‘Budget provides no incentives for the poor and middle class’

There is a need for a national consensus among all stakeholders on Pakistan’s defence, diplomatic, and economic goals and interests, according to economist Dr Kaiser Bengali. He noted that developed countries have a national consensus on sustaining economic and developmental continuity, and that policies remain consistent even as governments change.

Dr Bengali made these remarks as the guest speaker at the latest monthly meeting of Hamdard Shura Karachi, which was held at the Hamdard Corporate Head Office.

Titled ‘Budget 2024-25: Was Justice Done to All Sectors?’, the meeting was presided over by Speaker Gen (retd) Moinuddin Haider. Hamdard Foundation Pakistan President Sadia Rashid also attended the meeting.

Dr Bengali said in his address that there used to be a national consensus on the country’s economic development before 1977. However, he added, Pakistan later took a wrong direction.

He said that the main economic issue of Pakistan is trade and budget deficits. These can only be addressed by reducing unnecessary imports and prioritising exports, he added.

He also said that to achieve this we need long-term policy implementation and detailed strategies to reduce expenditures and boost exports. The recent budget provides no incentives for the poor and middle class, he added.

Citing the economic survey report, he said that all sectors in the country are declining. The economy is stagnant due to the lack of development in the manufacturing industry, which is crucial for economic growth, he added.

He pointed out that the budget allocates Rs400 billion for development projects, but the source of this funding has not been specified. Efforts are being made to collect funds through privatisation, he remarked.

The economist said that during the Musharraf era, large-scale privatisation occurred in various sectors, including the sale of many financial institutions. However, he added, investors later transferred their profits out of the country, leading to the negative remittances phenomenon.

He said that following the 18th amendment, many federal ministries were transferred to the provinces, but many ministries still exist in the federation, burdening the national budget with their civil administration costs.

Hamdard Shura members Zafar Iqbal, Cdre (retd) Sadeed Anwar Malik, Senator Abdul Haseeb Khan, Engr Ibnul Hassan, Col (retd) Mukhtar Ahmed Butt, Dr Amjad Jafri, Prof Dr Tanveer Khalid and Amir Tauseen said that the biggest issue for the poor and middle class is inflation.

They said a person earning Rs30,000 pays the same price for petrol as someone earning Rs3 million a month.

The prices of electricity, petrol and essential commodities should be adjusted according to the buyer’s purchasing power to minimise the burden on the lower income households, they added. They also said subsidies are given so that the price difference is covered by the government, ensuring that producers’ incomes are not affected and the goods remain affordable for the middle class. The current situation requires a comprehensive, multi-faceted economic policy to address this critical issue, they added.

They lamented that interest groups have monopolised each sector through collusion, and protect their interests through the power corridors. The entire system is controlled by a few influential individuals, they pointed out. They said that the primary role of industrialists is to create employment, which is why the government offers them incentives. Sadly, they added, the nation’s entrepreneurial potential has not been nurtured.

That is why very few technological startups are emerging in the country, resulting in little or no new job opportunities for the young human resource, they explained.

They said that benefiting the privileged classes in the budget that do not contribute to national exports is a disservice to the country and its people. Every employed Pakistani should pay income tax regardless of their sector, they added.

They also said that without this legislation, the tax net cannot expand. Non-filers should face stricter enforcement.

The income tax payment process should be simplified for ordinary people, and electronic money transfers should be promoted to reduce the size of cash economy, they added.

They remarked that the real estate sector is a major cause of inflation, with property prices driven up by speculation. Money that should be invested in industries is instead invested in property projects, they pointed out.

The Shura members said that international financial institutions, including the IMF, are influenced by global politics, and make decisions based on the interests of world powers.