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Highlights of Pakistan Budget 2016-17

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Finance Minister Ishaq Dar has unveiled a budget with a total outlay of Rs 4.39 trillion for the fiscal year 2016-17, indicating 7% increase over the outgoing year.

The government has set an ambitious growth target at 5.7pc in the next fiscal year. This is a deficit budget with a Rs 1.2 trillion gap in income and expenditure, said the minister.

“The growth rate is 4.7pc which is highest in the last eight years,” Dar said, adding that cotton crop destruction hampered the GDP growth.

According to the minister, the government has protected national economy from global fluctuations. He also underlined that poverty rate had declined to 28.4pc.

Tax revenue

Talking about the budgeted tax revenue, the finance minister said, “We will reach our target and we want to push the tax-to-GDP ratio to over seven percent.”

The Federal Board of Revenue has been provided a target of Rs 3.6 trillion tax target for the next fiscal year.  He said tax collection of Rs 3.1 trillion was recorded during the current fiscal year.

The tax revenue recovery registered 60pc hike in last three years.  The budget proposes zero duty on exports of textile, sports goods, surgical equipment and leather goods.

GDP growth rate

Dar, while outlining the economy’s performance in the past two years said, “In the past two years progress went over 4pc and reached 4.7pc – the highest in 8 years.

He announced that the government had targeted growth of 5.7pc for fiscal 2016-17, while sharing government’s ambitious target of 7pc growth rate for the fiscal year 2017-18.

Defence budget up by 10.2pc

Dar announced that Rs 860 billion have been allocated for defence expenses, showing 10.2pc increase in the defence budget comparing last year.

In 2015-16, the defence expenditure was raised up to 11.3pc at Rs 780 billion. The finance minister said the nation has rendered matchless sacrifices in the war on terrorism. He said that the armed forces were engaged in flushing out terrorists through the Operation Zarb-e-Azb.

The exports go down by 11pc in the ongoing year to US $18.2 billion. The country suffered 0.5pc loss in the GDP growth due to loss of the cotton crop.

Agriculture sector

Dar pointed out that the agriculture sector suffered due to floods and depressed prices. The PM Nawaz announced a Rs 341 billion Kisan package in 2015 to help farmers.

Fertiliser price will go down to Rs 1,400 per bag, from Rs 1,850, underlined Dar. While the price of DAP fertiliser will be reduced from Rs 2,800 to Rs 2,500 from July 1.

Agriculture tube wells electricity price cut by Rs 3.5 per unit.



Minimum wage fixed at Rs 14,000

Minimum wage has been increased to Rs 14,000, indicating a Rs 1,000 increase from the previous year.

Last year, the amount was hiked up from Rs 12,000 to Rs 13,000.



Fiscal deficit

Fiscal deficit has been proposed to be restricted at 4.3pc for the next fiscal year of the GDP. He added that this figure will be further reduced to 3.5pc of the GDP

He said the oil import bill goes down by 40pc due to lower oil prices.



Concession of customs duty

Concession of customs duty for dairy, livestock and poultry sectors as well as fish farming announced in the budget speech. The existing seven percent sale tax on pesticides is proposed to be abolished.

Concessions for industrial development include enhancing tax credit on employment generation and tax credit for making sales to registered persons; balancing modernization and replacement of plant and machinery; establishing new industry and expansion of existing plant or new project.

The Finance Minister also announced a series of measures for the provision of telecommunication and internet facilities in the far-flung areas of the country.



Super Tax announced

the finance minister said the super tax will be imposed on an income over Rs 500 million.



Capital Gain Tax relief

Capital Gain Tax relief period has been extended from four to five years.




Public debt management

The Federal Board of Revenue (FBR) increased from the level of Rs 1946 billion in FY2012-13 to Rs 2588 billion in FY2014-15. Dar said FBR is on course to achieve the revenue collection target in excess of Rs 3,000 billion during the FY2015-16.

Budget deficit was contained at 8.2pc in FY2012-13 (down from a projected 8.8pc) within weeks of assuming office. The deficit has been reduced to 5.3pc in FY 2014-15. We are on track so far to reduce it to 4.3pc for the FY 2016 ending in June 2016, said Dar.



Benazir Income Support Programme

The Finance Minister said under the Benazir Income Support Program (BISP), a sum of more Rs 115 billion is being added to BISP.

Last year the allocation was Rs 102 billion to cater to 31 million people of 5.3 million deserving families.




Rs 245 billion rupees have been earmarked for the pensioners in the fiscal year 2016-17.  The minister mentioned that pensioners older than 85 years will see a 25pc increase in compensation.

Annual Development Program

In Budget 2016-17, Rs 800 rupees have been earmarked for the Annual Development Programme.



More than 10,000 MW of additional electricity would be added to the national grid by March 2018.

Allocations for Pakistan Baitul Mal have been doubled to four billion rupees.

PM youth loan programme

The minister announced that Rs 20 billion have been allocated for the PM Youth and Skill Programs.

Last year, under the PM Youth Loan Program, as many as 15,000 loans approved. Rs 1.75 billion loans were given to 44,000 people in 2014-15 – while recovery rate had been 100pc.

Ad-hoc relief for government employees

The minister announced that 10pc ad hoc relief will be to government employees.

Public Sector Development Programme

Dar announced that the Public Sector Development Programme (PSDP) stands at Rs 800 billion with a foreign assistance of Rs 143 billion.


Dar said conveyance allowance of Grade 1 to 15 employees has been  enhanced by 50pc.


Duty on cigarettes

The government to increase 23 paisa  on low-category cigarettes while 55 paisa on high-category cigarettes.

Taxes on smartphones

Sales tax on medium level smart phones has been proposed to be enhanced from Rs 500 to Rs 1,000. The tax on lower level mobiles phone will remain unchanged.

Tax on foreign dramas, TV channels

Tax proposed on relaying foreign made dramas on television channels. He said the government had received proposal to promote locally-made television soaps.

Before the announcement of the budget, the Pakistan Stock Exchange rallied over 500 points to reach an intra-day high of 37360.88 points. The index registered 441 points increase, reaching 37,281 points an hour before closing.


Announcing development expenditure plans for next year, the finance minister announced a 20pc increase in the PSDP allocation with Rs1.675tr set aside for FY16-17, of which the Federal PSDP makes up Rs800bn.

These funds, Dar said, would be utilised for various ongoing and new development schemes.

“Gwadar will play an important role in Pakistan’s development in the future, hence we have allocated a special amount in the development budgets,” said the finance minister.

For roads and motorways construction, an amount of Rs188bn has been allocated, with the cost of Karachi-Lahore motorway included in the amount.

A total of Rs2bn has been set aside for the construction of a State Guest House, while Rs1.02bn has been allocated to the Climate Change Division under the PSDP.

This year, Rs115bn will be allocated to the Benazir Income Support Programme for the benefit of 350 million families until June 2016. About 300,000 more families will be inducted in the programme, with each family getting Rs18,500 monthly, he said.

Loadshedding has been regulated, Dar claimed, adding that an additional 10,000 megawatts would be inducted into the national grid by March 2018.

The finance minister announced allocation of Rs32bn for Diamer Bhasha Dam and Rs42bn for Wasoo dam. He added that other flood dispersion, small and delay dams will also be built.

For hydel-energy projects, Dar announced an allocation of Rs61bn for the 969MW Neelum-Jhelum Hydropower Project, Rs16.5bn for Tarbela dam and Rs60bn for other power related projects.

Rs11.94bn will be spent for development of IT infrastructure in rural areas, Dar said, and Rs1.9bn will be spent in IT development in all four provinces.

The minister said Pakistan Railways engines, bogies, tracks and signal systems will be improved. Rs14bn, he said, has been set aside for purchase of new bogies for railways. Rs37bn has also been set aside for railway employee salaries.

The Higher Education Commission (HEC) has received Rs79.5bn for the current fiscal year, which is a 11pc increase, with Dar calling it a “historical increase.”

Temporary Displaced Person (TDP) and security enhancement development programme has received an allotment of Rs100bn for fiscal year 2016-17.

For new Industrial plants and expansion, a five year tax credit till June 3, 2019 was announced. To further support industries, custom duty on import of Industrial raw material is being brought down to three pc.


A total of Rs57bn has been set aside for public sector salaries and pensions in the FY16-17 budget, Dar said.

Starting July 1, there will be a 10pc ad-hoc increase in salaries for all federal government employees, he said. The finance minister announced an increase in the monthly minimum wage, bringing it to Rs14,000.

A monthly conveyance allowance of Rs1,000 has been set aside for disabled employees in this budget, he said.

Dar proposed 10pc increase in pension for federal employees, with those above 85 years of age receiving a 25pc increase. Family members of deceased pensioners will receive Rs4,000 monthly as compared to the previous budget’s monthly allowance of Rs1,000.

The Pakistan Economic Survey on Thursday showed that the government had missed last year’s budgeted GDP growth target by a wide margin, mostly owing to a dismal performance by the agricultural sector.

But this was compensated by the industrial sector as the construction and electricity sectors outperformed expectations.

The services sector grew at par with the set target, bolstered by an increase in salaries of government employees and defence servicing.


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