The current year's target has been revised upward to 3.6 per cent from last revision of 3.3 per cent
From SHAMIM AHMED RIZVI
June 17 - 23, 2002
The National Economic Council (NEC) in its 4 hour long meeting presided over by President General Pervez Musharraf on Friday last gave final touches to the budget proposals for the next fiscal (2002/2003) year. The budget is likely to be announced on June 15.
The meeting reduced the size of PSDP from Rs. 144 billion approved earlier by Annual Plan Coordination Committee (APCC), to Rs. 134 billion as it was told that it seemed unlikely to meet the next year's CBR revenue target set for Rs. 144 billion PSDP, which has been now curtailed. The current year's revised PSDP target is now Rs. 127 billion, against the revised estimates of Rs. 140 billion.
The target for the next year's GDP growth has been envisaged as 4.5 per cent. The current year's target has been revised upward to 3.6 per cent from last revision of 3.3 per cent. This last revision of 3.3 per cent change after September 11 events from the budgeted 4 per cent GDP Growth.
Current account surplus for the ongoing fiscal would reach $2 billion, with remittances of $1.9 billion, which would cross $2.2 billion by end of the year. Inflation is likely to be below 4 per cent in the fiscal year 2002-2003. After the NEC meeting, Finance Minister Shaukat Aziz briefed the press about its salient features.
Finance Minister briefed the meeting that the drought had a negative impact on the economy, which swallowed 1.1 per cent GDP growth. Non-agriculture GDP growth stands at 4.3 per cent and non-agriculture and non-hydel power GDP would be 4.7 per cent. The per capita growth for the ongoing fiscal year would reach 3.2 per cent; inflation rate is the lowest in the decade, just 2.5 per cent and exports are likely to touch $9 billion, which, after September 11 suffered a setback.
The value-added textile industry has shown better figures as cotton cloth is likely to grow 12 per cent, bed-ware 26 per cent, towels 17 per cent and readymade garments 23 per cent.
The minister expressed hope that forex reserves would be crossing $6 billion before end of this fiscal year, which stand now at $5.6 billion. He said that NEC has been told that foreign debt rising trend has been arrested to cut it $36 billion against $38 billion at the time when this government came in.
The meeting was told that provinces would be given around Rs. 30 to 32 billion as the 2.5 per cent of GST from federal government which would be spend in districts on poverty alleviation and social sector spending.
In the next year's revised PSDP allocation, water and power sector is to get Rs. 23.7 billion; highways and roads Rs. 15 billion; railways Rs. 7 billion; and human development Rs. 39 billion (almost 40 per cent of the PSDP). The human development includes health, education, women development and other social sector allocations.
Responding to a question on reduction of the PSDP allocation for next fiscal year, the minister said that projects of ministry of petroleum and others have been placed in other expenses of a holding company through which the petroleum ministry would deal. Talking about defence budget, he said that the government would fulfil all requirements of security and the country, without any doubt, has resilience to meet its defence requirements.
According to the sources, the Finance Ministry has proposed Rs. 868.50 billion of federal budget for the next financial year 2002-2003 that is believed Rs. 116.80 billion more as compared to the outgoing fiscal. "Rs. 25 billion are expected to be increased in the head of the defence budget in the wake of the Indian massive deployment at the war time locations."
"The total earnings during the next fiscal year has been estimated at Rs. 752.80 billion and remaining Rs. 115 billion would be generated through other resources including the foreign donors and multilateral agencies." The Central Board of Revenue has fixed its target of revenue at Rs. 537.60. This include Rs. 485.60 gross receipts revenue, federal taxes of Rs. 52 billion which also include Rs. 35.6 billion petroleum surcharge, Rs. 15 billion gas surcharge and Rs. 1.40 billion surcharge in the other heads, the source said.
"Giving the details of the CBR revenue collection of Rs. 485.60 billion, the sources said, Rs. 215 billion from General Sales Tax, Rs. 156.40 from Income Tax, Rs. 52.80 from central excise duty and Rs. 61.40 from the custom duties were expected, the sources added. "The net relief of Rs. 100 billion has been estimated for the next financial year as a result of the rescheduling of $12.50 billion bilateral loan of the Paris Club debt swap of $1 billion and $1 billion waver sanctioned by the United States," the source said. As compared to Rs. 392.2 billion allocated to serve the foreign debt from this fiscal year, for the next financial year (2002-03), Rs. 190 billion are expected to be allocated. "Although yet the final estimates for the proposed defence budget for the next fiscal were not finalized, yet it is believed that it might be in between Rs. 145 to 150 billion, possibly Rs. 25 billion more, compared to the previous allocations on this count," the source said.
From whatever details are available so far, it is not difficult to conclude that the coming budget too is not going to provide any relief to the common man. It may be business friendly as has been repeatedly assured by the Finance Minister but there is no hope that it would be poor and common man friendly. As in the past it is going to add to the miseries of the common man and fixed income group in the form of GST on edible oil etc and further increase in the prices of utilities. This is a fact that despite all rhetoric and tall claims of improvement in economy, the fixed income group, salaried class and the common man has received no relief. Instead they have been burdened with constant periodical doze of hike in the prices of utilities with its adverse effects on cost of living. Electricity tariff has been raised by over half of dozen times and gas and petroleum products on over five accessions since this government took over in 1999. In May 2002 alone the prices of electricity and petroleum products were revised upward twice. Now there are reports that the prices of oil, gas, electricity, telephone are likely to go up by 5 to 20 per cent in the next budget.
The reason for all the ills and curses afflicting Pakistan lies only in one fact and that is corruption and mis-governance. Why it is that the government is not able to meet the target of revenue collection, it is a fact known from top to bottom in the government hierarchy that most of the taxes go to the private coffers of the tax collectors. Late Dr. Mahboobul Haq a former finance minister, is reported to have said in the eighties that there is a leakage of Rs. 40 billion in government revenues per year and now that leakage is estimated to be around Rs. 100 billion or so. That being so, where lies the sanctity of our budget.
The framers of budget should not only devote their energy in manipulating the jugglery of figures but also address themselves to the task of eliminating the parallel black economy, create circumstances and situation where people do not have to go to parallel system.
While preparing the budget, functionaries involved should ensure the following rules of conduct: 1. That there should be absolute secrecy of the budget. 2. That the government should not raise the price of commodities in order to raise the quantum of the budget. 3. Adopt measures to enhance the GDP growth. Our present growth rate which is about 3.5% is the lowest in the last two decades. 4. Eliminate budget deficit on war footing and make it transparent for the nation. 5. Reveal the names of bank defaulters and the quantum of loans and the recovery that has been made for the confidence-building of the nation in budgets. Why it is that the government has to revise time and again the revenue targets. Is it the inefficiency of the government or is it the inefficiency of the collectors, the nation would be very much interested to know this abject failure.