In his preamble to the Budget, Mr Piracha, the finance minister, said he was “grateful to Almighty Allah for the privilege of presenting the budget”. Of course, he didn’t mean a word of it and would probably have played truant that day if the Headmistress hadn’t put her foot down. In the event, despite the opposition’s predictable negativism and its determination to fight ‘over every clause’ in the forthcoming parliamentary debate, is it such a terrible budget, all things considered?
That phrase — all things considered — is crucial to any reasoned perspective on the budget. How does one go about squaring the insatiable appetite of the armed forces (allocation up by 19%) and foreign creditors (Rs 50 billion in debt payments) with the urgent demands of the destitute social sectors? The most sensible way, under the political circumstances, is by increasing the size of the cake. But the size of the cake is circumscribed by the bankruptcy of past economic practices and a flourishing ‘underground’ economy. Enlarge the tax net, you say? Easier said than done, given a corrupt tax-collecting bureaucracy and a business class that has neglected its responsibilities to society. Rely on direct taxation, cut subsidies instead? And thereby further alienate the impoverished masses, no, thank you!
For every budgetary palliative there are fairly predictable adverse reactions from someone or the other. In the end, it’s sadly never more than a nuts and bolts job which entails some marginal juggling of financial means and political ends.
Let us be positive. We welcome taxes that fall on those who can afford to trim their waistlines. If anything, the list should have been more extensive. Salary concessions to workers and government employees will barely keep pace with inflation. Financial incentives to education and health services in the private sector are the least we can expect. The self-assessment income tax scheme should make small businessmen happy and corrupt tax collectors despondent, which is as it should be. It is also sound to bring in a foreign company to oversee Customs evaluation procedures. It will surely clip many underhand practices which amount to tax-evasion and smuggling. Of course, the reduction in the duty on newsprint is most welcome. The press can only be free so long as it is strong. Its independence cannot be bargained away at the alter of government beneficence.
There is no justification, however, for across-the board and substantial increases in the cost of electricity, gas, water, service charges on passports, radios, TV, telephones etc. If the budget makers had done their homework, they could have produced a progressive structure which discriminates between consumers. Similarly, it is incomprehensible why the PM has backtracked on her public commitment to withdraw the 5% licence fee on books.
On privatisation, selling off stocks of profitable public sector companies is an eyewash without any positive long-term effects on investment. Again, confusion over the status of the GST was totally unnecessary. Mr Piracha and Mr Akhund have only made matters worse by contradicting each other.
Because the government threatened a tough budget, we are now left to speculate about the fate of this comparatively soft offering. Given its present political dilemmas, it is all too obvious that another mini-budget looms on the not too distant horizon, just as soon as the fallout of this one has been safely contained.
Spreading political risks over a period may make eminent sense. However, when this logic spills over to the budget it mocks the very concept of economic planning, in which certainty plays a major role, and reduces the budgetary exercise to a disagreeable farce. If the financial health of this country is going to be treated in the same cavalier fashion in which we conduct politics, we are truly doomed.