Budget 2009-2010

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ASSIGNMENT #1

ECONOMICS OF PAKISTAN

SUBMITTED TO

PROF RIZWANA HUSSAIN

SUBMITTED BY

RAFAY AHMAD DAR (BC08-374)

UMAIRAHMAD (BC08-371)

MUHAMMAD HAROON (BC08-322)

HAFIZ SALEEM (BC08-370)

MUHAMMAD UMER (BC08-375)

UMAIRAHMED (BC08-366)

HAFIZ JAVED (BC08-353)

HAILEY COLLEGE OF COMMERCE

UNIVERSITY OF THE PUNJAB LAHORE

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Budget 2009-2010

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

Formation of Budget:

Over the past decade budgetary policies have emphasised a firm restraint on thegrowth of total expenditure and a restructuring of the profile of both current anddevelopment expenditure to deal with a high fiscal deficit in Pakistan. Regarding currentexpenditure, there has been an increasing emphasis on meeting fully the recurrent cost

requirements of completed public investments and on the minimization of the costlysubsidy programmes. Development expenditure has been increasingly directed towards thepriority sectors pertaining to physical and social infrastructure and to early completion ofthe on-going development projects.

Effective public expenditure management places heavy demands on existinggovernment institutions and has a much wider scope than the formulation andimplementation of conventional expenditure budgets. The formulation of an appropriatemacroeconomic 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 expenditurebudgeting.

Notwithstanding the importance of these broader aspects of budgetary issues, this paper does not deal with such public expenditure management issues. Instead itconcentrates on a description and an analysis of the formulation process of governmentexpenditure 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 theadverse consequences of deficit financing with respect to macro instability have persuadedthe government to impose constraints on total expenditure. Donor agencies, especially theInternational 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 cyclein 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.

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Outlay of Budget 2009-10The budget had an allocation of Rs 724 billion for debt servicing, funds for which

would be financed through local and external borrowing. Non-development expendituresare estimated at Rs 1.55 trillion, Rs 621 billion have been apportioned for the Public SectorDevelopment 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 50billion, while the Earthquake Reconstruction and Rehabilitation Authority (ERRA) is likelyto 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, withnew taxes and duties amounting to around Rs 100 billion. The existing petroleumdevelopment levy may be replaced by a Carbon tax of around Rs 6 to 12 per litter onpetroleum, 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

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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 BudgetsThe 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 isas important as federal budget. The allocation of the budget of four provinces is givenbelow:

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

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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 currentfiscal year's revised estimates of Rs 267.568 billion. As per proposed budget, total revenuereceipts 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 125billion, with 12.7 percent increased over 2008-09 budget. The estimates under oil and gasreceipts are Rs 50 billion and these were six percent less than current year's revisedestimates of Rs 53.4 billion. Overall federal transfers were estimated at Rs 204.6 billion asagainst revised estimates of Rs 183.2 billion.

The province's own receipt pitched at Rs 39 billion with an increase of over 29 percentover revised estimates of outgoing year. On the expenditure side, the current revenueexpenditure was estimated at Rs 213.4 billion, with an increase of 15 percent over revisedestimates 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. Theshares of local governments worked out to Rs 94.4 (including Rs 27.6 billion of DistrictSupport Grant) on the basis of PFC Award, and it reflects an increase of 21 percent overbudget 2008-09.

The current revenue receipts were estimated at Rs 243.662 billion, Rs 30.126 billionhigher 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 Rs20.937 billion in revised budget of current fiscal year, depicting an increase of Rs 386million. Further, current capital expenditures estimated at Rs 15.879 billion, against Rs7.554 billion of revised budget of current fiscal year.

The current revenue expenditures were increased by Rs 28.446 billion to Rs 213.397billion for the next fiscal year, out of which provisional expenditures, showing a rise of Rs16.08 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 theupcoming 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, with49 percent increase. The overall allocation for promotion of education pitched at Rs 6billion with 27 percent increase over last year. The highest ever, Rs 75 billion allocated forAnnual Development Programme (ADP) as compared to Rs 55 billion in revised estimatesof fiscal year 2008-09, depicting an increase of Rs 20 billion. ADP allocation for districtgovernments had surged by Rs 3 billion to Rs 15 billion for the next fiscal year.

Expenditures under Public Sector Development Programme (PSDP) have beenestimated at Rs 97.905 billion against Rs 81.063 billion receipts. PSDP comprised Rs 75billion 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 CitiesImprovement Programme (SCIP).

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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 financialyears.

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 ofFederal tax assignment from the Federal government, while estimated receipt in 2.5 percentshare in the general sales tax (GST), the provincial government is expected to receive Rs7.9 billion.

Besides, another amount of Rs 7.6 billion were expected to be received by the Federalgovernment in the head of the royalty on oil and gas. The provincial government showed areceipt of rupees six billion in the head of the net-profit on electricity and Rs 14.8 billion inthe form of special grant from the Federal government, while an estimated receipt of Rs 7.5billion was expected from the own resources of the province. The share of the provincialgovernment 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. Thegeneral 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 ofrupees six billion for health and education, Rs 9.7 billion for police and another amount ofRs 7.2 billion for the payment of pensions. An estimated amount of Rs 34.9 billionearmarked for district governments for payment in the head of salaries and otherexpenditures; 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 andanother estimated amount of Rs 11 billion in the head of miscellaneous expenditures.

In total development expenditure, the estimated provincial Annual DevelopmentProgramme (ADP) was Rs 32.5 billion and Districts ADP of Rs 1.34 billion and specialFederal government Public Sector Development Programme (PSDP): Rs 10 billion,including grants of Rs 9.83 billion; and loans of Rs 214.91 million respectively. Theestimated development expenditure also comprised Population Welfare Programme of Rs574 million and foreign project assistance of Rs 4.61 billion.

Balochistan:

The Balochistan coalition government presented Rs.74.247 billion tax-free budget withan 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.5.107billion 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 estimatedreceipts were Rs.59.054 billion out of which Rs.3.645 billion as the province's own incomeincluding 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

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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 theoutgoing 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 inoutgoing financial year was as Rs.8.80 billion. The deficit amounting to Rs.8.832 billionwould 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 andremaining 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 governmentservants and 15 percent increase in pension of retired servants of Balochistan governmentfrom July 1, 2009.

Measures to reduce unemployment:Regarding measures, which had so far been taken for ending unemployment inBalochistan, he said that the provincial government had created 4212 new posts in variousdepartments during the last one-year aimed at reducing unemployment in the province.

Referring to financial crunch being faced by the cashed-strapped Balochistangovernment, government had evolved two pronged strategy for putting the fledglingeconomy back on track. These included; initiating reconciliation with annoyed (Baloch)political forces (for improving law and order) and contacting the federal government forconversion 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.

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Comparison between Expenditures and Receipts

This is the receipts and expenses at glanceduring the fiscal year 2009-10.

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Allocation of Federal Budget in Different MinistriesPakistan has agricultural based economy. But still it has got many infrastructure

regarding industry, mining, atomic energy and coal board etc. All these departments andministries have got their on budget allocation which makes it easier for the finance ministryto handle the balance of expenditures and receipts.

Some ministries in Pakistan have got more funds than others according to theirimportance 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 beenallocated 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. 14885million is the foreign component.

An amount of Rs 22967 million allocated for 800 MW Guddu Steam Power Projectwhile Rs 18418.730 million earmarked for 500 MW combined cycle power plant at ChichoKi Malian. Similarly, an amount of Rs 16000 million allocated for Neelum-JhelumHydropower Project while 13676.150 million earmarked for 425 MW combined cycleNandipur Power Plant.

An amount of Rs 8000 million allocated for Diamer Basha Dam project for acquisitionof land and resettlement (4500 MW) while 15000 million earmarked for construction ofDiamer Basha Dam project.

Duty on energy savers:The cabinet stymied Finance Ministrys attempt to import custom duty on energy

savers. Some Ministers expressed apprehension that levy of excise duty would ultimatelyaffect the common man. Similarly, withdrawal of subsidies on power consumption waslikely 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 SouthernPunjab 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 privatepartnership in the power sector to reduce demand supply gap. They would ensure to bringdown the line losses, those increase burden on the people. They also took steps to executepower generation projects through public private partnership.Projects had been undertakento reinforce the transmission and distribution systems to minimize power losses andoutages so as to provide a stable and reliable supply to consumers.

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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 atpromoting renewable energy in the country. The Board of Investment (BOI) designed thefinancing scheme under which financing will be provided by banks and development

financial institutions on first come first serve basis within the overall amount earmarkedfor 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 renewableenergy sources like wind, biogas, bio-fuels, solar power and geothermal energy as fuel willbe considered for funding under the scheme. While adequate funds have been earmarkedfor the scheme, banks and DFIs would be required to approach the Small and MediumEnterprises (SME) Finance Department, State Bank of Pakistan after their internal approvalof financing to each project for confirming the availability of funds, according to thescheme.

The investors of power projects can avail the financing facility for new imported andlocally-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 eligibleborrowers for the import and local purchase of plant, machinery and equipment. The BOIpolicy stated that sponsors of power projects will be required to meet the requirements ofAlternative Energy Development Board (AEDB) being the concerned governmentregulatory authority and other departments in compliance with the prevalent renewableenergy policy of the government. Under the scheme, financing under the scheme will beavailable for a maximum period of 10 years, including a maximum grace period of twoyears. 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, includinggrace 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. Therenewable energy investment programme was part of the governments long-term energysecurity strategy. The governments investment programme would cover various renewableenergy development activities in all parts of the country which include hydropowerprojects, 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-hourand a 20-25 per cent rate of return on investment for wind power projects, Indus. Theproposed 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 DevelopmentBoard (AEDB) hold series of negotiations to finalize a new medium term policy.

Multilateral lenders including World Bank and Asian Development Bank were part ofmany renewable energy projects. Yet, none started production. However, it is expected thatthe new policy framework will help different companies to achieve financial close for asmuch as 200mw wind power projects in 2010. Rise in demand in other countries foralternate power sources, deteriorating political and security situation here and relativelylow tariff were termed as main reasons behind failure of these project to materialize.

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Despite passage of more than five years since first alternate energy policy came, onlyone Turkish company, Zorlu Energy, set up windmills on commercial scale. It is runningsix turbines of 1mw each.

The power tariff for renewable energy projects automatically would come down after acertain 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 inmany cities. Circular debt, which runs into billions of rupees crippled governments powersector entities. Massive investment was needed in power infrastructure to check line lossesand improve service to convince people to pay their bills. While public sector powerdistributors were running in losses, government ensured fixed returns to independent powerproducers, 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-goingfiscal year 2008-09. Rs 23.372 billion allocated for Tertiary Education Affairs and Servicesout of the total budget of Rs 31.569 which was the maximum portion of the Educationbudget 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 Rs31,569 million, Rs 2,887 million has been earmarked for Pre-Primary Education AffairsServices, against Rs 2,368 million of the out-going fiscal year, showing an increase of21.92 percent.

Similarly, an amount of Rs 3,828 million allocated for Secondary Education Affairsand 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 TertiaryEducation Affairs and Services against Rs 17.461 billion earmarked for the same period oflast fiscal year, witnessing an increase of 33.85 percent.

In the new allocation, Rs 566 million allocated for Education Affairs, Services (notelsewhere) which has been increased by 7 percent against Rs 529 million of the previousfiscal year. In the budget Rs 845 million allocated for Administration which was Rs 739million during the same period of previous fiscal 2008-09, witnessing an increase of 14.34percent.

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 theofficial document, Rs 8029.787 millions earmarked for the ongoing schemes, while thenew 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 forEstablishment and Operation of Basic Education Community Schools, Rs 2000.000 millionfor Education For All (EFA), Rs 300.000 for capacity Building of teachers TrainingInstitutions and Training of Elementary School Teachers in Punjab and Rs 225.000 million

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for Capacity Building of Teachers Training Institutions and Training of Elementary SchoolTeachers in Sindh.

Similarly, an amount of Rs 209.595 million earmarked for Capacity Building ofTeachers 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 millionfor Establishment of Cadet College Okara.

While the major allocations for the new schemes included Rs 70.000 million for GirlsCollege Mona and Rs 36.165 million for Provision of Transport Facilities for FemaleTeachers Working in Educational Institutions under FDE Rural Areas of ICT.

An amount of Rs 30.000 million allocated each for establishment of Cadet CollegeKahuta 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 Classesand 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 SectorDevelopment Programme (PSDP) 2009-10.

An amount of Rs 158.464 mln would be spent on 13 new schemes includingEstablishment of Special Education Center for Visually Handicapped Children, Gilgit,Provision of Hostel facilities of Special Education Complex for Persons with Disabilities atMardan, Faisalabad and Benazirabad, Construction of Special Education Centers atKarachi, Larkana, Skardu and Dadu, and Establishment of 3 national Centers forRehabilitation of Child Labour at Sialkot.

While an amount of Rs 329.284 mln allocated for 55 ongoing projects of SocialWelfare and Special Education in which Construction of Special Education Centers atKohat, Mirpurkhas and Jhang, and upgradation of Special Education Centers for HearingImpaired Children, physically handicapped, visually handicapped and mentally retardedpersons and setting up of vocational training centers for disabled and needy were the majorprojects.

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 spenton ongoing projects.The government under PSDP earmarked Rs.3000 million for ExportProcessing Zones and Area Development, Balochistan including ROZs where as Rs.1100million 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 inBahawalpur, Sargodha, Okara, Larkana and Hyderabad. The government also earmarked

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under PSDP, Rs. 100 million for the establishment of Red Chillies Processing CenterKunnri, Sindh and Rs.300 million for Village Product Specialization project.

Under the PSDP, Rs. 150 million allocated for Leather Crafts Development CompanyMultan 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 governments objectives of

employment generation, increased income and poverty alleviation creating a better qualityof 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 ongoingschemes of Textile Industry Division, under the Public Sector Development Programme(PSDP) 2009 10.

According to budgetary allocations announced, Rs.246 million earmarked for providingand laying dedicated 48 inch diameter mild steel water pipeline for Textile City Karachiwhereas 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 ExportDevelopment Plan Implementation Unit and Rs.0.84 million for holding of conferences andseminars.

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 theongoing development schemes besides 25 new schemes during 2009-10.

An amount of Rs 4477.092 has allocated for 61 ongoing development schemes while achunk of Rs 1104.951 will go for 25 new schemes. The major aspect of allocated funds forHousing Division is that all these schemes would be completed without any foreign loan.

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The significant ones in the ongoing schemes included provision of Pak SecretariatBlocks, TU & V Islamabad at a cost of Rs 1000 million, Prime Ministers Special Initiativefor Housing for the Government Servant (revolving Fund) Rs 500 million, PrimeMinisters Special Initiative for Housing for the poor (including Sasti Basti) Rs 600million, 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 Rs150 million, Lahore at cost of Rs 150 million, Musa Khail Tunsa Road (35 km) Rs 200million, 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 atRs 398 million and widening and rehabilitation of metalled road in district Kasur at cost ofRs 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 andrehabilitation of roads in District Upper Dir PF-93 at Rs 30 million, in PF-91 at Rs 35million 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 47development projects, mostly related to the construction of news sports and residentialfacilities, under Public Sector Development Programme (2009-10).

The allocated amount would be spent on 35 ongoing development schemes while only12 new schemes are planned to be executed in fiscal 2009-10. All the projects would beexecuted 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 totalexpected cost of the ongoing 35 projects is Rs 1.04 billion while 12 new projects wouldincur Rs 1.6 billion.

The mega projects, for which the allocation being made under the PSDP for fiscal2009-10, included construction of sports complex at Sukkur (Rs 489.553 million), SportsComplex at Narowal (484.848 million) and up-gradation of football stadium at Multan (Rs356.881) 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 forongoing schemes in fiscal 2008-09 while thrown forward cost of the new projects equalsthe current allocation as the planned projects might not have been initiated in previousfiscal year.

The Sports Division spent Rs 587.107 million during the previous fiscal on theexecution of different development projects some of those are: construction of boxinggymnasium in Islamabad, Lahore, Quetta, Peshawar and Karachi, sports medicine centre inIslamabad, sports stadium at Lora Lai, Zhob, Nankana Sahib, Patuki, Mianwali, Upper Dir,Tando Adam, Chunian and Mastung.

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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 forthe 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 ofPakistan hockey,squash, athletics, wrestling, badminton, handball, taekwondo, karate, judo,cycling,volleyball,boxing, weightlifting,and other sports bodies, and officials ofprovincial Olympic Association.

Ministry of Health


The government allocated an amount of Rs. 23.15 billion for health sector under PublicSector Development Program (PSDP) 2009-10 for new and on-going development

projects. According to the budgetary allocations, out of total amount, Rs. 2090 millionallocated 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 forImmunization (EPI) and Control of Diarrheal Diseases, National Institute of Health

Under PSDP, an amount of Rs 2900 million allocated for National Maternal, Neonataland Child Health Programme while Rs 300 million were allocated for Enhanced HIV/AIDSControl 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 allocatedfor provision of Stereotactic Radio surgery System at JPMC, Karachi.An amount of Rs 100 million was also been allocated Prime Ministers 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 revisedestimated budget for 2008-09. Rupees 5,708 million have been allocated in the budget forhospital 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 35.16percent 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 allocatedwhich is the same amount reserved for it last year.

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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 newschemes, while rest of the amount Rs. 4995.072 million would be spent on 113 on-goingschemes.

The government allocated Rs. 1000 million out of an estimated cost of Rs. 3000 millionfor provision of security infrastructure in Malakand, Swat and other conflict areas ofNWFP, under new schemes.

An amount of Rs. 900 million allocated for on-going scheme of rising of BalochistanConstabulary, while Rs. 800 million allocated for conversion of B area into A areaBaluchistan. An amount of Rs. 800 million allocated for Machine Readable PassportProject (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 NationalForensic 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


The government allocated Rs. 916.12 million in Public Sector DevelopmentProgramme (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 of100 KW at Muzaffarabad, Hyderabad and Multan.

During the coming fiscal year, Rs. 100 million would be spent on establishment of 47FM radio stations throughout the country. The other important project was IslamabadMedia University for which Rs. 18.76 had been allocated.

The other on-going projects included setting up of TV Centre at Multan (Rs. 40million) 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. 11.55million) and Kel (AJK) (Rs. 11.55 million).During the year, the government would also spend Rs. 140 million on setting up transmitterat Chaman, Gwadar and Karachi. The government also allocated Rs. 10 million for theelectronic news gathering service of Associated Press of Pakistan (APP).

Under the new schemes, the main project was terrestrial digitalization of all PTVstations for which Rs. 60 million were being earmarked.

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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 andMonitoring cell at Islamabad. Similarly, an amount of Rs. 70.000 million allocated forInstitutional strengthening, capacity development and data base preparation, Rs. 150million 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 allocatedfor the project of Clean Drinking Water for All.

The Government under the PSDP 2009-10 allocated Rs.193.932 for Clean DrinkingWater Initiative whereas Rs 100 million allocated for the project White Revolution(Doodh Darya)/ Prime Ministers 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 IDPfamily, whether it is in the camps or with the host families. Besides, the Friends of Pakistanwould also assist the government in its endeavours to accommodate the IDPs, while asubstantial 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 currentfinancial 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 allacross the country.

Livestock Production and Development of Meat Production projects across the countrywould be completed with a total cost of Rs. 300 million while, Rs. 300 million were beenallocated for milk collection/processing and dairy production and development program.

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The government allocated Rs. 163 million for the development of fisheries trainingcenters at Gawadar and Rs. 13.653 million were spent on Accreditation of Quality ControlLaboratory of Marine Fisheries Deportment.

In PSDP 2009-10, the government allocated Rs. 110 million for six new schemesincluding 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 inthe 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 initiativesin 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


The government allocated an amount of Rs 135.4 million in the Public SectorDevelopment Programme (PSDP) for Labour and Manpower Division for completion ofeight on-going projects during 2009-10. The allocation for the projects involved six millionas visits of expatriate Pakistan Consultant for short duration assignmet in Pakistan.

An amount of six million allocated for Labour market information system and analysisIslamabad and Rs. 10 million earmarked for the training of trainers for skill developmentIslamabad.

Similarly, Rs. 12.4 million allocated for vocational training centre, Kashmore in Sindhwhile Rs.22 million allocated for construction of technical trainig institute for trade atMandra.

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 constructionof 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 literacyand awareness programme started and 15,000 volunteers registered for communitydevelopment activities and disaster management. Also, Rs 450 million had been set asidefor cultural development.

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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 AssociatedPress 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 1

st

July,2009.

Ministry of Communications


The government earmarked Rs.45971.990 million in the Public Sector DevelopmentProgramme (PSDP) 2009-10 for the Communications Division for its various ongoing andnew projects while Rs 45706.090 allocated for National Highway Authority (NHA).

According to the budgetary allocations, out of total amount, Rs. 35971,990 million waslocal 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 millionforeign loan component. For 30 NHA new projects Rs 10017.000 million were allocated.

Ministry of Culture


The government allocated an amount of Rs 449.993 mln for various ongoing and newprojects 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 andrehabilitation of Allama Iqbal Manzil, Sialkot, establishment of Classical Music AcademyPNCA, Archaeological Excavations at Tibba Sungawala District Toba Tek Singh, PC-II forNPAG Cultural Center, Burns Garden Karachi, Setting up of laboratory for Restoration ofDamaged paintings, PNCA, Preparation of Database of Paintings/ Arts Works PNCA,upgradation of Lok Virsa Media Studios and establishment of National Folklore Ensemblefor soft image of Pakistan.

While an amount of Rs 372.493 mln allocated for sixteen ongoing projects in whichdevelopment and restoration of archaeological sites from Taxila to Swat, master plan for preservation of Rohtas Fort and Shahdara Complex of Monuments, Jahangirs 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) forthe financial year 2009-10.

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According to PSDP documents, these funds spent on the up gradation of tourismresearch studies besides establishment and up gradation of Tourist Facilitation Centers invarious parts of the country.Four ongoing projects of the Tourism Division were upgradation 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 TouristFacilitation Centre at Provincial Headquarters, Lahore, Tourist Facilitation Centre atProvincial Headquarters, Karachi, Tourist Facilitation Centre at Gilgit, Northern Areas.Tourist Facilitation Centre at Muzaffarabad (AJK), Tourist Facilitation Centre atIslamabad, construction of Pakistan Tourism Development Corporation (PTDC) Motel atHawks Bay, Karachi and rehabilitation/Refurbishment of PTDC Motel at Moenjodaro.

Ministry of EnvironmentBudget 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 Rs2227.886 million for ongoing schemes and just Rs 26 million for the new schemes. ThePSDP allocations showed that Rs 17931.454 million were thrown forward and expenditurestill June 2009 were 5360.845 million. Estimated costs of the projects showed a total sum ofRs 23246 million with Rs 1737.155 million as foreign loan.

In PSDP for 2009-10, the government initiated just three new schemes with one, theMedia 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 Sectorresources for Carbon Sequestration in FATA. For other two schemes, Rs 5 millionallocated for Energy Conservation through Training and Mass Awareness Campaign andRs 20 million for Development of Forestry Sector Resources for Carbon Sequestration inFATA. In all, 45 schemes were mentioned in the PSDP including 42 ongoing and threenew schemes.

Figures show that only Rs 26 million allocated for the environment sector including Rsone million for Media Advertising Campaign on Energy, Conservation and InstitutionalStrengthening and Capacity Building of ENERCON.

Ministry of Youth Affairs


The government allocated an amount of Rs. 47.760 million in the Public SectorDevelopment Programme (PSDP) for the Youth Affairs to execute the six on-goingdevelopment schemes during 2009-10.

For the on-going Mobile Youth Computer Literacy Awareness Programme, an amountof Rs. 5 million allocated while Rs. 15 million allocated for Construction of YouthDevelopment Centre at Malir Karachi.

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Likewise, Rs. 1 million allocated for the construction of Youth Development Centre atSukkur, Rs. 10 million for construction of Youth Development Centre at Gawadar, Rs. 15million for the construction of Youth Development Centre at Gilgit and Rs. 1.760 millionhas been allocated for the establishment of planning and monitoring cell.

Ministry of States and Frontier Regions


The government allocated an amount of Rs. 12865 million in the Public SectorDevelopment Programme (PSDP) for the States and Frontiers Regions Division to executethe two on-going development schemes during 2009-10.

For Federally Administered Tribal Areas (FATA) including all Special Programs andFATA Rural Development Project, an amount of Rs. 12860 million allocated while Rs. 5million allocated for the Water Supply Scheme, Landi Kotal.

Ministry of Railways


Development Programme (PSDP) for completion of 20 on-going projects and execution ofeight new schemes in Railways Division during 2009-10. The allocation for the projectsinvolved foreign loans of Rs. 3030.000 million and Rs. 8150.400 million would be madeavailable from domestic resources.

An amount of Rs 11180.400 million earmarked for 20 on-going development schemeswhile a chunk of Rs 1500.800 million will be utilized for eight new schemes. An amount ofRs. 2832.000 million was made available for overcoming the damages to Railways assetsduring riots in December 2007.

Similarly, an amount of Rs. 1594.000 million allocated for doubling of track Khanewalto Raiwind Section and Rs. 1400.000 million specified for procurement and manufactureof 1000 High Capacity Wagons.

Ministry of Science and Technology


The government allocated an amount of Rs. 3265.377 million for the Public SectorDevelopment Projects (PSDP) for 132 projects of Science and Technological ResearchDivision (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 UrbanaChampaign, USA; Rs. 100 million have been allocated for PCSIR Industrial LinkageProgramme; 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 PCRETfacilities at Islamabad Center; while Rs. 150 million earmarked for Construction of OfficeBuilding for MoST and its Organization.

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Meanwhile, Rs. 882.108 million earmarked for 46 new approved projects whichincluded Rs.404.660 million allocation for acquisition of Oceanographic Research Vesselfor Coastal Surveys (upto 200 meter water depth), NIO; while Rs. 30 million allocated forPak-US agreement for S&T (Phase-II). No amount was allocated for any un-approvedproject.

Ministry of Narcotics Control


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 theprojects involved Rs. 315.480 million as foreign loan where as Rs. 296.233 million fromdomestic resources.

An amount of Rs 611.713 million was being allocated for 12 on-going developmentschemes 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 Academyheadquarters 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 AreaDevelopment Project.

Ministry of Petroleum & Natural Resources


The government allocated an amount of Rs 1874.329 million in the Public SectorDevelopment Programme (PSDP) for the Petroleum and Natural Resources Division to

execute the ongoing development schemes besides seven new schemes. An amount of Rs542.679 million was also being allocated for 18 ongoing development schemes while achunk of Rs 1331.650 million would go for 18 new schemes.

The main ongoing schemes included Oil and Gas Exploration Activities in Balochistanat 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 IslamabadRs 249.870 million, Capacity Building for Hydrocarbon Research and Development,Islamabad Rs 140.00 million, Associated Geological Mapping and GeochemicalExploration 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, Strengtheningand Capacity Building of Mineral Wing Rs 95.00 million, Establishment of ProjectMonitoring and Evaluation Cell Rs 39.675 million, National Coal Policy Rs 34. 324million, Training of Gemstone Mining, Processing and Evaluation on Scientific Lines toPrivate Sector in NA Gilgit Rs 25.30 million, Establishment of Facilitation Cell for thedevelopment of Reko-Diq Copper-Gold project, Balochistan Rs 21.97 million, Geo-

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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 ofNewly 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 26.040million, Exploration and Evaluation of Coal in Raghni Area Tehsil Shahing, BalochistanRs 20 million and Exploration of Tertiary Coal in Central Salt Range, Punjab Rs 15million.

Ministry of Kashmir Affairs and Northern Areas


The government allocated Rs 25.5 billion for Kashmir and Northern Areas Divisionunder 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 beinitiated in fiscal 2009-10.

The estimated cost of all the projects is Rs 212.7 billion that included Rs 184.29 billionfor ongoing schemes and Rs 28.4 billion for new ones. In the execution of already initiatedprojects, the foreign loan worth Rs 172.4 billion was involved while the ministry receivedRs 23.1 billion foreign loan for the new projects.

Among the project for those the allocation made in current fiscal and were planned tobe initiated in fiscal 2009-10 included social development package for 13 constituenciesalong LoC in AJK against (Rs 500 million), green skilled Kashmir programme (Rs 500million), 26 MW Hydro Power Project Shagarthang (Rs 400 million) and 4 MW HydroPower 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 projectwhile Rs 28.4 billion allocated for nine projects were re-appropriated as they could not beinitiated during previous fiscal.

Among the ongoing schemes, important ones included Northern Areas (BlockAllocation) (Rs 6.5 billion), AJK Block Allocation (Rs 1.07 billion), provision of watersupply and sewerage to Mirpur and Hamlets (Rs 1.5 billion), 43.5 MW Jagran HydroPower project (Rs 1.5 billion) and other power generation projects including 4.8 batterhydel power project, 1.7 MW Dhannan hydro power project, 14.4 MW Jhing hydro powerproject 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 newproject, while Rs. 829.167 million for the ongoing eight projects.

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Rs. 126 million allocated for construction of building for Pakistan School of FashionDesign at Jauhar Town Lahore, Rs 50 million earmarked for purchase of Equipment,Furnishing, Curriculum Development and Training of Pakistan School of Fashion DesignLahore and Rs. 80 million, including Rs. 60 million of foreign exponent for Trade andTransport Facilitation Project - 2: Trade and Transport Facilitation Unit (TTFU) - World

Bank.In addition, Rs. 445 million allocated for Expo Centre, Lahore, a joint venture ofFederal Government and Provincial Government of Punjab and Rs. 67.787 million forRestructuring Foreign Trade Institute of Pakistan, Islamabad. While Rs. 10 millionallocated for a new project, Setting up of Regional Reconstruction Opportunity Zones forTrade in FATA, NWFP, Balochistan and AJK.

Ministry of Planning and Development


new projects of Planning and Development Division, under the Public Sector DevelopmentProgramme (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 allocatedfor Drought Recovery Assistance Programme (DRAP)/DERA-II and Rs. 6745 millionearmarked for UN-funded important projects. The government under PSDP allocatedRs.400 million for poverty reduction through small holders livestock and dairydevelopment, 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 processingfacilities (for handling and purification of coal gas produced by under ground coalgasification).

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

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for Rebasing of National Accounts from 1999-2000 to 2005-06. In addition, Rs 50 millionallocated 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 billionearmarked for the on going schemes while the new projects got allocation of Rs 2.2 billionfor the upcoming fiscal year.

Pak-China seismic network in the country was to be established with allocation of Rs180 million, development of CFIs to fly on-board communication satellite (Pak Sat-IR) inLahore at Rs 267.262 million, development of labs for National Satellite DevelopmentProgramme (NSDP) in Lahore with Rs 222.55 million, development of support facilitiesfor NSDP, new airport at Gawadar Rs 750 million, Sialkot International Airport Rs 250million 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 andOrbital 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 ofRs 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 ofShip[ Lift and transfer System and Associated Machinery and Equipment to provideDocking and repair facilities to surface ships, submarines and commercial vessels of up to4,000 tones.

Another allocation of Rs 110 million was for the ongoing project for carrying out civilworks for the up gradation of Karachi Shipyard and engineering Works Limited (KSEW).

The new schemes including establishment of Project Management Cell of Ship BuildingIndustries, construction of houses for security personnel at DP Division Secretariat andconstruction of houses for General Officers at DP Division Secretariat with the respectiveallocations of Rs 150 million, 8 million and 9 million.

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Ministry of Finance


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 ongoingschemes of the division, Rs.2077 million allocated for the Project for Improvement ofFinancial Reporting and Auditing (PIFRA), Phase-II, Rs.1500 million allocated forconstruction of Northern Bypass for Multan City and Rs.1000 million for Greater QuettaWater Supply Project.

The government under PSDP also allocated Rs.1000 million for Lyari Expressresettlement Project and another Rs.1000 million earmarked for Gwadar DevelopmentAuthority. Among the new projects, Rs.3000 million allocated for Quetta DevelopmentPackage, 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 povertyalleviation 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 BypassPeshawar.

Allocation of Budget of Revenue Division:

The government allocated an amount of Rs. 2448.308 million for various ongoing andnew projects of Revenue Division, under the Public Sector Development Programme(PSDP) 2009-10. According to PSDP, the allocations include Rs.1888.649 million for theongoing projects and Rs. 559.659 million for new schemes of the division.

Among the ongoing schemes of the division, Rs.1472 million allocated for TaxAdministration Reform Project (TARP) and Rs. 135 million earmarked for construction ofsecond office block in CBR House Islamabad. The government allocated Rs.103 millionfor establishment of Taxpayers Facilities Centres (TFCs) and construction of transitaccommodation with RTOs and LTU at Islamabad, Rs.18.731 million for construction ofmulti storied office building for customs house, Multan.

Among new schemes, the government under PSDP allocated Rs. 39 million forpurchase of land in FDA city for Residential colony for RTO Faisalabad, Rs. 39 million forpurchase of land in FDA city for residential colony for DTO office, Faisalabad and Rs. 29million 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, Islamabadwhereas another Rs. 39 million earmarked for purchase of land for construction of back upoffices and bail off barracks and residences for Income Tax Department at Islamabad.

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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 fiscalyear 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 farmersin previous cropping season; amidst high commodity prices as well as supportivegovernment policies, according to SBPs projections, cotton, sugar and rice output will be12 million bales, 52 million tons and rice 6.5 million tons, respectively.

Rice harvest was significantly higher than estimated domestic consumption of 2.5million tons as growers were encouraged by higher rice price in international marketfollowing imposition of ban on rice exports by competing countries. Cotton, which has lostits favored position among farmers in last few years because of falling price, increased inoutput 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. Asharp decline in sugarcane harvest this year, the SBP said, can be attributed todisappointment farmers faced last year when they did not get benefit of record 63.9m tonsoutput. Not only purchase of sugarcane was delayed by mills it is alleged that payments tofarmers 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-termsolution to these problems lies in introduction of effective futures market with cropinsurance and contract enforcement.


The government allocated an amount of Rs. 16709.980 million under the Public SectorDevelopment Program (PSDP) for the development of agriculture sector during fiscal2009-10.

This amount would be spent on 36 ongoing schemes besides, 15 new developmentalprojects to be launched in current fiscal year. The government allocated Rs. 10000 millionfor National Programme for Improvement of Water Courses in Pakistan for efficient use ofwater in the country. Rs.1500 million was being allocated for the project of WaterConservation and Productivity Enhancement through High System irrigation.

The government would spend Rs. 1000 million on National Research and DevelopmentProject for Spate Irrigation System in Road Kohi Areas, Rs. 1000 million for SpecialProgram for Food Security and Productivity Enhancement of Small Farmers in 1012

villages and crop maximization project phase II. Rs. 150 million would be spent onCommercialization 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. 100million.

Besides ongoing projects, the government allocated 17961.980 million for 15 newdevelopmental projects including Accelerated agriculture mechanization for productivityenhancement (Benazir Tractor Scheme). Rs. 500 million was earmarked to provide tractorsand other inputs to farmers on subsidized rates.

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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 billionthis current year (2009-10). Government earmarked Rs.10 billion for the improvement ofwater 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 industrialdevelopment 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 substantialallocations of Rs. 15 billion. This amount would be spend on canal improvement andrehabilitation 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 amountwould 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 establishwarehousing storage facilities in the country. Nil custom duty regimes on tractors, poultryinputs and cattle feed would continue in future for the development livestock sector in thecountry. Two state of the art institution of research for wheat and cotton would beestablished besides upgrading the existing facilities.

Ten modern agriculture union councils would be established for each major crop acrossthe country. Modern technologies and hybrid seed were introduced with the help of foreigncompanies like Monsanto of US and farmers would be offered BT cotton hybrids duringfiscal 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 apopulation 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 2.9fold. During 1970/71 the amount of wheat imported was 0.3 million tones; it hasincreased to 4.1 million tones in 1997. Tremendous efforts have been carried out to narrowthe gap between population growth and food production.

Agriculture contributes about 24 percent of the gross domestic product (GDP) andemploys 47 percent of the national employed labour force. The contribution of theagricultural 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 remainsthe major sector of the GDP composition. A major part of the economy depends on farmingthrough production, processing and distribution of major agricultural commodities.

In foreign trade agriculture again dominates, through exports of raw products such asrice and cotton and semi-processed and processed products such as cotton yarn, cloth,carpets and leather production .Agriculture is essential for sustainable improvements ininternal and external balances. Of the total export earnings, the share of primary

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commodities and processed and semi-processed products constituted almost 60 percent ofthe total exports. There have been some structural changes over time, but the contributionof agro-based products has more or less sustained its position.

The average annual growth rates in the agricultural sector during the 1960s, 1970s and1980s 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 hasimproved 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 ofagricultural products because it has larger part in exports of Pakistan. Here are the fewsteps 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 facilitiesand initiating the establishment of two world class institutes of research forwheat 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 fiscalyear. Pak-China seismic network in the country would be established with allocation of Rs

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180 million, development of CFIs to fly on-board communication satellite (Pak Sat-IR) inLahore at Rs 267.262 million, development of labs for National Satellite DevelopmentProgramme (NSDP) in Lahore with Rs 222.55 million, development of support facilitiesfor NSDP, new airport at Gawadar Rs 750 million, Sialkot International Airport Rs 250million and National Electronics Complex Rs 200 million.

The major allocations among the ongoing schemes included Rs 2.8 billion forPaksat-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 andOrbital Control System (AOCS), Rs 161.20 million for Satellite Bus Development Facilityand 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 andMinerals exploration in order to attract foreign and local investment in this sector forenhancing its contribution in provincial GDP. The allocation will help expand miningsector by focusing on discovery and exploration of new mineral resources:

To enhance public sector investment for exploration/ resource mapping anddevelopment of geological-database for minerals.

To further strengthen governments role as a facilitator to create enablingenvironment for the prospective investors in mines and minerals sector.

To encourage and support exploitation of minerals, particularly through privatesector.

To promote environment-friendly mining practices and to take measures formitigation of environmental hazards of mining for sustainable development ofmineral 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


The government allocated an amount of Rs.50.000 million for ongoing projects ofNational 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.

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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) forfinancial year 2009-10.

According to the Public Sector Development Programme (PSDP), these ongoing projects are Capacity Building of Pakistan Nuclear Regulatory Authority (PNRA) toimplement National Nucleus Security Action Plan, Institutional Strengthening andCapacity Building of Pakistan Nuclear Regulatory Authority (PNRA), PNRAs School for Nuclear & Radiation Safety, Establishment of National Dosimetry and Protection levelCalibration Laboratory (PNRA) and National Programme on Environmental RadioactivitySurveillance 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 2009-10was allocated for ongoing 30 projects of the PAEC. However, Rs. 1.203 billion had beenallocated for 10 new projects of the Commission. A total Rs. 4.430 billion would be foreignloan for ongoing projects. However, there would be no foreign loan for all the ten newschemes which to be completed with a total Rs. 24.014 billion and Rs. 1.203 billion havebeen 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 2009-10government included two new sectors, real estate and services sectors in the tax net, whilewithin a couple of years two more sectors would be included init.

The country had attained tax revenues equivalent to 9 per cent of GDP in the year2008-09 and it had set the target to further improve this ratio by 0.6 per cent in the nextfinancial year (2009-10).

Besides broadening the tax net, solid administrative measures would be taken to ensureenforcement of tax. The tax rate would be decreased once the tax base is increased. Withthe innovative measures the governments tax collection target for the next year was 9.3percent of GDP. While Rs 1377.5 billion revenue collection targets was 17 percent higherthan the last year.

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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 thefiscal year 2009-10.

The tax measures being proposed by the government were fair and equitable, guided bythe principle of ability to pay, set in the context of an economy fighting a war. Exciseduty on petroleum products was being levied in the shape of a carbon surcharge whichwould eliminate the existing petroleum development levy. This would ensure transparencyin the pricing of petroleum products, curb consumption, save foreign exchange and reducecarbon emissions

In order to discourage consumption of cigarettes, excise duty and sales tax on cigaretteswas proposed to be enhanced; this would generate estimated revenues of Rs 15 billion. Asa revenue measure and to broaden the tax base, FED in VAT mode was proposed to belevied 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 toenhance the rate of withholding tax on imports of commercial nature from 2% to 4%. Thismeasure resulted in estimated revenue of Rs 23 billion. It was proposed to enhance the rateof Capital Value Tax on property from 2 to 4 percent. The Government intention were toadopt effective measures to ensure its collection. It was estimated to generate revenues ofRs 15 billion. To promote documentation of the economy, it was proposed that certainsectors 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 onemillion. It was further proposed to levy a flat rate of 30% on bonuses earned by individualsin the corporate sector drawing salary exceeding Rs one million. It was proposed to levy aMinimum Tax under Section 113 of the Income Tax Ordinance 2001 on the income of aresident company, provided that this would not be applicable to a company which declaredgross loss before set off of depreciation and other inadmissible expenses under theOrdinance.

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 1.9percent of the projected GDP for 2008-09 which was consistent with annual fiscal deficittarget 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 fastergrowth of 35.5 percent in the total revenues was more than off-set by even faster growth of25.2 percent in the current expenditure.

The financing patterns of fiscal deficit remained dominated by the banking systemwhich financed 85 percent of the fiscal deficit and only 15 percent were financed by thenon-bank sources. The government remained well ahead of the SBP financing limitallowed by the Economic Stabilization Program. The government received Rs.141.1 billion

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in gross external inflows against outflow of Rs.104.1 billion which means net availabilityof Rs.37 billion on account of to finance the deficit remained negligible at Rs.12 billiononly.

Tax Revenue collected by the Federal Board of Revenue (FBR)stood atRs. 704.2billion (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 healthyincrease of 20.0%. Direct taxes, which accounted for 36.9 percent of total tax collection ofthe FBR registered a growth of 18.3 percent. Indirect taxes, on the other hand, exhibited agrowth of 21.0 percent. Within indirect taxes, sales tax which accounted for roughly 63.6percent of indirect taxes and 40.1 percent of total taxes grew by 24.3 percent (Rs. 283.4billion). The custom duty collection is up by 7.3 percent and the collection of federal exciseduty (FED) recorded a note worthy in

Budget 2009-2010

Documents

Transcript of Budget 2009-2010