The upcoming budget may not be
offering a lot to the common man
Tax
revenues are the people’s money and they have the right to hold governments
accountable. The civil society has been actively engaged in the early stages of formulation of
the budget for targeting sectors. The civil society has suggested options to
the federal government at the preparedness stage which will definitely improve
the effectiveness of budget allocations in different sectors.
It is
commonly believed that the language of the budget is hardly understandable to
parliamentarians, the civil society, and common people. The first step should
be to explain budget terminologies and do away with jargons in the document.
Before
giving suggestions to the upcoming budget, clarity about term “budget” along
with snapshot/analysis of/on current political and economic situations of the
country seems necessary. Budget is the true reflection of the government policy
and priorities. It shows the directions where the government is going to
collect and where it is going to inject”.
Allocation
of budget to different sectors in Pakistan is such that
non-development expenditures and debt repayment are higher than the development
expenditure.
This
practice seems to be true again in the upcoming budget as it has been announced
that defence budget will be increased by 18pc this year. In addition, large number
of ministries still makes up large chunks of budget. Negligence of the
government in dividing the budget proportionately to different regions of the
country can be seen as a problem. FATA, KP, and southern parts of Punjab are
still least developed regions of Pakistan. In the backdrop of this
scenario, the common man believes budget in our country is not made considering
our needs.
According
to a recent report on Pakistan
by the World Bank, the budget deficit is going to increase. Many reasons have
been identified for this. Floods decreased the capacity of the government to
generate budget revenues. Terrorism and floods led to low-revenue generation of
Federal Bureau of Revenue (FBR). Many believe that floods did not affect the
industrial capacity but industrial production depends on agriculture produce.
Whenever
there are economic constraints, development expenditure has to face cuts. The
allocated development budget has been cut three times due to different reasons
while flood rehabilitation is one of them. Revenue gaps are always filled by
cutting down development expenditures.
Developed
countries’ allocation of the budget for the development sector is an
eye-opener. The US’s
defence expenditure allocation is highest in the world but it complies only 10-15
percent of its budget. In our country, a complete reverse is the case.
Government
policies have not supported an environment of investment in the country.
Absence of proper policy measures by the government has hit the common man,
which would definitely not strengthen revenue generation in the upcoming
budget.
Poverty in
Pakistan
is increasing day by day. As data on poverty has not been collected for so many
years, it has been estimated that poverty rate reached at 80 percent at the
international rate of $2.00 per day which is an alarming figure. Policies of
the government are not aligned with the contraction in poverty and, hence, if
poverty is not going to increase, it is not going to decrease as well.
The
programme of the governments in poverty reduction and social safety nets based
on poverty score card invited criticism by poverty analysts and academicians.
It seems that despite criticism, the government is committed to expand Benazir
Income Support Programme (BISP) to benefit the poor and needy in the country.
It is anticipated that the government will increase allocations for poverty
reduction and the current government is always blamed by the opponents for
increasing poverty and hunger in the country.
In Pakistan,
almost all dimensions of poverty exist. These dimensions may include economic,
political, social, human, and environmental poverty. These terms can be
explained as there are institutions that are not doing their job.
High urban
growth is another problem. Apart from high inflation, poverty and low
production rates, increasing rate of urbanisation is an emerging issue. The
population living in rural areas has decreased from 67 percent to 55 percent.
Apart from increasing trend of urbanisation, a problem of managing future
generation can also be envisaged as currently almost 70 percent of the
population consists of children and old people.
The
government should implement tax reforms which will help bridge revenue gaps and
spare money for development programmes. If that happens, deficit financing
through SBP will decrease and its effects on inflation will be minimised.
The
government will have to create political support, especially from the coalition
partners to get tax reforms through. The newly-released medium-term budgetary
framework is also marred with wrong growth rates and targets of fiscal
deficits. Consensus on tax reforms will shape the upcoming budget as a success
or failure. In its absence, heavy reliance on foreign aid will increase
massively and country will be trapped in IMF clutches for years to come.
The role
of the civil society in the execution, monitoring, and evaluation of the budget
should be increased, so that people’s money can be used effectively for
improved service delivery.
Gulbaz
Ali Khan and Afsheen Naz are researchers based at SDPI and may be contacted at
afsheen@sdpi.org
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