The recently announced Budget 2023-24 has generated considerable interest and anticipation among the public, policymakers, and businesses alike. With a total budget of PKR 14.5 trillion, Finance Minister Ishaq Dar presented an ambitious plan to drive economic growth, address social challenges, and foster development across various sectors.
In this blog, we will delve into the key features of Budget 2023-24, highlighting the initiatives, allocations, and growth targets that will shape the upcoming fiscal year.
Key Features of Budget 2023-24
The budget for the fiscal year 2023-24 presents several key highlights aimed at addressing the nation’s economic challenges and promoting growth.
Some of the key features of Budget 2023-24 include:
- Economic growth target fixed at 3.5% for FY 2023-24
- Inflation is forecasted to average at 21%
- Tax-to-GDP ratio to stand at 8.7%
- Current account deficit is projected to be USD 6 billion by the end of FY 2023-24
- Government has allocated PKR 1.8 trillion for defence spending
- PKR 1.1 trillion earmarked for subsidies
- PKR 761 billion allocated for pensions
- Government to spend PKR 950 billion on Public Sector Development Programme
- PKR 22.7 billion earmarked for the health sector
- Agricultural credit limit enhanced from PKR 1,800 billion to PKR 2,250 billion
- Solarisation of 50,000 agriculture tube wells through PKR 30 billion
- Withdrawal of all duties and taxes on imported seeds, combined harvesters, dryers, and rice planters
- PKR 10 billion earmarked for PM’s Youth Business and Agriculture Loans scheme
- PKR 6 billion subsidies announced on imported urea
- Targeted subsidy announced on wheat flour, ghee, pulses, and rice
- 35% increase in salaries of government servants of grades 1-16 in the form of ad-hoc relief
- 30% increase in salaries of government servants of grades 17-22 in the form of ad-hoc relief
- Tax-free imports of software and hardware by IT and IT-enabled services equal to 1% of their exports with a ceiling of USD 50,000
- No sales tax return is required by freelancers with exports of USD 2,000 per month
- Increase in Benazir Income Support Programme allocation from PKR 400 billion to PKR 450 billion
- Upward revision in pensions and increase in minimum pension to PKR 12,000
- PKR 10 billion was set aside for the provision of 100,000 laptops for students
- Exemption of customs duty on the import of raw material for batteries, solar panels, and inverters
Development Initiatives in FY 2023-24
The Annual Development Program (ADP) has been allocated a budget of PKR 1,150 billion and PKR 90 billion has been earmarked for the Public Sector Development Program (PSDP).
The following are the details of the initiatives in FY 2023-24:
- PKR 170 billion has been reserved for Special Initiatives of the Prime Minister and Development Schemes of lawmakers
- PKR 58.59 billion are reserved for Dasu Hydropower Project
- PKR 17 billion are allocated for Karachi Greater Water Supply Scheme
- PKR 17.63 billion will be used for purchasing railway freight wagons and passenger bogies
- PKR 14.86 billion allotted for Karachi Coastal Power Project
- PKR 26 billion is reserved for Merged districts of Khyber Pakhtunkhwa
- PKR 31 billion will be utilised for a 10-year development plan for the former tribal areas
- PKR 10.5 billion has been allocated for Mohmand Dam Hydropower Project
- PKR 12 billion reserved for Jamshoro Coal Power Project
- PKR 16 billion will be allocated for the Pakistan-Tajikistan transmission line
- PKR 6 billion has been allotted for the Rehabilitation of flood-affected areas
- PKR 5.70 has been set aside for the Hyderabad-Sukkur Motorway project
- PKR 5 billion has been reserved for New Gwadar International Airport
- PKR 5 billion allotted for Lahore-Sialkot Motorway, from Narang Mandi to Narowal
Growth Targets for Various Sectors for 2023-24
The budget for the fiscal year 2023-24 also outlines growth targets for different sectors. The target for GDP growth rate is set at 3.5%, with the agriculture sector and major crops also expected to grow by 3.5% each. The industrial production growth target is 3.4%, while manufacturing is targeted at 4.3%. The services sector is projected to grow by 3.6%.
Other growth targets include 3.6% for the livestock sector, 7.2% for cotton canning, 3% for forestry and fisheries, 3.2% for large-scale manufacturing, 2.2% for electricity generation and gas distribution, 2.8% for the wholesale and retail sector, and 5% for transport and communication sector. The education sector is aimed at a 3% growth rate, while the private sector production is expected to increase by 5%. The real estate sector is targeted at 3.6% growth, and the financial and insurance sector at 3.7%.
Tax Relief for Builders
In Budget 2023-24, tax relief for builders and individuals undertaking construction projects includes a 10% or PKR 5 million deductions on business income for three years. The individuals undertaking construction projects will get a tax relief of 10% or PKR 1 million for the next three years.
Concessional tax rates for banks providing loans to construction, agriculture, and SMEs are extended. Land developers will be taxed at a lower rate of 5% of turnover.
These were some of the key features of budget 2023-24. So, what do you think about the government’s recently announced budget? Share your thoughts at blog@zameen.com. We’d love to know about your point of view on this very important subject.
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