Daily Times

Managing an economy is an arduous undertaking, more so for the developing countries which are affected by the internal ground realities as well as the external factors due to the global connectivity. It is indeed very difficult for the cash-strapped economies to meet the aspirations of the people, who expect miracles not realising that miracles do not happen in the economic domain. Nonetheless the governments do try their best to strike a balance between development and welfare of the people within the given resources and the obtaining situation. Budgets presented by the government, therefore do generate lots of interest among all the segments of the society and they try to judge its implications from their own perspectives. Therefore while judging the current budget one has to keep the foregoing factors in mind.

Finance Minister Shaukat Tarin, while presenting the budget, claimed that the stabilisation phase was now over and that the 2021-22 budget would focus on inclusive and sustainable growth—fostering growth with investment. The figures in regards to the GDP growth rate of 3.94 per cent achieved during the fiscal year — which is far above the predicted growth of the economy — do corroborate the assertion regarding stabilisation. At the beginning of the year the economy had nosedived into negative growth due to the impact of the pandemic. The IMF and the government expected the growth rate to remain in the vicinity of 1.5 to 2.1 per cent, respectively.

Therefore, it was quite logical to capitalise on the achieved growth rate and to lay more emphasis on development to lead the country onto the path of sustained growth. In view of the admitted hardship faced by the people due to the spiralling prices of essential goods, the government also felt obliged to give relief to them and make their lives easier. The budget accordingly is a mix of steps to give boost to the economy and relief for the poor masses; a strategy beyond reproach.

The budget may not have fixed all the maladies afflicting the economy and nor provided one hundred percent relief to the people. But it certainly exhibits a sense of purpose and direction and might prove to be a stepping stone for a plunge into the domain of economic prosperity

In the 2021-22 budget, the government has allocated Rs900 billion for the PSDP (Public Sector Development Programme)which represents an increase of 40 percent the allocation for the outgoing fiscal year. Apart from the development projects in the public sector, realistic and imaginary steps have also been taken to create an enabling environment for the entrepreneurs and businesses which are considered pivotal for development of the economy. In this regard, the budget envisages interest-free business loans amounting to Rs500,000 to every household. Between four to six million low income households are expected to be targeted.

Agriculture is admittedly the backbone of the economy. The budget makes provision for Rs250,000 interest-free farming loans and Rs200,000 interest-free loans for tractors and machinery besides Rs 2million worth of low-interest loan for house building. A major favour has also been given to the stock market through reduction in capital gains tax from 15 percent down to 12.5 percent, while a series of withholding taxes has been removed, including those on banking transactions, stock exchange transactions, margin financing, air-travel services, debit and credit card-based international transactions and mineral exploration.

The budget also entails major concessions to the manufacturing sector, including automobile, textiles, pharmaceutical industry, mobile phone and information technology, and even small and medium enterprises (SMEs) through reduction in import duties on raw material and lower general sales tax. Similarly relief measures have also been announced for setting up cold storages for agriculture products and tax exemptions on COVID 19 related medical equipment etc for another six months.

In regards to welfare and relief measures, the government has not imposed any new tax on the salaried class. It has announced 10 percent raise in salaries and pensions which will surely provide them some relief. The government has also enhanced the allocation for Ehsas cash transfers to the poor people besides universal health coverage through Sehat Cards. Minimum wage for private workers has also been enhanced to Rs.20,000, an increase by 20 percent on the existing wage.

The revenue target for next year is targeted at Rs5.829tr, compared to Rs4.691tr this year, showing an increase by 24 percent as compared to the current fiscal year. It goes without saying that generating indigenous revenue to finance socio-economic development projects and reducing reliance on loans, is indispensable policy option. No sustained growth can be conceived without greater reliance on indigenous resources.

From the foregoing facts it can be safely inferred that it is a growth and welfare oriented budget. It envisages the welfare of all segments of the society from agriculture to industry and from services to social sector. It may not have fixed all the maladies afflicting the economy and provided hundred per cent relief to the people but it certainly exhibits a sense of purpose and direction and might prove to be a stepping stone for a plunge into the domain of economic prosperity. In the given situation it is a valiant effort on the part of the government.