Same old story
The Economic Survey is perhaps the most relevant budgeting document of Pakistan’s finance ministry. It tells us how unrealistic most original targets were – or how little the government did to pursue them – and just how impractical yet higher targets in the subsequent budget are going to be. Growth, for example, settled at 4.7 percent instead of the targeted 5.5 percent, but that won’t stop the ministry from raising the bar even further on Friday. That is precisely why the budget has become a one-day document. Its numbers imply very little.
The Survey is also important because it provides precious break-down of sectors. Growth tanked, it explained, because agriculture under-performed (-0.19 percent against the projected 3.9 percent). And Dar Sahab employed his usual spin, implying the six-and-a-half percent growth in industry made up for the agricultural shortfall, but the Survey’s numbers just didn’t add up. Even stellar performances in services and industry cannot offset an agriculture collapse. PML-N may well be justified in propping up its core voting constituency by supporting industry, but compromising agriculture will have far reaching implications on GDP. The government’s seven percent growth target, by term-end, will remain very far away if Dar Sahab does not give agriculture some serious attention in the next fiscal.
There was plenty to write home about on the inflation and deficit fronts, but that is about it. But since the Brent collapse softened CPI across the globe, and the somewhat tame deficit owed in no small part to incomplete PSDP disbursements, there is more than a little room for improvement practically across the board. The ruling party has all but abandoned its tax revolution – which was all the rage during the election campaign. Three years into the government tax-to-GDP ratio is 8.4 percent (target was 12.5 percent), and only 0.45 percent of the total population files tax returns, therefore taxes are clearly not going to add much to revenue this cycle, at least. Dar Sahab looks wise talking down indirect taxes, but embarrasses himself by relying chiefly on them. If the past is anything to go by very little will change as another budget is announced.
