KARACHI: The federal cabinet on Friday approved the budget for the fiscal year 2015-16 (FY2015-16), with a total outlay of Rs4.313 trillion, which is 9.1 per cent higher than the revised 2014-15 outlay of Rs3.9 trillion.

Finance Minister Ishaq Dar while presenting the budget for fiscal year 2015-16 on the floor of the National Assembly said a growth rate target of 5.5pc had been set for the upcoming year, which he said is budgeted to reach 7.0 percent by the end of PML-N government’s tenure in 2017-18

Before announcing the budget, the minister briefed the cabinet about the salient features of the budget and said measures have been proposed which may enhance exports, industrial growth, and employment.

This year the government is promising to continue walking down the path of stabilisation while moving towards stimulating growth in the economy.

Dar is also promising to hike the growth rate to 5.5 per cent, more than a percentage point increase over the current financial year’s accomplishment.

The main elements of the budget strategy are as follows:

Reduction of fiscal deficit: Dar says the government will continue to consolidate gains it made in reducing fiscal deficit. In 2015-16 he is targeting fiscal deficit at 4.3percent of GDP compared to 5percent in 2014-15.

Raising Tax Revenues: The minister says that the proposed reduction in deficit will be achieved through a combination of better tax collection and tight expenditure controls.

Continued Focus on Energy: Energy is a key government priority, which Dar says can be judged by the fact that the prime minister is devoting considerable time to oversee developments in the sector. A Cabinet Committee on Energy has been constituted which is headed by the Prime Minister himself.

Keeping in view the current gap in demand-supply of power in the face of GDP target, the government plans to bring 7,000 MW on stream besides setting up 3,600 MW LNG-based projects. By December 2016 the government aims to bring 10,600 MW in the system. Beyond December 2017, other projects such as Dasu, Diamer Bhashah, Karachi Civil Nuclear Energy and many other projects will also be completed.

Exports Promotion: The government announces additional measures to incentivise exports and taking other measures to ease the cost of doing business and improving the overall regulatory regime to facilitate exporters.

Investment to GDP Ratio: The investment-to-GDP ratio, which was registered at 12.4percent during 2012-2013, improved to 13.4percent during 2013-14 and is provisionally estimated at 13.5percent for the current fiscal year. The combined effect of increased public sector investments has also played a role in reversing the declining trend. Government projects this ratio to rise to 16.5percent during 2015-16.

Public debt Management: Debt Management has received special attention in our overall efforts for fiscal management. The fiscal consolidation we have achieved has paved the way for a reduction in public debt, which fell from 63.9percent in 2012-13 to a now projected level of 62.9percent at the close of current fiscal year. In the next three years, Debt-to-GDP ratio will be brought down to less than 60percent in accordance with the provisions of the Fiscal Responsibility and Debt Limitation (FRDL) Act, 2005.

In order to achieve target growth of 5.5percent, sector contributions in the upcoming fiscal year has been projected at as follows: agriculture 3.9 percent, manufacturing sector growth has been budgeted at 6.1 percent, and services sector growth at 5.7 percent.

Dar says the overall growth rate has been budgeted at 7.0 percent by 2017-18.

For the upcoming year, the finance minister says fiscal deficit target has been set at 4.3percent, significantly down from last year’s budgeted 5percent.

Dar says the improvement in fiscal deficit over the year is the result of improved tax collection that resulted in higher revenue in addition to disciplined expenditure. He says tax collection increased 3.0 per cent in the past 11 months.

Dar says funds allocated to the Benazir Income Support Programme have increased to $102 billion for the upcoming year. He says five million families will be covered under the BISP.

The finance minister says tax collection target as a percentage of GDP to be increased to 13.5 percent by the end of fiscal year 2015-16.

Dar says foreign exchange reserves had surged to $17 billion which will further grow to $19 billion during the next financial year (2015-16).

The government has allocated Rs125 million for scholarships to rural students for 2015-16.

The government has allocated Rs700 billion for annual federal development programmes and Rs814 billion for provinces, which translates into a total outlay of Rs1.514 trillion.

Dar says Rs3.0 billion has been allocated for an international airport in Gwadar.

The government has allocated Rs100 billion to Special Development Programme funds in order to enhance existing security apparatus, rehabilitate affected areas and resettle temporarily displaced persons.

Dar says Rs112.28 billion have been allocated for the Water and Power Development Authority for fiscal year 2015-16.

Dar says Rs781 billion have been allocated for expenditure on defence, which is 11 percent higher than last year’s allocation, with Rs39.415 billion budgeted expenditure on civil armed forces for the next fiscal year.

A total of Rs78 billion has been budgeted for Pakistan Railways, of which Rs41 billion has been allocated for development programmes and Rs37 billion for employees.

For 2015-16, Rs141.42 billion has been allocated for electricity and power projects, announces Ishaq Dar.

Dar announces Rs10bn for Islamabad and DI Khan route of the China-Pak Economic Corridor (CPEC), and Rs19.5 billion for the Raikot-Islamabad stretch of the CPEC.

Dar says loans will be given out for solar-powered tubewells on low markups, and will significantly reduce costs for farmers who have to run tubewells on diesel-powered generators.

Dar says Rs20.5 billion has been allocated for the completion of 143 Higher Education Commission projects targeting development of Pakistani universities. In addition, Rs51 billion is allocated to the HEC, bringing combined allocation to Rs71.5 billion.

Rates of federal excise duty (FED) on cigarettes are proposed 58 percent to 63 percent. For making informal sector pay due taxes on cigarettes, adjustable FED is proposed to be levied on filter rods at Rs0.75 rupees per filter rod.

Sales tax applicable on various categories of imported mobile phones is proposed to be increased from Rs150, Rs250 and Rs500 to Rs300, Rs500 and Rs1,000, respectively. On the implementation of new rates, regulatory duty imposed on import of mobile phones will be withdrawn.

Dar announced that minimum wage has been increased for Rs12,000 per month to Rs13,000.