The Federal Budget for the year 2004-05 was rushed through the National Assembly on Thursday, 24th June 2004, three days ahead of schedule amid an uproar as opposition members protesting against insults from some ruling coalition MNAs tore up papers and walked out of the house.
Prime Minister linked the opposition's action to the inaugural session of the National Security Council while opposition accused the government of provoking the incident.
Considering the previous record of the parliament, these kinds of accusations were not new. The presenting and passing of the budget, though a serious matter for the common man and the nation because of its impact on the economy and the people, has never been taken seriously by the parliament.
The elected representatives of the country are either too much engrossed in hurling accusations and point scoring or incapable of entering into a healthy debate about the pros and cons of budgetary measures.
Some are heard even saying that the budget is just a jugglery of figures without realising that figures reflect the quantitative impact of fiscal measures and policies and are an integral part of the budget.
How the government, or for that matter any other institution, can be run without proper accounting boggles the mind.
However, such an opening was merely a diversion and rather unintentional. The real purpose of this piece is to shed some light on the veracity of certain notions generally associated with the budget.
One of the most emotional moment while unveiling the budget comes at a point when the figures for defence expenditures are announced.
These figures are provided by the high command of the armed forces to be accommodated in the budget without any explanation and the Finance Minister has no role to play except to emphasise in his budget speech that any further requirements in this regard would be met at all costs.
Clapping follows to emphasise the point and in the subsequent proceedings the same theme is repeated even by the opposition members.
An excess expenditure of Rs 20 billion over the budget estimates for 2003-04 was not even whispered by anybody.
This procedure is followed every year so religiously that even a feeble call to discuss the defence figures is interpreted as an act of treason.
Several questions are pertinent in this respect. Defence consumes an overwhelming proportion of the revenues and if such a huge amount is not discussed and debated the purpose of the whole exercise cannot be served properly.
Granted that the amount indicated for the use of armed forces is really required but who is going to ensure that these resources are utilised judiciously and in the most effective manner.
The experience in 1965, 1971 and some subsequent encounters showed that performance of our armed forces was less than desired or expected. It means that either resources asked and provided for in the budget were less than the actual requirements or not utilised in a way so as to yield optimum results. It is thus clear that the whole approach has to be changed by doing something different.
Maybe the experience of other countries would be relevant to fashion new procedures and policies.
More important is, however, the justification of incurring such a huge expenditure which is often defended on the basis of the existence of an enemy on our eastern borders, bent upon maintaining its hold on Kashmir by force and threatening the integrity of Pakistan.
To keep the enemy at bay and win freedom for Kashmiris, the country has to consistently upgrade its defence capabilities, whatever the cost. After all missiles and atom bombs don't come cheap.
This is of course a very valid argument but the problem is that nobody has ever thought or cared about the general sentiment regarding the issue in the country and the sacrifices such a posture entails specially when it is clear that Kashmir problem can never be resolved by force. If half the money could be diverted from defence to social sectors and building of infrastructure, most of country's economic problems could be solved.
A high percentage of population wants better roads, better schools, better hospitals, better employment opportunities and above all better security for their life and property. And this cannot be had if we continue to devote major part of our revenue receipts to defence.
For poor people, this is not a choice between guns and butter but a choice between guns and the very basic necessities like chapatis to fill their empty stomachs and medicines for their sick children. Butter, under any circumstances, is totally out of their reach.
The purpose is not to argue for or against the allocation of huge amount for defence but only to stress the point that the fundamental decision in this regard should reflect the majority view and not imposed by the minority sitting in their comfortable surroundings and least bothered about the adverse impact of this rigid stand on the poor people. Best of luck for the recent initiatives to resolve all the outstanding issues between India and Pakistan but they have essentially come from sudden out bursting of public opinion in both countries to shun confrontation for a better future.
This is perhaps the only way to force the leadership to change the course and settle major issues peacefully to contain defence expenditures within reasonable limits and release resources for the welfare of the people.
Anyway, the decision on defence spending, either way, should be based on a clear understanding about the sacrifice being made by the nation and the expected returns from pursuing a confrontational policy.
Apart from defence, drums are always beaten about the importance of agriculture and how Pakistan could be turned into heaven if only more resources are made available for this sector.
Past regimes are blamed for their short-sighted view and the neglect of this sector.
Present government has gone even a step further by announcing a package of Rs 68 billion a few days before the budget in order to force the issue.
Support prices of major agricultural commodities are almost increased every year, more credit is promised at lower rates and some other incentives are announced. It looks a good idea on paper but nobody seems to analyse its economic merit.
Resources, as is well known, are limited and they should be put to best uses in order to get optimal returns.
Government should not be guided by slogans raised by powerful lobbies but seek advice of the professionals, think coolly and then deploy resources in accordance with the socio-economic objectives of the country.
Even within agriculture, we are sacrificing efficiency gains by arbitrarily fixing support prices of some major crops. It is well known that the country could gain if international price signals are allowed to determine the preferences of agriculturists in deciding about the area under various crops.
According to most analysts, Pakistan is losing by producing sugar because it would be more economical to produce surplus cotton and certain other crops and import sugar from the international market but the government's interference does not allow the market forces to play their role.
Similarly, why bank credit should be subsidised and administratively directed to sectors where its return and recovery rate is comparatively low.
The policies of the government are indirectly leading to a situation where factors of production are not used in an optimal fashion, consumers at large have to pay high prices and the commodities produced cannot be exported without subsidies.
Energy prices in Pakistan are hitting the consumers hard and expectations are raised for their reduction every year at the time of the budget. No serious effort, however, is made to see why we find ourselves in such a condition and how it could be improved.
In fact, such a situation is of our own making and punishes the honest consumers heavily. Crooked elements of society steal electricity through kundas and other devices in connivance with the relevant staff, people in certain areas of the country don't pay up their bills, most of the government departments are defaulters and certain parties raise hue and cry when some dams are planned for production of hydel electricity which is much cheaper than thermal and from other sources. It may be noted that ratio between hydel and thermal which was 70 percent and 30 percent in 1960 has changed to 34.7 percent and 65.3 percent by 2003-04 respectively.
To expect a major reduction in electricity tariff in such circumstances would only be foolhardy. Even the present tariffs are not enough to make Wapda and KESC self-sufficient.
A huge amount of subsidy has to be provided to them from the budget every year to keep them afloat but the whole system smacks of inequity. Honest consumers or tax payers are made to pay for the services which they have not consumed.
Thankfully, the rates in Faisalabad, Lahore and Multan regions have recently been lowered due to major reduction in line losses and improvement in recovery rates. If such an improvement does not happen in other regions, situation cannot be changed for the better.
A perfect understanding between the treasury and opposition benches on the need to raise the salaries of government servants is always found at the budget time. Inflation, high salaries in other countries and widespread corruption in civil service to supplement their meagre incomes are cited as the reasons to favour such a proposal while nobody seems to oppose it on any ground with the result that this class manages to get a reasonable increase in their emoluments every few years.
However, seen from any angle, their economic condition is not as miserable as propagated. In fact, after landlords, industrialists and big businessmen, this class is the most pampered one in the country enjoying all kinds of perks and privileges besides tainted money which most members of this class manage to get in some way or the other.
Also, most of them above a certain category are nominated for training courses, visits abroad etc which they generally utilise for meeting friends and relatives and rest and recreation.
The respect government servants get in our society and the effectiveness of their official position to get private advantage in all the government offices is an added advantage.
Compared to them, the unorganised labour in the private sector has no clout and is required to work almost the whole day without getting any fringe benefits like overtime, pension, normal leave and medical facilities.
Of course, highly educated people belonging to the poor families and without access to the right connections are the worst sufferers in our society because they cannot get jobs anywhere.
Unfortunately, however, there is no lobby to back them up and they remain the unfortunate victims of a society which is least bothered about their plight.
In any case, thousands of candidates would not apply for few vacancies if government jobs were so unattractive.
The above list is in no way complete. You could pick any item from the budget and think about the distortions and misperceptions fed into our psyche.
There is, therefore, a dire need to come out of one's shell and start analysing pros and cons of all the policy matters related to the fiscal field with an open mind because straight thinking at this point of time could affect the prospects of our future generations. At least, no harm could be done by articulating alternative views.
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