By Sardar Khan Niazi
The upcoming budget and the deliberations on it are, in a sense, quite tedious and unpleasant. Because the budget is only a description of the government’s revenue and spending, one cannot anticipate it will make any major alterations to the economic edifice.
On every occasion, the same kind of budget is ready with a somewhat bigger amount than the last occasion, a smaller amount is allocated in some sectors while an additional amount is in others, subject to the priorities set by the policymakers who are habitually influenced by the pressure, urging and demands of many authoritative individuals, institutions, companies, organizations, etc.
Through the process of analyzing the budget, one can understand the political economy of resource collection and distribution by the state and its impact on people’s lives and sources of revenue.
The debate and analysis of the budget are imperative, but to make it work, one needs to change the attention from extent, progression, shortfall, etc. to the distributional features of the budget. In this way, we can understand how much money the government is collecting from which segment of society, and how the collected money is going to be spent for the well-being of which segment.
If we examine the government’s revenue-gathering plan under the proposed budget for the 2023-24 fiscal year, it becomes evident that, as always, the government is relying habitually on indirect taxes to escalate revenue, which will put a burden more inflationary on the people who are already suffering from high inflation.
On the other hand, in developed countries, a bigger percentage of the total tax revenue is gathered through direct taxes. In our country, a major percentage of tax is collected via numerous duties on essential goods. As a result, pressure increases on relatively low-income people.
In order to meet the budget deficit, foreign loans are taken from friendly countries, and a lot of money is borrowed from domestic sources. While benefits from these loans in times of economic crisis are debatable, the load is sure to be borne by the public.
It is not made clear how much of these funds are going to be spent for the common people’s benefit, and how much to support the vested interests.
Even though there is a surge in indirect taxes, allocations for the direct benefits are on the decrease. It is quite evident from the declining proportion of budget allocations for agriculture, health, education, and social safety nets. A good percentage of the country’s total GDP should be spent on education, but it is already small and is still declining.
The allocation for the power and energy sector has increased. However, the increased allocation is mainly for the power sector; the budget for the energy sector’s development facing reduction is not enough to solve the current energy crisis.
As a result, the energy sector’s import dependency is unlikely to see a reduction, and the cycle of paying capacity charges by leaving the power plants idle due to fuel shortage will continue.
In the midst of the ongoing economic crisis, where allocation for social safety nets like BISP, PBM, EOBI, and WWF needed to be increased, it has seen a decrease as a proportion of the budget and GDP. There are already questions as to what percentage of this allocated money actually reaches the poor.
An important factor is political uncertainty. This was supposed to be an election year, but the government and the ECP combined not only to avoid holding elections to two dissolved provincial assemblies but also the remaining elections on time.
All we can do is pray that inflation does not get further out of control. It is already close to becoming hyperinflation.
