A national budget not only tends to mirror the government`s policy agenda but is also a reflection of its sincerity and commitment to people’s welfare. Ideally, a government’s budget should aim at balance and fairness which lead to stability and prosperity.
However, in our case the one reason which plays havoc with the budget management and its effectiveness is rapid inflation. Inflation simply means a great increase in the circulation of money.
On the national level, it is caused by a tendency of the government to overspend its funds which exhausts the available resources and leads to churning out further money. On the individual level, it is caused by overspending of the individuals on consumer products or indulging in what Thorstein Veblen identified as ‘conspicuous consumption’.
Inflation also depreciates the national currency and thus leads to a rise in the debt servicing which remains one of the largest components in our budget expenditure.
It goes without saying that the country is faced with the challenge of double-digit inflation today. Yet the indiscriminate spending by the government goes on, aided and abetted by experts and advisors who are unable to understand the finer points of economy and are incapable of reining in the inflationary pressures. How to control the inflation rests as a great responsibility upon our legislatures and policy makers. It should be their foremost duty to display a responsible attitude and come up with creative possibilities to curtail the menace.
A behavioural change can be proposed in the budget or at the administrative level which tends to encourage frugality and austerity while discouraging profligacy and ostentation at the same time.
It can not only take the country into a period of deflation but can also help its economy grow in the long-run by reducing its vulnerability to both the internal and external shocks.
IBAD AHMED
Karachi
