It’s not all black and white
In the modern era, governments all over the world are charged with the responsibility to propel economic development, playing a facilitating role in the creation of conducive atmosphere for different sectors of the economy enabling them to contribute to the overall development effort, raising revenues to meet ever growing needs for socio-economic development and above all promoting well-being of the masses through measures that aim at providing relief to them and alleviation of poverty. The diversity of stakeholders and conflicting interests makes the task of governments quite difficult in performing a balancing act. That is why economic management of an economy, especially a developing country like Pakistan, is an extremely onerous undertaking. Budget is considered as the most important tool of economic management and rightly invokes lot of interest among different sections of the society as it one way or the other affects the lives of the people and their economic situation.
People tend to judge a budget from the perspective of their own interests. That is why it is absolutely impossible to have a unanimous view about the impact of the budget on the economic landscape of the country. The budget for 2016-17 presented by Ishaq Dar has received a similar treatment. The opposition sticking to their politicking mode has out rightly rejected it terming it a drone attack on the masses. Some other comments made are: it is a mix of relief and burdens; it is a reasonable budget; economic targets have been missed; agriculture and exports have performed dismally; it is a routine exercise; it is people friendly budget; it is anti-people budget; it is an elitist budget and the budget protects the interests of the corporate sector. The foregoing evaluations surely reflect positive and negative biases of the concerned people and different segments of the society. However one thing which has been readily accepted and conceded by all people and economists savvy of the economic intricacies and importance of different components of the budget, is that tax revenues have increased by 81 per cent and the budget deficit has been reduced to 4.2 per cent of the GDP, which is a big plus.
A realistic evaluation of the budget requires looking at it from the perspective of the responsibilities that the government is supposed to shoulder in regards to the management of the economy. Looking at the budget from the standpoint of development, there is a discernible effort on the part of the government to expand and upgrade the development activity in the country. The allocation for federal PSDP stands at Rs.1001billion which represents 40 % increase over the last year. The major thrust of the budget remains on agriculture, industry, energy and infrastructure development and rightly so. In addition to PSDP Rs.180 billion have been set aside for uplift projects under CPEC as compared to Rs.122 billion last year. A sense of urgency and commitment has been exhibited to fix the maladies afflicting the under-performing agriculture sector and exports. For agriculture in addition to the special package of Rs.341 billion already announced, the government has brought yet another package comprising subsidies on inputs and electricity, which was a long outstanding demand of the farmers. In addition to this custom duty on import of machinery for dairy, livestock and poultry sector has been reduced. Prices of fertilisers have been reduced. Small farmers will be given loans up to Rs.50,000.
To revitalise the export sector and nudge investments in the industrial sector, imaginative and prudent measures like continuing the scheme of drawback on local taxes, zero-rating of export-oriented sectors such as textile, leather, sports goods, surgical goods and carpets, duty free import of machinery and finalisation of all the pending cases of sales tax refunds, are very imaginative and timely steps. These initiatives will tend to increase new investments in both agriculture and industrial sector besides creating new jobs. From the perspective of creation of congenial atmosphere for different sections of the economy, the foregoing policy initiatives are a ranting testimony to the commitment of the government in this regard.
In respect of raising additional revenues to meet the burgeoning needs for socio-economic development and other indispensable expenditures, a conscious effort has been made to broaden the tax base. The strategy in this regard is to further squeeze the budget deficit to 4.1% through increasing reliance on the generation of indigenous resources. A revenue target of Rs.4330 billion has been fixed for 2017-18 as against Rs.3,600 billion last year, representing a substantial increase of 20%. New taxes to the tune of Rs.122 billion have been imposed. The imposition of new taxes is the trickiest part of the budget. People justifiably or otherwise tend to show aversion to new taxes. But the fact is that it is an inevitable undertaking. However the redeeming factor is that a well-considered effort has been made to lay more emphasis on direct taxes e.g. increase in taxes on imported cloth, steel bar, cigarettes, cosmetics, perfumes and electronic etc. which tend to stay where they are and do not have a trickled down or inflationary impact.
As regards relief to the poorer sections of the society and poverty alleviation, the budget does offer something for everybody. The minimum wage of the labourer has been enhanced to Rs.15000 from Rs.14000. Notwithstanding the fact that the rate of inflation was around 3%, the salaried class and pensioners have been given a raise of 10%%. Millions of people are going to benefit from these initiatives of the government. The allocation for the youth programmes launched by the government has also been raised. Already thousands of youth across the country have benefitted from these programme by enhancing their technical skills to find gainful employments and by starting their own businesses.
Poverty alleviation continues to be the focus of government attention. Allocation for BISP has been raised to Rs.121 billion as compared to Rs.115billion last year. It is estimated that 5.5 million families will benefit from this scheme this year as compared to 5.3 million last year. In June 2013 the number of beneficiary families was 3.7 million. Similarly the budget of Baitul-Mal has also been increased from Rs.4 billion to Rs.6 billion. The government has also decided to wave of HBFC loans of window to the extent to Rs.5000,000.
It is quite evident from the foregoing discourse that the government has more or less tried to do its utmost under the given circumstances and available resources to perform its responsibilities with unswerving commitment. Its handling of the economy during the past four years has been quite satisfactory. It is the ultimate outcome which really matters. And the truth is that notwithstanding the missing of some targets the economy achieved a growth rate of 5.2%. as compared to 4.71% last year. Budget deficit was brought down to 4.2% from 5.3% last year. Inflation was lowest ever. Per capita income increased from $1560 to $1653 and unemployment rate also went down by 0.6 per cent and the number of unemployed fell by 854,000 during the last year.