The budget projections presented by the Pakistan Muslim League-Nawaz (PML-N)-led coalition government soon after its formation following May 11 elections is widely being dubbed by the experts and analysts as ‘investment and business friendly’.
This clearly indicates that the outlay of Rs3.5 trillion budget has hardly anything for the people belonging to the under-privileged and low income sections of the society.
The cash-strapped government depended on indirect tax to improve the condition of its kitty by proposing one percent increase in General Sales Tax (GST), raising it from 16 to 17 percent. The regressive budgetary measure will unleash a new wave of indiscriminate price hike for the nation comprising 185 million people. The worst hit will once again be the poor that form the majority of the population.
However, it was promised that the rate of inflation will be kept under single digit, whose targeted rate for FY 2013-14 has been fixed at 9.5 percent.
Unlike the previous government, that announced consecutive increases in salaries for the government employees in each of its budget, the Nawaz-led government decided not to follow this practice. However, it did increase the pension of retired government employees by 10 percent and also raised the minimum pension from Rs3000 to 5000.
What will be welcomed by the people are a few austerity measures that have been proposed in the budget. In this regard, the government seemed to have followed the policy of ‘charity begins at home’. Ishaq Dar proposed to bring down the expenditures of Prime Minister House by 45 percent, which is claimed to result in a national saving of Rs40 billion. There will be a complete ban on purchase of new cars for Prime Minister’s office.
The budget for next fiscal earmarks an amount of Rs75 billion under Income Support Program.
The tax exemption for luxury cars is proposed to be abolished while 1200 cc hybrid cars are being exempted form import duty. A concession of 25 percent has been proposed for 1800-2500 cc cars and 1200-1800 cc cars 50% duty reduction.
The government has allocated Rs185 billion as power subsidy and Rs225 billion for the development of energy sector.
It is to be seen if the Finance Minister’s claim to eliminate the circular debt amounting to more than Rs500 billion in 60 days gets fulfilled.
The budget also proposed to initiate a Prime Minister Laptop scheme while the auction for 3G technology will be held soon.
Ishaq Dar also expressed the government’s commitment to reduce the government borrowing from the central bank.
Do you think the promises made and budgetary measures announced by the newly formed government carry what it takes to steer the country out of the quagmire of current energy crisis and unprecedented inflation? Will the proposed steps put the country’s battered economy on the track of sustained growth?
Mazhar Bughio can be followed on Twitter @mazharbughio