Citizens generally complain that in order to buy the stuff from utility stores one has to stand in unending queues

June 12 - 18, 2006

The historical Rs1.5 trillion federal budget 2006-07 was presented last Monday and as usual the budget this year as well has generated lots of debates across the country.

I listened to the budget speech and got a few people-friendly points, which I need to share with the readers. My contention is not to prove whether the budget is people- friendly or not but to share a few points which I personally believe are excellent steps taken by the government in office. These points are I-provision of subsidy for the relief of the masses, ii- two per cent capital value tax (CVT) on real estate business, iii- substantial allocation for the Public Sector Development Programme, iv- dearness allowance and increase in minimum wages and v- increase in the amount for the tax exemption for the salaried class.

Citizens generally complain that in order to buy the stuff from utility stores one has to stand in unending queues and when the turn of an individual comes, he/she is asked to make a purchase of certain amount (1000 rupees in some instances reported) to get the desired commodity. It has also been observed that the quality of some products is also sub-standard. Well, the decision in the current budget to provide about Rs109 billion or 1.2 per cent of GDP as subsidies and relief is a nice step taken by the authorities provided that the citizens get the desired commodities without standing in the queues for hours and it should also be made sure that the products are as good as the commodities being sold at the general stores. There is no doubt, the utility stores are doing excellent job yet it must be made sure that the number of the stores is sufficient enough for our ever-increasing population. The decision to increase the number of Utility Stores to 1000 should be revised to at least 2000 incase the authorities want the poor and downtrodden citizens to have at least some sigh of relief. The authorities must know that there is no uniform pricing system in our country. The prices of the same products vary from area to area which is the issue to be addressed at the earliest. With Rs 3000, I don't think that one can support his family. Let me give you some figures received from some shopkeepers during my survey regarding the prices of the commodities. To begin with pulses: Moong for Rs64 per kg, Masoor for Rs44 per kg, Channa for Rs40 per kg etc. It is being expected that with the new crop of Channa in the market, the prices of Channa might come down by one rupee per kg. Sugar is still being sold at Rs38 per kg at general stores against Rs27.50 per kg at the Utility Stores. It has become difficult to survive since milk is for Rs30 per litre, curd is for Rs40 per kg, potatoes for Rs18 per kg, wheat flour for Rs13.50 per kg and so on. It is to see how the announced subsidies will impact the prices which rise unabated. One commendable step in the budget I suppose was to constrain the shooting property prices particularly in the large cities namely Islamabad, Karachi, Lahore, Quetta, Peshawar etc. by imposing two per cent capital value tax (CVT) on the value of land measuring 500 yards. Since the real estate business has been brought under the tax net, it might help the property prices stabilize and this benefit would pass on to the masses. Some reliable sources quote that the property prices soared by over 300% over the period of last three years in Karachi which has made it impossible particularly for the salaried class to even think of owing a house today or tomorrow even if the financing is available through financial institutions. One of the major issues in the property business I believe is huge investment made by big investors which has gone unchecked. The levy of CVT would off course curb this phenomenon and there would be transparent buying in the sector.

Infrastructural development is always crucial for the development of a country. One of the contemporary examples of superb infrastructure in the world is that of Malaysia which has attracted the world attention. Since we have been trying to attract foreign investment which so far has not been very fruitful as it should have been, we need to develop our infrastructure and look at the taxes which the investors have to pay. We charge huge corporate tax (35%) which is perhaps the major deterrent in attracting FDI. However, better infrastructure always helps in getting investors. The budget allocation of Rs415 billion for the Public Sector Development Programme, which focuses on infrastructure development, would be quite vital in this regard.

Though the economic conditions of our country are improving with good pace indicating that economic growth last year was 8.6 percent and this year it is around 6.6 percent, yet we must remember that there is around 24% population living under the poverty line. The recent budget has brought very good news for the employees who used to get just Rs3, 000 per month with a family to support in this era of rising inflation. Minimum wages have been increased to Rs 4,000 from Rs3, 000. An increase of 25 percent would help the downtrodden in meeting their daily demands. Along with this 15 per cent dearness allowance would be paid to the government employees and also tax exemption for salaried class has been increased from Rs100, 000 to Rs150, 000. All these decisions can be termed people-oriented decisions for which the poor class will get the relief. It must be made sure that it is not only the government employees who would get the raise in salary. There are thousands of workers in the private sector who should also be the recipients of such benefits and for this the private sector should follow the government's steps and increase salaries of their employees as announced in the federal budget.