Budget claims: how true?
Haseeb Ahmed Bhatti
Satureday,JUNE 09,2007
The most high-profile economic document, the federal budget will be presented in the National Assembly today. The government has revised many of its claimed targets of the last budget. The target for growth in industrial production has been reduced to half. Large-scale manufacturing has also been accepted formally as being not able to achieve its officially claimed target. The same sorry state of affairs exists in the export and import targets. Agriculture, like many previous years, has again failed to meet its growth target. Whether it is the issue of the Chief Justice, May 12 massacre in Karachi, the media or the economy, nothing is working in favour of the government presently. As the stage is set to present another federal budget in the most critical phase of the government, on one side there exist extreme sentiments, opposition and questions against their credibility and on the other, it is going to be the last federal budget of the present government. How the coming budget is going to be accepted by the people we will have to wait and see.
The federal budget of any country is normally a routine document not as much awaited by people as in Pakistan. The fundamental reason for great expectations arises when the priorities of any government are not pro-people and in the vain hope of betterment, people attach expectations with every coming budget. Historically, it has gained importance as governments fix their targets in different sectors of the economy and new economic initiatives are normally announced which get approval from parliament. In democratic societies, due consideration is given to the opposition’s concerns and ideas about the federal budget. Unfortunately, the last seven years’ budgets remained one-sided affairs, and even a single suggestion of the opposition or independent economists was never given due consideration. The government’s priorities and development agenda, if they remain rational and aims toward the genuine improvement in the welfare of a majority of the population, then federal budgets become only an announcement for a new year’s expenditures.
Where are the present government’s priorities wrong? These are in the agriculture sector where irrational prices of diesel and removal of subsidies from various inputs has made different crops for farmers no more profitable. Shortage of water is hurting them badly and poor road infrastructure is a major obstacle in getting good prices from better markets. Take trade relations, where it is in unnecessary haste to sign free trade agreements in every corner of the world. It has utterly failed to increase human development indicators and reduce of extreme poverty. The present government has failed to solve the energy and water crisis of the country. It is highly unsuccessful in attracting Foreign Direct Investment (FDI). Selling public assets at throw-away prices cannot be at all called Foreign Direct Investment. Citing an example about priorities, the total outlay of the last budget was Rs. 1,315 billion; 19.02 percent was allocated to defence while a meagre 1.17 percent to health and population combined, and 1.74 percent to education that also included the controversial allocation of a hefty amount for the Higher Education Commission (HEC).
The top-most objective of the last budget was, ‘to provide relief to the fixed income group and to the common man’. Who is this common man? We are in dire need to define this common man who is supposed to be benefited in the successive budget speeches and economic policy documents. To provide relief is of course a very general and vague statement. Let us suppose relief means making life better for the poor people. It is to provide them better chances of income, health facilities, better water sources and education for their children. Not only education, but a guarantee that this education will result in making their lives better through employment opportunities. Almost a whole year has gone after the announcement of this top-most objective of the last federal budget. How successfully it has been achieved or steps to achieve it have been taken by the government does not need a microscopic analysis but is quite visible to everyone. It is visible in the highest possible food inflation and in the basic utilities like the prices of sugar, vegetables and cooking oil and in prices of pulses and rice. The price of milk is at a historic high. This is to name a few. Ask anyone who is running a household and they would tell their long ordeal of this price-hike and its negative effects on household budgets. Recently at a seminar Dr. Salman Shah, the Adviser to the Prime Minister for Finance, declared Pakistan as Asia’s fastest-growing economy. How true is that claim needs a separate scrutiny from this topic, but he must be aware that in developed economies or in economies where people’s problems are taken care of, even a 0.5 percent increase in food items prices is taken very seriously. Policy planning there aims at keeping these prices at the level of negative growth rate. The same is true of unemployment figures; a single digit rise is dealt with extreme sensitivity. Unfortunately, things which matter most are neglected most by the economic managers of this country.
The government takes great pride in indicating the increase in automobiles and air conditioners’ sale as symbols of the prosperity of people. Pakistan thus becomes the only country in the world using such indicators of prosperity and emergence of the middle class. All other internationally accepted indicators like purchasing power parity, Gini index of inequality, inflation, increase in real income, unemployment rate and human development related indexes do not remain concerns to be worried about. The government plans to privatise assets worth $ 2.5 billion every year and in its present routine will claim it as increased foreign direct investment in the country. The coming budget is different from the previous ones; it is going to be presented in a charged national environment where many steps of the government are being questioned seriously. How the independent economists and other concerned businessmen and traders react to the budget is going to seen soon. But one thing is evidently clear. Tides are high and the boat is going to face a tough ride. Not words, but correct actions are the need of the hour.
The writer is a faculty member, Department of Business Studies, University of Sargodha
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