Pakistan raised its defense spending Wednesday by 6.78 percent to 296.07 billion rupees ($4.4 billion), in the new annual federal budget for fiscal 2008-09 starting on July 1. Last year, an amount of Rs277.265 billion was allocated for defense spending while this was now increased to Rs296.077 billion, according to budget documents presented in the National Assembly (Lower House of Parliament) by Finance Minister Syed Naveed Qamar. Giving the breakup of the defense budget, the finance minister said that an amount of Rs1.17 billion has been earmarked for defense administration; Rs99.092 billion for employees related expenses; Rs82.841 billion for operating expenses; Rs87.638 billion for physical assets; and Rs25.736 billion for civil works. The annual budget unveiled just as Pakistan faces mounting political uncertainty as well as an array of economic problems. The subsidies encouraged imports and knocked a big hole in the state's finances. Pakistan's budget deficit for the year through June is running at 7 percent of gross domestic product. Announcing the budget in Parliament on Wednesday, Finance Minister Naveed Qamar said the new budget would pull that overspend down to 4.7 percent in the coming fiscal year, which begins July 1. Still, he said government spending would rise by almost 30 percent, and he announced a raft of schemes to soften the impact of the subsidy cuts on the poor. Budget documents show that the government expects annual subsidies on fuel, foodstuffs, electricity and fertilizer to fall from 407 billion rupees (US$6.05 billion) to 295 billion rupees (US$4.39 billion). To raise more revenue, Qamar announced increases in import duties on 300 "nonessential and luxury imports" from big-engined cars and cosmetics to cell phones and cookies. Sales taxes and a range of other business taxes will also go up. He also announced an amnesty for tax dodgers designed to increase the number of taxpayers from a paltry 2.2 million – less than 2 percent of the population. Exemptions that allow many wealthy Pakistanis to escape paying tax would be pruned back, he promised. That would help free up funds for increases elsewhere. Qamar said the defense budget, the details of which are usually shrouded in secrecy, would be debated in Parliament for the first time. All the federal government employees including those of armed forces would get 20 percent raise in their basic pay, the finance minister announced. He said all the civilian and military pensioners would also receive 20 percent raise in the pension. The minimum pension has been raised to Rs 2,000. The employees from grade 1 to 19 would get 100 percent increase in the conveyance allowance while the medical allowance has been raised from Rs425 to Rs 500. The minimum wage has been hiked to Rs6,000 from Rs4,600. The minister also announced abolition of duty on the import of lifesaving drugs. Fifteen percent duty on the import of CNG buses has been scrapped. – with Agencies __
