ISLAMABAD, June 18: The social indicators envisaged to be achieved through the budget 2004-05 are unlikely to materialize because of unrealistic assumptions , Dr Shaukat Ali Kazmi, former chief economist of the Planning Commission, told a meeting of Islamabad Cultural Forum here on Friday.

One of the assumptions was that employment would be generated and the problem of increasing poverty addressed through tax concessions for the housing and textile industry. Both poverty and unemployed had risen further during the outgoing year, he observed.

Dr Kazmi instanced the 10 per cent reduction in tax on paints and varnishes. Constituting only 5 percent of the total cost of construction, its effect would be neutral in terms of boosting the construction industry, he argued.

He also dismissed the assumptions about trickle-down factor and increase in exports as possible contributors to employment, pointing out that textiles, dominating the exports, involved high technology which was labour-displacing and not labour-intensive.

The budget is tilted towards the rich by dint of its measures that would skew the income distribution through the kind of incentives provided in the budget for stimulating production and industrialisation, Dr Kazmi thought.

In Pakistan, he said, it were the non-economic factors which impinged on the realisation of the assumptions underlying budgetary expectations. He listed among these the law and order situation, political instability, the weather and regional peace in the context of the continued violence in Afghanistan and the uncertainty over- shadowing the normalisation process with India.

The veteran economist was critical of the finance minister's intention to sever the relationship with the IMF. He wondered as to who would monitor the kind of policies that had provided in the past the grounds for the role of IMF such as balance of payments crunch faced by this country.

Responding to a question, he argued that without IMF's oversight over the financial policies of the government, the military budget might have been more than Rs200 billion.

Asked about the implications of 7 per cent growth in military budget, Dr Kazmi said the real increase came to nearly 21 per cent when compared to the budgetary allocation of Rs160 billion in 2003-04.

The budgetary outlay of Rs193 million for 2004-05 denoted 7 percent increase really in relation to the real expenditure of Rs180 billion in the out-going year, he added.