Now that emotional outbursts against and ballyhoo of acclaims in favour have subsided, it is time to look at the 2004-2005 Budget dispassionately. People expect the finance ministers to be magicians to waive an abracadabra wand and solve complex financial problems of the country by pulling out a rabbit of cornucopia out of the budget hat. But the budget is a painstaking exercise to balance the state's actual and projected income with the recurring expenses and anticipated increases.
While everyone wants the government to spend more on development, social welfare i.e. education, health etc., no one wants to pay Income Tax at a higher rate. To avoid the kitty scrapping the bottom, the government has no alternative but to resort to alternate sources of revenue. Invariably the blow falls on indirect taxes impacting the common man which becomes an impediment in the drive for poverty alleviation and provides ammunition to the critics to bombard the budget.
Coming to the nitty-gritty of the budget, proper it is growth oriented to encourage domestic investment so as to forestall absence of Foreign Direct Investment (FDI) in the near future. However, much you make it attractive no foreign investor in his senses would contemplate coming to Pakistan to face the ongoing bomb blasts, assassinations, strikes and violence.
During the preceding year industrial expansion has been spectacular (13.6%) to help us achieve GDP growth of over 6% despite lacklustre performance in the agriculture sector. With incentives provided in the budget it is likely to excel further and contribute towards fighting unemployment.
The Finance Minister in office is singled out to bear the brunt of criticism as soon as the budget is announced although it is not a solo exercise as many economic experts and planners participate in its preparation. Shaukat Aziz is not a politician; neither is he a reputed economist. He is a proficient and successful commercial international banker who has sacrificed a high paying professional career to serve Pakistan. Instead of appreciating his patriotism the opposition distrust him as an imported talent - possibly an "American agent". No sooner the budget was declared the uncharitable critics pulled out their knives to castigate him.
Admitted that the budget does not satisfy all shades of opinion but credit must be given where it is due. An average Pakistani who grudgingly parts with 21/2% of his savings by way of Zakat, believes that he has done his duty to the poor and now it is upto the government to abolish poverty overnight. Thanks to economic mismanagement of the past many years, more than 50% of our population can be categorised as poor while 35% live below subsistence level, and unchecked population growth is adding to the endemic problem of poverty. Recognising that inflation and price rise make life difficult for the fixed income group, the budget has given 15% rise in salaries of government employees and pensioners. It is, however, strange to see that wage award to improve the emoluments of newspaper employees is seen by the owners as "Suppression of Press Freedom" and an advertisement campaign has been launched to condemn the government. Likewise CVT of just 0.1% on share transactions is considered a death blow to the thriving Stock Exchange.
Raising GDP growth to 6.4%, bringing deficit below 4%, balance of payment to 12 billion and trend of reduction in national debt is no small achievement and augurs well for the future. Till date defence expenditure was a holy cow. It is, therefore, a healthy sign that despite the President being a military man, criticism is permitted on this score. With Kashmir dispute not yet resolved and internal security risks on the increase, we do need a strong defence force which justifies marginal increase in expenditure.
Pakistan's economy has always been elitist because rulers belonged to affluent class giving only lip sympathy to social welfare. Shaukat Aziz should be credited with changing the trend. His emphasis on macro-economic corrections has enabled Pakistan to overcome IMF restraints and manage our economy with a degree of freedom. Aiming at 8% GDP growth is rather ambitious but our economy is expanding on the right lines and in the long run the benefits would trickle down to the under privileged sector of our society.