Business leaders in the provincial capital have termed the Federal Budget 2011-12 an incomplete policy statement since it fails to propose any economic revival package. Federal Finance Minister Dr Abdul Hafeez Sheikh did not mention how the government expects to meet its expenditures, especially in the context of its remarkably limited resources.
After hearing the budget speech at Lahore Chamber of Commerce and Industry (LCCI) and All Pakistan Textile Mills Association (APTMA), business leaders were united in their disappointment over the budget speech. They underlined that finance minister only presented the rosy picture of the economy, but avoided touching real economic problems. Business community leaders underscored that the federal budget was mainly focused on the international monetary agencies’ policies and ignored proposals put forward by local trade bodies and stakeholders.
LCCI Senior Vice President Sheikh Mohammad Arshad indicated that the federal budget in no way would help achieve the proposed GDP growth target of 4.2 percent as it seemed that the document was prepared in haste. He said that despite the gravity of the situation, the federal government had allocated a meager amount of Rs18 billion for new dams and water reservoirs. He pointed out that the government had discriminatory approach in power subsidies.
Out of total eight power distribution companies (DISCOs) three major Punjab-based DISCOs including LESCO, FESCO and GEPCO were not receiving even a single rupee in relief out total subsidies of Rs122 billion. KESC alone would be enjoying a subsidy of Rs24 billion. Sheikh remarked that according to the budget document, the government would have to heavily borrow to bridge the budget deficit and effectively trigger a surge in the inflation rate from around 15 percent to 25 percent thus rendering all Pakistani merchandise uncompetitive in the global marketplace due to high cost of inputs.
LCCI senior vice president urged the parliamentarians to raise voice on the floor of the house against mounting non-development expenditure.
Pakistan Industrial & Traders Association Front (PIAF) Chairman Sohail Lashari said that one percent reduction in GST was not enough. It would hardly provide any relief, business community in its budget proposals had asked the government to bring down the GST to 12 per cent but government ignored this recommendation. He said that increase in the taxable income from Rs300,000 to Rs350,000 and increase in the salaries and pensions of government employees was a step in right direction.
He also mentioned that business community was expecting a special package for the construction of water reservoirs but unfortunately no such announcement had been made despite repeated appeals by the masses.
All Pakistan Textile Mills Association (APTMA) Chairman Gohar Ejaz appreciated that no new taxes had been imposed but expressed the hope that the government would be able to meet its inflation target of nine percent in the next fiscal. “This would help the central bank to lower interest rates and spur investment that has remained elusive for the last four years,” he commented.
He said that allocation for development of energy and power resources should have been higher. “Textile industry is hostage to severe energy and power shortage” he observed. He further added that textile exports, touching a record $14 billion could be enhance to a level of $20 billion in the next fiscal year provided that a constant supply of gas and electricity is assured.
LCCI former President Shahid Hassan Sheikh said that though all budget speeches in the history of Pakistan left many questions unanswered, the budget speech of the Federal Finance Minister Dr Abdul Hafeez Sheikh was truly underwhelming.
He pointed out that the finance minister only mentioned the positive aspects of the federal budget. Budget speech was silent how the government would meet budget deficit and where the external resource targets would be met. He underlined that the government had rely heavily on the borrowing from banks.
Pakistan Industrial and Trader Associations Front (PIAF) former chairman Mian Anjum Nisar said that the trade and industry in the country was passing through the most difficult times owing to energy crisis. Gas and electricity shortages had compromised the competitiveness of local trade and industry, but the federal budget did not offer any solution for the energy crisis.
He pointed out that the government had earmarked Rs50 billion for the Benazir Income Support Programme (BISP), but did not make any noteworthy allocation for reforming the energy sector. He also indicated that the federal government did not offer any incentive in the budget which could help industrial or manufacturing growth in the country.
Pakistan Autoparts Manufacturers & Exporters Association Chairman Tahir Javed Malik said that though the budget had nothing for the development of trade and industry in the country, but did have some positive aspects including the reduction in the rate of General Sales Tax from 17 percent to 16 percent, reduction in Withholding Tax rate on cash withdrawal from banks and reduction in the rate of Special Excise Duty. However, he also believed that the budget speech was merely and jugglery of word. The federal government did not mention any strategy to curb poverty and unemployment.
Former LCCI senior vice president Aftab Ahmad Vohra has pointed out that the federal budget had failed to give any package for improving law and order situation in the country. He underlined that for a conducive business environment improved law and order situation was a prerequisite.
He said investment climate in the country was worst in the region owing to bad law and order situation, but the budget document was silent over this major concern of the business community in the country.
