The budget came and went. The government desks in parliament thundered with applause, the opposition desks whimpered in protest. The thick budget document and the long budget speech deterred many from making an instant informed comment. However the tradition of having a budget with deficits in nearly everything in the previous year and then targeting for next year’s deficit reduction continued. The budget exercise is a lethal combination of tedious economics and crafty accounting. The expenditures have to be matched with income and a balancing act of pushing a few categories from the left to the right side of the balance sheet is done to arrive at a look of respectability. The fact that nearly all macro-economic targets were missed, including GDP growth rate, inflation rate, foreign direct investment, agricultural growth, etc, is perhaps a story we have been hearing for the last six years. On the brighter side the rupee appreciated, foreign exchange reserves improved and terrorism has subsided comparatively. Does this reflect better governance and in turn better government? Does this reflect Pakistan becoming a better place to live and work? Does this reflect Pakistan’s ability to stand on its feet and face the global challenges? These issues require a longer period of assessment than one year but an indicator of the country starting off on this journey is the priorities that become visible in this budget. The budget in fact is a reflection of the mindset of the people who manage the country.
A year ago at voting time most parties had shared their manifestos. The PML-N had a very clear focus on reducing load shedding, expanding the tax net and decreasing the begging bowl. These were the right things to focus on as the previous government had failed to undertake any substantive steps to overcome these issues. The retirement of circular debt worth Rs 480 billion was seen as a step in the right direction. However, it is still a mystery of where this money has gone and why the circular debt has reared its ugly head again. The budget document is very nebulous on this issue so the likelihood of load shedding persisting for an indefinite period is now being justified by claims that the rot is much deeper than they thought. Similarly, the tax net has become inelastic as the figure of hardly one percent of the population paying tax stays put. In fact tax collection has registered a shortfall of almost Rs 200 billion despite taxes on nearly everything increasing. The reason is a Rs 470 billion tax amnesty being given to those who matter. The budget does say that gradually this amnesty will be withdrawn with about Rs 135 billion in Statutory Regulatory Orders (SROs) to be withdrawn this year but does not specify when and where it will happen. The begging bowl has now become a begging saucepan as record loans have been taken from all sources; in fact it is being marketed as a great achievement instead of a huge liability that the taxpayers will be paying off for the next few generations.
With a heavy focus on energy and infrastructure projects in the development budget, what is really missing? Answer: the element that has strengthened those nations whom the government gives examples of as Asian ‘tigers’, i.e. human development. Education remains low in their priorities. Last year the education budget was revised to Rs 87.8 billion. This year it has decreased to Rs 86.4 billion. This decrease may be just one more fiscal adjustment on the accounting sheet but is a serious reflection of the sorry state of priorities of this government. Compare it to the Metro Train project that the government plans to start that has been allocated Rs 166 billion and is going to benefit 250,000 people only, while the total education budget for almost 120 million people is half the amount of a single train project. What are the reasons for this negligence? Is it because an educated population will not be fooled by a completely bricks and mortar definition of development, or because education projects cannot give the tangible and visible recall and publicity value that a road/bus/train can over a short period of time? Similarly, health remains a backbencher. From maternal mortality to infant mortality, Pakistan remains in the top five countries in the world. There are 12.5 million Pakistanis who suffer from hepatitis B and C, which is a breeding pipeline for cancer. Unfortunately the allocations for them are so nominal that they barely deserve a mention.
While Islamabad is still trying to fight the case of the Metro Bus project being environmentally damaging, we find out how low environment ranks on government priorities. Last year the budget allocated to climate change division was Rs 58 billion. This year it has been halved to Rs 25 billion. Pakistan is the third most vulnerable country in the world that suffers from direct and indirect climate change as floods and sea intrusion destroy millions of settlements and livelihoods. But again, environmental investment may pay off after a number of years, so why take the responsibility of anything beyond the closest and the most obvious? With soaring inflation, the government logically asks people to bear this tough period by cutting down on their expenses and living in austerity. These are all the right appeals if the budget would show a decrease in expenditures of those who are requesting them to tighten their belts. Sadly the budget also reveals that the Prime Minister’s and President’s House expenditures have surpassed their ceiling. This is what makes the public frustrated and agitated. This is where governance becomes irrational and ineffective and the resentment of people leads to more crime and lawlessness. Every budget should have a comparative analysis of the promises made in the manifesto and the measures taken in the budget to align with those priorities. The format of the budget needs to move away from insipid number crunching to laying out priorities and then mentioning the allocations made according to the importance given to them in our goals and objectives. At the end of the day, if the budget does not measure the government’s ability to walk the talk, it is just a walk in no man’s land.
The writer is an analyst and columnist and can be reached at [email protected]