Looking at the economic progress of Pakistan over the period of last 05 years of the incumbent government, one can easily gauge that the claims of prosperity belie the ground realities.
Based on the performance of the economy over the period under discussion, it is cakewalk to presume what one must expect from the Budget 2018-19. Domestic debt increased by five times and external debt by 1.4 times between 2009 and 2018: the bigger chunk during the last five years. External debt in 2013-14 was 20.7% of GDP which increased to 27.3% of GDP in 2016-17. Trade deficit was $16.6 billion in 2013-14 which increased to $26.6 billion in 2016-17. Minimum wage was Rs 10,000/- in 2013-14 which increased to Rs 15000/- billion in 2016-17 whereas the prices of essential commodities have skyrocketed and are currently out of the reach of the masses. The trickle-down effect has not worked as such. The supposed trickle-down effect of lower taxes as claimed has not yet resulted in prosperity for society as a whole. One can agree with one of the claims made by an individual recently that despite the government’s self-congratulatory claims, the fact remains that the entire paradigm of economic development continues to be underpinned by debts and subsidies.
Pakistan’s taxation system continues to be rigid and reliant on indirect taxes. The ratio of direct versus indirect taxes remained around 38:62 over the period of last decade. Almost every businessman seems perturbed with the withholding tax regime. The incumbent government has imposed 20 new withholding taxes since it took over in June 2013.The number of withholding tax categories has risen to 56 from 36 since June 2013. It is quite unnerving that withholding taxes account for over 70 percent of the total direct tax collection. The business community seems unnerved about the super tax, tax on bonus shares and on undistributed inter-company dividends. What to expect from the Budget 2018-19 in this regard is a question mark. Pakistan has the potential to collect Rs 6000 billion through taxation measures provided that the revenue machinery is geared up and the policy is in the right direction. The tax revenue target of around Rs5,000 billion for the FBR should be a cakewalk for this institution.
The resistance put up by three provinces regarding the presentation of the sixth federal budget by the current government may make some sense to some economists since this budget would become operational in the next financial year starting July 1, 2018 and there are surely chances that the budget may be rescinded by the next government citing the reasons of the economic constraints etc. To some individuals, it actually does not make any sense that one month before its five-year term ends on May 31, 2018, the PML-N government adhered with its presentation of the budget albeit the criticism.
The Public Sector Development Program (PSDP) should always get a priority since it leads to economic development as such provided that it is not politicized and is not nepotistic.
Agriculture sector needs a great focus in terms of provision of loans to those who need and use it. Green revolution is the need of the hour. Pakistan is the 5th largest cotton grower in the world and produces over seven million tons of rice. Pakistan is Asia’s third-largest producer of wheat with 25 million tons. It is of utmost significance to see the results produced by the Budget 2018-19 for the agriculture sector of Pakistan.
Only claims, empty promises and nepotistic approach would be disastrous to this utterly sine qua non sector for the economic prosperity of the millions of Pakistanis living in rural Pakistan. Agricultural Support Fund if allocated in the right hands may help support research on new kinds of seeds and plants in order to increase agriculture output and for the promotion of agriculture technology.
It has been tradition that every finance minister claims while presenting the budget that it is pro-poor and pro-industry, however, it is contrary in nature by and large. Let’s hope it augurs well this time.