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June 5, 2016

A routine exercise


June 5, 2016

With the announcement of the budget for FY2016-17, it has again been established that our budget-makers, no matter under what regime, consciously or unconsciously follow failed economic models.

Since 1962, successive governments in Pakistan – following the free-for-all meritocracy approach – have been extending economic benefits to the state oligarchy. Budget 2016-17 too is reflective of toeing the failed approach of restless uncertainties of market-driven models with no social protection for the less privileged. Our budget-makers have never bothered to adopt an egalitarian approach that inherently deplores extremes of wealth and poverty.

For growth-oriented-equitable economic development, social stability is a prerequisite and a price worth paying to avoid the perpetual class conflicts and restless uncertainties of market-driven models. The negative growth in the agricultural sector this year is evidence of the failed policies of the present regime.

‘A routine exercise of balancing the book’ – that was the instant reaction of most experts after hearing the budget speech on June 3. The figures released by the government proved beyond any doubt that there was a misplaced stress on showing ‘extraordinary economic indicators’ under the ‘superb leadership’ of PM Nawaz Sharif and his economic wizard Ishaq Dar, who said that “desirable economic transformation was achieved”.

The figures, however, speak otherwise. For example, the government says that inflation is at its lowest since the past two decades. The poor and middle classes claim that with the rising prices of food and other necessary daily use items life is becoming increasingly harder for them. Even the upper classes say the burden of utility bills and various taxes is one of the highest in the world.

The extremes of rich and poor are squeezing out a true middle class; a sizeable segment is being pushed below the poverty line on a daily basis and the number is now as high as 60 million. Budget 2016-17 thus shows elitist thinking – growth without equality. In Dar’s definition of ‘economic growth’, there is no share for the Pakistan’s poor. He calculated per capita income without a census having been conducted – a unique feat indeed.

Budget 2016-17 repeats the same old pattern of living beyond one means. Our ruling classes want the luxuries of developed societies at the cost of the poor. The members of the National Assembly increased their salaries three-fold even before the budget, while millions are living below the poverty line. The gigantic bureaucratic apparatus – the epitome of bad governance and corruption – has also received a pay raise and more facilities. The government did not bother to curtail wasteful expenditure by monetising all perquisites and benefits of its employees. The common people have been burdened with more taxes to provide more luxuries to the ruling elite – the military-judicial-civil-complex and politicians.

As expected, by showing inflated figures of revenues, holding back over Rs200 billion undisputed refunds, and taking credit of Rs300 billion of surplus by the provinces, the consolidated budget deficit was manipulated as 4.3 percent of GDP.

Dar did not divulge how much debt the government has accumulated since June 2013. He also failed to mention the fact that the debt-to-revenue ratio is now over 600 percent. Every year we have to borrow billions to meet our fiscal deficit. Our capacity to pay back outstanding loans is eroding every year as well. In these circumstances, the finance minister offered no explanation to the nation as to why the ruling elite have been living in palatial houses with armies of servants and are not ready to sacrifice their comforts/luxuries in these extremely difficult economic conditions.

Why don’t the majority of parliamentarians pay taxes on their colossal incomes? Why is there no political will to reduce wasteful government expenses on perks and benefits? These questions nag every Pakistani. It is shameful that the current expenditure shows a hefty increase over the revised estimates of 2015-16, whereas these could easily be reduced by 50 percent at least. Non-developmental expenditure, including debt servicing, transfer payments and superannuation allowance, is nearly Rs2 trillion. Though the size of the Public Sector Development Programme (PSDP) is shown at Rs.800 billion, it is not clear how much will be actually used.

The Economic Survey 2016 (Chapter 4, Page 78) claims that “since 2013, Pakistan has made a considerable improvement in restoring economic stability and now the economy is moving on a high growth trajectory”. This claim has repeatedly been made by the finance minister as well. But where is this “high growth trajectory”. There is negative growth in the vital agricultural sector and almost all targets – like growth rate and exports – have been missed. Yes, there is ‘high growth trajectory’ in the current expenditure demand for the PM Secretariat – near one billion now. Even for the ceremonial office of the president, the allocation is nearly half a billion. Do we still need evidence to show that our rulers are wasting national revenues and resources ruthlessly?

The figures relating to foreign and domestic debts and their servicing, and of new loans of billions of dollars are horrifying. After debt servicing and wasteful expenditure, we have to borrow more for infrastructure and human resource development.

This is the story of our economy. Budget 2016-2017 is yet another routine exercise of balancing the books through window dressing. There is nothing in this budget that aims at achieving self-reliance and national prosperity. It is, as usual, a disappointing document that has figures and fancy presentation (sic) – all of which is Greek to a common man.

There is nothing in terms of policy design that promises a bright future for all citizens, especially victims of an oppressive economic system. This is an elitist budget in an elitist economy. The dismantling of this elitist economic structure, the root cause of our main ills, is still a far cry in Pakistan since no political party has the desire to do so.

The writer is an advocate of the Supreme Court and adjunct faculty at LUMS.

Email: [email protected]

Twitter: @drikramulhaq

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