In the budget proposed for the fiscal year 2021-22, total expenditure stands at Rs 7,523 billion, a Rs 1,178 billion increase over the last year. 20.6 percent of this amount is to be spent on interest payments, 3.3 percent on pensions, 9 percent on defence, 6.3 percent on grants and transfers, 1.5 percent on subsidies, 3.3 percent on the running of civil government, 5.5 percent on overall development, and 4.6 percent on the federal PSDP (specifically to spur private investment by way of developing human capital and improving the infrastructure).

Spokespersons for the government are calling it a pro-growth budget having four major goals. First, to achieve a 4.8 percent GDP growth. Second, to limit the current account deficit to 0.7 percent. Third, to bring the inflation down from the current high level. Fourth, to increase the revenue by 23 percent while introducing no new taxes. Some of the independent experts have said the goals represent good intentions but might be easier to define than reach.

A major drawback is the Rs 377 billion anticipated borrowing from abroad. It is feared that even this figure is an under-projection based on the assumption that the International Monetary Fund (IMF) will overlook the country’s failure to meet some of the conditions of its loan programme. Tax collection targets and the decision to not raise tax rates may thus be unrealistic.

Another point to take into account is that as inflation rates rise the consequences will be most harshly rain down on the lower-middle income people. This is ironically the segment of the society being described as the major benefactor of the budget. Key add-ons to in the federal government’s spending this year include interest-free loans for starting businesses and farm inputs, increased Ehsaas cash transfers, reduction in capital gains tax on stocks, universal health coverage subsidy through Sehat cards, increase in pay and pensions of government employees, and tax relief for women entrepreneurs.