Federal Budget 2007-08

8/8/2019 Federal Budget 2007-08

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Federal BudgetFederal Budget20072007--08 (Pakistan)08 (Pakistan)

By: Group 2By: Group 2


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IntroductionIntroduction

TheThe budgetbudget isis thethe mostmost effectiveeffective instrumentinstrument ofof publicpublic regulationregulation ofofthethe economyeconomy..

ItIt isis aa powerfulpowerful tooltool forfor increasingincreasing capitalcapital formation,formation, acceleratingacceleratingeconomiceconomic growth,growth, modifyingmodifying thethe existingexisting distributiondistribution ofof incomeincome andandwealth,wealth, raisingraising thethe levellevel ofof employmentemployment andand buildingbuilding upup humanhumanresourcesresources..

IfIf budgetarybudgetary policypolicy isis notnot consistentconsistent withwith otherother economiceconomic andand socialsocialreforms,reforms, thethe outcomeoutcome maymay notnot bebe upup toto thethe expectationsexpectations ofof policypolicymakersmakers..


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"Though usually overlooked, setting up a"Though usually overlooked, setting up a

good personal budget is the first step togood personal budget is the first step to

any money management activity. Withoutany money management activity. Withoutit, you cannot control your finances andit, you cannot control your finances and

will always fall short of your goals."will always fall short of your goals."

Mark J. Randall, Certified Financial PlannerMark J. Randall, Certified Financial Planner


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Basic Elements of BudgetBasic Elements of Budget

TheThe twotwo basicbasic elementselements ofof aa budgetbudget areare thetheRevenuesRevenues andand ExpensesExpenses..

Elements of Budget

Revenues Expenses


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Salient Features of Budget 2007Salient Features of Budget 2007--0808

TotalTotal outlayoutlay ofof thethe budgetbudget 20072007--0808 isis RsRs 11,,599599 trillion,trillion, 2121..77%% higherhigherthanthan thethe sizesize ofof budgetbudget estimatesestimates forfor thethe yearyear 20062006--0707..

TheThe resourceresource availabilityavailability duringduring 20072007--0808 hashas beenbeen estimatedestimated atat RsRs11,,394394 billionbillion againstagainst RsRs 11,,100100 billionbillion inin thethe budgetbudget estimatesestimates ofof

20062006--0707..

NetNet revenuerevenue receiptsreceipts forfor 20072007--0808 havehave beenbeen estimatedestimated atat RsRs 902902billionbillion indicatingindicating anan increaseincrease ofof 2828%% overover thethe budgetbudget estimatesestimates ofof

20062006--0707..

TheThe provincialprovincial shareshare inin federalfederal revenuerevenue receiptsreceipts isis estimatedestimated atat RsRs466466 billionbillion duringduring 20072007--0808,, 2323%% higherhigher thanthan thethe budgetbudget estimatesestimates forfor20062006--0707..

TheThe sizesize ofof totaltotal revenuerevenue hashas beenbeen setset atat RsRs..14751475 billionbillion..


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TheThe externalexternal receiptsreceipts inin 20072007--0808 areare estimatedestimated atat RsRs 259259 billionbillion..

ThisThis showsshows anan increaseincrease ofof 88%% overover thethe budgetbudget estimatesestimates forfor 20062006--0707..

TheThe capitalcapital receiptsreceipts (net)(net) forfor 20072007--0808 havehave beenbeen estimatedestimated atat RsRs 5959billionbillion asas comparedcompared toto budgetbudget estimatesestimates ofof RsRs 1616 billionbillion inin 20062006--0707..

TheThe overalloverall expenditureexpenditure duringduring 20072007--0808 hashas beenbeen estimatedestimated atatRsRs 11,,599599 billionbillion ofof whichwhich thethe currentcurrent expenditureexpenditure isis RsRs 11,,056056 billionbillionandand developmentdevelopment expenditureexpenditure RsRs 543543 billionbillion..

CurrentCurrent expenditureexpenditure showsshows anan increaseincrease ofof 22..22 perper centcent overover thetherevisedrevised estimatesestimates ofof 20062006--0707,, whilewhile developmentdevelopment expenditureexpenditure willwill

increaseincrease byby 3737..77%% inin 20072007--0808 overover thethe revisedrevised estimatesestimates ofof 20062006--0707..

TheThe shareshare ofof currentcurrent expenditureexpenditure inin totaltotal budgetarybudgetary outlayoutlay forfor thetheyearyear 20072007--0808 isis 6666%% asas comparedcompared toto 7272..44%% inin revisedrevised estimatesestimates forfor20062006--0707..


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TheThe sizesize ofof publicpublic sectorsector developmentdevelopment programmeprogramme forfor thethe yearyear 20072007--0808 isis RsRs 520520 billionbillion.. WhileWhile forfor otherother developmentdevelopment expenditureexpenditure ananamountamount ofof RsRs 2323 billionbillion hashas beenbeen allocatedallocated.. ShowingShowing anan increaseincrease ofof1919..55%% andand 3131..88%% overover thethe budgetbudget andand revisedrevised estimatesestimates ofof 20062006--0707respectivelyrespectively..

TheThe provincesprovinces havehave beenbeen allocatedallocated anan enhancedenhanced allocationallocation forforbudgetbudget estimatesestimates 20072007--0808 inin theirtheir PSDPPSDP.. TheThe increaseincrease isis RsRs 3535billionbillion whenwhen comparedcompared withwith budgetbudget estimatesestimates forfor 20062006--0707..

EstimatedEstimated expenditureexpenditure onon DefenseDefense Affairs Affairs andand ServicesServices isis toto thethetunetune ofof RsRs 275275 billionbillion..

TheThe governmentgovernment hashas estimatedestimated tradetrade deficitdeficit atat $$1010..66 billionbillion.. ExportsExportstargettarget forfor thethe nextnext fiscalfiscal yearyear setset atat $$1818..99 billion,billion, wherewhere asas importsimportsforfor thethe nextnext fiscalfiscal yearyear havehave beenbeen estimatedestimated atat $$2929..55 billionbillion..


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An An amountamount ofof RsRs 3535 billionbillion hashas beenbeen allocatedallocated forfor EarthquakeEarthquakeReconstructionReconstruction andand RehabilitationRehabilitation AuthorityAuthority inin thethe PSDPPSDP 20072007--0808..

EstimatedEstimated expenditureexpenditure onon PublicPublic OrderOrder SafetySafety AffairsAffairs isis RsRs 2424..540540billionbillion..

TheThe expenditureexpenditure onon EconomicEconomic Affairs Affairs isis estimatedestimated atat RsRs 7878..941941billionbillion..

TheThe expendituresexpenditures onon EnvironmentEnvironment Protection,Protection, HousingHousing &&Community,Community, HealthHealth Affairs Affairs && Services,Services, Recreational,Recreational, CultureCulture

Services,Services, EducationEducation Affairs Affairs ServiceService andand SocialSocial ProtectionProtection isisestimatedestimated atat RsRs 00..182182 bn,bn, RsRs 11..095095 bnbn ,, RsRs 55..240240 bn,bn, RsRs 22..929929 bn,bn,RsRs 2424..147147 bnbn andand RsRs 22..401401 bnbn respectivelyrespectively..


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An An amountamount ofof RsRs..11..55 billionbillion wouldwould bebe spentspent onon agricultureagriculture andandlivestocklivestock whichwhich willwill enableenable peoplepeople toto becomebecome selfself supportingsupporting..

TheThe investmentinvestment targettarget hashas beenbeen setset atat RsRs 22,,382382 billionbillion oror 2323..88 perper

centcent ofof thethe GDPGDP.. TheThe shareshare ofof thethe privateprivate sectorsector wouldwould remainremain 1616..55percent,percent, wherewhere as,as, publicpublic sectorssectors shareshare inin investmentinvestment wouldwouldincreaseincrease toto 55..77 percentpercent..


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Relief MeasuresRelief Measures

SalariesSalaries ofof governmentgovernment servantsservants areare beingbeing increasedincreased byby 1515 percentpercent..PensionPension ofof governmentgovernment pensionerspensioners isis beingbeing increasedincreased byby 1515 toto 2020percentpercent.. IncreaseIncrease inin pensionpension isis beingbeing givengiven inin twotwo tierstiers:: oldoldpensionerspensioners willwill getget 2020 percentpercent raiseraise whilewhile newnew pensionerspensioners willwill getget 1515percentpercent raiseraise..

UpUp--gradationgradation ofof postsposts waswas aa longlong standingstanding demanddemand ofof thethe clericalclericalstaffstaff.. EmployeesEmployees inin BPSBPS 55,, BPSBPS 77 andand BPSBPS 1111 areare beingbeing promotedpromotedtoto BPSBPS 77,, BPSBPS 99 andand BPSBPS 1414 respectivelyrespectively.. AA totaltotal ofof 8750087500 federalfederalemployeesemployees willwill benefitbenefit fromfrom thisthis measuremeasure..

ForFor thethe welfarewelfare ofof RailwayRailway employeesemployees thethe governmentgovernment hashas decideddecidedupup--gradationgradation ofof BasicBasic ScaleScale byby oneone stepstep forfor thethe remainingremaining 6262,,482482staffstaff excludingexcluding SecretarialSecretarial Staff,Staff, alongalong withwith increaseincrease inin theirtheirallowancesallowances.. A A totaltotal ofof 1212,,510510 employeesemployees havehave benefitedbenefited fromfrom thisthisincreaseincrease..


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ResidentialResidential accommodationaccommodation isis aa majormajor problemproblem forfor employeesemployees inin

IslamabadIslamabad .. GovernmentGovernment hashas decideddecided toto immediateimmediate constructconstruct 3737,,000000 houseshouses forfor thethe lowlow paidpaid employeesemployees andand givegive itit toto themthem ononownershipownership basisbasis..

MinimumMinimum wagewage ofof unskilledunskilled workersworkers isis beingbeing increasedincreased fromfrom

RsRs..40004000//-- perper monthmonth toto RsRs..46004600//-- perper monthmonth..

ContractContract employeesemployees havehave beenbeen mademade entitledentitled toto receivereceive companiescompaniesprofitprofit underunder thethe CompaniesCompanies ProfitProfit (Workers(Workers Participation)Participation) ActAct 19681968..TheThe limitlimit ofof profitprofit hashas beenbeen enhancedenhanced fromfrom RsRs..1200012000//-- toto RsRs..2000020000//--..

WorkersWorkers WelfareWelfare FundFund OrdinanceOrdinance 19711971 amendedamended toto increaseincrease thethelimitlimit ofof deathdeath grantgrant fromfrom RsRs..200200,,000000 toto RsRs..300300,,000000//--


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TheThe numbernumber ofof UtilityUtility StoresStores willwill bebe increasedincreased byby additionaladditional 55,,000000andand provideprovide aa utilityutility storestore atat everyevery UnionUnion CouncilCouncil inin thethe nextnext 44monthsmonths wherewhere peoplepeople willwill alsoalso getget medicinesmedicines atat reducedreduced ratesrates..

AnAn allocationallocation ofof RsRs 77..55 billionbillion hashas beenbeen mademade forfor PakistanPakistan BaitBait--ulul--MalMal whichwhich isis RsRs 22..55 billionbillion moremore thanthan thethe allocationallocation forfor lastlast yearyear.. AtAtpresent,present, itit isis helpinghelping 11,,500500,,000000 householdshouseholds throughthrough itsits foodfood supportsupportprogrammeprogramme.. ThisThis yearyear 700700,,000000 moremore householdshouseholds willwill benefitbenefit thusthusbringingbringing thethe numbernumber ofof beneficiariesbeneficiaries toto aa totaltotal ofof 22,,200200,,000000..

A A subsidysubsidy ofof 2020%% payablepayable onon electricityelectricity chargescharges forfor tubetube wellswells isisbeingbeing introducedintroduced.. ThisThis subsidysubsidy willwill bebe sharedshared byby thethe CenterCenter andandProvincesProvinces equallyequally..


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Aspects of Budget 2007Aspects of Budget 2007--0808

SomeSome ofof thethe negativenegative aspectsaspects andand positivepositive aspectsaspects ofof thethe budgetbudgetareare::

-- TheThe totaltotal budgetbudget deficitdeficit ofof RsRs395395 billionbillion willwill representrepresent aboutabout 44 perper

centcent ofof thethe GDPGDP comparedcompared toto lastlast yearsyears 33..77 perper centcent..

-- TheThe reductionreduction inin thethe pricesprices ofof essentialessential itemsitems atat thethe utilityutility storesstores andandexpansionexpansion inin theirtheir networknetwork waswas announcedannounced lastlast yearyear asas wellwell butbutfailedfailed toto controlcontrol thethe foodfood priceprice inflationinflation..

-- TheThe actualactual levellevel ofof defensedefense spendingspending isis closeclose toto 44%% ofof GDPGDP.. RsRs275275billionbillion isis fourfour timestimes moremore thanthan thethe combinedcombined allocationallocation forfor water,water,electricity,electricity, higherhigher educationeducation andand motormotor highwayhighway constructionconstruction inin thethecurrentcurrent budgetbudget..


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-- IndustrialistsIndustrialists areare hesitanthesitant inin implementingimplementing thethe minimumminimum wagewage ofof RsRs44,,600600 onon thethe groundground thatthat thethe costcost ofof doingdoing businessbusiness waswas veryvery highhigh inin

thethe countrycountry..

-- ThereThere hashas beenbeen massivemassive increaseincrease inin indirectindirect taxationtaxation toto hithit thethe poorpoorwhilewhile nono substantialsubstantial increaseincrease waswas visiblevisible inin directdirect taxestaxes..

-- TheThe nonnon--developmentdevelopment expenditureexpenditure continuescontinues toto swellswell everyevery yearyear asasitit hashas increasedincreased byby 143143..55 perper centcent fromfrom RsRs424424..44 billionbillion inin 19981998--9999 totoRsRs10561056 billionbillion inin 20072007--0808..

-- TheThe governmentgovernment hashas failedfailed toto reducereduce itsits debtsdebts asas domesticdomestic debtsdebtsactuallyactually increasedincreased fromfrom RsRs14591459 billionbillion inin 19991999 toto RsRs23512351..77 billionbillion byby20072007 andand externalexternal debtsdebts whichwhich werewere $$ 2828..33 billionbillion inin 19991999 roserose toto $$

3131..0808 billionbillion asas ofof MarchMarch--endend..

-- TheThe budgetbudget forfor 20072007--0808 doesdoes notnot provideprovide anyany reliefrelief toto salariedsalaried classclasstaxpayerstaxpayers becausebecause thethe governmentgovernment neitherneither raisedraised thethe exemptionexemptionthresholdthreshold forfor incomeincome taxtax nornor mademade anyany changeschanges inin thethe ratesrates ofof thethelevylevy..


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-- OnOn inflation,inflation, CPICPI hadhad increasedincreased fromfrom 33..66%% toto 77..99 %%.. Likewise,Likewise, WPIWPI

jumpedjumped upup fromfrom 11..88%% toto 66..99%%,, whereaswhereas SPISPI wentwent upup fromfrom 11..88%% toto aawhoppingwhopping 1111..11%%.. Thus,Thus, CPI,CPI, WPIWPI andand SPISPI increasedincreased byby 119119 perpercent,cent, 283283 perper centcent andand 516516 perper cent,cent, respectively,respectively, duringduring 19991999--20072007..

-- CurrentCurrent accountaccount deficitdeficit andand fiscalfiscal deficitdeficit duringduring pastpast yearsyears hashasincreasedincreased.. TheThe fiscalfiscal deficitdeficit inin 20062006--0707 jumpedjumped toto RsRs 373373 billionbillion asascomparedcompared toto RsRs 179179 billionbillion inin 19981998--9999.. Similarly,Similarly, thethe levellevel ofof currentcurrentaccountaccount deficitdeficit overover thethe lastlast threethree yearsyears hashas beenbeen:: $$11,,753753 millionmillion inin20042004--0505,, $$55,,649649 millionmillion inin 20052005--0606 andand $$66,,212212 millionmillion inin 20062006--0707..

++ TheThe governmentgovernment hadhad increasedincreased salariessalaries andand pensionspensions andand extendedextendedsubsidysubsidy andand reliefrelief thisthis yearyear tootoo toto savesave thethe vulnerablevulnerable segmentssegments ofofsocietysociety fromfrom inflationinflation andand povertypoverty..

++ InIn orderorder toto containcontain inflationinflation thethe governmentgovernment thisthis timetime hashas increasedincreasedfoodfood subsidysubsidy toto RsRs 113113 billionbillion onon essentialessential itemsitems suchsuch asas sugar,sugar, Atta,Atta,pulses,pulses, edibleedible oil/ghee,oil/ghee, andand somesome basicbasic medicinesmedicines..


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++ TheThe sizesize ofof publicpublic sectorsector developmentdevelopment programmeprogramme forfor thethe yearyear 20072007--

0808 isis RsRs 520520 billionbillion.. WhileWhile forfor otherother developmentdevelopment expenditureexpenditure ananamountamount ofof RsRs 2323 billionbillion hashas beenbeen allocatedallocated.. TheThe PSDPPSDP showsshows ananincreaseincrease ofof 1919..55%% andand 3131..88%% overover thethe budgetbudget andand revisedrevised estimatesestimatesofof 20062006--0707 respectivelyrespectively.. TheThe provincesprovinces havehave beenbeen allocatedallocated ananenhancedenhanced allocationallocation forfor budgetbudget estimatesestimates 20072007--0808 inin theirtheir PSDPPSDP..TheThe increaseincrease isis RsRs 3535 billionbillion whenwhen comparedcompared withwith budgetbudget estimatesestimatesforfor 20062006--0707..

++ TheThe budgetbudget proposesproposes thethe withdrawalwithdrawal ofof customscustoms dutyduty fromfrom thethemachinerymachinery usedused inin horticulture,horticulture, furniture,furniture, marblemarble andand granite,granite,surgicalsurgical andand medicalmedical instrumentsinstrumentsbusinessbusiness.. ItIt alsoalso proposesproposeswithdrawalwithdrawal ofof customscustoms dutyduty oror reductionreduction byby fivefive percentpercent onon rawrawmaterialsmaterials usedused inin electricalelectrical capitalcapital goods,goods, paperpaper andand paperboard,paperboard,

chemicals,chemicals, plasticplastic andand rubberrubber industriesindustries.. ItIt isis hopedhoped thethe budgetbudget willwillproveprove aa milestonemilestone forfor thethe sociallysocially necessarynecessary sustainedsustained growthgrowth ofof thetheeconomyeconomy andand alsoalso makemake aa significantsignificant contributioncontribution inin generatinggeneratingmoremore employmentemployment opportunitiesopportunities andand alleviatingalleviating povertypoverty..


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++ TheThe openingopening ofof 50005000 utilityutility storesstores willwill createcreate job job opportunities,opportunities,enhanceenhance thethe availabilityavailability ofof essentialessential commoditiescommodities atat thethe doorstepsdoorsteps ofofthethe peoplepeople atat anan affordableaffordable priceprice..

++HugeHuge amountamount ofof RsRs 7272..55 billionbillion waswas proposedproposed toto bebe allocatedallocated totosubsidizesubsidize powerpower sectorsector toto pickpick upup powerpower tarifftariff differentialdifferential andandadditionaladditional surchargessurcharges againstagainst GSTGST throughthrough WAPDAWAPDA andand KESCKESC..

++ InIn federalfederal budgetbudget RsRs.. 1414..33 billionbillion hashas beenbeen announcedannounced forfor thethe healthhealthsectorsector developmentdevelopment whichwhich isis 2929..77%% increaseincrease fromfrom thethe lastlast yearyear

allocationallocation ofof RsRs.. 1111 billionbillion..


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ConclusionConclusion

Budgets have an economic, political andBudgets have an economic, political and

technical basis. Unlike a pure economictechnical basis. Unlike a pure economic

budget, they are not entirely designed tobudget, they are not entirely designed to

allocate scarce resources for the best economicallocate scarce resources for the best economic

use. They also have a political basis whereinuse. They also have a political basis wherein

different interests push and pull in an attemptdifferent interests push and pull in an attempt

to obtain benefits and avoid burdens. Theto obtain benefits and avoid burdens. Thetechnical element is the forecast of the likelytechnical element is the forecast of the likely

levels of revenues and expenses.levels of revenues and expenses.

Documents

Federal Budget 2007-08