Walking a Tight-Rope
Universal opinion has variously labelled Orientals as excitable or patient, given their economic circumstances South Asians have much to be excited against, yet year after year they receive the bad news in their respective Annual Budgets with what can only be described as studied calm. One supposes that having braced oneself for the worst, the lowered quantum of bad news is taken conversely (or perversely) as good news. In the respect of economic circumstances, the lot of the average Pakistani is better than that of his/her less fortunate neighbours. For this dubious pleasure, credit cannot be claimed by any mortal, Divine Providence having made Pakistan self-sufficient (or almost so) in the main human-requirement areas of food, shelter and clothing. Every successive Annual Budget has managed to increasingly cramp the lifestyle of the average Pakistani but in all fairness this is much more due to external circumstances than due to domestic inadequacies. Our problem stems from a singular lack of applying imagination to the concept of Revenue gathering coupled with the necessity for wholesale reform of the system. The Federal Budget remains mostly the same, making the poor poorer and encompassing a greater number of the hapless middle class into the “poor” category, it does manage to make a small coterie of rich people much richer. The worst hit are the better-life aspirants of the wretched middle class, already bearing the awesome burden of increasing inflationary pressures on hearth and home. While life goes on and the average Pakistani learns to be stoic, the rulers must not become complacent that the streets will never resort to wide-scale protest, to quote John Dryden, “Beware the Fury of the Patient Man”, unquote.
Sartaj Aziz is a man of great integrity, his presentation of the Budget was forthright and honest as much as domestic politics and the vested pressure of special interest lobbies would allow him. The Opposition may have rightly claimed that there was a deliberate jugglery of facts and figures but that was also true when they were in power, a combination of last minute changes and resource constraints could have led to certain genuine mistakes. The Finance Minister of the Islamic Republic of Pakistan is always a man under pressure, like Professor Stephen Leacock’s fictional hero, in presenting his proposals he is apt to jump on his horse and gallop off in all directions. Unlike most of his predecessors, some of whom were either intellectually dishonest and/or flagrantly corrupt, Sartaj Aziz comes across as much more deserving incumbent of a post where incorruptibility must be the hallmark. That he has managed to cope in the prevailing economic situation is an almost impossible feat, a measure of the man’s inherent ability.
The delivery of the Budget speech did not become an occasion for Opposition tantrums, to the credit of Ms Benazir and a measure of the Opposition’s growing maturity. The studied calm of the Opposition in the face of contrived provocation has obtained for them a tremendous plus point in the esteem of the intelligentsia, the growing realization among a majority of the politicians that instead of being used against each other, they would be better off sorting out their problems through constant dialogue, public and private. In any case, no one could play around with two vital statistics, the allocations for “Debt Servicing” at an awesome Rs 93.175 billion and “Defence Expenditures” at Rs 82.152 billion, a cumulative total of Rs 175.322 billion, leaving a surplus of ONLY Rs 3.277 billion in the NET Federal Revenue of Rs 178.604 billion. To meet the other Federal Expenditures of Rs 43.487 billion approximately such as General Administration (Rs 10.775 billion), Law and Order (Rs 4.284 billion), Community Services (Rs 3.540 billion), Social Services (Rs 6.769 billion), Economic Services (Rs 1.326 billion), Subsidies (Rs 5.049 billion), Grants to AJK, Railways and other (Rs 9.236 billion) and the “Unallocable” (??) (Rs 2.507 billion) the Federal Government has a Revenue Account Deficit of Rs 40.211 billion.
As usual the reliance to raise the Federal Gross Revenue of Rs 243.458 billion has been on Tax Revenue (Rs 160.541 billion), Non-Tax Revenue (Rs 65.722 billion) and Surcharge on Natural Gas and Petroleum (Rs 17.194 billion). In the Tax Revenues, indirect taxes contribute Rs 130.301 billion while direct taxes will raise only Rs 30.240 billion (less than 20%). The share of the Province in the Taxes is given at Rs 64.853 billion, bringing the net Federal Revenue down to Rs 178.604 billion. From External Resources (Project And Non-Project Aid), the Government of Pakistan (GoP) has a commitment of Rs 49.600 billion, with the Development Expenditure (PSDP) estimated at Rs 74.099 billion including Federal Government (Rs 54.889 billion), Provincial ADPs at Rs 17.600 billion and the Social Action Plan (SAP) at
Rs 1.6 billion. There is thus a huge budget deficit and the new tax proposals only contain contingencies for Rs 19.5 billion. The budgetary gap will thus have to be covered by bank and non-bank borrowings.
The Prime Minister in his first post-Budget comments to the Press has called it a welfare budget while the Leader of the Opposition, Ms Benazir Bhutto, has deemed it to be a Businessman’s Budget. Both the comments and the reaction are to be expected, essentially both are true to various extents. The Government has continued the effort to increase the allocations for the social sector while keeping in mind its own economic reforms and the need to encourage entrepreneurs to keep on investing in the economy. While the socio-economic measures seem to be on the right track, the common man will not get the same commensurate benefits as the businessmen, for whom rationalisation and consolidation will help in bringing more business from the ambit of the parallel economy into the mainstream where GoP would be able to ultimately collect on much needed tax revenues. If GoP were to give the responsibility of collecting the entire Direct Tax of Rs 30.240 billion to the Provinces, it is a safe bet that the Provinces will double the take. The Federal Government will thus not have to give a share of indirect taxes to the Provinces. GoP must realise that most of the loss in the collection of revenues is due to over centralisation, let the Provinces have to go at collecting direct taxes from those who reside in that Province.
Given the major economic reforms enacted and implemented by the Nawaz Sharif regime, one expected that the Finance Minister would submit proposals for a complete reform of the Budget but in the non-conducive political climate, it was understandable that only a few innovative schemes for garnering more taxes were proposed. While the Government has yet to touch the sacred Agriculture cow, there seems to be a definite move to touch the safe havens of black money in the form of real estate and motor cars. There is also an attempt to link the usage of electricity with taxation. These proposals should not be of any concern to the common man since it would effect the upper middle class and upwards. Still there is no real attempt to go exclusively after the individual rich, in fact reduction of the various customs duties, etc is business-enhancement oriented in keeping with the “opening of bureaucratic doors” philosophy of the Nawaz Sharif Government. In the circumstances prevailing one must thank God that the expected tax increases in prices of POL, electricity, water, gas, etc has not taken place but one hopes that Sartaj Aziz will not damage his credibility by resorting to a creeping mini-Budget down the line. In the face of expecting the worst the taxation proposals were taken to be mild, given the economic climate and expectations thereof, Sartaj Aziz’s proposals comes across relatively as a success of sorts for the incumbent government.
We have a group of people in this country who cannot seem to comprehend (deliberately or otherwise) the danger that India poses to Pakistan. Numerically speaking India’s Armed Forces are several times the size of Pakistan. These bleeding hearts refuse to accept the brutality being inflicted on the people of Kashmir and Punjab. One wishes that the Bodos, Manipuris, Gurkhas, Assamese Nayaz, Mizos etc were better placed geographically for world media attention but maybe a seminar can be organised by the liberal-minded to show India’s democracy in action. India is bent upon destabilising Pakistan, particularly in Sindh. While the allocation for Defence is labelled as out-size in the Federal Budget, Indian commensurate disclosed expenditure is for nine times that amount. Theoretically it is all very well to talk about mutually balanced reduction in the quantum of conventional forces and talk about Leadership Conferences, but when six neighbours have no grouse with each other except with one big and common neighbour India, it is much more reasonable and pragmatic to ask the leaders of that particular nation to engage in a Soul-Searching Conference among themselves as to where their Akhund Bharat (a la Kautalya) dream will take them (and the region). In the meantime the Pakistan Armed Forces would be well advised to keep its powder dry.
One respects Javed Jabbar’s integrity, otherwise one would be persuaded that RAW must have put him up to this obvious filibuster to divert international and domestic public opinion from Kashmir and Punjab. JJ may be honest about his many varying political pursuits, in the circumstances one can label it as another one of his intermittent crusades, misplaced at this time.
There is no doubt that the Opposition is going to skewer the Ruling Party’s Budgetary proposals when the Great Debate starts, that is their responsibility to the electorate as much as it is the Government’s job to defend their position. One hopes that logic and common sense will be applied to effect, delivered with gusto but not exceeding Parliamentary decorum. If the two sides could show as much unanimity and alacrity as they did in proposing, debating and voting into law their perks (and then thankfully undoing it), we will be well along the road to institutionalising democracy. In the meantime they would be well-advised to beware of the fine hand that having struck once prepares to strike again (with apologies to Omar Khayyam) and can undo both the major parties. Those people act in the name of democracy but really because of their own selfish, individually corrupt, vested interest that has done much to bring this resource-rich country to such a bad economic state that a man of such intellectual integrity as the present Finance Minister has to play hop-skotch with Budgetary figures.
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