Industrialisation, investment: government fails to give any solid plan in budget: PIAF

Pakistan Industrial and Traders Association Front (PIAF) has said the government has failed to give any solid plan in the Federal Budget 2011-12 to expedite industrialisation and attract foreign investment in the country.
PIAF office bearers, Chairman PIAF Sohail Lashari, Senior Vice Chairman Nadar Kamal Osman and Vice Chairman Junaid Iqbal Sheikh, in a statement on Monday, said that relief for government employees and reduction of one percent sales tax are good steps but these are 'just peanuts'.
Government has to bring the untaxed sector into tax net to achieve the revenue target of Rs 1952 billion set for FY 2011-12. They said that government has allocated very little amount for new dams despite the fact that energy crisis has jolted the foundation of industrial sector. It is a matter of concern that despite having knowledge of gravity of the situation, government has ignored the issue of energy shortage in the country.
They observed that Pakistan is passing through a critical time of the history and facing historical economic crisis, adding that government's dependence on external debts is proving costly as government has allocated Rs 790 for debt servicing while this huge amount could be used for a number of development projects.
According to budget documents, government would have to make heavy borrowing to bridge budget deficit that would lead to increase in inflation rate from 15 percent to 25 percent, thus rendering all Pakistani merchandise uncompetitive in the global marketplace due to high input cost.
PIAF office-bearers said that financing of the deficit will heavily rely on borrowing from banks, estimated to be around Rs 561 billion and around Rs 250 billion from national saving schemes. As a result of persistent borrowing by the government, about rupees one trillion will be paid in debt servicing which is more than 50 percent of the tax revenue target of Rs 1.952 trillion.
They said that total revenue collection has been set at Rs 2.860 trillion, which is rather ambitious in the given economic environment in the country. With a view to improve revenue generation, tax reforms should focus on removing discretionary powers of tax officials in order to check harassment, coercion and corruption while widening the tax-net, especially covering the agriculture and services sector, they concluded.