Budget

Capital suggestion

It’s a reasonable budget. To be certain, the entire government paraphernalia has absolutely no capacity to reform itself. Budget is about two things: revenues and expenditures. What’s needed is revenue reforms and expenditure reforms – and without reforms we are going nowhere. I have been told that ‘if you are going nowhere, any road will take your there’. In that sense, the budget has been a good accounting exercise.

To the credit of the Ministry of Finance: the 8-year high rate of GDP growth; inflation at a 10-year low; foreign exchange reserves at an all-time high; tax collection at a new historical high and a 40-year low SBP policy rate of interest. The other side of the equation is: third consecutive year of missing targeted rate of GDP growth; a 25-year low for the agriculture sector; an alarming drop both in exports and investment.

A national budget should not be a pure accounting exercise. The Ministry of Finance must develop a vision both for the current as well as the future generation of Pakistanis – and then design a budget to get as close to that vision as possible. All that the current generation needs is jobs, around 1.5 million jobs a year. For the future generation of Pakistanis the best that we can do is to leave them as debt-free as possible. Budget 2016-17 fails on both counts.

The opposition must also be held accountable for playing absolutely no role whatsoever. For the record, the MQM is the only major political party that came out with a shadow budget. The PTI did come out with a shadow budget last year but I couldn’t find one this year.

On the energy front, I was shocked to see the installed capacity actually going down from 23,212 MW in 2014-15 to 23,101 MW in 2015-16. After all, the PML-N government paid off a colossal Rs480 billion in 2013 and then allocated Rs260 billion and Rs248 billion during 2014 and 2015, respectively. That’s an outlay of Rs988 billion over three years – and still the installed capacity went down.

On the agriculture front – where we saw the worst of times in 25 years – the budget could only come up with a 10 percent drop in DAP prices for an accumulated subsidy of Rs10 billion. For the agriculture sector, which contributes Rs6 trillion to our GDP, a subsidy Rs10 billion means little, if anything at all. Yes, there’s an additional subsidy of Rs27 billion in the form of electricity but the two subsidies put together amount to a meagre 0.6 percent of agriculture’s contribution to the GDP.

For the promotion of exports, it was good to see the zero rating for five major export industries. Would that be enough? I don’t think so. The real issue is the cost of production and there’s been nothing on that.

For poverty alleviation, the allocation for BISP goes up to Rs115 billion. That’s a step in the right direction. BISP will now cover 5.6 million families. BISP is well managed and disbursement is based on scientific lines. Yes, BISP has been an affective poverty alleviation tool.

The Public Sector Development Programme goes up by a wholesome 21 percent. Another step in the right direction. But this must be complemented with an affective monitoring tool or at least one-third of the massive Rs1.675 billion programme will be lost to corruption and incompetence (Rs730 million of which were found in the house of Balochistan’s finance secretary).

Finally, this is going to be a very good year for the parliamentarians. They have already jacked up their salary and allowances from Rs80,000 a month to Rs470,000 a month for a 500 percent one-time increase (as government servants get a 10 percent rise). Lo and behold, parliament will spend around 40 hours to pass the budget and get Rs60 million each for their favourite development schemes. Congratulations.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh