THE budget which is the sixth presented by the PML (N) government before its mandated term is coming to end on May 31 looks quite promising from the perspective of relief to the masses, incentives and concessions to different sectors of the economy and broadening of the tax base which is absolutely essential not only for generating revenues for the future developmental and social welfare projects but also reducing the budget deficit which is the mother of all economic ills. The other good feature of the budget is that an effort has been made to lay more emphasis on direct taxes and avoiding indirect taxes, which ultimately become a burden on the masses. The business community has also appreciated the budget hoping that it would spur the business activity in the country.
Needless to emphasize that managing an economy, particularly of the third world countries like Pakistan who suffer from the resource constraint and struggle to strike a balance between development and welfare-oriented measure is an arduous and excruciating exercise, more so in view of the vulnerabilities to the ever changing global economic environment. Considering these factors and the state of economy inherited by the PML (N) government, it is hard to deny that the overall handling of the economy has been quite satisfactory and due to the policies pursued by it the country has been winched out of the quagmire that it was stuck into in 2013. Perhaps it would be pertinent to have a bird’s eye view of the state of economy then and now to understand the difference and fathom the scale of success that the PML (N) government achieved.
There is a verifiable and irrefutable evidence of the fact that the PML (N) government in spite of egregious circumstances, resource constraints, huge expenditure on the fight against terrorism and political instability fomented by its opponents, worked with unruffled focus in reviving the economy which was almost on the verge of collapse and even faced the prospect of default on IMF loans. When the PML (N) government assumed power the economy was almost stagnant at 3% GDP growth rate and the budgetary deficit stood at 8.8%. The GDP growth rate has been enhanced to 5.8% and the budgetary deficit pulled down to 5.5.4%. And above all the energy crisis which badly affected the industrial as well as agricultural sectors and caused inconvenience to millions of house-holds across the country has been surmounted to a great extent and the country is fast heading towards becoming an energy surplus country. The foundation laid by the PML (N) would surely take the country on the path to sustained development thus improving on the GDP growth rate. The GDP growth rate set at 6% for the year 2018-19 seems quite reasonable and achievable in view of the going trend of growth in the GDP. The CPEC has led to exponential increase in the direct foreign investment in Pakistan and the economists expect a jump of 2-3% in the GDP with the completion of the projects under it.
Some people raise doubts about the sustainability of the current rate of economic growth citing the reason for increase in the internal and external debt and feel it could ultimately have debilitating impact on the economy. While their apprehensions cannot be dismissed lightly it is pertinent to point out that this argument represents only one side of the equation which is normally based on the assumption that the loans obtained will not be employed on the productive avenues. The fact is that almost all the countries of the world take loans to finance their development and welfare projects and these loans if used prudently on productive avenues not only generate enough resources to pay for themselves but also add considerably to the resource availability of that country. It is noteworthy that during the last 5 years the net debt to GDP ratio increased from 60.2% to 61.4% which is not alarming considering the fact that the debt has also increased due to CPEC projects and there is no doubt about their productive potential to off-set the negative impact that the critics are trying to bandy around.
Riding on the successes achieved in the economic sector the government could afford to present a budget with greater emphasis on measures designed to promote welfare and well being of the lower and middle strata of the society. The relief provided to the salaried class and pensioners, reduction in tax ratio for them, increase in BISP allocations, raise in the minimum pension, increase in the house rent ceiling and allowance for government servants, are appreciable steps that will benefit millions of families. Equally appreciable is the reduction in duty on agriculture and dairy items which will benefit the farmers and the ultimate users i.e the public. Agriculture particularly has been given substantial incentives. The budget is also loaded with fiscal concessions for various sectors and the burden of the additional taxes is minimal. Export sector has also been provided substantial relief and no wonder that the FPCCI has welcomed the measures announced by the government.
The budget also projects targets for economic growth, revenue collection and reduced fiscal deficit and enhancement of expenditure in the vital sectors like defence. The argument by the opposition parties that the government did not have the right to present budget for one year at the fag-end of its tenure and that it was pre-poll rigging is not valid. Political parties all over the world do give relief to the masses irrespective of the fact whether it is a first budget or the last. And when it is for good of the majority of the population why grudge it?
— The writer is freelance columnist based in Islamabad.