ISLAMABAD: With the Federal Budget 2012/13 just 19 days away, the controversy of rebasing the economy took new turn as the Governing Council of Pakistan Statistical Bureau (PSB), which met on Friday with Finance Minister Dr Hafeez A Shaikh in the chair, refused to validate the rewriting of economic history of the country from 2005/06 onwards, saying PBS has taken the major initiative in violation of the laid down procedure.
The National Accounts Committee (NAC) in its meeting held on April 26 approved the GDP growth figure of 3.2 percent on the basis of market price after rebasing of GDP by fixing 2005/06 as base year. The NAC, after rebasing, had pulled out around Rs2,200/2,500 billion from the size of economy, owing to which GDP size shrank to Rs18.50 trillion from Rs21 trillion, mainly because of the contraction of manufacturing, services and financial and insurance sectors.
Now the National Accounts Committee would meet again and work out the size of GDP based on the existing system of national account on base year of 1999/2000. Under the existing system, the GDP growth of the current fiscal year 2011/12 is likely to be at 3.8-3.9 percent.
Under the law, PBS is bound to take the approval from the Governing Council, but its secretary did not take the Governing Council into confidence prior to taking the major and important initiative of rebasing the economy.
Sohail Ahmad, secretary of PBS, admitted that he himself is responsible for flouting the rules of procedure and carrying out the exercise of rebasing the economy without approval of the Governing Council. He said he was made secretary PBS in January and he was not aware of the fact that the approval from the Governing Council is mandatory prior to initiating the process of rebasing the economy.
However, sources said that the top mandarins of the ministry of finance are very upset as PBS has exposed the government to a lot of embarrassment. Now in the meeting, PBS has been asked to come up with measuring of economy’s size on the existing System of National Accounts (SNA) on the base year of 1999/2000.
However, the Governing Council, according to Ahmad, has asked PBS to also come up with the detailed presentation on rewriting of economy with logic of rebasing, explanation of process, mythology and sector-wise changes used for rebasing. Ahmad said that in the next National Accounts Committee meeting that is scheduled within next four to five days, PBS will come up with the national account based on the existing system of national account and presentation, which the Governing Council has asked for.
He said that the size of the economy would be worked out on the existing system in the next budget.
The Statistics Division had earlier sought time from Minister for Finance Dr Hafeez Shaikh to hold a meeting of the Governing Council last month because its last meeting held in December and under the newly-approved act of the parliament this council was required to meet once on a quarterly basis.
The project of rebasing of economy was approved by the Central Development Working Party (CDWP) and then by ECNEC with an estimated cost of Rs283 million to convert the base year of calculating growth from 1999/2000 to 2005/06.
This exercise took five to six years to get results of rebasing of the economy, but the Governing Council has now rejected the whole exercise of rebasing the economy, wasting the taxpayers money of Rs283 million.