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June 29, 2015

Budget to make the economy work


June 29, 2015

National Assembly has approved the Federal Budget 2015-16 after deliberations although some politicians from the Opposition side did not extend proper cooperation to facilitate the smooth passage of the budget proposals.
These few politicians from the rival camp also did not come up with solid figures and data in support of their opposition to the budget and budget statistics.The fact is that the Federal Budget 2015-16 has come up as a foolproof document after a long time. In the past, some of the finance ministers prior to Ishaq Dar, had been resorting to haphazard, non-serious calculations some of which had been self-conflicting, as exposed off and on by media and seasoned economic analysts. This practice has been done away with and replaced with serious work and scientific calculations. Actually, the current budget was presented after a lot of homework that was done painstakingly by the Finance Minister Ishaq Dar and his team of finance experts.
According to the well-informed people, the basic theme of the budget was enhancement of productivity by way of industrial-cum-agricultural growth so as to create enabling environment for financially empowering the common man.
The government has, in this manner, performed its duty well by giving a working budget, a term that means ‘a budget that makes the economy work’. The fact is that the work on building up such an enabling environment is already on which would facilitate expansion of industrial and agricultural economy. Once the economy expands, it leads to creation of hundreds of thousands of job opportunities in both the formal and informal sectors.
Some of the salient features of the present state of economy speak for themselves and suffice to suggest that things have started moving in a satisfactory direction that is indicative of good times ahead. Take, for instance 9.3% increase in Per Capita Income from $1384 to $1512; Inflation has come down at 4.6% which is the lowest in 11 years. The

government is also determined to keep the Fiscal Deficit for 2015-16 limited to 4.3%. Effective financial discipline is already in place to achieve this difficult target and this discipline is going to continue through an additionally streamlined system. Even the reduction in policy rate of State Bank of Pakistan to the 7% mark is aimed at generating enhanced economic activity as the government is of the conviction that with this measure, idle money will be invested at a greater rate and with greater frequency in the economy. Equal emphasis is being laid on exports’ expansion with the target of $17 billion of Forex reserves likely to cross any moment.
The government has also tried to reduce the import-export gap and though exports couldn’t achieve the previously set target, imports declined by 1.61% from $34.65bn to $34.09bn.Here, the key indicator of country’s economic strength also needs mention and that is KSE Index that has gone up by 70% to 34,000.
The progress in these major sections of our economy owes to pragmatic economic policy of Nawaz Sharif government whose economic managers have worked studiously to strengthen the national economy with the ultimate objective of providing honourable means of living to the people.
The rationale of budget-making by Ishaq Dar needs to be understood. The basic foundation of the federal budget announced for the year 2015-16 by Finance Minister Ishaq Dar is rationalised prioritisation that has been done after identifying all the major areas of national economy.
One of these major areas includes work on new power projects that is underway. They would generate 7000MW, 3600MW from LNG. Keeping in view the pace of the work on these ongoing power generation schemes, the prime minister’s pledge of increasing the power generation to the extent of 10,6000MW now seems to become a reality by the promised year i.e 2017.
Rupees 248 billion have been allocated for Power Sector as compared to Rs200 billion last year that include Rs52bn for Dasu Hydropower Project, Rs21bn for acquisition of land for Diamer-Bhasha Dam, Rs11bn for Neelum Jhelum, Rs11bn for Tarbela IV and Rs5bn for Guddu.
One encouraging news that gives the impression that the economic turnaround is in sight, is that 4100 new companies have been registered which shows that business community has reposed greater trust in the government’s economic policies. That is quite significant because without earning the trust of the private sector, no government can play an effective role in improving the economy. It is an economic reality that private sector always tends to be an employment sector much bigger than the government sector and moreover, the private entrepreneurs and private enterprises constitute a bigger and more proactive economic growth engine.
Nawaz government has kept this consideration on top priority in its economic plans and it has also set the target of investment to GDP ratio in the year 2015-16 at 16.5%. In the current year, this ratio has risen to 13.5%.
The government is also seriously contemplating taking measures to reduce public debts. During the current year, the public debt management remained around 62.9% but in the next three years, it will be brought down to 60%. Obviously, the government had not been capable of setting such an ambitious target of reducing public debts, had the economy not gone strong and vibrant.
As for the direct support for the downtrodden and the poor, the Federal Budget 2015-16 has increased the scope of BISP to support five million families. As such, the BISP funds are being enhanced to Rs102bn from the present Rs97bn. In the same area that of direct relief, the budget for Pakistan Baitul Maal is also being doubled to Rs4 bn.
The government plan also envisages setting up of 500 universal e-tele-centres to be established at the cost of Rs12bn to encourage e-agriculture, e-commerce, e-learning. Besides that, remaining areas of country will be linked with fibre optic cable at the cost of Rs2.8bn in consultation with provincial governments and rural areas will be linked with communication network at the cost of Rs3.6 bn.
The scheme of Information and Communication Technology Scholarships will continue next year. For roads and bridges, Rs185bn have been allocated which means an increase of 65% from the present Rs112b; for Karachi-Lahore motorway Rs120bn have been allocated for Lahore-Abdul Hakeem Section, Rs61bn for Multan-Sukkur and Rs10.5bn for Sukkur-Hyderabad. Additionally, Rs16bn have been earmarked for Bus Transit System in Karachi to carry 0.3 million people daily; Rs78bn have been allocated for Railways and Rail Track’s dualisation from Khanewal-Raiwind, Shahdara-Lalamusa will be completed in 2015-16. And in the area of higher education, Rs.71.5bn have been allocated for HEC.

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