Aurangzeb Presents Tax-Heavy and Deficit-Laden 2024-25 Budget

Aurangzeb Presents Tax-Heavy and Deficit-Laden 2024-25 Budget

Senator Muhammad Aurangzeb, the Minister for Finance and Revenue, unfolded the details of the Rs 18.877 trillion federal budget for the fiscal year 2024-25 in a session of the National Assembly on Wednesday.

The budget, characterized by tax measures and deficit projections, reflects the government’s strategy to navigate economic challenges and prioritize key sectors amidst fiscal constraints.

Aurangzeb outlined the economic targets for the upcoming fiscal year, with a GDP growth target set at 3.6 percent and an expected inflation rate of 12 percent. The minister emphasized the need for fiscal prudence in light of these projections, acknowledging the task ahead to manage the deficit and stimulate economic growth.

The budget announcement was punctuated by various tax measures aimed at bolstering revenue collection. Aurangzeb revealed that the budget deficit to GDP ratio for the period is estimated at 6.9 percent, while a primary surplus of 1.0 percent of the GDP is projected. The Revenue collection target for the Federal Board of Revenue stands at Rs 12,970 billion for the upcoming fiscal year, reflecting the government’s commitment to enhancing tax compliance and widening the tax base.

Nonetheless, the minister acknowledged the significance of non-tax revenue, with targets set at Rs 3,587 billion. The net income of the federal government is estimated to be Rs 9,119 billion, indicating a multifaceted approach to revenue generation and expenditure management.

In terms of expenditure allocation, Aurangzeb outlined the government’s priorities. Out of the total budget, Rs 9,775 billion is earmarked for expenditures, with a significant portion allocated to interest payments amounting to Rs 9,775 billion. This underscores the challenge posed by debt servicing and the imperative to address structural issues affecting fiscal sustainability.

Highlighting the government’s commitment to development, Aurangzeb announced an allocation of Rs 1,400 billion for the Public Sector Development Program (PSDP) in the current budget, supplemented by an additional Rs 100 billion for Public Private Partnership initiatives. He noted that this year’s overall development budget, totaling Rs 1,500 billion, marks a historic high in the country’s development agenda.

In line with national security imperatives, the government has allocated Rs 2,122 billion for defense expenditure. Additionally, Rs 839 billion is allocated for Civil Administration, ensuring the smooth functioning of governmental affairs.

Addressing social welfare concerns, Aurangzeb revealed allocations amounting to Rs 1,014 billion for pension expenses and Rs 1,363 billion for subsidies in sectors such as gas and electricity. These allocations reflect the government’s commitment to social protection and addressing the needs of vulnerable segments of society.

As the budget undergoes scrutiny and debate in the legislative process, the government remains focused on achieving its economic objectives while navigating the challenges posed by fiscal constraints and external pressures.