This is apropos an op-ed “A stagflationary federal budget” carried by the newspaper yesterday. The writer, Dr Omer Javed, has explained the word ‘stagflation’ as “a situation when economic growth is stagnating, and inflation is also increasing. Growth requires increase in domestic production, which, in turn, needs investment”.
That the writer is spot on is a fact. Having said that, I would like to state that the budget is in fact constitutes a huge challenge to the incumbent government mainly because of the fact that it envisages, among other things, a nearly Rs 13 trillion tax collection target for the fiscal year 2024-25.
In other words, it will be nearly 40 percent higher than the outgoing fiscal year’s target. In my view, the country’s taxation machinery will find it extremely difficult to attain this target owing to a variety of reasons.
One of the reasons is a pretty modest growth rate that the government has set for the next fiscal year. Only a higher economic growth can help the Federal Board of Revenue (FBR) meet its tax collection target in an effective and meaningful manner.
Hence the need for revisiting the growth target in order to raising it to at least 5 percent of GDP.
Sana Rahman (Karachi)
Copyright Business Recorder, 2024
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