Pak. reduces defence outlay

By B. Muralidhar Reddy

ISLAMABAD, JUNE 18. For the first time, Pakistan has slashed the outlay on defence, sending out a clear signal to the international lending agencies and potential investors that it has no intentions of joining the arms race - conventional or nuclear - in the sub-continent.

The budget for 2001-2002, unveiled by the Finance Minister, Mr. Shaukat Aziz, proposes no increase in the defence budget, which has been fixed at Rs. 131.63 billion. While the defence budget for 2000-2001 was Rs. 133.49 billion, the revised estimates show that the actual expenditure incurred was 131.63 billion rupees.

The decision of the military Government to keep the defence outlay at Rs. 131.63 billion means that in real terms the defence budget has been slashed. Contrary to expectations, the Finance Minister has not increased the defence outlay even to cover the inflation of 4.5 per cent.

Mr. Aziz said the defence expenditure for 2001-2002 has been kept ``flat'' after the Defence Ministry decided to contribute its bit for ``economic adjustment''. He said the Ministry had slashed expenditure in areas wherever it was possible.

At the same time, the Minister said the ``sovereignty'' and ``credible deterrence'' of the country would never be compromised. Implied in the announcement was the suggestion that if necessary the Government could consider enhancement of defence outlay at a later stage.

Defence and security experts warmly welcomed freezing of the defence budget. The general view was that it augured well for furtherance of security and peace in South Asia and with the summit between Gen. Pervez Musharraf and the Prime Minister, Mr. Atal Behari Vajpayee, it could not have come at a better time.

Dr. Riffat Hussain, Chairman, Department of Defence and Strategic Studies, Quaid-I-Azam University told The Hindu that there were two ways of looking at the freeze. ``The government is sending out a signal to the international financial institutions and potential investors that Pakistan has no intention to join the arms race''. The slash in the actual outlay augured well for South Asia and underlined the need for focus on poverty reduction and alleviation. He said that hopefully the other countries in the region would follow suit.

Total outlay Rs. 751 bn

The total outlay of for the year is Rs. 751.7 billion projecting a GDP growth of four per cent. Mr. Shaukat Aziz said that the resource availability was estimated at Rs. 741.2 billion showing an increase of 2.8 per cent over revised estimates of the outgoing financial year.

Net revenue receipts for the year 2001-02 will stand at Rs. 453.8 billion, indicating an increase of 16.9 per cent over the revised estimates of the current fiscal year. The receipts from external resources are estimated at Rs. 261.1 billion.

The overall expenditure during the next financial year has been estimated at Rs. 751.7 billion, of which the current expenditure will be Rs. 621.7 billion and development expenditure Rs. 130 billion. The current expenditure shows a growth of 7.3 per cent and development expenditure an increase of 27.4 per cent over the revised estimates of the outgoing year.

The expenditure on running of civil government is estimated at Rs. 80.6 billion, which is at the same level as budget estimates and revised estimates of this year.

The debt servicing for the next year has been estimated at Rs. 329.2 billion. These include Rs. 197.8 billion for domestic debt servicing, Rs. 62.2 billion for the servicing of foreign debts and Rs. 69 billion for foreign loan repayments.

Expenditure on Social Services, including education, health, population planning and sports have been placed at Rs. 12.3 billion. The Public Sector Development Programme has emerged out of a well considered change in comprehensive policy and programme framework to move towards sustainable economic growth, reduce poverty, generate employment on a nation-wide basis and raise the quality of social services.Concessions to citizens

By Our Special Correspondent

ISLAMABAD, JUNE 18. In a small but symbolic gesture, Pakistan today announced that its citizens travelling from India could carry goods worth $100 free of duty.

In his nearly two-and-half-hours long presentation of the budget for 2001-2002, the Pakistan Finance Minister, Mr. Shaukat Aziz, said that the duty free baggage for passengers coming from India is being enhanced from $25 to $100. This was the only reference to India in the budget.

The business community on both sides of the border is eagerly waiting for the military government to announce its trade policy for 2001-2002.

Industry on both sides has urged for relaxation of the existing restrictions on trade between the two countries. India has accorded Most Favoured Nation (MFN) status to Pakistan and has been urging it to reciprocate the gesture.

Pakistan has reservations on granting MFN status to India. At the moment only 600-odd items could be imported from India. There have been demands from the industry to expand the list and the new trade policy would reveal if the military government is prepared to concede the demand.

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