The budget-gadget. By Mohammed Akmal Pasha

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The Federal Budget 2014-15 seems attempting to hoodwink the perennially poor strata of the economy through the gadget of promised financial reliefs which are concomitantly undercut by other economic hazards implicit in the budget-gadget. Ironically, the aggregation of indirect taxes and other inflationary blows grossly outplace the financial cushions of relief-statistics; as vectored towards poverty alleviation. Rather these statistics tend to offer largesse to the business community, though per se they are acclaimed to represent a pro-poor budget. The statistics about which Benjamin Disraeli declared: ‘there are three types of lies; lies, damn lies and the statistics.’ However, at macroeconomic policy level, the basic predicaments that erect in the way of economic relief of the common man stem from an economic triplet: a: the excess of federal expenditures over revenues; b: a mild rate of economic growth (if government measure is believed to be correct) as led by the overall growth strategy; and c: a banal volition for ensuring equitable growth that ideally must permeate nation-wide, that is equal distribution of income.
Let us start from the first predicament; the excess of federal expenditures over revenues. The gross revenue collection stands at Rs. 3,945 billion, out of which taxes contribute Rs. 2,810 billion, finally the excess of expenditures over revenues equals Rs. 905 billion. Coincidentally, this shortfall is akin to Rs. 945 billion lavishly dissipated by the ministers under the luxury of ‘discretionary fund’. Simultaneously, other non-development expenditures also tend to put a mammoth dent in financial might of the country; chiefly the recurring expenditures incurred on PM house, presidency and the governor houses. Nevertheless, the PM’s record fourteen foreign visits during just twelve months entail massive monetary cost vis-à-vis their political or strategic (positive) potential offshoots. Then the ponderous perks bestowed upon the top-grade government officers stay degenerative towards developmentally productive usage of national exchequer built from the blood and sweat of the proletariats. Naturally, if we compound all these, the collective outlays present negative outcome, put on the national cost and benefit scale. Here the common man remains deprived of any trickle-down benefit, since nothing trickles down in such cases, luxuries remain esoteric.
Consequently, what churns out is the fiscal deficit equaling Rs. 1.4 trillion which is 4.9 percent of the Gross Domestic Product. This leaves the government with zero leeway to provide economic relief to the common man. However, in the wake of such a depravity, the gadget of budget unleashes a couple of so-called reliefs for the poor. To begin with, there is an award of pay-raise by 10 %, an increase in minimum wage rate by 9 % (from Rs. 11,000 to Rs. 12,000), an increase in pension by 20 % (from Rs. 5,000 to Rs. 6,000) and finally a 25 % increase in income of each beneficiary of the Benazir Income Support Program (each individual’s income raised from Rs. 1,200 to Rs. 1,500). But unfortunately, each of these increases is substantially outplaced by the hammer of inflation and then by that of the indirect taxes. Inflation though claimed by the government equals 8 %, but region-wise studies suggest an awful range of 15 % to 20 %. If we irksomely take it at government’s claim at 8 %, the net pay-raise squeezes to just 2 % (10 % pay-raise minus 8 % inflation). Add to it the 5 % rise in retail tax, the real pay-raise further slips down from 2 %. Yet, the 17 % rise in tax on CNG would add to cost of transportation of all sorts which in turn would further inhibit the real effect of the 10% pay-raise. It would be additionally exacerbated when customarily the Pakistani transporters would take leverage of 17 % tax and hence they may raise fares by 25 % to 50 % ‘discretionarily’ as CNG goes up from Rs. 73.25 to Rs. 85.7 per kg. Having said all, yet the implementation of enhanced minimum wage, pensions and income under BNISP has to be potentially ascertained.
The government does not stay here in relieving its poor people. A 10 % rise in tax on incomes of doctors, engineers and advocates is another blow in the form of indirect tax for the poor. Though not every citizen is concerned with these service-providers so frequently, yet this raise must add to the overall cost of living in the end. We are yet to list the increased prices of edible oil, electricity, and laptops. Taken index of all these negativities, the aggregation of financial benefits wrapped up in statistics, would dwindle to a substantial negative effect, which is nothing but a parody of financial cushion, the gadget.
While the overall budget deficit equals Rs. 1.4 trillion and the tax revenue falls by Rs. 200 billion, a larger pie in expenditures is ascribable to debt servicing which equals Rs. 1,325 billion, that usurps more than 33 % of the total revenues of Rs. 3,945 billion. These debts were if harnessed on public good or economic welfare, the benefits must have been overwhelming and ubiquitous. The labyrinth of 74 mega projects of motorways, highways, bridges, tunnels and new rail links, no doubt ease out the moving feet but certainly fall short of stuffing the empty stomachs. The routine suicides and sale of children by the parents in the hands of hunger and poverty furnish ample evidence in this regard.
The second predicament, the growth in Gross Domestic Product which is claimed at 4.1 % is again a mere statistic; the rational economists believe it to loom around 3.5 %. Even if it happens to be 4.1 %, the translation of gross domestic product into gross national happiness portrays a gloomy picture if taken in terms of Human Development Index where Pakistan sways at 146th rank in the world community of 187 countries, which means there is a long list of 145 countries which are ahead of us.
In the end, it’s high time that the momentum of transfer of power between the alternate ruling parties is broken. For, their political terms have merely widened the gap between the haves and the have-nots. The preachers of boosting foreign investor-confidence through the conduit of patriotism and incentivization; have colossal investments outside Pakistan, a sheer hypocrisy. A daily corruption of Rs. 8 billion takes place under the nose of the government-body. The third predicament, the income distribution is highly skewed and inequitable. The Lorenz curve depicting income inequality suggests seven times difference between the income levels of the lowest-income tier and the highest-income tier in Pakistan. The financial arrogance of 200 families who enjoy national wealth and political reigns, mockingly marginalizes more than 100 million Pakistanis to swarm below the poverty line. The poverty line recommends a provision of at least Rs. 6,000 per person per month, and a minimum wage rate of Rs. 12,000 per month fixed by the government forces one to believe that the government through the budge-gadget has obliviously assumed that the wage-earners are just couples, without children; either sold or drown. The proletariats are but to succumb to the budget-gadget; ‘their’s not to make reply; their’s not to reason why, theirs but to do and die.’ (Lord Alfred Tennyson) (The author is a PhD scholar and freelance writer; he can be accessed at akmalp@yahoo.com)

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