ASSIGNMENT #1

ECONOMICS OF PAKISTAN

SUBMITTED TO
PROF RIZWANA HUSSAIN

SUBMITTED BY
RAFAY AHMAD DAR (BC08-374)
U MAIR AHMAD
(BC08-371)
M UHAMMAD HAROON
(BC08-322)
H AFIZ SALEEM
(BC08-370)
M UHAMMAD UMER
(BC08-375)
U MAIR AHMED
(BC08-366)
HAFIZ JAVED (BC08-
353)
 HAILEY COLLEGE OF COMMERCE
UNIVERSITY OF THE PUNJAB
LAHORE
Budget 2009-2010

Introduction:
Budget can be defined as “A budget is a financial document used to project future
income and expenses. The budgeting process may be carried out by individuals or by
companies to estimate whether the person/company can continue to operate with its
projected income and expenses.”

Formation of Budget:
Over the past decade budgetary policies have emphasised a firm restraint on the
growth of total expenditure and a restructuring of the profile of both current and
development expenditure to deal with a high fiscal deficit in Pakistan. Regarding current
expenditure, there has been an increasing emphasis on meeting fully the recurrent cost
requirements of completed public investments and on the minimization of the costly
subsidy programmes. Development expenditure has been increasingly directed towards the
priority sectors pertaining to physical and social infrastructure and to early completion of
the on-going development projects.
Effective public expenditure management places heavy demands on existing
government institutions and has a much wider scope than the formulation and
implementation of conventional expenditure budgets. The formulation of an appropriate
macroeconomic framework, selection Of projects on a sound basis, proper designing of
public sector investment programmes and appropriate linkages between planning and
budgetary processes is as, if not more, important than the narrow focus on expenditure
budgeting.
Notwithstanding the importance of these broader aspects of budgetary issues, this
paper does not deal with such public expenditure management issues. Instead it
concentrates on a description and an analysis of the formulation process of government
expenditure budgeting.
The conventional practice in Pakistan in the formulation of expenditure budgets is
based on the "bottom-up" demands of various government agencies. Feats regarding the
adverse consequences of deficit financing with respect to macro instability have persuaded
the government to impose constraints on total expenditure. Donor agencies, especially the
International Monetary Fund, have been instrumental in the imposition of 'top-down'
constraints on the 'bottom-up' demands.
 We present information on selected aspects of the annual budget formulation cycle
in Pakistan. The public expenditure on account of Defense, Development and non-
Development involves different procedures and are subject to different criteria in Pakistan,
The analysis for each type of expenditure and the interface between the conventional
'bottom-up' and the 'top-down' approaches is discussed at some length.

Outlay of Budget 2009-10

The budget had an allocation of Rs 724 billion for debt servicing, funds for which
would be financed through local and external borrowing. Non-development expenditures
are estimated at Rs 1.55 trillion, Rs 621 billion have been apportioned for the Public Sector
Development Programme (PSDP) 2009-10 and the allocation for the defence budget was
likely to be around Rs 343 billion.
The budget proposal estimated foreign and domestic debt servicing at Rs 655 billion,
Rs 70 billion had been earmarked for the Benazir Income Support Programme (BISP),
allocation for the rehabilitation of the internally displaced persons (IDPs) is likely to Rs 50
billion, while the Earthquake Reconstruction and Rehabilitation Authority (ERRA) is likely
to get Rs 25 billion for the year 2009-10.
The tax collection target was to be set at between Rs 1.380 and Rs 1.390 trillion, with
new taxes and duties amounting to around Rs 100 billion. The existing petroleum
development levy may be replaced by a Carbon tax of around Rs 6 to 12 per litter on
petroleum, oil and lubricant products, likely to be imposed from July 1, 2009.
Now a brief outlay of the budgetary allocation to different departments in precise form
is given below;
 Excise duty on cellular down to 19%
 Excise duty on CKD down by 5%
 Regulatory duty on handsets of Rs. 250 abolished
 Rs. 50 billion allocated for IDPs
 Salaries to be raised from July 1
 Rs 264.9 billion foreign aid expected
 Petroleum levy for development to end in Fy10
 Withholding tax on domestic vehicles ended
 SIM activation charges reduced from 500 to 200
 Most importance to be given to electricity and gas
 Corporate and rehabilitation act in final stages for Industrial sector
 Industrial relations act approved by cabinet for relationship between employer and
employees
 NHA to get 40.2 billion (increased from 36 billion)
 Allocation for agricultural sector to be 18 billion
 Health sector to get 23 billion (61% increase)
 Fata payables for PEPCO to be paid by Govt.
 Current excise duty on cement to be reduced
 Southern Punjab to get power project
 Govt. approves 2.2 billion for environment
 Education ministry to spend 2 billion on developing community schools and improve
primary education
 6419 new towns will be given electricity
 4 billion allocated for Diamer Bhasha Dams
 11 billion to be spent on PMs disease control program
 Tax on Cigarettes to be increased
 Increase in CVT to generate 15 billion in revenue for FY10
 Benazir Human rights commission to be set up for Human rights
 National internship program to get 3.6 billion for 30,000 internships for youth
 583 millions for sports
 Govt. employees to get 15% raise in salaries
 15% adhoc relief allowance for army men on western borders (this will finish in
December, since it is adhoc)
 Education to get 31 billion
 GDP growth in fy10 expected to be 3.5%
 Rehabilitation of earthquake affected to continue. 25 billion allocated
 CVT on real estate to increase to 4% from 2%
 Clean water allocation 47.2 billion

Provincial Budgets
The provincial budgets are as important as federal budget. Although there are no as
such provincial autonomy in Pakistan yet somehow the importance of Provincial budgets is
as important as federal budget. The allocation of the budget of four provinces is given
below:

Punjab Budget:
Budget outlay for the year estimated at Rs 489.8 billion including development
expenditure Rs 175 billion.
 Comprehensive development, Poverty alleviation, health, education to get
priority
 Increase in industrial, agriculture output to be focused.
 Transfer of inherited immoveable property exempted from levy of 2% stamp
duty.
 Rs 30 billion allocated for subsidy on Sasti rooti, eatables, stipends to poor
students, medical facilities and other facilities
 15% increase in salaries and pensions of government employees.
 Rs 23 billion allocated for education sector.
 Rs 26 billion allocated for special infrastructure projects.
 Rs 8.5 billion allocated for clean drinking water arrangements.
 Rs 3 billion allocated for farm to market roads, road connections and missing
facilities in rural areas.
 Rs 2 billion allocated for providing facilities at Kach-abadies.
 Rs 12 billion for Health services.
 Rs 1.60 billion for Sports.
 Rs 2 billion for provision of basic life amenities in slum dwellings (Kachi
Abadies).
  Rs 3.2 billion for Agriculture.
 Rs 47.55 billion for communication and civil works.
 Rs 5 billion for development of Southern Punjab.
 Rs 2 billion for link roads to connect rural areas with urban centers.
 Rs 2.30 billion for Technical Education and Vocational

Sindh:
Rs 327.182 billion budget for fiscal year 2009-10, marking "a big" deficit of Rs 16.84
billion was presented. The budget showed an increase of 22 percent against the current
fiscal year's revised estimates of Rs 267.568 billion. As per proposed budget, total revenue
receipts estimated at Rs 310.34 billion, which are Rs 42 billion higher than current year
revised revenue estimates of Rs 268.271 billion.
Estimated revenue receipts from Divisible Pool, including Grant-in-Aid, are Rs 125
billion, with 12.7 percent increased over 2008-09 budget. The estimates under oil and gas
receipts are Rs 50 billion and these were six percent less than current year's revised
estimates of Rs 53.4 billion. Overall federal transfers were estimated at Rs 204.6 billion as
against revised estimates of Rs 183.2 billion.
The province's own receipt pitched at Rs 39 billion with an increase of over 29 percent
over revised estimates of outgoing year. On the expenditure side, the current revenue
expenditure was estimated at Rs 213.4 billion, with an increase of 15 percent over revised
estimates of Rs 185 billion.
The current capital budget had a surplus of Rs 5.4 billion as Sindh government was
expecting "Budget Support Loans" from World Bank and Asian Development Bank. The
shares of local governments worked out to Rs 94.4 (including Rs 27.6 billion of District
Support Grant) on the basis of PFC Award, and it reflects an increase of 21 percent over
budget 2008-09.
The current revenue receipts were estimated at Rs 243.662 billion, Rs 30.126 billion
higher than current fiscal year revised revenue receipts of Rs 213.536 billion. In addition,
current capital receipts estimated Rs 21.323 billion for next fiscal year as compared to Rs
20.937 billion in revised budget of current fiscal year, depicting an increase of Rs 386
million. Further, current capital expenditures estimated at Rs 15.879 billion, against Rs
7.554 billion of revised budget of current fiscal year.
The current revenue expenditures were increased by Rs 28.446 billion to Rs 213.397
billion for the next fiscal year, out of which provisional expenditures, showing a rise of Rs
16.08 billion to Rs 118.972 billion for 2009-10. In addition, with an increase of Rs 11.838
billion, local governments' expenditures were estimated at Rs 94.425 billion for the
upcoming fiscal year at Rs 82.587 billion, showing an increase of Rs 11.838 billion.
The Health Development Budget increased from Rs 3.5 billion to Rs 5.23 billion, with
49 percent increase. The overall allocation for promotion of education pitched at Rs 6
billion with 27 percent increase over last year. The highest ever, Rs 75 billion allocated for
Annual Development Programme (ADP) as compared to Rs 55 billion in revised estimates
of fiscal year 2008-09, depicting an increase of Rs 20 billion. ADP allocation for district
governments had surged by Rs 3 billion to Rs 15 billion for the next fiscal year.
 Expenditures under Public Sector Development Programme (PSDP) have been
estimated at Rs 97.905 billion against Rs 81.063 billion receipts. PSDP comprised Rs 75
billion for provincial ADP, Rs 892.77 million for Drought Emergency Relief Assistance
(DERA), Rs 4.4 billion for foreign project assistance and Rs one billion for Sindh Cities
Improvement Programme (SCIP).

NWFP:
The NWFP government presented a budget of Rs 214.2 billion against the estimated
receipts of Rs 211.1 billion, showing a deficit of Rs 3.100 billion for the 2009-10 financial
years.
Special security arrangements were made for the budget session in the wake of the
recent bombing incidents, particularly the huge bomb blast in a five-star hotel of the city.
Out of the total estimated receipts, the province would get Rs 67.8 billion in the head of
Federal tax assignment from the Federal government, while estimated receipt in 2.5 percent
share in the general sales tax (GST), the provincial government is expected to receive Rs
7.9 billion.
Besides, another amount of Rs 7.6 billion were expected to be received by the Federal
government in the head of the royalty on oil and gas. The provincial government showed a
receipt of rupees six billion in the head of the net-profit on electricity and Rs 14.8 billion in
the form of special grant from the Federal government, while an estimated receipt of Rs 7.5
billion was expected from the own resources of the province. The share of the provincial
government in head of GST on services estimated at Rs 2.1 billion; an amount of Rs 400
million on general capital receipt and Rs 17.1 billion in head of development receipts. The
general capital receipt in the head of food is estimated at Rs 79.8 billion.
Out of the total outlay of Rs 214.2 billion, an estimated huge amount of Rs 80 billion
has been sanctioned in the head of current revenue expenditure with an expenditure of
rupees six billion for health and education, Rs 9.7 billion for police and another amount of
Rs 7.2 billion for the payment of pensions. An estimated amount of Rs 34.9 billion
earmarked for district governments for payment in the head of salaries and other
expenditures; Rs 1.1 billion for initiating relief measures by revenue and estate department;
rupees two billion for payment of subsidy on wheat; Rs 8.1 billion for retiring of debts and
another estimated amount of Rs 11 billion in the head of miscellaneous expenditures.
In total development expenditure, the estimated provincial Annual Development
Programme (ADP) was Rs 32.5 billion and Districts ADP of Rs 1.34 billion and special
Federal government Public Sector Development Programme (PSDP): Rs 10 billion,
including grants of Rs 9.83 billion; and loans of Rs 214.91 million respectively. The
estimated development expenditure also comprised Population Welfare Programme of Rs
574 million and foreign project assistance of Rs 4.61 billion.

Balochistan:
The Balochistan coalition government presented Rs.74.247 billion tax-free budget with
an overall deficit of Rs.8.332 billion for the fiscal year 2009-10.
 Development Programme:
The budget envisaged development programme of Rs.18.536 billion including Rs.5.107
billion of foreign project assistance-FPA and with current budget of Rs.53.081 billion.

Net Receipts:
Keeping in view burden of common man, the budget was tax-free. Total estimated
receipts were Rs.59.054 billion out of which Rs.3.645 billion as the province's own income
including Rs.1.132 billion as tax while Rs.2.512 billion non-tax receipts, and Rs.55.408
billion as federal transfers including Rs.12.227 billion direct transfers, Rs.13.975 billion
subvention/grants and Rs.29.204 as share in tax. In comparison with the outgoing budget,
the total estimated receipts of Rs.59.054 billion of the budget 2009-10 were lesser than the
outgoing fiscal budget of Rs.62.38 billion.

Budget Deficit:
The deficit in the budget was amounting to Rs.8.832 billion as the deficit budget in
outgoing financial year was as Rs.8.80 billion. The deficit amounting to Rs.8.832 billion
would be met from promised grants of Rs.3 billion by the federal government set for
budgetary support, Rs.3 billion set for public representative programme-PRP and
remaining deficit of Rs .2.332 billion would be met be enhancing province's own resources.

Salary Increaement:
Government announced ad-hoc relief allowance of 15 percent of serving government
servants and 15 percent increase in pension of retired servants of Balochistan government
from July 1, 2009.

Measures to reduce unemployment:

Regarding measures, which had so far been taken for ending unemployment in
Balochistan, he said that the provincial government had created 4212 new posts in various
departments during the last one-year aimed at reducing unemployment in the province.
Referring to financial crunch being faced by the cashed-strapped Balochistan
government, government had evolved two pronged strategy for putting the fledgling
economy back on track. These included; initiating reconciliation with annoyed (Baloch)
political forces (for improving law and order) and contacting the federal government for
conversion of over draft into soft loan.

Salient Features:
 Rs.74.247 billion tax-free budget
 A deficit of Rs.8.332 billion for the fiscal year 2009-10.
 Development programme of Rs.18.536 billion.
 Total estimated receipts are Rs.59.054 billion.
 15 percent increase in pension of Balochistan government.
 Comparison between Expenditures and Receipts

This is the receipts and expenses at glance

during the fiscal year 2009-10.
 Allocation of Federal Budget in Different Ministries
Pakistan has agricultural based economy. But still it has got many infrastructure
regarding industry, mining, atomic energy and coal board etc. All these departments and
ministries have got their on budget allocation which makes it easier for the finance ministry
to handle the balance of expenditures and receipts.
Some ministries in Pakistan have got more funds than others according to their
importance in the economy. So the budget allocation for the different ministries,
departments and institutions is given below:

Ministry of Power and Water

Allocation of Budget:
The government allocated Rs. 139306.880 million for power sector under Public Sector
Development Program (PSDP) 2009-10 for new and on-going development projects.
According to the budgetary allocations, out of total amount, Rs. 21455 million have been
allocated for 24 news projects while Rs 117751.880 million earmarked for 49 on-going
schemes. In total amount Rs. 124421.880 million is local component while Rs. 14885
million is the foreign component.
An amount of Rs 22967 million allocated for 800 MW Guddu Steam Power Project
while Rs 18418.730 million earmarked for 500 MW combined cycle power plant at Chicho
Ki Malian. Similarly, an amount of Rs 16000 million allocated for Neelum-Jhelum
Hydropower Project while 13676.150 million earmarked for 425 MW combined cycle
Nandipur Power Plant.
An amount of Rs 8000 million allocated for Diamer Basha Dam project for acquisition
of land and resettlement (4500 MW) while 15000 million earmarked for construction of
Diamer Basha Dam project.

Duty on energy savers:

The cabinet stymied Finance Ministry’s attempt to import custom duty on energy
savers. Some Ministers expressed apprehension that levy of excise duty would ultimately
affect the common man. Similarly, withdrawal of subsidies on power consumption was
likely to create difficulties for consumers of Karachi Electric Supply Corporation (KESC).
So these steps are going to help general public in near future.

Solar Energy:
 The government focused on establishing more installations of alternative energy and
the solar energy is one of those. One Solar energy plant was being established in Southern
Punjab while more solar energy units would be developed across country.

Reduction of line losses:

The government took concrete steps to reduce line losses and encourage public private
partnership in the power sector to reduce demand supply gap. They would ensure to bring
down the line losses, those increase burden on the people. They also took steps to execute
power generation projects through public private partnership. Projects had been undertaken
to reinforce the transmission and distribution systems to minimize power losses and
outages so as to provide a stable and reliable supply to consumers.
Schemes for the renewal of energy projects:
The government finalized a scheme to provide financing for the establishment of power
projects using renewable energy with a capacity of up to 10MW. The project was aimed at
promoting renewable energy in the country. The Board of Investment (BOI) designed the
financing scheme under which financing will be provided by banks and development
financial institutions on “first come first serve basis” within the overall amount earmarked
for the purpose. The government will give preference to projects in less developed areas.
The new power plants of up to 10MW installed capacity using alternative and renewable
energy sources like wind, biogas, bio-fuels, solar power and geothermal energy as fuel will
be considered for funding under the scheme. While adequate funds have been earmarked
for the scheme, banks and DFIs would be required to approach the Small and Medium
Enterprises (SME) Finance Department, State Bank of Pakistan after their internal approval
of financing to each project for confirming the availability of funds, according to the
scheme.
The investors of power projects can avail the financing facility for new imported and
locally-manufactured plant, machinery and equipment. Under the scheme, refinancing
would be provided up to 100 per cent of financing provided by banks or DFIs to eligible
borrowers for the import and local purchase of plant, machinery and equipment. The BOI
policy stated that sponsors of power projects will be required to meet the requirements of
Alternative Energy Development Board (AEDB) being the concerned government
regulatory authority and other departments in compliance with the prevalent renewable
energy policy of the government. Under the scheme, financing under the scheme will be
available for a maximum period of 10 years, including a maximum grace period of two
years. The grace period will be over and above the ‘availability period’ of one year.
However, maximum period of financing will not exceed the period of 10 years, including
grace and availability period from the date of first disbursement.
Meanwhile, the government requested the Asian Development Bank to provide a multi-
tranche financing facility (MFF) to facilitate investments in renewable energy. The
renewable energy investment programme was part of the government’s long-term energy
security strategy. The government’s investment programme would cover various renewable
energy development activities in all parts of the country which include hydropower
projects, wind power projects, solar power projects, and biomass projects.

Wind power projects:

 The government would likely have to offer a tariff of 13.5 US cents per kilowatt-hour
and a 20-25 per cent rate of return on investment for wind power projects, Indus. The
proposed tariff was more than the previous upfront 9.5 cents offered to investors that had to
be withdrawn late last year after it failed to generate any interest, a consultat.
Representatives of the industry, experts and officials of the Alternate Energy Development
Board (AEDB) hold series of negotiations to finalize a new medium term policy.
Multilateral lenders including World Bank and Asian Development Bank were part of
many renewable energy projects. Yet, none started production. However, it is expected that
the new policy framework will help different companies to achieve financial close for as
much as 200mw wind power projects in 2010. Rise in demand in other countries for
alternate power sources, deteriorating political and security situation here and relatively
low tariff were termed as main reasons behind failure of these project to materialize.
Despite passage of more than five years since first alternate energy policy came, only
one Turkish company, Zorlu Energy, set up windmills on commercial scale. It is running
six turbines of 1mw each.
The power tariff for renewable energy projects automatically would come down after a
certain period, normally 10 years, as the investors recover finance cost. Pakistan is facing a
severe energy shortage, which slowed down industrial output and caused angry riots in
many cities. Circular debt, which runs into billions of rupees crippled government’s power
sector entities. Massive investment was needed in power infrastructure to check line losses
and improve service to convince people to pay their bills. While public sector power
distributors were running in losses, government ensured fixed returns to independent power
producers, which used expensive fuel oil.

Ministry of Education

Allocation of Budget:
The government allocated Rs 31.569 billion for education in the 2009-10 budget,
increasing by 28 percent against the revised estimate of Rs 24.640 billion for the on-going
fiscal year 2008-09. Rs 23.372 billion allocated for Tertiary Education Affairs and Services
out of the total budget of Rs 31.569 which was the maximum portion of the Education
budget about 74 percent.
The government had allocated Rs 24.622 billion for education in 2008-09 budget,
followed by a supplementary grant of Rs 18 million. Out of the total allocation of Rs
31,569 million, Rs 2,887 million has been earmarked for Pre-Primary Education Affairs
Services, against Rs 2,368 million of the out-going fiscal year, showing an increase of
21.92 percent.
Similarly, an amount of Rs 3,828 million allocated for Secondary Education Affairs
and Services, against Rs 3,464 million for the same period of last fiscal year 2008-09,
showing an increase of 10.5 percent. An amount of Rs 23.372 billion allocated for Tertiary
Education Affairs and Services against Rs 17.461 billion earmarked for the same period of
last fiscal year, witnessing an increase of 33.85 percent.
In the new allocation, Rs 566 million allocated for Education Affairs, Services (not
elsewhere) which has been increased by 7 percent against Rs 529 million of the previous
fiscal year. In the budget Rs 845 million allocated for Administration which was Rs 739
million during the same period of previous fiscal 2008-09, witnessing an increase of 14.34
percent.

Education sector under PSDP:

The government allocated Rs 8551.269 million for execution of 76 ongoing and 26
news projects under Public Sector Development Programme 2009-10. According to the
official document, Rs 8029.787 millions earmarked for the ongoing schemes, while the
new projects got allocation of Rs 521.482 million for the upcoming fiscal year.

The major allocations for the ongoing projects include Rs 2000.000 million for
Establishment and Operation of Basic Education Community Schools, Rs 2000.000 million
for Education For All (EFA), Rs 300.000 for capacity Building of teachers Training
Institutions and Training of Elementary School Teachers in Punjab and Rs 225.000 million
for Capacity Building of Teachers Training Institutions and Training of Elementary School
Teachers in Sindh.
Similarly, an amount of Rs 209.595 million earmarked for Capacity Building of
Teachers Training Institutions and Training of Elementary School Teachers in Balochistan,
Rs 198.398 for Establishment of Cadet College at Choa Saiden Shah, District Chakwal, Rs
185.585 million for Establishment of Captain Karnal Sher Khan Shaheed Cadet College,
Swabi, Rs 150,000 million for Cadet College Panjgur Balochistan and Rs 113.330 million
for Establishment of Cadet College Okara.
While the major allocations for the new schemes included Rs 70.000 million for Girls
College Mona and Rs 36.165 million for Provision of Transport Facilities for Female
Teachers Working in Educational Institutions under FDE Rural Areas of ICT.
An amount of Rs 30.000 million allocated each for establishment of Cadet College
Kahuta and F.G Junior Model School Margalla View Housing Scheme Zone-II, D-17,
Islamabad. While Rs 27.605 million earmarked for Introduction of Intermediate Classes
and Upgradation of IMCB, F-11/3

Special Education:
The government allocated an amount of Rs 487.748 mln for various ongoing and new
projects of the Social Welfare and Special Education Division under the Public Sector
Development Programme (PSDP) 2009-10.
An amount of Rs 158.464 mln would be spent on 13 new schemes including
Establishment of Special Education Center for Visually Handicapped Children, Gilgit,
Provision of Hostel facilities of Special Education Complex for Persons with Disabilities at
Mardan, Faisalabad and Benazirabad, Construction of Special Education Centers at
Karachi, Larkana, Skardu and Dadu, and Establishment of 3 national Centers for
Rehabilitation of Child Labour at Sialkot.
While an amount of Rs 329.284 mln allocated for 55 ongoing projects of Social
Welfare and Special Education in which Construction of Special Education Centers at
Kohat, Mirpurkhas and Jhang, and upgradation of Special Education Centers for Hearing
Impaired Children, physically handicapped, visually handicapped and mentally retarded
persons and setting up of vocational training centers for disabled and needy were the major
projects.
 Ministry of Industries and Production

Allocation of Budget:
The government allocated an amount of Rs.7822.261 million for 49 ongoing and new
projects of Industries and Production Division, under the Public Sector Development
Programme (PSDP) 2009 10.
Rs.5056.309 million earmarked for new projects where as Rs.2765.952 would be spent
on ongoing projects. The government under PSDP earmarked Rs.3000 million for Export
Processing Zones and Area Development, Balochistan including ROZs where as Rs.1100
million allocated for development of marble and granite sector.
An amount of Rs. 300 million allocated for ‘Industrial Estates including ROZs in
NWFP and Rs.100 million for Establishment of 6 CAD/CAM Training Centres in
Bahawalpur, Sargodha, Okara, Larkana and Hyderabad. The government also earmarked
under PSDP, Rs. 100 million for the establishment of Red Chillies Processing Center
Kunnri, Sindh and Rs.300 million for Village Product Specialization project.
Under the PSDP, Rs. 150 million allocated for Leather Crafts Development Company
Multan and Rs.100 million for Establishment of Bostan Industrial Estate at Bostan, Pishin,
Balochistan.

Technological up-gradation:
 Employment generation in the industrial/Services/agro industrial sector
 Sustained growth in profits from industrial and services sectors
Sustained growth in Government revenues and export earning.
 Sustained growth in foreign and local investment in manufacturing & service
sector in Punjab.

Policy:
Government would create an enabling environment for the private sector to grow and
prosper. The resulting economic activity would achieve the government’s objectives of
employment generation, increased income and poverty alleviation creating a better quality
of life for the citizens of Punjab by:
 Encouraging private sector to invest in Punjab
 Generating growth in the economy to create employment
 Up-grading technology to enhance profitability
 Improving infrastructure necessary for economic uplift
 Provision of one-roof facility to the manufacturers under cluster development
program

Textile Industry Allocation:

The government allocated an amount of Rs.509.746 million for various ongoing
schemes of Textile Industry Division, under the Public Sector Development Programme
(PSDP) 2009 10.
According to budgetary allocations announced, Rs.246 million earmarked for providing
and laying dedicated 48 inch diameter mild steel water pipeline for Textile City Karachi
whereas Rs. 207 million allocated for Faisalabad Garment City Project.
 The government under PSDP allocated Rs.25 million for Lahore Garment City Project,
17.330 for up gradation of EDF Funded Textile Institutes, Rs.13.576 million for Export
Development Plan Implementation Unit and Rs.0.84 million for holding of conferences and
seminars.

Ministry of Housing and Works:

Allocation of Budget:
The government allocated an amount of Rs 5582.043 million in the Public Sector
Development Programme (PSDP) for the Housing and Works Division to execute the
ongoing development schemes besides 25 new schemes during 2009-10.
An amount of Rs 4477.092 has allocated for 61 ongoing development schemes while a
chunk of Rs 1104.951 will go for 25 new schemes. The major aspect of allocated funds for
Housing Division is that all these schemes would be completed without any foreign loan.
The significant ones in the ongoing schemes included provision of Pak Secretariat
Blocks, TU & V Islamabad at a cost of Rs 1000 million, Prime Minister’s Special Initiative
for Housing for the Government Servant (revolving Fund) Rs 500 million, Prime
Minister’s Special Initiative for Housing for the poor (including Sasti Basti) Rs 600
million, PC-II for construction of Monument of Mohtarma Shaheed Benazir Bhutto at a
cost of Rs 20 million, construction of National Accountability Bureau Punjab Complex Rs
150 million, Lahore at cost of Rs 150 million, Musa Khail Tunsa Road (35 km) Rs 200
million, extension of IB Academy H-11/1 Islamabad at a cost of Rs 100 million,
construction of metalled road District Nankana Sahib at cost of Rs 398 million,
construction of metalled road from Gandha Singh to Kanganpur road in District Kasur at
Rs 398 million and widening and rehabilitation of metalled road in district Kasur at cost of
Rs 397 million.
 While new schemes include Safe drinking water supply in Malakand at Rs 50 million,
resettlement of Christian community in Quetta at Rs 50 million, construction and
rehabilitation of roads in District Upper Dir PF-93 at Rs 30 million, in PF-91 at Rs 35
million and in PF-Rs 952 at million and completion and rehabilitation of incomplete water
supply schemes in Balochistan at cost of Rs 100 million.

Ministry of Sports

Allocation of Budget:
The government allocated Rs 583.161 million for Sports Division to execute 47
development projects, mostly related to the construction of news sports and residential
facilities, under Public Sector Development Programme (2009-10).
The allocated amount would be spent on 35 ongoing development schemes while only
12 new schemes are planned to be executed in fiscal 2009-10. All the projects would be
executed by the government through its own expenditures as foreign funding is neither
involved in ongoing schemes nor the new schemes. According to the estimate, the total
expected cost of the ongoing 35 projects is Rs 1.04 billion while 12 new projects would
incur Rs 1.6 billion.
The mega projects, for which the allocation being made under the PSDP for fiscal
2009-10, included construction of sports complex at Sukkur (Rs 489.553 million), Sports
Complex at Narowal (484.848 million) and up-gradation of football stadium at Multan (Rs
356.881) while the allocation for none of the ongoing project exceeded Rs 100 million.
The amount of Rs 462.661 million was thrown forward from the allocation made for
ongoing schemes in fiscal 2008-09 while thrown forward cost of the new projects equals
the current allocation as the planned projects might not have been initiated in previous
fiscal year.
The Sports Division spent Rs 587.107 million during the previous fiscal on the
execution of different development projects some of those are: construction of boxing
gymnasium in Islamabad, Lahore, Quetta, Peshawar and Karachi, sports medicine centre in
Islamabad, sports stadium at Lora Lai, Zhob, Nankana Sahib, Patuki, Mianwali, Upper Dir,
Tando Adam, Chunian and Mastung.

Responses from Different people on Allocation:

A number of National and Provincial Sports Bodies and officials of Pakistan Olympic
Association have hailed record allocation of Rs 583 million in Federal Budget 2009-10 for
the development of sports “a step forward to open a new era in sports”.
“ It is a landmark decision of the government to increase the funds to three times
compared to previous allocation of Rs 140 million “,said officials of the sports bodies.
Those who hailed the considerable rise in allocation of funds included officials of
Pakistan hockey,squash, athletics, wrestling, badminton, handball, taekwondo, karate,
judo,cycling,volleyball,boxing, weightlifting,and other sports bodies, and officials of
provincial Olympic Association.

Ministry of Health

Allocation of Budget:
The government allocated an amount of Rs. 23.15 billion for health sector under Public
Sector Development Program (PSDP) 2009-10 for new and on-going development
projects. According to the budgetary allocations, out of total amount, Rs. 2090 million
allocated for 11 new projects while 21.64 billion earmarked for 67 on-going schemes.
In total amount Rs. 21079.401 million was local component while Rs. 2074.683 million
is the foreign component.
An amount of Rs. 6800 million allocated for National Program for Family Planning and
Primary Health care while Rs. 6000 million allocated for Expanded Programme for
Immunization (EPI) and Control of Diarrheal Diseases, National Institute of Health
Under PSDP, an amount of Rs 2900 million allocated for National Maternal, Neonatal
and Child Health Programme while Rs 300 million were allocated for Enhanced HIV/AIDS
Control Program, NIH.
Similarly, an amount of Rs 500 million allocated for establishment of Cardiac Surgery
Facilities at Pakistan Institute of Medical Sciences (PIMS) while Rs. 477 million allocated
for provision of Stereotactic Radio surgery System at JPMC, Karachi.
An amount of Rs 100 million was also been allocated Prime Minister’s Emergency
Action Plan for Hepatitis.
 Rupees 65 million allocated for Medical Product, Appliances and Equipment, an
increase of 20 percent in the budget 2009-10 as compared to Rs 54 million in the revised
estimated budget for 2008-09. Rupees 5,708 million have been allocated in the budget for
hospital services, which is enhanced by 16.68 percent against Rs 4,892 million for 2008-
09.
Similarly, Rs 469 million allocated for Public Health Services, an increase of 35.16
percent against Rs 347 million allocated for 2008-09. In the new budget, Rs 241 million
have been allocated for Health Administration, which was Rs 195 million in FY09,
showing an increase of 23.59 percent. For R&D Health Rs 2 million have been allocated
which is the same amount reserved for it last year.

Ministry of Interior

Allocation of Budget:
The government allocated Rs. 7031.289 million for Interior Division under Public
Sector Development Programme 2009-10 (PSDP) for 166 new and on-going schemes.
Out of the total allocation, an amount of Rs 2036.217 million allocated for 53 new
schemes, while rest of the amount Rs. 4995.072 million would be spent on 113 on-going
schemes.
The government allocated Rs. 1000 million out of an estimated cost of Rs. 3000 million
for provision of security infrastructure in Malakand, Swat and other conflict areas of
NWFP, under new schemes.
An amount of Rs. 900 million allocated for on-going scheme of rising of Balochistan
Constabulary, while Rs. 800 million allocated for conversion of B area into A area
Baluchistan. An amount of Rs. 800 million allocated for Machine Readable Passport
Project (Phase-II).
Similarly, an amount of Rs. 361.068 million earmarked for Islamabad Development
Package. An amount of Rs. 150 million was being specified for setting up of National
Forensic Science Agency, (HQs), and Islamabad Laboratory.
An amount of Rs. 129.476 million allocated for construction of surgical medical block
JCO war and other Allied Facilities along with Renovation of Family wing at FC hospital,
Quetta.

Ministry of Information and technology

Allocation of Budget:
The government allocated Rs. 916.12 million in Public Sector Development
Programme (PSDP) to execute projects of Information and Broadcasting Division during
fiscal year 2009-10.
The amount earmarked for 31 projects, out of which Rs. 257.52 million would be spent
for seven new schemes.
 According to PSDP document here Saturday, Rs. 658.59 million would be incurred on
24 on-going projects and among them major scheme is replacement of three transmitter of
100 KW at Muzaffarabad, Hyderabad and Multan.
During the coming fiscal year, Rs. 100 million would be spent on establishment of 47
FM radio stations throughout the country. The other important project was Islamabad
Media University for which Rs. 18.76 had been allocated.
The other on-going projects included setting up of TV Centre at Multan (Rs. 40
million) and rebroadcast stations at Kohat (Rs. 10 million) Badin (Rs. 8.4 million), Bar
Khan (Rs. 9.77 million), Mian Channu (Rs. 36 million), Jura (Rs 11.5 million), Athmaqam
(Rs. 11.55 million), Karan (Rs. 8 million), Dhudhial (Rs. 11.55 million), Shadra (Rs. 11.55
million) and Kel (AJK) (Rs. 11.55 million).
During the year, the government would also spend Rs. 140 million on setting up transmitter
at Chaman, Gwadar and Karachi. The government also allocated Rs. 10 million for the
electronic news gathering service of Associated Press of Pakistan (APP).
Under the new schemes, the main project was terrestrial digitalization of all PTV
stations for which Rs. 60 million were being earmarked.
Ministry of Local Government and Rural Development

Allocation of Budget:
The government allocated an amount of Rs443.995 million in the Public Sector
Development Programme (PSDP) for Local Government and Rural Development sector for
8 ongoing and 2 new schemes.
An amount of Rs 428.995 million allocated for 8 on-going development schemes while
a chunk of Rs 15 million allocated for six new schemes. The division also received Rs.
24480.700 million from foreign loan under the PSDP 2009-10.
An amount of Rs. 33.000 million allocated for establishment of Planning and
Monitoring cell at Islamabad. Similarly, an amount of Rs. 70.000 million allocated for
Institutional strengthening, capacity development and data base preparation, Rs. 150
million has been specified for Gender Justice through Musallhat Anjuman Project.

Ministry of Special Initiatives

Allocation of Budget:
The government allocated an amount of Rs.2793.932 million for ongoing schemes of
Special Initiatives Division, under the Public Sector Development Programme (PSDP)
2009 10.According budgetary allocations announced, Rs.2500 million have been allocated
for the project of Clean Drinking Water for All.
The Government under the PSDP 2009-10 allocated Rs.193.932 for Clean Drinking
Water Initiative whereas Rs 100 million allocated for the project  White Revolution
(Doodh Darya)/ Prime Minister’s Special Initiative for Whiter Revolution.

Allocation of Budget for IDPS:

The government allocated Rs 50 billion for the rehabilitation of internally displaced
persons (IDPS). Rs. 25,000 announced by the government would be given to each IDP
family, whether it is in the camps or with the host families. Besides, the Friends of Pakistan
would also assist the government in its endeavours to accommodate the IDPs, while a
substantial amount was also being reserved in BISP for them.

Ministry of Livestock and Dairy Development

Allocation of Budget:
The government allocated Rs. 2586.353 million for the development of Livestock and
Dairy Development Division in Public Sector Development Program (PSDP) for current
financial year (2009-10).This amount would be spent on 12 ongoing projects besides six
new developmental projects in livestock and dairy sector would also be launched worth Rs.
110 million.
The government has earmarked Rs. 450 million for aquaculture and shrimp farming,
Rs. 375 million were spent on national program for and prevention of avian influenza all
across the country.
Livestock Production and Development of Meat Production projects across the country
would be completed with a total cost of Rs. 300 million while, Rs. 300 million were been
allocated for milk collection/processing and dairy production and development program.
The government allocated Rs. 163 million for the development of fisheries training
centers at Gawadar and Rs. 13.653 million were spent on Accreditation of Quality Control
Laboratory of Marine Fisheries Deportment.
In PSDP 2009-10, the government allocated Rs. 110 million for six new schemes
including establishment of halal food certification system with cost of Rs. 10 million and
Rs 50 million were spent on sustainable development of salt brackish water aquaculture in
the country.

Improvement in Livestock Sector:

The proposed allocation enabled the farmers to realize the dividends of livestock
farming by smartly deploying public investments & inducing private capital and initiatives
in the sector for poverty alleviation, food security & generation of exportable surpluses.
Following things would help the farmers to achieve their goals:
 Food security through increased milk and meat production
 Poverty alleviation by supporting livestock subsistence farmers and women
(organize, empower and provide hands-on training).
 Productivity enhancement through improved genetics, balanced nutrition &
improved husbandry.
 Better functioning of markets and regulatory regime.
 Private enterprise development to optimally realize potential of livestock assets.
 Applied research and technology.
 Provision of quality products (dairy & meat for domestic consumption & export
markets.

Ministry of Manpower

Allocation of Budget:
The government allocated an amount of Rs 135.4 million in the Public Sector
Development Programme (PSDP) for Labour and Manpower Division for completion of
eight on-going projects during 2009-10. The allocation for the projects involved six million
as visits of expatriate Pakistan Consultant for short duration assignmet in Pakistan.
An amount of six million allocated for Labour market information system and analysis
Islamabad and Rs. 10 million earmarked for the training of trainers for skill development
Islamabad.
Similarly, Rs. 12.4 million allocated for vocational training centre, Kashmore in Sindh
while Rs.22 million allocated for construction of technical trainig institute for  trade at
Mandra.
Whereas Rs.4 million allocated for green man certificate course on gardening while
five million allocated for trade testing and certification and Rs.70 million for construction
of hostel building for 100 persons in NTB complex in Islamabad.
The government gave 30,000 postgraduates internships in 2009-10. A sum of Rs 3.6
billion allocated for the National Internship Programme. A mobile youth computer literacy
and awareness programme started and 15,000 volunteers registered for community
development activities and disaster management. Also, Rs 450 million had been set aside
for cultural development.

Salaries of the Employees:

The government servants were given ad-hoc relief allowance of 15 percent of pay. It
would be applicable to corporations like Pakistan Broadcasting Corporation and Associated
Press of Pakistan as well as contractual and daily wage employees. Contractual and daily-
wage employees of government organizations and corporations would also get raise in their
salaries as announced by the government in the budget 2009-10 from 1st July,2009.

Ministry of Communications

Allocation of Budget:
The government earmarked Rs.45971.990 million in the Public Sector Development
Programme (PSDP) 2009-10 for the Communications Division for its various ongoing and
new projects while Rs 45706.090 allocated for National Highway Authority (NHA).
According to the budgetary allocations, out of total amount, Rs. 35971,990 million was
local component while Rs.10000,000 million is the foreign component.In the PSDP 2009-
10,total of 10 ongoing projects of Communications Division, Rs 265.900 million were
allocated. Rs.45706.090 million earmarked for 45 ongoing National Highways Authority
(NHA) projects with Rs26025.540 million local component and Rs 9663.550 million
foreign loan component.  For 30 NHA new projects Rs 10017.000 million were allocated.

Ministry of Culture

Allocation of Budget:
The government allocated an amount of Rs 449.993 mln for various ongoing and new
projects of the Culture Division under the Public Sector Development Programme (PSDP)
2009-10.
According to PSDP documents, the allocated amount of Rs 77.500 mln would be spent
on nine new schemes including restoration of Heritage Sties in Sindh, Renovation and
rehabilitation of Allama Iqbal Manzil, Sialkot, establishment of Classical Music Academy
PNCA, Archaeological Excavations at Tibba Sungawala District Toba Tek Singh, PC-II for
NPAG Cultural Center, Burns Garden Karachi, Setting up of laboratory for Restoration of
Damaged paintings, PNCA, Preparation of Database of Paintings/ Arts Works PNCA,
upgradation of Lok Virsa Media Studios and establishment of National Folklore Ensemble
for soft image of Pakistan.
While an amount of Rs 372.493 mln allocated for sixteen ongoing projects in which
development and restoration of archaeological sites from Taxila to Swat, master plan for
preservation of Rohtas Fort and Shahdara Complex of Monuments, Jahangir’s Tomb,
Lahore, construction of Aiwan-e-Quaid, Establishment of National Center for Performing
Arts and Pak-China Friendship Center are the major projects of the culture division.

Ministry of Tourism

Allocation of Budget:
The government allocated a total Rs. 195.489 million for 4 ongoing and seven new
schemes of the Tourism Division in the Public Sector Development Programme (PSDP) for
the financial year 2009-10.
According to PSDP documents, these funds spent on the up gradation of tourism
research studies besides establishment and up gradation of Tourist Facilitation Centers in
various parts of the country.Four ongoing projects of the Tourism Division were up
gradation of Tourism Research Studies, Development of Website for Tourism Industry,
Setting up Bus Terminal at Nankana Sahib and Tourist Facilitation Centre (TFC) at Quetta
and Peshawar.
Seven new schemes which were launched in the financial year 2009-10 are Tourist
Facilitation Centre at Provincial Headquarters, Lahore, Tourist Facilitation Centre at
Provincial Headquarters, Karachi, Tourist Facilitation Centre at Gilgit, Northern Areas.
Tourist Facilitation Centre at Muzaffarabad (AJK), Tourist Facilitation Centre at
Islamabad, construction of Pakistan Tourism Development Corporation (PTDC) Motel at
Hawks Bay, Karachi and rehabilitation/Refurbishment of PTDC Motel at Moenjodaro.

Ministry of Environment
Budget Allocation:
The government allocated Rs 2253.886 million in Public Sector Development
Programme (PSDP) for Environment Division in the budget for next financial year
(2009-10).
These allocations included Rs 2203.155 from local resources and Rs 50.731 million as
foreign loan to be incurred on various projects during 2009-10. The allocations included Rs
2227.886 million for ongoing schemes and just Rs 26 million for the new schemes. The
PSDP allocations showed that Rs 17931.454 million were thrown forward and expenditures
till June 2009 were 5360.845 million. Estimated costs of the projects showed a total sum of
Rs 23246 million with Rs 1737.155 million as foreign loan.
In PSDP for 2009-10, the government initiated just three new schemes with one, the
Media Advertising Campaign on Energy, Conservation and Institutional Strengthening,
Capacity Building of ENERCON. Other two schemes included Energy Conservation
through Training and Mass Awareness Campaign and Development of Forestry Sector
resources for Carbon Sequestration in FATA. For other two schemes, Rs 5 million
allocated for Energy Conservation through Training and Mass Awareness Campaign and
Rs 20 million for Development of Forestry Sector Resources for Carbon Sequestration in
FATA. In all, 45 schemes were mentioned in the PSDP including 42 ongoing and three
new schemes.
Figures show that only Rs 26 million allocated for the environment sector including Rs
one million for Media Advertising Campaign on Energy, Conservation and Institutional
Strengthening and Capacity Building of ENERCON.

Ministry of Youth Affairs

Allocation of Budget:
The government allocated an amount of Rs. 47.760 million in the Public Sector
Development Programme (PSDP) for the Youth Affairs to execute the six on-going
development schemes during 2009-10.
For the on-going Mobile Youth Computer Literacy Awareness Programme, an amount 
of Rs. 5 million allocated while Rs. 15 million allocated for Construction of Youth
Development Centre at Malir Karachi.
Likewise, Rs. 1 million allocated for the construction of Youth Development Centre at
Sukkur, Rs. 10 million for construction of Youth Development Centre at Gawadar, Rs. 15
million for the construction of Youth Development Centre at Gilgit and Rs. 1.760 million
has been allocated for the establishment of planning and monitoring cell.

Ministry of States and Frontier Regions

Allocation of Budget:
The government allocated an amount of Rs. 12865 million in the Public Sector
Development Programme (PSDP) for the States and Frontiers Regions Division to execute
the two on-going development schemes during 2009-10.
For Federally Administered Tribal Areas (FATA) including all Special Programs and
FATA Rural Development Project, an amount of Rs. 12860 million allocated while Rs. 5
million allocated for the Water Supply Scheme, Landi Kotal.

Ministry of Railways

Allocation of Budget:
The government allocated an amount of Rs 12681.200 million in the Public Sector
Development Programme (PSDP) for completion of 20 on-going projects and execution of
eight new schemes in Railways Division during 2009-10. The allocation for the projects
involved foreign loans of Rs. 3030.000 million and Rs. 8150.400 million would be made
available from domestic resources.
An amount of Rs 11180.400 million earmarked for 20 on-going development schemes
while a chunk of Rs 1500.800 million will be utilized for eight new schemes. An amount of
Rs. 2832.000 million was made available for overcoming the damages to Railways assets
during riots in December 2007.
 Similarly, an amount of Rs. 1594.000 million allocated for doubling of track Khanewal
to Raiwind Section and Rs.  1400.000 million specified for procurement and manufacture
of 1000 High Capacity Wagons.

Ministry of Science and Technology

Allocation of Budget:
The government allocated an amount of Rs. 3265.377 million for the Public Sector
Development Projects (PSDP) for 132 projects of Science and Technological Research
Division (S&TRD) for the Financial Year 2009-10.
Out of the total amount of Rs. 2383.269 million allocated for 86 ongoing schemes, Rs.
115 million had been allocated for Faculty Development at University of Illinois at Urbana
Champaign, USA; Rs.  100 million have been allocated for PCSIR Industrial Linkage
Programme; Rs. 130 million had been allocated for provision of safe drinking water; Rs.
100 million had been earmarked for Up gradation/BMR of NPSL, Islamabad.
Moreover, Rs. 220 million have allocated for upgradation and extension of PCRET
facilities at Islamabad Center; while Rs. 150 million earmarked for Construction of Office
Building for MoST and its Organization.
Meanwhile, Rs. 882.108 million earmarked for 46 new approved projects which
included Rs.404.660 million allocation for acquisition of Oceanographic Research Vessel
for Coastal Surveys (upto 200 meter water depth), NIO; while Rs. 30 million allocated for
Pak-US agreement for S&T (Phase-II). No amount was allocated for any un-approved
project.

Ministry of Narcotics Control

Allocation of Budget:
The government allocated an amount of Rs 679.050 million in the Public Sector
Development Programme (PSDP) for Narcotics Control Division for completion of 12 on-
going projects and execution of six new schemes during 2009-10. The allocation for the
projects involved Rs. 315.480 million as foreign loan where as Rs. 296.233 million from
domestic resources.
An amount of Rs 611.713 million was being allocated for 12 on-going development
schemes while a chunk of Rs 67.337 million would go for six new schemes. An amount of
Rs. 128.000 million earmarked for construction of Anti Narcotics Force Academy
headquarters building at Islamabad.
Similarly, an amount of Rs. 120.000 million allocated for Khyber Area Development
Project Phase-II, FATA and Rs. 115 million was being specified for Kohistan Area
Development Project.

Ministry of Petroleum & Natural Resources

Allocation of Budget:
The government allocated an amount of Rs 1874.329 million in the Public Sector
Development Programme (PSDP) for the Petroleum and Natural Resources Division to
execute the ongoing development schemes besides seven new schemes. An amount of Rs
542.679 million was also being allocated for 18 ongoing development schemes while a
chunk of Rs 1331.650 million would go for 18 new schemes.

The main ongoing schemes included Oil and Gas Exploration Activities in Balochistan
at a cost of Rs 763.434 million, Construction of Petroleum House Rs 452.440 million,,
Ground Follow up Aeromagnetic Anomalies in Chagai district Balochistan Rs 162.982,
Upgradation/strengthening of Geoscience Advance Research Laboratories, GSP Islamabad
Rs 249.870 million, Capacity Building for Hydrocarbon Research and Development,
Islamabad Rs 140.00 million, Associated Geological Mapping and Geochemical
Exploration of the Out-crop Area of Pakistan Rs 198.643 million, Capacity Expansion of
HDIP CNG Station at Islamabad Rs 37 million.
Establishment of Project Management Unit (PMU) Rs 50.900 million, Strengthening
and Capacity Building of Mineral Wing Rs 95.00 million, Establishment of Project
Monitoring and Evaluation Cell Rs 39.675 million, National Coal Policy Rs 34. 324
million, Training of Gemstone Mining, Processing and Evaluation on Scientific Lines to
Private Sector in NA Gilgit Rs 25.30 million, Establishment of Facilitation Cell for the
development of Reko-Diq Copper-Gold project, Balochistan Rs 21.97 million, Geo-
Hydrological exploration for Development of Underground Water in Hamun-e-Mushkil,
Chaghi district Balochistan Rs 46.00 million.
The new schemes included Thar Coal Infrastructure Development Rs 1000 million,
Establishment of HDIPs Mega CNG station Karachi Rs 150.600 million, Appraisal of
Newly discovered Coal Resources of Badin Coal Field and its adjoining areas of Southern
Sindh Rs 40.00 million,Institute of Drilling Geological Survey of Pakistan Rs 26.040
million, Exploration and Evaluation of Coal in Raghni Area Tehsil Shahing, Balochistan
Rs 20 million and Exploration of Tertiary Coal in Central Salt Range, Punjab Rs 15
million.

Ministry of Kashmir Affairs and Northern Areas

Allocation of Budget:
The government allocated Rs 25.5 billion for Kashmir and Northern Areas Division
under Public Sector Development Programme (2009-10) to execute 23 development
projects, of those 14 projects were initiated. According to the PSDP, the amount of Rs
23.31 billion allocated for ongoing projects and Rs 22.1 billion for the projects yet to be
initiated in fiscal 2009-10.
The estimated cost of all the projects is Rs 212.7 billion that included Rs 184.29 billion
for ongoing schemes and Rs 28.4 billion for new ones. In the execution of already initiated
projects, the foreign loan worth Rs 172.4 billion was involved while the ministry received
Rs 23.1 billion foreign loan for the new projects.
Among the project for those the allocation made in current fiscal and were planned to
be initiated in fiscal 2009-10 included social development package for 13 constituencies
along LoC in AJK against (Rs 500 million), green skilled Kashmir programme (Rs 500
million), 26 MW Hydro Power Project Shagarthang (Rs 400 million) and 4 MW Hydro
Power project at Thack Nullah Chilas (Rs 211 million) and others. The amount of Rs 127.5
billion was thrown forward from the allocation made in fiscal 2008-09 for ongoing project
while Rs 28.4 billion allocated for nine projects were re-appropriated as they could not be
initiated during previous fiscal.

Among the ongoing schemes, important ones included Northern Areas (Block
Allocation) (Rs 6.5 billion), AJK Block Allocation (Rs 1.07 billion), provision of water
supply and sewerage to Mirpur and Hamlets (Rs 1.5 billion), 43.5 MW Jagran Hydro
Power project (Rs 1.5 billion) and other power generation projects including 4.8 batter
hydel power project, 1.7 MW Dhannan hydro power project, 14.4 MW Jhing hydro power
project and 16 and 14 MW hydro power projects Nultar-III and IV respectively

Ministry of Trade and Commerce

Allocation of Budget:
The government allocated an amount of Rs. 839.167 million for various ongoing and
new projects of Commerce Division under the Public Sector Development Programme
(PSDP) 2009-10. According to PSDP documents, Rs. 10 million earmarked for a new
project, while Rs. 829.167 million for the ongoing eight projects.
Rs. 126 million allocated for construction of building for Pakistan School of Fashion
Design at Jauhar Town Lahore, Rs 50 million earmarked for purchase of Equipment,
Furnishing, Curriculum Development and Training of Pakistan School of Fashion Design
Lahore and Rs. 80 million, including Rs. 60 million of foreign exponent for Trade and
Transport Facilitation Project - 2: Trade and Transport Facilitation Unit (TTFU) - World
Bank.
In addition, Rs. 445 million allocated for Expo Centre, Lahore, a joint venture of
Federal Government and Provincial Government of Punjab and Rs. 67.787 million for
Restructuring Foreign Trade Institute of Pakistan, Islamabad. While Rs. 10 million
allocated for a new project, Setting up of Regional Reconstruction Opportunity Zones for
Trade in FATA, NWFP, Balochistan and AJK.

Ministry of Planning and Development

Allocation of Budget:
The government allocated an amount of Rs. 17968.222 million for various ongoing and
new projects of Planning and Development Division, under the Public Sector Development
Programme (PSDP) 2009 10.
According to PSDP documents, the allocations include Rs.11894.262 for the ongoing
projects where as Rs.6073.960 for new schemes of the division. Rs.1500 million allocated
for Drought Recovery Assistance Programme (DRAP)/DERA-II and Rs. 6745 million
earmarked for UN-funded important projects. The government under PSDP allocated
Rs.400 million for poverty reduction through small holders livestock and dairy
development, Rs 300 million for capacity enhancement of dairy products under public
private partnership and Rs.300 for establishment of National Technical Training Centre
(NTTC) Kasur.
In the new schemes, Rs. 2100 million earmarked for establishment of technical training
institutes in 27 districts and 490 million allocated for construction of new processing
facilities (for handling and purification of coal gas produced by under ground coal
gasification).

Ministry of Economic Affairs and Statistics

Allocation of Budget for Economic Affairs:

The government allocated an amount of Rs.15.839 million for the ongoing scheme of
Economic Affairs Division, under the Public Sector Development Programme (PSDP)
2009 10. According to budgetary allocations announced, the amount would be spent on
institutional strengthening and efficiency enhancement of Economic Affairs Division.

Allocation of Budget for Statistics:

The government allocated an amount of Rs. 180 million for various ongoing projects of
Statistics Division under the Public Sector Development Programme (PSDP) 2009-10.
According to PSDP documents released, Rs. 50 million were earmarked for Pakistan
Social and Living Standard Measurement Survey, Islamabad and Rs 80 million h allocated
for Rebasing of National Accounts from 1999-2000 to 2005-06. In addition, Rs 50 million
allocated for the construction of office buildings.

Ministry of Defence

Allocation of Budget:
The Defense Division allocated Rs. 343.723 million for execution of 17 ongoing and
three new projects under Public Sector Development Programme 2009-10.Rs 5.3 billion
earmarked for the on going schemes while the new projects got allocation of Rs 2.2 billion
for the upcoming fiscal year.
Pak-China seismic network in the country was to be established with allocation of Rs
180 million, development of CFIs to fly on-board communication satellite (Pak Sat-IR) in
Lahore at Rs 267.262 million, development of labs for National Satellite Development
Programme (NSDP) in Lahore with Rs 222.55 million, development of support facilities
for NSDP, new airport at Gawadar Rs 750 million, Sialkot International Airport Rs 250
million and National Electronics Complex Rs 200 million.
The major allocations among the ongoing schemes included Rs 2.8 billion for Paksat-
IR, Rs 420.47 million for design and development of Compact Antenna Test Range
(CATR), Rs 292 million for Paksat project (Phase-I), Rs 179.84 million for Altitude and
Orbital Control System (AOCS), Rs 161.20 million for Satellite Bus Development Facility,
Rs 148 million for Development of Satellite Assembly Integration and Test (SAINT)
Facility, Rs 145 million for development of Satellite Environmental Validation and Testing
(EVT) Facility and Rs 122.63 million for Remote Sensing Data Transmission (RSDT)
Facility.

Allocation of Budget for Production:

Under the Public Sector Development Programme for 2009-10 the government
allocated Rs 1.67 billion for the Defense Production Division. According to the document,
the allocations are for total five schemes which include three new one with the breakup of
Rs 1.51 billion for on-going while Rs 167 million for new schemes.

The allocation of Rs 1.40 billion earmarked for the ongoing project for installation of
Ship[ Lift and transfer System and Associated Machinery and Equipment to provide
Docking and repair facilities to surface ships, submarines and commercial vessels of up to
4,000 tones.
Another allocation of Rs 110 million was for the ongoing project for carrying out civil
works for the up gradation of Karachi Shipyard and engineering Works Limited (KSEW).
The new schemes including establishment of Project Management Cell of Ship Building
Industries, construction of houses for security personnel at DP Division Secretariat and
construction of houses for General Officers at DP Division Secretariat with the respective
allocations of Rs 150 million, 8 million and 9 million.

Ministry of Finance

Allocation of Budget:
The government allocated an amount of Rs. 45599.270 million for various ongoing and
new projects of Finance Division, under the Public Sector Development Programme
(PSDP) 2009 10.
According to budgetary document, the allocations included Rs.16596.690 for the
ongoing projects and Rs.29002.580 for new schemes of the division. Among the ongoing
schemes of the division, Rs.2077 million allocated for the Project for Improvement of
Financial Reporting and Auditing (PIFRA), Phase-II, Rs.1500 million allocated for
construction of Northern Bypass for Multan City and Rs.1000 million for Greater Quetta
Water Supply Project.
The government under PSDP also allocated Rs.1000 million for Lyari Express
resettlement Project and another Rs.1000 million earmarked for Gwadar Development
Authority. Among the new projects, Rs.3000 million allocated for Quetta Development
Package, Rs.2500 million for Hyderabad Package (for Drainage), Rs.2500 for Karachi
Package (new) and Rs.3000 for Extension of inner Ring Road Project at Multan.
The government under PSDP also allocated Rs.1708 million for programme for poverty
alleviation in NWFP, Rs.1575 million for repair and rehabilitation of road network in
NWFP and Rs.1000 million for up gradation and remodeling of Southern Bypass
Peshawar.

Allocation of Budget of Revenue Division:

The government allocated an amount of Rs. 2448.308 million for various ongoing and
new projects of Revenue Division, under the Public Sector Development Programme
(PSDP) 2009-10. According to PSDP, the allocations include Rs.1888.649 million for the
ongoing projects and Rs. 559.659 million for new schemes of the division.
 Among the ongoing schemes of the division, Rs.1472 million allocated for Tax
Administration Reform Project (TARP) and Rs. 135 million earmarked for construction of
second office block in CBR House Islamabad. The government allocated Rs.103 million
for establishment of Taxpayers Facilities Centres (TFCs) and construction of transit
accommodation with RTOs and LTU at Islamabad, Rs.18.731 million for construction of
multi storied office building for customs house, Multan.
Among new schemes, the government under PSDP allocated Rs. 39 million for
purchase of land in FDA city for Residential colony for RTO Faisalabad, Rs. 39 million for
purchase of land in FDA city for residential colony for DTO office, Faisalabad and Rs. 29
million for purchase of land for residential accommodation for RTO Peshawar.
The government also allocated Rs. 39 million for purchase of land for construction of
warehouse, back up offices and espies barrack and residences for customs, Islamabad
whereas another Rs. 39 million earmarked for purchase of land for construction of back up
offices and bail off barracks and residences for Income Tax Department at Islamabad.

Ministry of Agriculture

Introductory Report about Crops’ Production:

Agricultural sector of Pakistan is poised to post good growth in fiscal 2008-09 as a
result of record rice and wheat harvests. Despite 18.5 per cent decline in sugarcane output,
anticipated record wheat harvest of 24 million tons will help jack up the figures for fiscal
year that ends next June, it said in the second quarterly economic review report.
“Improvement in crop sub-sectors appeared to be helped by significant gains to farmers
in previous cropping season; amidst high commodity prices as well as supportive
government policies,” according to SBP’s projections, cotton, sugar and rice output will be
12 million bales, 52 million tons and rice 6.5 million tons, respectively.
Rice harvest was significantly higher than estimated domestic consumption of 2.5
million tons as growers were encouraged by higher rice price in international market
following imposition of ban on rice exports by competing countries. Cotton, which has lost
its favored position among farmers in last few years because of falling price, increased in
output by 3.5 per cent despite a decrease in its cultivated area.
“It was an improvement in cotton prices that encouraged farmers to put extra efforts,
resulting in 10.9 per cent gain in cotton yield which more than offset decline in acreage.” A
sharp decline in sugarcane harvest this year, the SBP said, can be attributed to
disappointment farmers faced last year when they did not get benefit of record 63.9m tons
output. “Not only purchase of sugarcane was delayed by mills it is alleged that payments to
farmers were also not made in time.” It asked the government to come up with an effective
policy on sugarcane after taking all stakeholders onboard. “One sustainable long-term
solution to these problems lies in introduction of effective futures market with crop
insurance and contract enforcement.”

Allocation of Budget:
 The government allocated an amount of Rs. 16709.980 million under the Public Sector
Development Program (PSDP) for the development of agriculture sector during fiscal
2009-10.
This amount would be spent on 36 ongoing schemes besides, 15 new developmental
projects to be launched in current fiscal year. The government allocated Rs. 10000 million
for National Programme for Improvement of Water Courses in Pakistan for efficient use of
water in the country. Rs.1500 million was being allocated for the project of Water
Conservation and Productivity Enhancement through High System irrigation.
The government would spend Rs. 1000 million on National Research and Development
Project for Spate Irrigation System in Road Kohi Areas, Rs. 1000 million for Special
Program for Food Security and Productivity Enhancement of Small Farmers in 1012
villages and crop maximization project phase II. Rs. 150 million would be spent on
Commercialization of tea production in NWFP and Azad Kashmir besides; National bio-
saline agriculture programme would be completed this year with a total cost of Rs. 100
million.
Besides ongoing projects, the government allocated 17961.980 million for 15 new
developmental projects including Accelerated agriculture mechanization for productivity
enhancement (Benazir Tractor Scheme). Rs. 500 million was earmarked to provide tractors
and other inputs to farmers on subsidized rates.
Allocation percentage for Food and Agriculture:
Overall Public Sector Development Program allocation for Ministry of Food and
Agriculture was increased by 29 percent from Rs.14 billion in 2008-09 to Rs. 18 billion
this current year (2009-10). Government earmarked Rs.10 billion for the improvement of
water courses besides Rs.2.5 billion would be spent on food security and productivity
enhancement.
Water reservoirs played an important role in overall agriculture and industrial
development of the country as it fulfill the water demand for crop irrigation as well for
power generation. This year, many projects across the country were given substantial
allocations of Rs. 15 billion. This amount would be spend on canal improvement and
rehabilitation of irrigation system in the country

Agricultural Infrastructure:
Government allocated Rs. 37 billion for the development of two agriculture
infrastructure development programmes including warehousing facilities. This amount
would also be spent on integrated agriculture marketing and storage infrastructures
including feasibility study projects.
This year in budget 2009-10 the government earmarked Rs.  500 million to establish
warehousing storage facilities in the country. Nil custom duty regimes on tractors, poultry
inputs and cattle feed would continue in future for the development livestock sector in the
country. Two state of the art institution of research for wheat and cotton would be
established besides upgrading the existing facilities.
Ten modern agriculture union councils would be established for each major crop across
the country. Modern technologies and hybrid seed were introduced with the help of foreign
companies like Monsanto of US and farmers would be offered BT cotton hybrids during
fiscal year 2009-10.
 Significance of the agricultural sector in the economy:
Agriculture is an important sector, providing food to the fast-growing population of the
country. According the 1998 census, the total population of Pakistan is 130 million. With a
population growth rate of 2.6 percent there is a net addition of 3.4 million people each year.
In 1947 the population of Pakistan was 32.5 million; in 50 years it has increased fourfold.
During this period the production of wheat, the major food crop, has increased only 2.9
fold. During 1970/71 the amount of wheat imported was 0.3 million tones; it has
increased to 4.1 million tones in 1997. Tremendous efforts have been carried out to narrow
the gap between population growth and food production.
Agriculture contributes about 24 percent of the gross domestic product (GDP) and
employs 47 percent of the national employed labour force. The contribution of the
agricultural sector to the GDP has declined gradually since Pakistan came into existence,
from over 50 percent in 1949-50 to about 24 percent in 1996-97. Agriculture still remains
the major sector of the GDP composition. A major part of the economy depends on farming
through production, processing and distribution of major agricultural commodities.
In foreign trade agriculture again dominates, through exports of raw products such as
rice and cotton and semi-processed and processed products such as cotton yarn, cloth,
carpets and leather production .Agriculture is essential for sustainable improvements in
internal and external balances. Of the total export earnings, the share of primary
commodities and processed and semi-processed products constituted almost 60 percent of
the total exports. There have been some structural changes over time, but the contribution
of agro-based products has more or less sustained its position.
The average annual growth rates in the agricultural sector during the 1960s, 1970s and
1980s were 5.07, 2.37 and 5.4 percent, respectively. With the announcement of a new
agriculture package by the government in April 1997, the growth rate during 1997/98 has
improved to 5.9 percent.
More specifically; the agricultural sector plays an important part in Pakistan's economy
by:
 contributing 24 percent towards GDP;
 providing food to about 130 million people;
 earning about 60 percent of the country's total export earnings;
 providing employment to 47 percent of the total work force;
 providing the main source of livelihood for the rural population of Pakistan;
 Providing raw materials for many industries and a market for many locally
produced industrial products.

Steps to Enhance Agricultural Products

Government of Pakistan is taking much more interest in the enhancement of
agricultural products because it has larger part in exports of Pakistan. Here are the few
steps given below which were taken by Federal government during the fiscal year 2009-10;
 Focusing research and development by up grading existing R and D facilities
and initiating the establishment of two world class institutes of research for
wheat and cotton.
 Development of new techniques.
 More productive use of water through precision land leveling and high
efficiency irrigation system.
  Promoting production and high value export.
 Accelerating the move towards high value activities such as livestock, rearing,
dairy production, fisheries and horticulture.
 Creating necessary infrastructure.
 Ensuring availability of agriculture credit.
 Formation of common facilitation centre.
 Establishment of ten model agricultural union councils for each major crop.
 Encouraging research and extension.
 Promotion of model organic farming.

General Developmental Schemes

Allocation of Budget:
The Women Development Division was allocated Rs. 343.723 million for execution of
17 ongoing and three new projects under Public Sector Development Programme 2009-10.
According to the official document, Rs 5.3 billion were earmarked for the on going
schemes while the new projects got allocation of Rs 2.2 billion for the upcoming fiscal
year. Pak-China seismic network in the country would be established with allocation of Rs
180 million, development of CFIs to fly on-board communication satellite (Pak Sat-IR) in
Lahore at Rs 267.262 million, development of labs for National Satellite Development
Programme (NSDP) in Lahore with Rs 222.55 million, development of support facilities
for NSDP, new airport at Gawadar Rs 750 million, Sialkot International Airport Rs 250
million and National Electronics Complex Rs 200 million.
The major allocations among the ongoing schemes included Rs 2.8 billion for
Paksat-IR, Rs 420.47 million for design and development of Compact Antenna Test Range
(CATR), Rs 292 million for Paksat project (Phase-I), Rs 179.84 million for Altitude and
Orbital Control System (AOCS), Rs 161.20 million for Satellite Bus Development Facility
and Rs 148 million for Development of Satellite Assembly Integration and Test (SAINT)
Facility.

Department of Mines and Minerals

Allocation of Budget:
The Mines and Mineral Development department in the coming annual provincial
budget will get an allocation of Rs. 300 million to promote and facilitate Mines and
Minerals exploration in order to attract foreign and local investment in this sector for
enhancing its contribution in provincial GDP. The allocation will help expand mining
sector by focusing on discovery and exploration of new mineral resources:

 To enhance public sector investment for exploration/ resource mapping and

development of geological-database for minerals.
 To further strengthen government’s role as a facilitator to create enabling
environment for the prospective investors in mines and minerals sector.
 To encourage and support exploitation of minerals, particularly through private
sector.
  To promote environment-friendly mining practices and to take measures for
mitigation of environmental hazards of mining for sustainable development of
mineral sector.
 To develop schemes for welfare and safety of mine workers.
 Provide internationally competitive regulatory frame work
 Mining concession rules and restructuring of the institutional arrangements for
administration in the light of practices followed in developed countries.

National Reconstruction Bureau

Allocation of Budget:
The government allocated an amount of Rs.50.000 million for ongoing projects of
National Reconstruction Bureau under the Public Sector Development Programme (PSDP)
2009-10.
According to PSDP documents, Rs.50.000 million earmarked for ongoing project titled,
“support to good governance Islamabad (phase-111) UNDP funded as grant.

Nuclear Regulatory Authority

Allocation of Budget:
The government allocated Rs. 447.440 million for five ongoing upgradation and
establishment of Environmental Radioactivity Surveillance projects of Pakistan Nuclear
Regulatory Authority (PNRA) in the Public Sector Development Programme (PSDP) for
financial year 2009-10.
According to the Public Sector Development Programme (PSDP), these ongoing
projects are Capacity Building of Pakistan Nuclear Regulatory Authority (PNRA) to
implement National Nucleus Security Action Plan, Institutional Strengthening  and
Capacity Building of Pakistan Nuclear Regulatory Authority (PNRA), PNRA’s School for
Nuclear & Radiation Safety, Establishment of National Dosimetry and Protection level
Calibration Laboratory (PNRA) and National Programme on Environmental Radioactivity
Surveillance Islamabad, Kundian and Karachi.

Pakistan Atomic Energy Commission

Allocation of Budget:
The government allocated a total Rs. 19.533 billion for 30 ongoing and 10 new projects
of the Pakistan Atomic Energy Commission (PAEC) in the financial year 2009- 10.
According to the Public Sector Development Programme (PSDP) announced by the
Finance Ministry, Rs.18.330 billion out of total allocation for the financial year 2009-10
was allocated for ongoing 30 projects of the PAEC. However, Rs. 1.203 billion had been
allocated for 10 new projects of the Commission. A total Rs. 4.430 billion would be foreign
loan for ongoing projects. However, there would be no foreign loan for all the ten new
schemes which to be completed with a total Rs. 24.014 billion and Rs. 1.203 billion have
been allocated in the financial year 2009-10.
 Federal Board of Revenue

Broadening of Tax Base:

The government took concrete steps to broaden tax base instead of overburdening the
existing taxpayers during the fiscal year 2009-2010. In the financial budget 2009-10
government included two new sectors, real estate and services sectors in the tax net, while
within a couple of years two more sectors would be included in it.
The country had attained tax revenues equivalent to 9 per cent of GDP in the year
2008-09 and it had set the target to further improve this ratio by 0.6 per cent in the next
financial year (2009-10).
Besides broadening the tax net, solid administrative measures would be taken to ensure
enforcement of tax. The tax rate would be decreased once the tax base is increased. With
the innovative measures the government’s tax collection target for the next year was 9.3
percent of GDP. While Rs 1377.5 billion revenue collection targets was 17 percent higher
than the last year.

Taxation measures to fetch Additional Revenue:

The government proposed some new taxation measures in the form of excise duty,
withholding tax, value added tax, capital value tax etc. on various goods and services,
which will bring an additional estimated Rs. 69 billion revenue to national exchequer in the
fiscal year 2009-10.
The tax measures being proposed by the government were fair and equitable, guided by
the principle of “ability to pay”, set in the context of an economy fighting a war. Excise
duty on petroleum products was being levied in the shape of a carbon surcharge which
would eliminate the existing petroleum development levy. This would ensure transparency
in the pricing of petroleum products, curb consumption, save foreign exchange and reduce
carbon emissions
In order to discourage consumption of cigarettes, excise duty and sales tax on cigarettes
was proposed to be enhanced; this would generate estimated revenues of Rs 15 billion. As
a revenue measure and to broaden the tax base, FED in VAT mode was proposed to be
levied on the additional services including: Fees charged by banking services; Fees charged
by import cargo handlers; Fees charged by stock brokers; Fees charged by insurance
companies; and Fees charged by electronic media for advertisements.
The estimated revenue impact of these measures is Rs 16 billion. It was proposed to
enhance the rate of withholding tax on imports of commercial nature from 2% to 4%. This
measure resulted in estimated revenue of Rs 23 billion. It was proposed to enhance the rate
of Capital Value Tax on property from 2 to 4 percent. The Government intention were to
adopt effective measures to ensure its collection. It was estimated to generate revenues of
Rs 15 billion. To promote documentation of the economy, it was proposed that certain
sectors may be pulled out of the presumptive.
To help the internally displaced persons, government proposed to levy for a single year:
a nominal tax of 5% on the tax payable by every individual deriving income above Rs one
million. It was further proposed to levy a flat rate of 30% on bonuses earned by individuals
in the corporate sector drawing salary exceeding Rs one million. It was proposed to levy a
Minimum Tax under Section 113 of the Income Tax Ordinance 2001 on the income of a
resident company, provided that this would not be applicable to a company which declared
gross loss before set off of depreciation and other inadmissible expenses under the
Ordinance.

Fiscal Policy:
The government decided in the economic stabilization program to adhere to the fiscal
deficit target reverently and during the first half the fiscal deficit hovered around 1.9
percent of the projected GDP for 2008-09 which was consistent with annual fiscal deficit
target of 4.2 percent. The fiscal improvement in the first half largely based on reduction of
oil subsidies and a cut in development spending. All meaningful efforts to expand revenues
particularly by broadening the tax base will only work in the medium-term. The faster
growth of 35.5 percent in the total revenues was more than off-set by even faster growth of
25.2 percent in the current expenditure.
The financing patterns of fiscal deficit remained dominated by the banking system
which financed 85 percent of the fiscal deficit and only 15 percent were financed by the
non-bank sources. The government remained well ahead of the SBP financing limit
allowed by the Economic Stabilization Program. The government received Rs.141.1 billion
in gross external inflows against outflow of Rs.104.1 billion which means net availability
of Rs.37 billion on account of to finance the deficit remained negligible at Rs.12 billion
only.
Tax Revenue collected by the Federal Board of Revenue (FBR) stood at  Rs. 704.2
billion (net) during the first eight months (July-February) of the current fiscal year (2008-
09) as compared to Rs. 585.4 billion in July-February, 2007-08 — posting a healthy
increase of 20.0%. Direct taxes, which accounted for 36.9 percent of total tax collection of
the FBR registered a growth of 18.3 percent. Indirect taxes, on the other hand, exhibited a
growth of 21.0 percent. Within indirect taxes, sales tax which accounted for roughly 63.6
percent of indirect taxes and 40.1 percent of total taxes grew by 24.3 percent (Rs. 283.4
billion). The custom duty collection is up by 7.3 percent and the collection of federal excise
duty (FED) recorded a note worthy increase of 29.1 percent (collected Rs. 69.7 billion)
during the period under review.

Total Receipts of taxes during the Fiscal Year 2009-10

Revenue Head Target July-February Change
2009-10 2008-09 2009-10 (%)
A)  Direct
Taxes 496.0 216.7 256.3 18.3
B)  Indirect
Taxes 754.0 368.7 446.1 21.0
  1.  Sales
Tax       472.0 228.1 283.4 24.3
  2.  Federal
Excise 112.0 54.01 69.7 29.1
  3.  Customs 170.0 86.6 93.0 7.3
Total Net 585.4 702.5 20.0
 Collection 1250
  
Despite a decline in fiscal deficit in the first half of 2008-09, the growth in domestic
debt accelerated reflecting non-availability of financing through external sources. The
stock of domestic debt grew by Rs.341 billion by end-January 2009. This strong growth in
the domestic debt reflect non-realization of privatization proceeds and reduced availability
of net external financing due to increase in external debt repayments on maturing stock of
foreign currency bonds. The main contribution came from 16.3 percent rise in floating debt
but this rise is lower than 21.2 percent increase in floating debt in the comparable period of
last year. The stock of permanent debt increased by Rs.44.5 billion while unfunded debt
witnessed a moderate growth of 7.2 percent in Jul-January 2008-09.
This fiscal policy looks good on paper but the real issue is the implementation of this
policy on the faster basis.

Outlay of the Budget 2010-11

Policy Decision:
1. Recommendations for the policy decisions in the budget
 Ban on import of expensive cars and jeeps over 1600 CC
 Ban on purchase of new cars for Government Departments for 5 years
 Defense expertise to be utilized for the uplift of civil society in respect of
health, engineering and agriculture sector to boost the economy.
 Increase dependency on agriculture sector, un-utilized agricultural land to be
given on short period lease to group of people with agriculture background for
cultivations.
 Government run schools should be developed on modern lines to improve the
education system and the standards.
 Manufacturing should be encouraged instead of trading business based on
imports. All support should be given to the industrial sector to avoid slow down
and complete halt in the sector, In addition to catering high cost of production,
provision of utilities (gas, electricity) should be made efficient and
uninterrupted.
 A medium to long term policy framework for the development of the
manufacturing sector should be prepared, for proper identification of industries
the country should and can concentrate, based on its economic fundamentals
and then a facilitation process be implemented through cascading of duties to be
levied for the same. 
 Documentation of economy by compulsory issue of receipt for every transaction
made by any business.
 Tax net to be broadened, no new tax should be levied on the existing tax payers;
rather taxing those who are earning well and are still out of tax net.
  Industrial Development Banks must be encouraged to support the industrial
sector instead of commercial banks that are focused in consumer finance.
 Trade development Authority to be given targets to find out new avenues for
boosting our exports.
 Do not allow Pakistan to become dumping market for exporters from different
countries; and antidumping    duties to be imposed as and when required.
 Under the Concurrent List of the Constitution, Sales Tax on Goods is a Federal
subject whereas    sales tax on Services is a Provincial subject which needs to be
decided.
 In case of Afghan Transit Trade, like all other land locked countries, the
agreement [treaty] for    facilitation of imports with Afghanistan should be
revised. There has to be quantitative ceiling for imports required for
Afghanistan.
 Exchange control mechanism to be streamlined so that economic barriers are
placed for financing of under invoiced goods. At present, liberation of exchange
controls are being abused to finance such under invoiced imports.
 Automation is the only answer for maladministration. Unfortunately, the urge
for automation has    dropped down. Perception is being built up to demonstrate
that solution lies somewhere else. This    perception needs to be removed with a
conviction that the only answer is automation. There is a need to make a policy
change for the same and automate the processes as soon as possible.
 The fiscal reforms and policies must have wide support of the society. For this,
tax policy and administration must be based on sound principles of (i) Equity,
fairness and facilitation to tax payers (ii) No harassment to tax payers under any
circumstance, but zero tolerance for tax fraud    and tax evaders & (iii) Risk
based audits and use of IT to identify potential tax revenue. It would    require a
major effort by FBR and Provincial Governments and the will and commitment
of the    Federal and the Provincial Governments. It is essential that the tax
policy and administration reforms are conceived and implemented as a National
Tax Policy Reforms and not just    confined to the Federal Government.
 It is essential that Federal and Provincial Governments come together to
formulate such a policy so that it is implemented with effective coordination of
both tiers of government.
 There has to be a clear and a standard policy that every person is required to file
the return be it income tax or sales tax and claim exemption or zero rating
where ever required. Issue of return filling is separated from taxability. There
can be zero rated or exempt person and sectors but no person having business
operation to be outside the requirement of filing the return in one form or
another for all taxes.
 The requirement of Annual Sales Tax Return should be made mandatory across
the board along with an inbuilt reconciliation between Sales Tax & Federal
Excise returns and Income Tax return which should be introduced and filed
along with the Income Tax Return. Income tax and Sales Tax / Federal Excise
audits should be integrated. There is also a need to integrate the data base of
SECP, FBR and Banks.
2. Proposal for the support of Industry in our country
  To be at par and bring in line with the international practices, like China, India
etc, the Government should resume support for our garment industry. China has
Export tax rebates on textiles and garments to 16%, which increased for the 5th
consecutive time in the last eight months. This support will help exporters who
are facing stiff competition from China, India, Bangladesh, and Indonesia etc.
 For the protection of local industry and save the foreign exchange of US $ 30
Million per year the duty on Alkyl Benzene Sulphonic Acid (H.S.code
3402.1110) should be increased from 10% to 20%.
 Vegetable (cooked or uncooked by steaming of boiling in water) frozen falling
under H.S.Code 0710. Current 15% custom duty should be reduced to 10%.
 The chemicals and dyes, and raw materials not produced locally should be
subject to 5% custom duty instead of the existing.
 As the current recession in world badly affected country’s exports, therefore, it
is suggested that settlement of duty draw back claims under SRO 450(1) 2001
be immediately solved to avoid any negative thought in the exporters mind.
 Kitchen equipments (PCT Code 8419.8990). It is proposed that rate of duty be
reduced to 5% from 20% under SRO 575 as quality product is not manufactured
locally.
 Food Items (Beef, Fish, Chicken, Fries) under PCT (Codes1602.3900,
0304.9900, 0207.1400 and 2004.1400. It is proposed that the rate duty, which is
already 10%-30%, be reduced to 0% - 5 %, as quality food products are not
produced locally according to the international standards.
 In order to reduce cost of production, duty on fabric’s raw material (polyester
yarn) be reduced to 7%.
 In PCT 85.04 a separate heading should be allotted for Current Transformer,
Instrument Transformer, Voltage Transformer and Potential Transformer as
they do mix-up with the description of Distribution Transformer and Power
Transformers and creates problem.
 Import of Plant & Machinery with spares should be allowed to be imported at 0
% duty.
 Income of new Industries, starting production till December 2012 should be free
of tax for five years from the start of production.
 Export Industries should be zero rated.
 No withholding tax on utility bills of industrial sector.
 New Energy supplies up to 4,000MW to be added to the National Grid as soon
as possible.
 Simple procedures for Audit of Sales Tax & Income Tax should be adopted.
 Curb smuggling of Tires & Tubes, Electronic items etc., by various measures
including reduction in high tariffs.

3. Proposal for Direct Taxes INCOME TAX ACT 2001 AND RULES
 The existing base of tax assesses, which is very nominal in relation to the
population and overall size of the country’s economy, be broadened. In this
context, information from certain sources can be collected to determine if a
person is an existing assesses or not. Some sources of information are
 particulars of the parents from all schools which are charging Rs. 4000 or more
to students per month. And survey of commercial markets in the posh areas of
different cities.
 The coverage of withholding tax may be extended in order to increase the tax
revenues and bring more assesses into the tax net. Accordingly, the provision of
withholding tax with different slab rates be imposed on the Tuition fees of
private schools, where monthly fee is more than Rs. 4,000/=.
 Keeping in view the tremendous increase in the general price level and high
inflation, it is recommended that income up to Rs. 250,000/- be exempted from
the income tax.
 In order to expand the tax base and number of assessees, it is proposed that a
general amnesty be granted for a period of one year to the new assessee to
declare their hidden assets/ wealth at a very low rate of tax. Afterwards, if
anybody is caught with the concealed income/wealth shall be liable to the
imposition of heavy penalties.
 The exemptions for industrialization which were available earlier but withdrawn
later on should be reinstated.
 Rates of Taxes on Income from Property -Section 15 and Section 155: The rates
on property income under section 15 and 155 have been amended through
Finance Act 2008. Four tables have been inserted for income from property. It
creates confusion between the taxpayers. Our recommendation is that only one
table of rates should be introduced to avoid confusions.
 Tax deduction on software payments, International Roaming/ Termination: ITO
2001 should address issue of E-commerce (esp. taxation of software payments),
and payments against International Roaming /Termination.
 Relief to Salaried Tax Payers: Due to increase in cost of living / inflation, relief
in tax should be given to the salaried taxpayers.
 The rate of income tax for corporate / non-corporate sector should be reduced
by 5% from the current tax slabs. 

Suggestions:

 It is suggested for the Continuation of the Policy in Future as well for

development of efficient Capital Markets
 Tax Credit on Investment in Shares under Section 62 of the Income Tax
Ordinance, 2001. Present Limit Rs. 300,000 or 10% of the persons Taxable
Income
 It is suggested that it may be raised to Rs. 500,000/= or 20% of the persons
Taxable Income to encourage Individual Investors for more savings and listing
of new companies.
 The interpretation contained in Para 22 of Circular No.1 of 2007 does not
represent the intention of the legislature as envisaged in Sub-section 6(b) of
Section 153; the said interpretation may kindly be withdrawn.
 More Appellate Authorities should be appointed enabling to dispose off appeals
of small taxpayers. Appellate Authorities should be under the Ministry of
Justice so that they could decide appeal without an influence. There must also
 be a time limit to dispose off appeals so that the uncertainty caused by the
pendency, be avoided.
 Audit of the current year must be carried out within next 12 months. The penal
clauses for cases detected after one year should not include additional tax. The
additional tax should also not be levied if the mistake is not detected during
annual audit.

Responses from Different heads of People

Unhappiness of Business Community:

The business community was not at all happy with the budget as according to them
there were hardly any incentives in it. Even though the commencing financial year had
been announced as the Year of Revival for Industries, businessmen and industrialists said
that many of their demands were not considered and no major decisions were announced to
help revive the industries.
Meanwhile market traders, though upset, said that they were not the least bit surprised
that their demands were not met, as they accused the government of always having ignored
them. Interestingly, the stock market also continued to shed points leading to daily
turnovers reaching a three month low in the process. The higher taxes both on imports and
exports seemed to be the culprits for this negative impact, along with the fact that even the
stock market got no incentives in this year’s budget.
One businessman, requesting anonymity for his scathing remarks said that the entire
pre-budget and post-budget scenario was often staged. Laying reason to his statement, this
businessman said that budget proposals had been sent to the govt. as a routine matter but
the budget was often decided well in advance by the ministry of finance. He said that very
few of the final budget decisions actually match the proposals that had been provided to the
government. “Post budget, the disappointed that people show is also pointless. I know that
deep down in their hearts, they always know that it would not be a good budget,” he added.
(We personally asked questions to the businessman)

Business Community Critics:

The entire business community of the country unanimously rejected the federal budget
for the next fiscal year of 2009-10 and said it was anti-business, trade & industry, full of
anomalies and would empower the corrupt elements in tax departments. Textile
industrialist threatened to relocate their textile units to Bangladesh, if anomalies in budget
were not removed in the given time.
 Underlining the anomalies, few businessmen said that there used to be only one tax
commission to deal with the pertaining issues, but from next fiscal year there would be four
tax commissions under different heads. Moreover, government conferred discretionary
powers to these commissioners and other officials in the taxation department. This was said
in the finance bill that any of the tax commissioners can appoint an auditor and deploy him
at any department of the industry for any purpose. Therefore, the giving of these
discretionary power to them and increase in number of commissioners were meant to
harass the business community and would empower the elements of corruption in the
system.
Moreover, the condition of selling goods to only those buyers who either provide their
NTN numbers or CNIN numbers was also not practically viable. Hundred per cent increase
in Withholding Tax (form two per cent to four per cent) on import of raw material would
prove fatal for many industries in the provided environment for doing business here.
Moreover, the withdrawal of subsidies from electricity and gas would automatically raise
the cost of doing business here, while shortfall in generation of electricity was rising on
every passing day too.
Businessmen also criticized the proposed imposition of five per cent carbon-tax on
carbon-less fuel i.e. Compressed Natural Gas (GAS), which was known as green fuel at
world because of its environment friendly nature. The government had set a growth target
of 1.8 per cent for Large Scale Manufacturing (LSM) sector for the next fiscal year. But to
achieve this target, the LSM will have to grow by 9.5 per cent next year, as this
government-neglected major sector was measured to post a decline of 7.7 per cent at the
end of current fiscal year.
Business community questioned the government about their failure to tax landlords in
agriculture sector, who made massive transactions on the sale & purchase of orchards and
explained themselves that as assemblies were represented by 70-80 per cent feudal lords.
The government declared the next fiscal year, which was round the corner to being, as
the year of industrial revival in the country, but each angry businessman declared this
government’s slogan as a joke with the industry.

Budget in our point of view:

Nuclear program funding is frozen. Nuclear commission (PAEC) told to use "less
money and stop all research". All new jobs in government institute stopped. Crush nation
with new oil price formula. Inflation was at over 30-50% and still going up. Extra taxes
imposed on everything so people can be bankrupt. No new development projects while
stopping the ones already started. SO, this is what democracy brings for us Pakistanis.
Earlier to Zardari, as during Musharaf rule kSE no 1 stock market of world, inflation 7%,
growth 9%, no capital flight, $/Rs at 60. Now, when Mr. Zaradri is in power(so-called
democratic government):
KSE index is worst performer, inflation 30-70%, growth in minus 3 -5%, massive
capital flight (around $30 billion as even accepted by government itself in FY09 since Mr.
Zardari arrived). $/RS at 83 these days.
Although the Sindh government increased allocation of budget for different
departments but one thing is lacking in this budget which is the education sector.
Government did not take any serious steps to enhance the quality of the education in
the grass route level. They are only focusing in infrastructure not at quality. Primarily our
suggestion is that Sindh government should adopt the policy ‘Education free for all’. Then
they should go for quality education. There must be a proper 10 years plan for education
sector.
Another thing is that non developmental expenditures of the Sindh govt. is increasing
day by day. Government should make their selves an example of simplicity to encourage
the people to go for simplicity in the routing life. When the govt. personals are just trying
to make their life luxurious then why would people not do that? All in all this is creating
too much budget deficit for Sindh.
The government allocated Rs 70 billion for Benazir income support programme. We
think it is a shameful act giving a nominal sum to poor families. In my view the people will
be discouraged with regard to their self-dependence and won't try to earn of their own in
future. In my opinion, if govt. injects that much amount of money in the power sector and
in installing new industries in the underdeveloped areas of SINDH and BALOCHISTAN,
this would earn them the sympathies of most and the condition of on average will improve.
Government attention is requested to the unjust treatment to corporate employees by
imposing two tier IDP tax viz. 30% on Bonus and then 5% of tax payable. The problem
multiplies; when these taxes are applied to income for the tax year 2009 (i.e. employees
have just one month (June’s salary) salary to pay off the taxes). This means that most of the
corporate employees will have negative take home pay this month. On the first place the
imposition of IDP tax on only one segment is unjust. Secondly, when every one in
contributing to IDP funds raised by Prime Minister, or donating through their corporate
organization, or donating through various other channels, there remains no justification of
imposing two tier IDP tax on corporate employees. Please appreciate that it is only one
sector (corporate employees) that is paying tax honestly and who does not have any black
money. We would request the honorable Finance Minister, Chairman of FBR and other
finance bodies to revisit the two tier IDP tax make necessary adjustments. My
recommendations are: There should not be 30% tax on bonuses of Corporate employees. 2.
5% tax on tax payable should be (a) reduced to 2%, (b) applied to income for the tax year
2010 and (c) expanded across the board to all tax payers including
companies/banks/service industries. Tax Credit against IDP tax to be allowed for the
amount deposited in PM Account for IDPs donated to IDP through employers by way of
charge to salary and or any other method for which evidence of payment is available. Hope
to hear positive response soon.

Baluchistan’s Financial Issue:

Thus setting the mood for the listeners. The budget includes rupees 18 billion for
development and 15 billion for administration and law and order. The budget also offers
nearing 5000 additional jobs. Mouth watering isn’t it.
Now let’s see what benefits it is going to bring to a common Baloch ….. last year 40%
of the budget went to roads and communication infrastructure. That included mostly the
shingle roads WHY WHY WHY?? May be because Shingle roads are easy to make and
easy to wash away & thus become an excellent source generating continuous employment
opportunity for complete chain. The PSDP issue is also extremely interesting again
creating the doubts that Balochistan has once again being IGNORED. What happened to
the 46 Billion President aid? What happened to the PRE-BUDGET meetings of the Baloch
CM and Finance Minister with the president and the PM? What about the earnings of Reko
Diq and Sandak? Probably, the provincial government also proudly announced the
functionality of Gwadar port this year? Every barefoot Baloch also walks on gold and
copper reserves? What about federally funded and federally drained MEGA PROJECTS?
What about royalties of natural gas? How come the provincial income is only Rupees 3
Billion? Why are we asking such irrelevant questions may be we are stupid or we are loyal
Pakistani?
Baluchistan’s economy otherwise is the most complex in many many ways i.e. 20%
surface and 80% underground. The rural populace is virtually sustained by their Vaderas/
Nawabs/ Sradars who collect the complete income and then manage the livelihood for the
subservient masses. The masses pay homage and respect to the masters as second only to
the Almighty and in most cases as second to none as well. The private armies, lashkars and
gangs including those made to fight for the Baloch nationalism involve much more money
than the Balochistan government. These funds are well circulated into Baloch economy
though the effect on common man’s life i.e. well being remains invisible. Smuggling, gun
running, international stake holders and Vaderas/ Nawabs/ Sradars combined make a
complex scenario coupled with majority ignorant masses ---- ignorant of their manipulation
– ignorant of their rights and extremely loyal to and dependant on their manipulators.
Budget after budget and regardless of the billions paid in royalties to Baloch masters or the
mega projects the common Baloch will always be used as crop for harvesting fruits for
someone else. This budget won’t make a difference -- it has again been orchestrated on the
same rules ---- HOW TO TRANSFER IT TO OUR PERSONAL POCKETS NEATLY
AND COMPLETELY.

Conclusion:
The federal and provincial budgets were not reflecting the real problems of the general
public of the Pakistan. It was just the manipulation of words. It did not even have a long
term planning for education sector and power sector.
The only positive aspects of the budget was that government just made hold of the
economic situation and tried their best to raise foreign reserves.
But the problem is that Pakistan generally does not have infrastructure for the
implementation of the long term policies. We need full determination, diligence, hard work
and minds to overcome the crisis of Pakistan. We are hopeful that we will rise someday in
future and our economy will hold the world economy and that day will come sooner if we
work with some purpose not just to spend life.