The federal budget for the next financial year presented by the government in National Assembly on Friday has all the contours of pre-election magnanimity. It is loaded with fiscal concessions for various sectors of the economy. The burden of additional taxation appears minimal. It has also projected targets for economic growth, revenue collection and a reduced fiscal deficit.
It is noticeable that the agriculture has been given a fairly large number of incentives including duty reduction on inputs. Being an agrarian economy the benefits announced in the budget will be well received by millions of farmers across the country. Farm credit is an important component to boost this sector and it will be substantially increased.
Another area which has been provided substantial relief is the export sector. Low growth in exports and high level of imports has widened the current account deficit which in turn impacted upon the balance of payments situation. After the recent depreciation of the rupee, plus the newly announced incentives are expected to accelerate exports. However, they ought to acquire an edge in the international competition.
The larger allocation have been made for social welfare schemes in education, health and drinking water. Yet the vital question is that the needs of the people are so enormous that much more is required to be done than what presently is the case. There is much talk about saving the unnecessary expenditure and relocate the funds for social welfare schemes. There are also benefits for the government employees and pensioners. The reduction in income tax slabs and scaling up the taxable limit, which had already been announced, have been incorporated in the budget.
Despite high economic growth in the outgoing financial year, the dependence on borrowing remains heavy. External receipts have been estimated at Rs342 billion and bank borrowing at Rs1,015 billion. On the expenditure side, interest payments will consume Rs1,620 billion.
The fiscal deficit has been an area of concern. As such an effort has been made to bring it down. The overall fiscal deficit has been estimated at Rs1,890 billion or 4.9 percent of the gross domestic product. Here comes the vital need to maintain strict financial discipline ensuring that the expenditure did not overshoot the approved limit. Though there was uproar from the opposition asking the government to announce a budget for three to four months as it was at the fag end of its tenure. The counter argument from the government was that it was necessary to present a budget for the whole year to maintain the momentum of the economic progress. It is quite often argued that all the major political parties should evolve a consensus on basic parameters of the economy.
In conclusion it must be said that two things will be extremely important. One is fullest possible realisation of the government's income and strict control over expenditure. Equally important will be the enforcement or implementation of the budget provisions.
The dichotomy of the situation is that the outgoing government has given the budget, but it will be for the next government to translate it into action. So let us sit with our fingers crossed.