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June 3, 2015

An instrument of economic growth and social welfare


June 3, 2015

The new budget which will be announced in a few days from now would be seen and discussed from at least five different perspectives. These include its emphasis on growth, investment, employment generation, control over fiscal deficit, and relief measure for the people.
In fact, over the last two years the government claims to have laid the foundation of economic stabilisation paving the way for accelerating investment and growth. It has been frequently argued that the growth rate of the economy should be spurred to around seven to eight percent on an annual basis. This is a long-cherished goal but yet to be achieved. Efforts toward that end, it seems, would get underway from next year in a more determined way. For the next financial year, the NEC has set a growth target of 5.5 percent.
Some broad indications of moving to higher growth mode came to light when the National Economic Council approved a one and half trillion rupees public sector annual development programme.
The Federal development programme would be worth Rs700 billion and the provinces will mount Rs80 billion development effort. It is also quite evident that while energy and infrastructure would largely be in the Federal domain, the provinces will be required to focus on the development of social sectors.
It is necessary to recognise that bulk of development resources are usually obtained through borrowing. Therefore, it is essential that these funds are put to the most productive use creating in the economy the capacity to repay them. Now that the debt-servicing is the largest charge on the current expenditure, this has acquired much greater significance and regular attention.
Now a word about development programmes to be mounted by the provinces. The responsibility of providing and expanding facilities like education, health, transport and drinking water falls within the domain, they need to be more vigorous in carrying on with that task.
Though it might bear repetition but

needs to be mentioned that almost all social sector facilities are woefully deficient both in terms of new schemes as well as in maintaining the old ones.
Economic development with a human face has been a much touted slogan. It is the same thing as saying that the benefits of economic development much reach the common man. With elections to the local bodies now in sight, it is only to be hoped that development work at the local level would get a big boost.
The directive from the Prime Minister reportedly is that the tax burden on the common man should not increase. That means that reliance should be placed on removing exemptions, broaden the tax base and exercise strict control over unproductive expenditure.
The new budget will unfold the direction which the fiscal policy might take to move towards a robust and knowledge-based economic growth. In that case, impetus to employment generation would demand unwavering commitment and high priority.
For an economy which is self-sufficient in food grains, receives something like 13 billion dollars a year in home remittances, is endowed with a hard-working work force and a growing well qualified class of professionals should not be lagging behind.
On the contrary, it should have been moving ahead fast. It is only ironic that the period in which the economy has faced problems are far too many as compared to the ones when it showed resilience and stability.
The budget, it is often argued, is not merely numbers. The fiscal policy it unfolds through taxation measures sets the broad socio-economic objectives which the government intends to follow. Somehow, policy changes in the past have been much too drastic and quite frequent.
It is to be hoped that while the effort now is to move from stabilisation to higher growth, the basic policy parameters would remain unchanged. The new budget has thus acquired much significance and is probably being awaited as such.

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