Post-Budget Dialogue

Under the auspices of Jahangir’s World Times, a post-budget dialogue was organised at the Economics Department of Balochistan University of Engineering, Information Technology and Management Sciences (BUITEMS), Quetta. This dialogue was chaired by Accountant General (AG) Balochistan Mehfooz Ali Khan along with the Chairperson of Department of Economics Irum Shafiq. However, Aziz Ahmad, a faculty member of Department of Economics also participated as programme coordinator. In this dialogue, the students of BS Economics expressed their views on the ‘Federal Budget 2011-12’. Their arguments were logical, convincing and categorically sound. Actually, their views reflect a vision and keenness about the economic future of Pakistan which in fact, the nation expects from our policy makers and leaders. icy makers and leaders.

Before initiating the debate programme coordinator of this dialogue Aziz Ahmad spoke about the budget. He said, ‘Today we are facing multiple challenges and the most daunting challenge is the revival of economy’. In fact, the budget, he said, can be rightly dubbed as the annual roadmap of the economy of a country. He then opened the floor for the students to discuss as how the budget 2011-12 can be instrumental in bringing an end to the economic woes of Pakistan.

Syed Allaudin, looking energetic, said, He would like to highlight the development sector i.e. Public Sector Development Programme (PSDP). Actually, the most important feature of this PSDP is that it is the first one since the implementation of 18th Amendment. However, total allocation of funds for PSDP in the Budget 2011-12 is Rs 730billion, 300 billion rupees for the federal PSDP and 430 billion rupees for the provincial PSDP. Moreover, present PSDP is 10 per cent higher than the last budget of 2010-11 because last year it was only 462 billion rupees. In this PSDP water and power sectors have been given priority in the new fiscal year because it contains an allocation of 33.2 for water projects. It includes the raising of Mangla Dam, the construction of Satpara a multi-purpose dam in Gilgit-Baltistan and Gomalzam Dam in Khyber Pukhtunkhwa. Thus, in my opinion it is a good sign that provinces have larger share in the present development budget and government also allocated reasonable funds for the construction of new dams which indeed help us to overcome the energy crisis.

Highlighting another aspect of the development sector of Pakistan Fyazan Hussain Qureshi said, ‘It’s good that we have this time a larger chunk of budget for PSDP as compared to the previous budget but unfortunately our planning, implementation and monitoring mechanism for development and public investment has failed to deliver the optimum results. Moreover, delays, costs-overruns, missed benefits and waste of public money are some of the hallmarks of the development activity in Pakistan. So, having such a history of development spending we cannot expect any favourable outcome from this PSDP.’

Salman Bazai, another student of BS-Economics, criticising the development budget said, ‘Only 40 billion rupees are allocated for the education sector and 15 billion rupees for health projects. However, the budgetary allocation will cater to 160 projects under the HEC. In fact, Pakistan has a dismal record of human development. Majority of our population remains poorly educated and has no access to the basic health facilities even.  These conditions will not improve unless we focus on education and health more in the public sector than anything else.’

Speaking differently Samiullah said, ‘The new budget also includes a few measures that can bring some relief in future to the common man in general and the manufacturing sector in particular. These include reduction in GST from 17 per cent to 16 per cent, abolition of special excise duties and regulatory duties on 392 items to curb their smuggling. Moreover, Federal Excise Duty (FED) is ending on cement within three years with a reduction of Rs 500 per metric tonnes in the first year, reduction in FED on beverages from 12 per cent to six per cent. The new budget also proposes increase in salaries of government employees and the pension by 15- 20 per cent. The limit of exempted income has also been raised from Rs. 300,000 to 350,000.’

Throwing light on taxation Ghulam Sarwar said, ‘In the budget 2011-12 revenue collection has been estimated at 1.9 trillion rupees. Moreover, a number of measures have also been proposed in the new budget to improve tax collection i.e. budget proposes to raise the tax on commercial importers from two per cent to three per cent while tax notices have been issued to 71000 people, who have not been paying any tax so far.’

Abdul Mateen Nasir said, ‘Instead of taxing the rich the government has continued to depend upon indirect taxes proposing to raise Rs 180 billion through imposition of 16 per cent GST on 15 new items. However, 64 per cent of the national revenue comes from the indirect taxes and only 36 per cent revenue is generated by the direct taxation. That is why, an American magazine Wall Street Journal has declared that the Government of Pakistan has once again failed to bring the influential billionaires into the much required tax-net thereby forcing the country to subsist on foreign loans. Furthermore, the target of tax collection for the new fiscal year, which is 1.9 trillion rupees, is too much ambitious because without bringing the untaxed sectors like agriculture and without reducing the inequities of our taxation system this target cannot be achieved. In fact, the budget does not contain anything to show that the government is serious in addressing tax inequities.’

Sania Sabir highlighting the government expenses said, ‘Budget 2011-12 envisages federal expenditure outlay of Rs 2.504 trillion out of which 975 billion rupees will go against the head of budget deficit which is almost 4.6 per cent of the GDP, Rs 786 billion will go to debt servicing and security related expenditure is of rupees 790 billion against last fiscal year 727 billion. Moreover, the expenses of President House have been increased up to 12.88 per cent. Similarly, the overall budget of the Prime Minister’s House is Rs 1.37 billion for 2011-12 against Rs 1.18 billion in 2010-11. In addition, I would say, out of total 64 budgets since independence, only 12 have been so far in surplus. On the other hand, all the budgets after 1960 have been reported to be as in loss and no further miracles of surplus budget have ever since surfaced. In fact, the present budget is a pro-IMF budget because it reduced the subsidies on essential food items and electricity as it is longstanding demand of IMF.  Thus, I must say this budget is just a game of words and statistics because the government adopted the same traditional approach by cutting-off development budget and subsidies but did not reduce their own expanses.

Hira Hameed Achkzai, another student of BS-Economics, highlighted the increase in defense budget and said, ‘The operative expenses of the three defense services stand at RS 128.28 billion, against Rs 111.24 billion in 2010-11. Actually, the total defense budget for 2011-12 is of Rs 495 billion, it is 12 per cent higher as compared to the Rs 442 billion allotted in the last fiscal year. In fact, defense budget of Pakistan is as much important as the remaining budget because it covers a larger part of our budget.’ That is why, once an economist said, ‘Pakistan’s budget always consists of three Ds’ Defense, Debt and Deficit.

Now in the end chief guest of the programme AG Balochistan Mehfooz Ali Khan summed up the debate and said, ‘Actually, we have a traditional tendency of comparing ourselves with India and we also have a habit of accusing IMF for our economic worries. IMF is a borrowing agency and it exploits our inability to pay. So when we go to IMF they say this is the package available for you and these are the terms and conditions of this package according to which you have to pay back this loan. Once you agree then they will start attaching more and more conditions. So, IMF is not to be blamed for the economic mess. We ourselves are responsible for our economic woes. Our foreign debt in 2004-05 was only $ 35 billion but today it is $59 billion.  Hence, we are getting deeper and deeper into this trap.

Moreover, we are surrounded with economic giants ‘China and India. Both are growing with the rate of 10 per cent per year. India is far ahead of us and to compare ourselves with it is not in tandem with the reality. So, it is highly important for us that we should focus on our economic progress.

Furthermore, if we grow only two per cent annually then we will be a subservient country in the future. Our tax to GDP ratio is alarmingly low and sadly it is going down. Last year it was 9.7 per cent of the GDP and this year it would be 9.3 per cent. Sadly, we badly mix politics with economics and this is where we falter as a nation. Sadly, in Pakistan we have more politics and less economics unlike that of India. That is why we are suffering and I do not know as to how long we will suffer. Finally, he paid thanks to all.