Budget as an exercise in book keeping

An election lollypop

The strategic vision behind the federal budget for the financial year 2017-18 was highlighted by both Nawaz Sharif and Ishaq Dar. The focus of the budget according to the Prime Minister would be on ‘achieving higher, sustainable and inclusive growth.’ The finance minister promised in the same vein to ‘put Pakistan on the path of sustainable economic growth’. The question is whether the measures being proposed in the budget document are going to achieve the goal of equitable growth over a long period.

Inclusive growth implies creation of opportunity for all segments of the population with equitable distribution of the dividends of increased prosperity, both in monetary and non-monetary terms, fairly across society. The gap between rich and poor has to begin to narrow. Besides reduction of inequality in wealth gaps, the inequalities in education, life expectancy, and employment prospects too have to narrow down.

The development budget of Rs1 trillion is no doubt a fairly large sum. But keeping in view the government’s past performance, will the expenditure or revenue projections hold up? During the last four years the initial growth targets have invariably been revised downward.

The budget gives priority to Prime Minister’s pet schemes which having high visibility can be useful in getting votes. These are not education, health, social development, employment or poverty alleviation. The PMLN government’s concept of growth moves around mega infrastructure projects. What is lacking are policies and stimulus for the real engines of employment and growth. The agricultural sector employs over 40 pc of the labour force while small and medium enterprises are the other sector providing large number of jobs. .

Ishaq Dar’s Kissan package is meant in the main to benefit the big landlords duly represented in the assemblies. They are the ones who benefit from bank loans and reduced custom duty- cum- sales tax on agricultural machinery. There is little in the budget for poor farmers, landless peasants or the rural labour. There is no mention of land reforms which alone can end rural poverty, increase productivity, and boost the purchasing power. There is no subsidised power or fertilisers for the farmers who protested outside the Parliament on Friday. Reducing the cost of doing business is a major issue for entrepreneurs including those running small and medium industrial units. There is no word about the matter in the budget.

There are no concrete measures in the budget to address the issues of those living under the poverty line other than dole dispensed through the Benazir Income Support Programme while what is needed is to enable them to stand on their own legs .

One had expected the budget document to highlight the measures that need to be undertaken to develop the human capital in the country. Whatever insufficient training programmes currently exist need overhauling, modernising and expansion to cater to the needs of the investors over the next decade. There is little recognition of the issue in the budget.

Women receive just a passing mention in the budget speech. There is no earmarking of funds for improvement in women’s condition or children’s welfare as required under international agreements signed by Pakistan

And how is the development to be financed?

The export performance which is a source of revenue in developed countries remains poor and will take years of hard work under right planning before exports outpace imports. Tax revenue is the other source for financing development. As things stand annual tax projections have never materialised in the past. The question is whether the government is going to widen the tax net or continue milking the present 1,004,300 tax payers further as has been the practice during the last four years? The budget proposals indicate that political exigencies continue to stand in the way of the government to bring into the tax net tens of thousands of tax dodgers among the trading community.

Absence of meaningful measures for an inclusive growth is the budget’s Achilles heel. In case of a prolonged social unrest, political uncertainty can slow down the economic activity thus bringing down the growth figures. High and sustainable growth are thus linked with an equitable development.