotic, where no one knows who is selling what, why and when he would quietly exit the market after inflicting billions of rupees in losses on the farmers. Water shortages are now a permanent part of farming, interrupted by super floods sweeping everything away between severe scarcity times.
Even a cursory reality check on measures taken by the budget reveals their irrelevance to the sector and its bigger issues.
As far as increasing loan limits is concerned, all financial institutions agree that they do not benefit farmers — only a tiny part of it goes to them and the rest to industry, which is regularly recycled and restructured in the name of the farmers.
The banks prefer paying fines for failing to meet these targets because they are less than the administrative cost of giving small loans to clientele spread far around. On top of it all, can farming afford a 25 per cent markup and still survive?
Shifting tubewells to solar energy has been a hoax every government resorted to because of perceived benefits. But the experiment has not taken off because no farmer can risk leaving equipment worth Rs3 million in the field, given law and order in rural areas.
Withdrawal of duties on machines and seeds should certainly positively affect individual farmers and crops, which can only be welcomed.
The measures announced in the budget look smaller also for two reasons: high hopes given by the prime minister in a pre-budget meeting and dismal performance by the sector last year.
In a meeting at Lahore, a week before the budget, the prime minister promised “practical and permanent steps” for agriculture reforms. It immediately raised hopes, especially because previous “Kissan packages,” announced by the PML-N governments, both at the centre and province, were worth hundreds of billions of rupees.
Khalid Khokhar of Pakistan Kissan Ittehad says that farmers had a single demand: control the cost of production. Help reduce input prices and bring fertiliser within farmers’ fiscal reach. Electricity, which used to cost farmers Rs5.35 per unit until two years ago, now costs between Rs45 and Rs50 per unit. It has been left untouched. “Solarisation has been offered as an alternative. However, no one has realised it has been on the offer for the last many years without any success. The process never took off because of massive investment in it and deteriorating social conditions. It has been dusted off again.
“The biggest investment is fertiliser, and there has been no relief. The usage of phosphorus fertiliser dropped by 50pc, and the application of potash fertiliser by 40pc last year due to price factors. Urea fertiliser has three different prices in the market and is given to growers on the fourth one — the black market rate, which naturally is the highest one. All these missing steps hardly leave room for any optimism as far this finance bill is concerned,” he says.
Syed Nadeem Shah
Member of Pakistan Central Cotton Committee
“The financial allocation in the budget does not match agriculture’s contribution to GDP.
I found nothing for the cotton sector. While seed imports were incentivised through duty exemption, it won’t benefit growers owing to ‘adaptability’ and ‘acceptability’ issues.
Rather, the government should concentrate on seed research and development allocations since indigenous varieties respond to climatic conditions. But with zero allocations for research, such seeds can not be produced.
If cotton is not getting attention, how will the Pakistan Central Cotton Committee (PCCC) come up with new varieties? PCCC employees are not given salaries regularly.
The subsidy on urea will most likely benefit traders instead of farmers. We should curb urea smuggling, and for this, the subsidy should be given directly to farmers to increase its uptake.
And, given past experiences, the Rs10bn markup subsidy for small farmers to enhance per-acre productivity will be good for nothing because the provincial government won’t pitch in its share.
Dr. Iqrar A Khan
Vice-Chancellor, Agriculture University, Faisalabad
“The budget can catalyse a second green revolution. It is likely to promote investment through enhanced credit availability, solarisation of tubewells, tax waivers on seed imports, fertiliser and machinery, promotion of SMEs through business loans, and prevention of postharvest losses.
Looking back, the green revolution of the 1960s was catalysed by the introduction of a new seed of wheat (MaxiPak), which was fertiliser responsive. The yields went up manifolds, necessitating mechanisation. Ever since then, we have continued to reinvent the same recipe. The times have changed with the arrival of GM crops, precision technologies, value addition and better trade and marketing options.
While I fully endorse the budget announcements, there could be more to it. The seed imports should be clearly spelt to allow the introduction of GM seeds. There are 1.2 million tubewells, and 50,000 is a modest start. The solar subsidy should be linked with net metering to avoid unnecessary pumping. My frustration is about a lack of attention to the investment in research. The largest research sector is universities with a stagnant budget allocation of Rs65bn only when fixed expenditure is bound to rise by 30-40pc.“
Aamer Hayat Bhandara
Co-founder of think-tank Agriculture Republic
“The budget is very good if one goes by the current state of the economy and resources available with the government. But, it does not emphasise as much as it should have on research and development of indigenous high-yielding, drought and heat-resistant seed varieties and localisation of imported farm inputs to make the country food secure.
In the absence of indigenously developed good quality seed, the country will have to depend on imported sources at the cost of previous foreign exchange. At the same time, the behaviour of the kernel in the local environment will be uncertain.
The decision-makers should have thought more of climate change resilience, early warning systems and crop insurance to enable the sector to survive in the harshest time of history.
I am upbeat about the policy of setting up value-addition small industries close to villages and hope that the step will lead to four immediate benefits for the rural population: cutting the crop transportation cost to markets, eliminating supply-chain losses, creating job opportunities for the jobless rural youth, and turning the unskilled labour into a skilled one force.
ghazi52
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Jun 12, 2023
Every year, the federal budget is a cruel reminder of the Pakistani economy’s descent into chaos and the meaninglessness of numbers. The mediocrity of the size of outlays, the unrealistic targets and the crushing burden of debt are all recurring features now, with no end in sight to this madness.
However, unlike all previous editions, this budget was unique in one respect: the focus on information technology. The finance minister called it the “engine of growth” and set its promotion as one of the guiding principles. This is in stark contrast to the yesteryears when one would struggle to find more than a handful of mentions on the sector.
For starters, it extended the concessionary fixed tax rate at 0.25pc to export IT services until June 2026. In contrast, the Pakistan Software House Association (P@SHA) had asked for a complete exemption in its recommendations. In Islamabad Capital Territory, the sales tax has been proposed to be reduced by 10 percentage points to 5pc.
On the other hand, the industry body’s demand regarding the import of hardware was met. Well, at least partially. The budget has proposed that IT and enabled service companies can import hardware and software of up to 1pc of their exports without paying any tax, but capping it at an annual $50,000.
While the cap on the amount may be a little restrictive, this was a much-needed measure. Pakistan has a hardware problem which has been brewing for some time. First of all, the rupee devaluation over the past five years has made imports quite expensive. It’s not just the iPhones or other top-of-the-line handsets (where Pakistan Telecommunication Authority has played a role, too) but any computing machine.
According to TradeMap, Pakistan imported just $50.7 million of goods in Q3-2022 — the latest period available — under the HS code 8471, defined as: automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included. This includes laptops, computers and other devices.
Though it’s not entirely by IT exporters, this is still the lowest value of imports in more than half a decade, since at least the last Q4-2017. While the reason for this specific window has to do more with the across-the-board restrictions to save dollar outflow, imports under HS Code 8471 haven’t grown that much in the last many years. One major explanation for that could be the increase in average prices.
Unfortunately, TradeMap does not have recent quantity data, but numbers up to Q2-2020 show that the average price of an imported data processing machine — HS 847130 — paid by Pakistan had fallen to $113. Back in Q1-2017, that number used to be $278.
So for quite some time now, there’s been a general degradation of technology equipment being bought, if laptops are a proxy for an overall trend. Of course, the actual problem is the devaluation of the rupee here, which the budget won’t do anything about, so hardware, regardless of taxes, will continue to become more expensive.
Moving on, the budget has also proposed an exemption from filing sales tax returns for freelancers earning up to $24,000 from exports. It further plans to issue a single-pager form for this segment.
There’s also been a reasonable level of attention paid towards access to financing. Most significantly, the government plans to launch a Rs5 billion venture capital fund though it’s not yet entirely clear who’d manage the money. On that note, the Ministry of Information Technology and Telecom saw its outlay reduced to Rs6bn for FY24 from Rs6.33bn.
Similarly, the budget plans to incentivise bank lending towards IT services companies by offering them a concessionary tax rate of 20pc on income instead of the existing 39pc. As of April, the total outstanding credit to the sector — herein defined as heads 58d, 62 and 63 as per the State Bank dataset on loans classified by borrowers — was only Rs16.1bn. For context, when times were good, Airlift alone raised around Rs14bn at the prevailing exchange rate.
That said, this ‘relief’ kinda ignores the root cause of the problem from both the demand and supply sides. On the former, the interest rate environment (both the prevailing rates and the continuity) make borrowing a pretty expensive source of capital for rather petty amounts. Meanwhile, the latter doesn’t lend to anyone, largely because the government’s own fiscal indiscipline leaves little incentive for them.
Whether these measures will reap the desired effect remains to be seen, but one thing seems abundantly clear: the government is clueless about how big the trust deficit has become.
More than a year of disastrous economic management, trade restrictions, and rupee devaluations was already too much, but the final straw came in the form of an internet shutdown. A few goodie bags won’t undo that damage.
A few goodie bags won’t undo the damage
By DAWNJun 12, 2023
Every year, the federal budget is a cruel reminder of the Pakistani economy’s descent into chaos and the meaninglessness of numbers. The mediocrity of the size of outlays, the unrealistic targets and the crushing burden of debt are all recurring features now, with no end in sight to this madness.
However, unlike all previous editions, this budget was unique in one respect: the focus on information technology. The finance minister called it the “engine of growth” and set its promotion as one of the guiding principles. This is in stark contrast to the yesteryears when one would struggle to find more than a handful of mentions on the sector.
For starters, it extended the concessionary fixed tax rate at 0.25pc to export IT services until June 2026. In contrast, the Pakistan Software House Association (P@SHA) had asked for a complete exemption in its recommendations. In Islamabad Capital Territory, the sales tax has been proposed to be reduced by 10 percentage points to 5pc.
On the other hand, the industry body’s demand regarding the import of hardware was met. Well, at least partially. The budget has proposed that IT and enabled service companies can import hardware and software of up to 1pc of their exports without paying any tax, but capping it at an annual $50,000.
While the cap on the amount may be a little restrictive, this was a much-needed measure. Pakistan has a hardware problem which has been brewing for some time. First of all, the rupee devaluation over the past five years has made imports quite expensive. It’s not just the iPhones or other top-of-the-line handsets (where Pakistan Telecommunication Authority has played a role, too) but any computing machine.
According to TradeMap, Pakistan imported just $50.7 million of goods in Q3-2022 — the latest period available — under the HS code 8471, defined as: automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included. This includes laptops, computers and other devices.
Though it’s not entirely by IT exporters, this is still the lowest value of imports in more than half a decade, since at least the last Q4-2017. While the reason for this specific window has to do more with the across-the-board restrictions to save dollar outflow, imports under HS Code 8471 haven’t grown that much in the last many years. One major explanation for that could be the increase in average prices.
Unfortunately, TradeMap does not have recent quantity data, but numbers up to Q2-2020 show that the average price of an imported data processing machine — HS 847130 — paid by Pakistan had fallen to $113. Back in Q1-2017, that number used to be $278.
So for quite some time now, there’s been a general degradation of technology equipment being bought, if laptops are a proxy for an overall trend. Of course, the actual problem is the devaluation of the rupee here, which the budget won’t do anything about, so hardware, regardless of taxes, will continue to become more expensive.
Moving on, the budget has also proposed an exemption from filing sales tax returns for freelancers earning up to $24,000 from exports. It further plans to issue a single-pager form for this segment.
There’s also been a reasonable level of attention paid towards access to financing. Most significantly, the government plans to launch a Rs5 billion venture capital fund though it’s not yet entirely clear who’d manage the money. On that note, the Ministry of Information Technology and Telecom saw its outlay reduced to Rs6bn for FY24 from Rs6.33bn.
Similarly, the budget plans to incentivise bank lending towards IT services companies by offering them a concessionary tax rate of 20pc on income instead of the existing 39pc. As of April, the total outstanding credit to the sector — herein defined as heads 58d, 62 and 63 as per the State Bank dataset on loans classified by borrowers — was only Rs16.1bn. For context, when times were good, Airlift alone raised around Rs14bn at the prevailing exchange rate.
That said, this ‘relief’ kinda ignores the root cause of the problem from both the demand and supply sides. On the former, the interest rate environment (both the prevailing rates and the continuity) make borrowing a pretty expensive source of capital for rather petty amounts. Meanwhile, the latter doesn’t lend to anyone, largely because the government’s own fiscal indiscipline leaves little incentive for them.
Whether these measures will reap the desired effect remains to be seen, but one thing seems abundantly clear: the government is clueless about how big the trust deficit has become.
More than a year of disastrous economic management, trade restrictions, and rupee devaluations was already too much, but the final straw came in the form of an internet shutdown. A few goodie bags won’t undo that damage.
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