AT a time when there is an overwhelming impression that the budget for the next financial year will add to the miseries of the people, Prime Minister Shehbaz Sharif has revived hopes for the better by making a pledge that it would include measures to provide relief to the general public and that efforts were being made to bring the informal economy into the tax net. During a consultative meeting with leading industrialists and businessmen to get their input for the budget, he also highlighted the government’s focus on expanding industrial, agricultural and information technology sectors, saying these areas would generate employment and strengthen long-term economic stability.
An ideal budget should aim at achieving sustainable economic growth, equitable wealth distribution and long-term fiscal stability. It should serve as a blueprint for balancing immediate societal needs with future investments while ensuring transparency and accountability of public funds. The leadership, no doubt, makes lofty claims about moves towards realization of these cherished goals but there seems to be a major gap in words and deeds. The present government inherited an economy, which was at the verge of default and credit surely goes to the economic team and the guiding vision of the Prime Minister for avoiding such a scenario but it was not enough as the country is over-dependent on foreign loans, which are not only eating up all efforts aimed at resource mobilization but also cause losses of economic and political sovereignty. This is explained by the painful reality that the budget for the coming fiscal year has virtually been dictated by the International Monetary Fund (IMF) and as a result the elected government finds it difficult to accommodate programmes and initiatives as per aspirations of the people, who are groaning under the burden of price-hike, unemployment and accumulation of civic problems that are not being addressed due to lack of resources.
The Prime Minister did not explain what he meant by provision of relief but for the common man relief should invariably mean, among other things, measures that could help bring down the inflation, reduced electricity and gas tariffs, a reasonable increase in pay and pension and a substantial increase in the minimum wage (along with a mechanism to ensure its implementation). There is an unfortunate impression and rightly so that the budget has merely become an exercise to mint money through mindless taxation that does not keep in view the plight of the ordinary citizen. We have been hearing for a long time the slogan of bringing untaxed sectors and segments of the society into the tax net but at the end of the day the burden falls on the existing taxpayers whereas holy cows go scot-free using their connections and pressure tactics. There is every reason to appreciate the intention of the Prime Minister to bring the informal economy into the tax net because of its sheer scale and the impact. Estimates of Pakistan’s informal economy range from 35% to 59% of the total GDP, with conservative projections valuing it at roughly $457 billion. This massive unrecorded and unregulated sector is estimated to be approximately 64% larger than the country’s documented formal economy. Therefore, any move towards regulation of the undocumented economy can yield substantial revenue for the Government but it has repeatedly been observed that all such plans are discarded in the initial stages due to stiff resistance by the vested interests. There is all the more need to focus on export-led growth as latest reports indicate the trade deficit widened 17.5% to $34.8 billion on weak exports and rising imports. This situation is untenable and the Government will have to address contradictions in its policies to bring down the cost of doing business and remove genuine business concerns of different sectors of the economy.
