Sunday April 02, 2023

Rs5.5tr revenue target will choke economy: Dr Ashfaq

May 26, 2019

ISLAMABAD: Renowned economist Dr Ashfaq Hasan Khan has termed government’s revenue target of Rs5.5 trillion in coming budgetary year at a projected growth of 4 percent a mere joke, adding it is tantamount to further choking the economy.

No one can understand as how this economic team will achieve the target of additional taxation of over Rs1 trillion in the financial year of stabilization with the projected growth of 4 percent being claimed by the economic team. The existing budget is already out of control and it is quite possible that three to four months after presenting the budget for 2019-20, the slippages will start taking place and again the coming budget may go out of control.

The Rs1 trillion taxation will choke the whole system; this was stated by Dr Ashfaq H Khan, Principal and Dean School of Social Sciences and Humanities in NUST and member of Economic Advisory Council. He said to achieve the 34 percent growth in taxation is simply impossible to realise and he also doubted that the PTI government will achieve the growth target of 4 percent. He said in his view it will be much below the 4 percent target and reminded that IMF has worked out the GDP growth of Pakistan for next fiscal at 2.7-2.8 percent.

The government which is claiming that next year would be of stabilization and austerity, is actually negating that as it has increased the national development budget up to Rs1,837 billion with federal budget of Rs925 billion. In addition the government is going to extend subsidy of Rs216 billion for electricity and gas to the low end consumers, and more importantly expenditure are being increased for the Ahsas programme from Rs100 billion to Rs180 billion and Rs30 billion for food subsidy showing that there will be significant cut in the defence budget.

Under IMF programme, the government is bound to bring down the primary deficit to 0.6 percent and the increase in expenditure on development, Ahsas programme, and subsidies to electricity, gas and food consumers, the brunt of adjustment to achieve 0.6 percent primary deficit will fall on defence budget and Pakistan cannot afford this time to slash the defence budget keeping in view the geo strategic situation and particularly when Modi known for initiating war against Pakistan has again won the election. More importantly the armed forces are still heavily engaged on the eastern and western borders. In addition the armed forces are also busy in fighting terrorists within the country.