Expenditure on defence surpasses allocation – By Kalbe Ali
SLAMABAD, May 21: While the development budget saw a massive reduction of about Rs146 billion during the current fiscal year because of financial constraints, defence expenditures increased by Rs60 billion mainly on account of military operations in parts of Khyber Pakhtunkhwa and tribal areas.
The National Assembly’s Standing Committee on Finance was informed on Thursday that an amount of Rs343 billion had been allocated for defence-related expenditures during the current fiscal year, but these rose to Rs403 billion.
Advisor to the Prime Minister on Finance Dr Abdul Hafeez Sheikh and Finance Secretary Salman Siddique briefed the committee on the second Budget Strategy Paper (BSP-II).
The committee headed by Fauzia Wahab was informed that defence expenditures had increased because of the tense situation in border areas. Mr Siddique said the defence ministry had sought an increase of Rs110 billion in the next budget.
Dr Hafeez said that in view of the tight fiscal position the finance ministry had allowed an increase of Rs105 billion in the defence budget for 2010-11.
The committee was informed that allocation for defence would be Rs448 billion which was higher than Rs442 billion estimated by the finance ministry in its BSP-1.
The committee was informed that total government expenditures during the fiscal year 2009-10 were Rs2.92 trillion and inflows Rs2.16 trillion — a deficit of Rs763 billion. Eight state-owned organisations, including PIA, Wapda and Steel Mills, were suffering an annual loss of about Rs400 billion.
The finance secretary said the revenue collection target had been set at Rs1.7 trillion for the next fiscal year and introduction of value-added tax would support collections by the Federal Board of Revenue. But, he said, if the country failed to enforce VAT from July the economy would be in trouble.
Abdul Rashid Godil of the MQM said the country needed to introduce a tax on agriculture income. “Practically, only Rs66 is paid in terms of various taxes on one acre,” he said, adding that there was a need to tax rich farmers and not small land-holders.
The committee was informed that the finance ministry had allocated Rs40 billion in the next budget for increase in the salary of government employees, but a final decision on this and on the issue of subsidies would be taken by the federal cabinet.
Saturday, 22 May, 2010