Reverse Robin Hood

By Dr Farrukh Saleem
May 28, 2017

Capital suggestion

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First the good news: GDP growth at 5.28 percent is at a 10-year record. The rate of inflation hovers at around 4 percent compared to a high of 25 percent during the PPP government, eight years ago. And we are in a low interest rate environment. Alas, that’s about it.

For the first time in Pakistan’s history, our annual budget exercise has allocated an amount of Rs2.1 trillion to a totally discretionary component of the budget – euphemistically the Public Sector Development Programme (PSDP). Budget 2017-18 is truly an election-year budget. Yes, the PML-N government at the federal level now has an election purse of over Rs1 trillion plus the PML-N government in Punjab has Rs500 billion.

Imagine: a Rs2.1 trillion election purse means Rs40,000 for each and every Pakistani voter. Imagine: a Rs2.1 trillion election purse means Rs150,000 for each and every Pakistani voter who voted for PML-N in 2013. Imagine: a Rs2.1 trillion election purse means Rs75,000 for each and every family that lives in Pakistan. Who can beat that?

The single largest expense item in Budget 2017-18 is the Rs2.1 trillion PSDP. Of the Rs2.1 trillion, 70 percent goes into ‘steel and cement’ projects, 20 percent into the buying of vehicles and a mere 6 percent into human capital (other: 4 percent). Of the Rs2.1 trillion, estimates on how much leaks out in the form of corrupt practices ranges from a low of Rs200 billion to a high of Rs600 billion.

Budget 2017-18 has absolutely nothing for the most deserving segments of our population. Imagine: around 30 percent of our population or 60 million Pakistanis are managing to survive below the level of poverty – at or below Rs200 per day. Imagine: around 25 percent of our population or around 50 million Pakistanis are mentioned. There’s nothing in the budget for all the people that are below the poverty line or suffer from malnutrition.

On the GDP growth front there’s an anomaly that I am trying to understand: The Economic Survey 2016-17 states that the electricity and gas sectors expanded by a mere 3.5 percent. How come the GDP expanded by 5.3 percent? Isn’t there always a correlation between economic growth and the amount of electricity produced?

Here’s the hard reality about the energy sector: The Economic Survey states that the installed capacity has gone up from 22.9 million MW last year to 25.1 million MW in 2017. But power generation has gone down from 101,970GW/h (July-March) last year to 85,206 GW/h (July-March). In essence, there is a lot of generation capacity out there, but the government is not being able to generate electricity out of it. That’s really serious.

A budget ought to be visionary. Our budgets are just numbers. A budget ought to have objectives. Our budgets are all about numerical targets. A budget has to be qualitative. Our budgets are all quantitative.

Budget 2017-18 is another in a series of ‘reverse Robin Hood’ operations – ‘stealing from the poor and distributing among the rich’. Around 60 percent of all taxes in the budget are regressive in nature (a regressive tax is a ‘tax that takes a larger percentage of income from low-income earners than from high-income earners’). In essence, the poorest of the poor Pakistanis are being burdened more and more as the government fails to collect taxes from the rich. That’s a classic case of ‘reverse Robin Hood’.

The writer is a columnist based in Islamabad.

Email: farrukh15hotmail.com Twitter: saleemfarrukh

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