Senior economists and analysts at Institute of Policy Studies (IPS) Islamabad have urged the government to rethink and revise its fiscal policies for the forthcoming year, advising it to adopt a rather balanced, pragmatic and growth-oriented approach.
The call came from the post-budget review report published by the IPS, Islamabad. The report was prepared by a special task force at the Institute comprising renowned economist and IPS Chairman Professor Khurshid Ahmad, Fasih Uddin, Pakistan’s former chief economist, Mirza Hamid Hasan, former secretary, water and power, DG-IPS Khalid Rahman, Malik M Irfan, and IPS Lead Coordinator Irfan Shahzad.
The experts viewed that despite the ‘participatory approach’ adopted by the government for budget formulation, majority of the suggestions put forward by the parliamentary committee and the business community were not incorporated for the forthcoming fiscal scheme, consequently making it difficult for the budget to achieve its own targets with the given set of budgetary provisions and proposals.
The economists termed the foreseen increase in taxes to be collected as an indicator that the thrust will remain to be on indirect taxes, still keeping millions under the tax ambit untaxed. The government’s dependence on loans was also quite visible to the analysts who believed that the resultant debt burden would increase by another over one trillion rupees during 2015-16.
The budget’s continued focus on energy, particularly on hydro resources, was among the things appreciated in the report but the lack of clear strategy to deal with the issue of circular debt was termed worrisome. The neglect of the oil and gas sector was another thing criticised in the document.
The paper termed the target of agri-credit and provision of interest free loans for solar powered tube wells as appreciable initiatives, but ruled that the agriculture sector had still not received due attention to cause meaningful reductions to make inputs affordable or to trigger its paradigm shift towards value addition.
The incentives for the export too, according to the report, were largely concentrated towards the textile sector, leaving the other type of exports, particularly the non-traditional ones, deprived and neglected.
The report welcomed the second phase of reduction in SROs, yet recommended that all the discriminatory SRO’s and exemptions should be done away with the earlier the better. Similarly, it also suggested that the practice of supplementary grants – which have almost doubled at 200 billion rupees compared to the previous year – must be stopped and made conditional with the parliamentary sanctions.
The analysis did recognise the increase in the federal development expenditure as the need of the hour, but regarded the allocations, such as for displaced persons, as hardly developmental in its essence. According to the report, the total number of PSDP projects was around one and half thousand, which meant there would be lesser allocations per project. The report stressed on carrying out a thorough analysis of PSDP to ascertain as to which of the projects were not proving fruitful and then setting the priorities accordingly.
The decrease in the federal development expenditure for education, health and water also did not seem corresponding to the country’s socio-economic needs according to the document.
The report also slated the Benazir Income Support Program (BISP) whose monthly meagre payments were rather contributing to the ‘dependence syndrome’ instead of making people economically active and self-reliant. The whole approach, the report advised, needed to be rethought and re-devised to bring the poor into the production stream.
