Research Analyst
June 14 - 20, 2010

An unprecedented increase of 50 per cent in salaries of government employees and 15 to 20 per cent raise in pension is the hallmark of the Federal Budget 2010-11. The budget also envisaged some new tax exemptions on food items besides providing relief in health and education sectors. The budget presented in the National Assembly by Federal Finance Minister Dr Abdul Hafeez Shaikh had a total outlay of Rs3.259 trillion with a jump of 10.7 per cent over the last fiscal year. It offered scores of incentives to the working class at a time when the world was constantly in the grip of a sweeping recession.

A sizeable 50 per cent adhoc increase in salaries and 15 to 20 per cent rise in pension of government employees were among a host of people-friendly features of the third budget in row prepared by the PPP-led coalition government.

The budget envisaged employment opportunities for the youth and income-generating measures for laborers, workers and poor segments of the society.

According to Dr Hafeez Sheikh, the total budget deficit estimated at Rs685 billion would be met through internal and external resources. The total size of the deficit is 4 per cent of the GDP. Rs1033 billion would be transferred by the federation to provinces under the recently-adopted National Finance Commission (NFC) award. For the current fiscal year, the disbursement was planned at Rs655 billion. According to the 7th NFC Award, the provinces would be paid their due share on quarterly basis, which would be released by the Federal Government automatically as per schedule.

Now, the current expenditures of the government had been frozen, with the exception of salaries, to the level of outgoing financial year as a major austerity step.


In every budget, the government announced the salary increases of 20 to 25 per cent in the salaries of the government employees. Only some million of people benefit from this salary increase, while the taxation and levies and other cruelties in the budget affect the whole nation. This year they have announced 50 per cent of the basic pay, which is quite good as compared to the past, though it would be added as ad hoc allowance along with the pay, and will not affect the basic pay.

But these government employees also do very little and look busy. They go to their offices late and come back early and while in office either only rest, or take tea or read newspaper or remain busy in petty politics. However we must expect some better results from them in the future after increase in salaries.

Meanwhile, as a major step forward to reduce tax burden on salaried class government has planned to enhance tax exemption slab from Rs200,000 to Rs300,000, whereas for the non-salaried class the exemption will be from Rs100,000 to Rs300,000.

In order to extend relief in the prices of essential food items, it has been decided to reduce import duty on palm oil to Rs9,000 per ton. The Finance Minister also announced an allocation of Rs442 billion for defence sector, whereas the government has allocated Rs680 billion for re-payment of loans and interests.


1992 1500
1996 1650
1998 1950
2001 2500
2003 3000
2004 4000
2008 6000
2010 7000


Government has ignored millions of private sector employees in the budget 2010-11 as the minimum salary should be at least rupees ten thousand.

The increase in the basic salaries of the government employees was nice initiative. The government ignored millions of private sector employees in this budget.

The increase in minimum wages from six thousands to seven thousands is absolutely insufficient even to run a kitchen. The employees were expecting ten thousand rupees minimum salary in this budget 2010-11.

In this state of food price hike and high inflation, mere increase of one thousand is not less than a joke. This budget discouraged the private sector employees. Mere increase of one thousand will not make any difference and the important thing was that government should make sure that its decisions were implemented by the private sector. It also seems that government has failed in devising the mechanism to monitor their decisions.


Private sector's employees work hard and attract foreign investment, and are really burning the midnight oil. These people are actually doing something and contributing to the national exchequer. They are paying taxes. It is high time for the government to take concrete steps for the private employees working for the country and should make sure that these private employees are also given the same kind of benefits as government employees are given.