Govt constitutes committee to finalise relief for retail sector

ISLAMABAD: The government on Thursday formed a committee to broach upon taxation and other incentives for the retail sector expected to show negative growth during the current fiscal year after it reeled from almost one month of coronavirus-induced lockdown.

Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh constituted a five-member committee to finalise proposals for providing relief to the retail sector. The committee comprises senior officials from finance division and the Federal Board of Revenue and representatives of the retail sector.

Shaikh took the decision during a video conference arranged at the finance division with the representatives and office-bearers of a retailers association to discuss the problems faced by the sector and their possible solutions.

The finance adviser said the government is keen to help the retail sector and constituted a committee to further discuss and firm up proposals offered by the representatives of retailers association before the next meeting, which would finalise the proposals.

“He (adviser) directed the committee to follow a quick-action approach to decide the mechanism of support as the government wanted to alleviate the hardships being faced by the various sectors of economy,” a statement cited him as saying.

Cases of coronavirus were identified in Pakistan in February. Sindh government imposed lockdown from March 23 in an apparent effort to prevent the outbreak. The lockdown halted all the manufacturing activities, wholesale and retail businesses running at shopping plazas and markets. The provincial government shows restraint in relaxing the lockdown in the industrial and commercial hub of the country despite a nationwide ease.

The association representatives said the retail sector contributes 18 percent to the GDP, besides employing 16 percent of the labour force. They anticipated negative growth of the retail sector in the current year due to prevailing circumstances. They called for relief, particularly in taxes, to the retail sector, especially the integrated sector.

Prior to coronavirus tumult, the country was already undergoing economic correction aimed toward stabilisation.

The State Bank of Pakistan (SBP) said wholesale and retail trade activity, which accounts for the bulk of services sector output, was subdued during the first half of the current fiscal year.

“Proxy indicators like year-on-year growth in LSM (large scale manufacturing) and sectoral credit offtake declined during the first half,” SBP said in a latest report. “By contrast, sectoral credit flows had been in the positive territory by the half-way point last year, and even so, the services sector had missed its FY19 full year target. Imports also dropped sharply, which could be attributed to the continuing macroeconomic stabilisation measures.” Growth decelerated to 3.3 percent last fiscal year from 5.5 percent a year earlier as consumer demand remained subdued due to inflationary pressures. The central bank expected import compression and weak performance of the crop sector to impede retail subsector growth.