Daily Times

You cannot sell a bad product with a good advertisement. That is the principle of long term selling. This may be true for business of products and services but for the business of politics it may just sound ridiculous. Switch on any channel, and you see advertisements of roads being built, poor being served, electricity projects being launched, and health insurance being doled out. As soon as these ads finish, there is breaking news on road disasters, children falling in manholes, 18 hours of load-shedding and women dying as hospitals fail to give basic health facilities. This is the real picture, the real state of affairs, the real measure of development, the real assessment of government performance. They say facts speak louder than words. When we look at half-page advertisements in newspaper, statistics shown with arrow pointing up and down exhibit inflation disappearing, deficits cutting down and investments going up. However, one visit to the local market shops, and you hear buyers complaining of record high prices and shopkeepers complaining of high costs and low sales. If seeing is believing, the real dilemma is how to believe what you see on media and on ground.

The Pakistan Economic Survey is the document that gives a picture of how the county is progressing on macro variables. This year the news on economic front is not encouraging. It is not encouraging because for the third year running, nearly all of the major targets of government have been missed. Analysts say that three years are enough time for a government to show its capacity to achieve the set targets. Government says the legacy of previous government has made it difficult for them to achieve targets. While the opposition claims that the poor have become poorer at the hands of government, government says they have done massive development for the public, which is confirmed by the public vote that they have gained consistently in by-elections. This debate is endless and non-conclusive. However, even if we go by government claims this year has been disastrous in terms of agriculture, exports, investments and savings. Economic reasoning is that with these sectors faring badly, development will be adversely affected. Political reasoning is that as long as the public cannot understand the economic logic, government keeps up its propaganda and media instructs the uneducated mind.

Regardless of this debate the sad part is that the direction of the economy is still wrong, and no matter what publicity gimmicks government uses it will not be able to hide the truth. The biggest deficit in the budget is not fiscal, monetary, of revenue or trade; it is the deficit of policy and priority. What is our economic policy? What principles govern this policy? Are we trying to be a self-reliant economy, or are we happy to continue being an economy existing on loans? This is the starting point of determining the direction of the economy. If you ask the government their statement is that they want to make Pakistan self-reliant, and that Pakistan is well on the way to becoming that. If we look at the advertisements their claims seem fulfilled, but when you look at the budget it takes us far away from this claim.

With self- reliance as a governing principle the budget should have had a focus on revenue-generation through internal means and less reliance on loans. However, we see the highest increase in debt during the tenure of this government. Foreign loans and domestic debt have broken all records. The explanation government gives is that there is a revenue shortfall that has to be filled. The question is why did tax revenues not increase to fill this shortfall. The answer is that the required tax reforms that are needed to increase tax revenues have not taken place. The question is why has the tax reforms not taken place. The answer is that FBR reforms have not happened, and FBR reforms have not happened because that would mean legislation to be passed that may bring into the tax net the legislators themselves or their sponsors. There the story ends.

Without policy there will be no direction. Without direction there will be no reform. Without reform there will be no difference in the results. That is exactly what has been happening for the last eight years where lawmakers have been lawbreakers, and thus unable to amend laws needed to plug the leaking tax system that creates huge gaps in revenue targets. The present budget is an excellent example. The budget relies on withholding taxes and turnover taxes imposed on the pool of sacrificial lambs available for the last many years. Despite the amnesty schemes that have been offered, the number of filers have actually gone down from 1.1 million to 0.90 million. The reason for this fall is simple.

If we do not broaden the tax net and instead give amnesty to non-filers, those who file and pay will find ways of joining those who do not pay as rewards and amnesties are for the evaders and not for the payers. This fundamental flaw describes why the country is in such a big fiscal mess. Similarly, the zero-rated tax regime for exporters is a good step but it will not solve the fundamental issue of price uncompetitiveness due to energy costs and the lack of product and market diversification. While the whole world is gatecrashing in the Iranian market to sell after the sanctions have been lifted, Pakistan’s commerce ministry is helplessly watching the foreign policy debacle of turning the Iranian head of state’s visit into a diplomatic disaster.

One example of mixed-up priorities is how government claims that elimination of terrorism, and reforms in education and health are its priority. Glossy ads have shown the prime minister launching school up-gradation schemes and promising zero tolerance for terrorists. The budget document belies all these claims. NACTA — the main tool of implementing at least half of the commitments of the National Action Plans — has been allocated a dismal Rs 109.2 million, which is 90 percent less than what it was last year, and 20 times below the required amount. Health has been allocated 0.27 percent and education 1.9 percent.

One area that has been generously blessed is the department handling government advertisements and publicity; government has allocated eight billion rupees, and in a special supplementary budget has asked for more money for it. This allocation shows why development in Pakistan remains a fairy tale that looks alluring in advertisements but has no correlation with the deploring reality of the daily misery the people of Pakistan go through to survive against all odds.

The writer is a columnist and analyst and can be reached at andleeb.abbas1@gmail.com