ISLAMABAD: An unprecedented increase of 50 per cent in salaries of government employees and 15 to 20 per cent raise in pension is the salient features of the Federal Budget 2010-11.
The budget also envisaged some new tax exemptions on food items besides providing relief in health and education sectors.
The budget, presented in the National Assembly by Federal Finance Minister Dr. Abdul Hafeez Shaikh had a total outlay of Rs 3.259 trillion?a jump of 10.7 per cent over the last fiscal year. It offered scores of incentives to the working class at a time when the world was constantly in the grip of a sweeping recession.
A sizeable 50 per cent adhoc increase in salaries and 15 to 20 per cent raise in pension of government employees were among a host of people-friendly features of the third budget in row prepared by the PPP-led coalition government.
The budget envisaged employment opportunities for the youth and income-generating measures for laborers, workers and poor segments of the society.
Senator Hafeez Sheikh, who was inducted into the Federal Cabinet just hours before tabling the budget in the lower house of the Parliament, said the total budget deficit of an estimated Rs.685 billion would be met through internal and external resources.
The total size of the deficit is 4% of the GDP, the Minister said, adding that Rs.1033 billion would be transferred by the federation to provinces under the recently-adopted National Finance Commission (NFC) award.
In the current year, the provinces had been given an amount of Rs.655 billion under the same head, Hafeez Sheikh said, adding that according to the 7th NFC Award, the provinces would be paid their due share on quarterly basis, which would be released by the Federal Government automatically as per schedule.
?No big wig will have to visit finance department for the release of provincial share as now it will be released automatically,? he said.
He said the present government, in its efforts to revive the economy, has to strictly follow the policy of belt-tightening in its expenditures.
Now, he added, the current expenditures of the government had been frozen, with the exception of salaries, to the level of outgoing financial year as a major austerity step.
The Minister said that the recommendations formulated by the Pay and Pension Commission would be implemented during the next three years.
The minister said that despite severe financial constraints, weak and poor segments of the society were not forgotten as they have been provided cover under Benazir Income Support Programme, which provides financial assistance to 3.5 million households with Rs. 1,000 on monthly basis to each.
He said the incentives given this time include, a reasonable increase in medical and conveyance allowance.
In tax sector, he said, keeping in view the general consensus, the government decided to defer Value Added Tax (VAT) till October 1, 2010, he added.
The minister said that it has also been proposed that the rate of general sales tax would be increased from 16 per cent to 17 per cent from October 1 this year.
In order to minimise and discourage the use of electricity, he said, it has been decided to impose 10 per cent excise duty on air-conditioners and deep-freezers mostly used by the upper class.
Hafeez Sheikh further said that a one-rupee excise duty has been proposed on each filtered cigarette.
As a major step forward to reduce tax burden on salaried class, it has been proposed to enhance tax exemption slab from Rs.200,000 to Rs.300,000, whereas for the non-salaried class the exemption will be from Rs.100,000 to Rs.300,000.
In order to extend relief in the prices of essential food items, it has been decided to reduce import duty on palm oil to Rs. 9,000 per ton, he said.
The finance minister also announced an allocation of Rs.442 billion for defence sector. Where as the government has allocated Rs. 680 billion for repayment of loans and interests.
While announcing government determination and resolve, the minister said, maximum austerity measures would be adopted in all the government departments and ministries, reducing non-development sector expenditures.
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