The sugar-coated figures of the federal budget have conveniently ignored the list of serious challenges that the country is facing currently. The recently passed Rs8.48 trillion budget is based on unfeasible collection targets; liberal spending on non-development projects; a higher level of borrowings; and excessive reliance on remittances. The concept of self-reliance is missing. A nearly impossible target of Rs5.85 trillion for tax collection has been set. Last year, the government was able to collect Rs4 trillion in taxes. Non-tax revenue targets are also unrealistic – especially when the privatization process is not moving forward in the country. The import bill is also underestimated.
With the reopening of the economy, relaxation in import duties, and a steep increase in crude oil prices, the import bill is likely to reach around $65 billion. It is shocking that the government seems unwilling to compress the import bill, which it can easily do by discontinuing the entry of luxury and unnecessary goods. This restriction can save around $8-10 billion – which will be sufficient enough to exit the IMF programme. The government is of the view that remittances are likely to increase in the next fiscal year. However, once restrictions on travel are lifted, remittances may fall. Our budget is heavily dependent on dollar and rupee borrowings. The federal budget expects a provincial surplus of Rs570 billion. However, the budget of the biggest province, Punjab, projects a surplus of mere Rs125 billion. The education sector continues to be ignored. Once again, the government has allocated insufficient funds for this sector. The government, however, has set aside a good amount of money for research and innovation to help the country adopt new technology. At present, even small-scale projects depend on foreign help. It is hoped that now the country will set the stage for technological innovation.
The government has reduced duties on 850cc cars. On the other hand, it has given no relief to people who use public transport. An increase in car sales is not a sign of improved performance. It just highlights the growing divide between the haves and have-nots. The bottom line is that the key challenges that the economy has been facing for many years now remain unaddressed.
Arif Majeed
Karachi
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