The newly formed government of Pakistan on Wednesday unveiled what is being termed as ‘an investment and business friendly budget’ with a total outlay of Rs3.5 trillion for the financial year 2013-14. Finance Minister, Senator Ishaq Dar presented the budget speech at the special session of the National Assembly convened by President Asif Ali Zardari for presenting proposals for Federal Budget 2013-14. The budget focused on boosting business activities includes significant increases in government spending for energy sector reform and development.

The budget envisages a record allocation of Rs 1.155 trillion for Public Sector Development Program (PSDP) with an aim to stimulate the economy which presently depicts a bleak picture. A big chunk of Rs 225 billion will be spent on energy sector. The government has allocated Rs 185 billion as power subsidy. The first budget of Nawaz Sharif-led government has allocated Rs 627 billion for FY 2013-14 defence compared to Rs 570 billion for the preceding year. Dar proposed an increase in General Sales Tax (GST) from 16 percent to 17, a decision which is going to further raise the prices of commodities for the people already battered by the worst price hike in the country.

As an austerity measure, Ishaq Dar proposed to bring down the expenditures of Prime Minister House by 45 percent, which he claimed will result in a national saving of Rs40 billion. There will be a complete ban on purchase of new cars for Prime Minister’s office but the ban will not be applicable for law enforcement agencies and other inevitable requirements. Ishaq Dar maintained that the circular debt amounting to more than Rs500 billion will be eliminated in 60 days. The budget proposes to abolish the ministers’ discretionary funds.

The budget for next fiscal earmarks an amount of Rs75 billion under Income Support Program. The tax exemption for luxury cars is proposed to be abolished while 1200 cc hybrid cars are being exempted from import duty. A concession of 50 percent has been proposed for 1200-1800 cc cars. Rs20,000 tax will also be applicable on the purchase of 1000 CC cars. A withholding tax on wedding cermonies being held at commercial venues has also been proposed along with taxes on foreign movies and dramas. GDP growth rate target for FY 2013-14 has been projected at 4.8 percent and revenue target at Rs2.475 trillion. (Agency)

‘Nepal should learn from Pakistani government’s initiative’

Though a much larger economy, Pakistan is also facing long-standing electricity shortage like Nepal. The ‘loadshedding’ problem has taken a huge toll in Pakistan’s economic productivity and competitiveness. The daily schedule of up to 22 hour electricity cut has not only paralysed the lives of ordinary Pakistanis but also crippled once booming manufacturing and other business sectors. But, things are about to change as the newly elected government under Prime Minister Nawaz Sharif gave priority to boost the energy sector. Analysts say that the five-year reform plan and the significant budget increase in energy sector development highlights that the initiatives taken by Sharif government are in right direction.

‘We can learn from Pakistan,’ says Dr Suvarna Das Shrestha, the President of Independent Power Producers’ Association of Nepal (IPPAN). As Nepal government is set to unveil the annual budget for the fiscal year 2013- 14, Shrestha urged the government and political parties to acknowledge the urgency to reform the Nepali energy sector. ‘ Energy is one of the most important factors for country’s long-term economic growth, so government should address various problems seen in the distribution and production of electricity,’ he said. Shrestha added that budget increment in establishing nationwide high-voltage transmission lines would be the first step to reform the Nepali energy sector which will ensure the effective distribution of electricity produced. ‘There is also a need of budget allocation to subsidize the electricity production to encourage the private sector,’ he argued. Shrestha suggested that subsidising Power Purchase (PP) rate and Value Added Tax (VAT) along with bank interest rates would facilitate the private sector. According to him, the government should also allocate some money for hydropower research and development so that viabilities and possibilities of various projects can be found out with actual facts and figures. ‘The energy sector is one of the most depressed sector in the country because the overall budget allocation is just 2-3 per cent of the total government spending, now the allocation should reach at least 20-30 percent,’ he added.