ISLAMABAD: The Institute of Policy Studies (IPS) has said that Pakistan’s indigenous resources are only able to fulfill the country’s debt financing, defence and civil administration needs as depicted in the fiscal budget. It said that all further development initiatives will have to rely on borrowed money as budget is devoid of any vision for economic growth.
The view came out of a session ‘Federal Budget 2015-16: A Review’, held at IPS here on Thursday. The session was addressed by chairman of the Institute and ex-senator, Professor Khurshid Ahmad, former chief economist government of Pakistan, Fasih Uddin, former secretary Ministry of Water and Power, Mirza Hamid Hasan, taxation expert, Malik M Irfan, director, Riphah Institute of Public Policy, Dr. Rashid Aftab, DG-IPS Khalid Rahman and IPS Lead Coordinator Irfan Shahzad.
Professor Khurshid Ahmad rued on the amount of loans that Pakistan was constantly laden with, stressing that the mitigation of country’s dependence on foreign loans should have been part of the government’s scheme.
Speaking of the tax provisions in the budget, he said that the government did not seem committed in spreading the tax net to the non-tax payers, instead its policies were over-burdening the existing tax payers.
He elaborated his argument with the example of the last household income survey, according to which there were about five million people in the country earning over Rs1.5mn annually, still the number of total tax payers was merely between six to eight lacs. He further backed his claim referring former finance minister Hafeez Sheikh’s statements, according to which the government had a list of over 38 lac people who were millionaires, yet not part of the tax net.
Prof. Khurshid lamented that despite the pre-budget meetings with business community, as well as the parliament’s finance committee, about 80 per cent of their recommendations were not considered. He also directed attention towards various other areas neglected in the budget including agriculture, unemployment, large scale industries, small and medium industries, inflation, price reduction and people relief.
Presenting his analysis on federal budget 2015-16, Fasih Uddin said that though government’s performance was slightly better than the previous year, it was still far away from anything it had promised.
“Except for inflation, all other major targets have been missed,” he lamented.
The analyst evaluated the budget from the economic, social and governance perspectives, questioning the rise in different forms of taxes and reduction in subsidies, which he feared, could have a devastating inflationary impact, hitting mainly upon those with limited incomes.
He deplored that the targets set by the government for 2015-16 were very modest, which indicated that the government was not interested in putting in any great deal of effort for a major economic boost. Even the roadmap or the policy framework to achieve those targets, he lamented, were not defined anywhere.
Overall the speaker felt that the budget was by and large devoid of any long term vision. The document, to him, was lacking creative approach for kick starting any economic activity as well as to foster the much needed inclusive growth.
Hasan preferred to look at the budget with the ‘half-full’ perspective, terming the budget neither pro-rich, nor pro-poor, but rather a modestly balanced one given the limited resources the authorities had to work with.
The speaker said that the government had treated the energy sector among its key priorities and regarded the government’s policy shift towards hydro and solar power as a welcome change. He was however skeptic over the idea of pursuing with two mega-projects of Dasu dam and Diamir Bhasha dam simultaneously, stating that due to country’s limited economic resources, even the completion of one such project would not be short of an achievement.
Hasan also reflected upon the country’s transmission capacity, stating that though the government had understood any power generation projects would be useless without proper dispersal mechanisms, it was yet to realize that the improvement in present transmission lines was equally important. The measures for the theft control as well as to mitigate the circular debt, he stressed, were also needed to be taken.
The expert also deemed that reduction in power subsidy, which was cut down 47% from Rs. 222 billion to Rs. 118 billion, will have severe implications on industries, agriculture and eventually the common household consumer, who will be the final bearer for the production costs, apart from paying extra for his utility bills.
The panelists were unanimous that the federal budget for public sector development programs (PSDP) was not only low, but also infrastructure centric, having even lower share for health and education if compared with the previous year’s allocation. They also criticized the “rusty approach of continuing with a vision-less Benazir Income Support Program (BSIP)” wasting huge amounts without any tangible benefits. “Such programs [as BISP] need to be targeted towards making people self-reliant, not continuously dependent,” expressed one expert.