ISLAMABAD: Minister for Industries Hammad Azhar is presenting the much-anticipated budget for the fiscal year 2021-2022 in National Assembly.
The minister started his speech by saying that Pakistan Tehreek-e-Insaf (PTI) government’s main goal was to revive the dwindling economy by eliminating corruption, setting development goals aimed at benefiting the poor people of the country.
He repeated that PTI govt inherited an economy which is in doldrums due to the wrong policies of the past government with zero exports, increase in current account deficit and non-development expenditure.
He said that some of the major achievements of the PTI government in past two years were bringing down the current account deficit to 73 percent, an increase of about 17 percent FBR revenue, 134 percent increase in non-tax revenue and $6billion loan repayment.
He was of the view that due to the government’s economic reforms, rating agency Moody’s upgraded Pakistan’s outlook to stable in December 2019.
About the impact of coronavirus lockdown in the country, the minister said that PTI government’s reforms received a setback in the form of COVID-19 spread but the government is still committed to economic reforms while dealing with the pandemic at the same time.
He maintained that at least Rs1200 billion stimulus package was approved for coronavirus and lockdown affectees.
Rs20billion allocated for health sector
Balochistan to get Rs10billion special grant
Rs1billion allocated for artist welfare fund
Inflation to be brought down to 6.5 percent
Current account deficit to be maintained at 4.4 percent
Rs40billion allocated for Pakistan Railways
Rs10billion for the agricultural sector
Rs6billion allocated to deal with challenges posed by climate change
Rs20billion allocated for science and technology
Rs48billion for KP’s tribal areas
Exemption from taxes and duties on medical and testing equipment extended to three more months
Traders can do transactions up to Rs100, 000 without showing NIC
Although, provisional GDP growth rate for FY2020 is estimated at negative 0.38 percent, however, macroeconomic stabilization measures undertaken by the government over the past year resulted in significant reduction in Saving-Investment Gap which was mainly driven by reduction in trade deficit and increase in workers’ remittances. It is also mentionable that fiscal deficit remained contained in first three quarters of FY2020.
Historically, Private Consumption had significantly contributed in Pakistan’s economic growth. The pattern was likely to continue, however, due to COVID-19, private consumption suffered significantly. In percentage of GDP, it dropped to 78.5 percent in FY2020 compared to 82.9 percent in FY2019. Private Investment as a percentage of GDP dropped to 9.98 percent from 10.29 percent in FY2019 while Public Investment (including General Government investment) has shown improvement as it remained 3.8 percent compared to 3.7 percent last year. However, there was 13.2 percent growth in Public
Investment (including General Government investment) during FY2020, while it declined
by 21.6 percent last year.
The economy of Pakistan like other economies has a diverse structure with three main sectors -agriculture, industry and services. The agriculture sector, as mentioned earlier, grew by 2.67 percent. The crops sector has witnessed positive growth of 2.98 percent during FY2020 mainly due to positive growth of 2.90 percent in important crops.
According to Pakistan Bureau of Statistics, fourth quarter has been estimated by keeping in
view the lockdown situation faced by the industrial sector due to COVID-19.
Signifcant impact has been observed in the manufacturing sector, particularly Large-Scale manufacturing and Small-Scale Manufacturing. The provisional growth in industrial sector has been estimated at -2.64 percent mainly due to a negative growth of 8.82 percent in mining and quarrying sector and decline of 7.78 percent in large-scale manufacturing sector.
Due to lock down situation in the country, the growth estimates of Small-Scale Industry for FY2020 are 1.52 percent.
Similar to the industrial sector, services sector of the economy has also witnessed significant impact of the lock down situation in the country due to COVID-19, particularly in Wholesale and Retail Trade and Transport Sectors. The services sector has declined provisionally at 0.59 percent mainly due to 3.42 percent decline in Wholesale and Retail Trade sector and 7.13 percent decline in Transport, Storage and Communication sectors.
Finance and insurance sector witnessed a slight increase of 0.79 percent. The Housing Services, General Government Services and Other private services have contributed positively at 4.02, 3.92 and 5.39 percent respectively.