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Saturday, June 5, 2010

Govt presents FY 2010-2011 federal budget

ISLAMABAD: The government has unveiled the federal budget for fiscal year 2010-2011 of more than Rs 685 billion deficit.Federal Minister for Finance and Economic Affairs Senator Dr Abdul Hafeez Shaikh presented the budget before the National Assembly.Total volume of the budget is Rs 3259 billion, 10.7 percent more than the current year, while expected revenue collection has been estimated at Rs 2574 billion. So, the government would have to bear a budget deficit of Rs 685 billion. Basic salary limit has been increased from existing Rs 6000 to Rs 7000.Fifty percent increase in the salaries of public servants and ten percent cut in the salaries of members of the federal cabinet have also been proposed, the channel added. The minister said that custom duties are not being increased on any product, but duties on 29 products are being curtailed.He announced to reform the existing system of Sales Tax and replace it with the new system that would be effective from October 1, 2010. He said new, uniform rate of 17 percent GST will be introduced in the country, under which no sales tax will be imposed on education, health and edible items.Income Tax limit for salaried class has been increased from existing Rs 200,000 per annum to Rs 300,000 per annum. Hence, the people earning less than Rs 25,000/month will pay no income tax, he said.Withholding tax on industrial importers has been increased from existing 4 percent to 5 percent, while five percent withholding tax on domestic air tickets has also been proposed in the budget.Shaikh in his budget speech highlighted the challenges faced by the national economy in the wake of war on terror and global economic meltdown. He said that the government was compelled to go to IMF to avoid being bankrupt. But, he added, the revival of the economy has begun.“The process of economic revival has begun and we are seeing the beginning of the turnaround in the country,” Shaikh told the national assembly. He claimed to achieve economic stability and control rising inflation “to some extent”.He said 3.5 million families were provided with the monetary support under Benazir Income Support Programme, and announced to further increase the allocation of funds for BISP.Minister was critic of providing subsidies to the masses and repeatedly urged reforms in the system. He also announced end the subsidy being provided on Utility Stores on floor, pulses, ghee and tea. Shaikh also announced Rs 2 billion relief in tax for 0.3 million taxpayers belonging Khyber Pakhtoonkhuwa, FATA and PATA.He said all federal employees will receive a per-month ad-hoc allowance equivalent to fifty percent of their basic salaries. Medical allowance is also being doubled for employees of grade 1-15 and 15 percent raise for grade 16-22. Pensioners retired from the government service before 2001 will get 20 raise in their pension, while those retired after 2001 will get 15 percent increment in their monthly pensions.He termed the Budget 2010-11 different from past budgets, saying that it has been prepared keeping the standards of transparency in view. The budget has special focus on agriculture, infrastructure and social sector development, while new measures have also been proposed for increased revenue collection, he said.Shaikh said that the government is likely to receive Rs 52 billion from the U.S. under Kerry-Lugar Act.Minister termed the rate of government’s borrowing ‘alarming’, which he said has reached upto 55 percent of gross domestic product. He said government’s borrowing directly affects country’s key policy rate.Shaikh said that power crisis is hampering the economic progress in the country, and announced more funds for different projects of power generation. He said Gomal Dam and other major hydro power projects will be completed in next fiscal. He said that Pepco is asking the government for providing subsidy of Rs 180 billion.Minister also hailed the revival of 1973 Constitution by the sitting Parliament and felicitated Speaker National Assembly and Leaders of the House and Opposition on this endeavor.Prior to the National Assembly’s session, a special cabinet meeting chaired by Prime Minister Yousuf Raza Gilani gave the final approval of the budget proposals. The Cabinet also approved 10 percent curtailment in salaries of its members, the channel added

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