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Karachi needs 80,000 new housing units a year

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KARACHI: What does encroachment mean and who is responsible for the recent wave of violent evictions that have taken place all over Karachi?

The key reason behind 10% increase was that Dr Ismail tried to present relatively realistic picture of expenditures, unlike his predecessor Ishaq Dar who always understated expenditures at time of budget.

Using the Karachi Circular Railway as case study, research group Karachi Urban Lab (KUL) looked into how land acquisition and dispossession work in the city, how large-scale displacement affected the families that have to go through it, and the many ways its effects could spread throughout the city at the Irtiqa Institute of Social Sciences office here on Saturday.

Two KUL researchers, Mohammad Tauheed and Arsam Saleem, discussed through their study ‘Evictions, dispossessions and urban sprawl in Karachi’ the legal and illegal frameworks being used by the state to perform these operations, who they benefit and how they might be understood.

Looking ahead a few years, the researchers spoke about the causes and effects of urbanisation. It has been estimated that by 2030, 50 to 60 per cent of Pakistan’s population will be urban, which would obviously affect public utilities and social services.

“Land ownership and control has remained an ongoing change since 1947,” said Tauheed. “At the time of partition, the built-up area of Karachi was just above 100 square kilometres. And now its metropolitan area covers 3,527 square kilometres,” he said, showing how quickly the city grew.

To begin with all land belonged to the government of Sindh, which then gave away large portions to the Karachi Port Trust, the Civil Aviation Authority, Railways, and cantonments. Urban properties had a 99-year lease. Agriculture properties in Karachi district also had freehold ownership. The remaining land in the district was vested with the provincial Board of Revenue.

Karachi’s expansion, both formal and informal, has taken place on the Board of Revenue lands and on a major part of the irrigated farms. “As a result, the rural economy of Karachi district has been devastated and much of the pasture land has turned into a desert,” Tauheed said.

The city government of Karachi, or CDGK, which came about in 2001, directly controls 30.9pc land as well as the 1.9pc of land allocated to civilian cooperative housing societies. Another 20.7pc is allocated for national parks while the rest of the land is controlled by federal agencies, including the military cantonment boards and the Defence Housing Authority. “And for planning, there is no coordination among these different agencies except for dealing with issues related to utilities.”

The housing demand in Karachi is estimated at 80,000 new units per year. “The formal sector supplies 32,000 housing units and another 32,000 are built in katchi abadis. Meanwhile, 75.5pc of the city’s residents are classified as poor, and as such they constitute the majority of the unmet demand. The result has been the continuous demand for katchi abadis.”

Saleem then explained that the housing-related provisions of the Karachi Strategic Development Plan or KSDP 2020 included strengthening the Katchi Abadi Impr­ovement and Regularisation Prog­ramme, or KAIRP, converting sites for single-storey units houses into apartment complexes and commercialising the main city arteries. “Except for KAIRP, none of the other proposals will provide housing to the urban poor,” said Saleem.

“Karachi’s conflicts and the informalisation of the formal sector in housing and development have created a number of problems for citizens who wish to buy, sell or rent accommodation. They are not sure if they are being defrauded and whether or not the schemes they are investing in are legal.

“Encroachment is not a poor person looking to save some petty cash. It is a complex network involving government institutions, in an official or unofficial capacity, seeking to reap the rewards of quick land dispensation with none of the risks attached,” Saleem said.

Coming to the Karachi Circular Railway (KCR) in light of all this, a quick look at the maps showed that it starts from the Drigh Road Station on the Pakistan Railways main line and, after crossing Sharea Faisal short of Karachi airport, it passes through populated areas of Gulistan-i-Jauhar, Gulshan-i-Iqbal, Liaquatabad, Nazimabad, SITE, Baldia, Lyari, Kharadar, Mithadar and finally touches Karachi City Station.

In addition to increasing petroleum levy rates, the government also took some inflationary tax measures. The most regressive measure is the FBR’s decision to increase 1% additional custom duty on almost all imported items except those that come on concessionary rates under the bilateral free trade agreements. It is already charging 1% additional custom duty on all the four slabs.

The 1% additional duty will be applicable on 7,200 imported tariff lines, said the FBR Member Customs Zahid Khokar. The government will earn extra revenue of Rs28 billion from this single measure.

The other most regressive taxation measure is the increase in further sales tax rate from 2% to 3%, which will generate Rs12 billion in additional revenues. The further tax is charged from those who are not registered sales tax persons and there are less than 150,000 registered sales tax persons. The decision will effectively increase the standard 17% General Sales Tax Rate to 20%, which is inflationary.

The government has also increased the tax rates on cement by Rs0.25 to Rs1.5 per kg aimed at getting additional revenue of Rs11 billion, said the FBR Member Inland Revenue Policy Dr Mohammad Iqbal.

Relief measures

Dr Ismail announced to accept most of the demands put forth by the industrialists and stock market brokers. He announced to abolish 5% bonus tax share, reduced the corporate tax rate by 1% and super tax rate by 1% and lowered the taxes on undistributed profits.

The income tax rates for mutual funds and REITs are also cut to appease Karachi-based industrialists. For Punjab-based agriculturists lobby, the sales tax rates on fertilizers and agriculture machinery are lowered.

The federal cabinet has approved an expansionary fiscal policy that offers little for development but gives away more than half of the estimated budget of Rs5.237 trillion for new fiscal year to meet growing needs of the defense and debt servicing. It announced to continue textile export package, Greenfield investment package and revival of sick industries package for the next fiscal year.

Budget outlay

Miftah Ismail announced that the size of the budget will be Rs5.246 trillion – higher by Rs493 billion or 10.3%. About 54% of the budget has been proposed to allocate for defense and debt servicing.

The current expenditures are estimated at Rs4.2 trillion for the new fiscal year. The development budget is Rs800 billion and Rs180 billion are allocated for other development expenditures.

Another amount of Rs1.620 trillion or 31% of the proposed budget has been earmarked for the debt serving. The original debt servicing cost in the outgoing fiscal year was Rs1.364 trillion, which has now jacked by Rs243 billion or 17.8% for the next year.

Ismail proposed Rs800 billion for the Public Sector Development Programme (PSDP), which is Rs230 billion less than the Planning Ministry printed in its document of the PSDP for 2018-19.

For running the civilian government, the federal cabinet approved Rs463.4 billion for the next fiscal year as against Rs377 billion in the outgoing fiscal year.

Another main expense is on account of pension including military’s, as the government proposes Rs342 billion or 6.6% of the proposed budget under this head.

In the outgoing fiscal year, former finance minister Ishaq Dar had set aside Rs248 billion for pensions which the Finance Ministry has now upward revised to Rs320 billion.

For subsidies, the government has proposed Rs174.7 billion in the next budget, which is up from Rs144 billion revised budget for the outgoing year. For Benazir Income Support Programme Rs124 billion have been proposed.

The government has proposed the FBR’s tax collection target at Rs4.435 trillion, non-tax collection target at Rs772 billion. The four provinces will get Rs2.59 trillion as their share in the federal tax collection under the 7th National Finance Commission Award.

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