KARACHI, Oct 27: Current fiscal year's budget needs a fresh look and probably a bit of revamping, because many of the budgetary allocations and sectoral projections for 04-05 have been knocked out in the very first quarter.

Dr Salman Shah, the government adviser on finance has recently said in Lahore that the government would review the economic situation in December indicating that a change in the federal budget 04-05 may be brought about in January.

"Either the government is shy of making changes now in the budget within three months of the presentation or else there is some political consideration which is preventing decision makers to make adjustments in sectoral allocations," a senior business leader and a readymade garment exporter said.

Businessmen, executives in multinationals and retired civil servants are convinced that the government will take up the exercise of budgetary changes in January after the issue of President's uniform is resolved one way or the other. "Changes in 04-05 budget may shake up the market," the businessman said who pointed out that appropriate time for such earth moving decisions is after resolving the political issue. "Why don't you realise that the on-going heated debate on President's uniform has diverted the public attention from rising inflation and falling value of rupee," he said.

In the very first quarter of the current fiscal year, the trade imbalance has widened to $839 million and shows no sign of any let up. It may rise to well over $5 billion by end-June next. The import bill swelled to $4.30bn and may touch $17bn. The oil prices touched peak of $55 a barrel and remain unpredictable. And there is unforeseen demand for import of one million tons of wheat because of bad wheat crop. Urea is being imported and reduced water levels in rivers have affected hydel power generation that warranted import of fuel oil.

A beleaguered government is left with no choice but to provide generous subsidy in wheat trade. Market analyst estimates subsidy on imported wheat at about Rs4 billion. About Rs3 billion subsidies is expected to be given on locally procured wheat on imported urea at the rate of Rs550 a bag of 100 kg. The government has already frozen petroleum prices since May and is said to have taken a hit of Rs20 billion on itself in the first quarter. The Utility Stores Corporation has been dug out of grave to provide 450 items of daily consumption at 5 to 10 per cent less prices than that of the market that too will take considerable amount of subsidy. The Annual Budget Statement of 04-05 gives a figure of Rs82.315 billion sum required and authorised expenditure for "subsidies and miscellaneous expenditure".

The deployment of 70,000 troops in South Waziristan agency and rapid movement in last three months means a pretty big cost which might have to be provided in the budget when it comes up for scrutiny again.

As a consequence of all these economic developments, the value of rupee has declined by four per cent against dollar. So far the difference between the between the inter bank and perk rate remains narrow, the remittances are showing a rise.

"Either the government is shy of doing any adjustments in the 04-05 budget within three months of its presentation or else there are strong political considerations which are weighing quite heavily on decision makers to delay fiscal changes," a top business leader remarked. His views were endorsed by a business executive of a multinational.

Dawn talked to three business leaders, two executives of multinationals a banker and two retired civil servants to share with them their perceptions on the economic scenario that is about to set in and the government's capacity to respond to the future challenges. All these gentlemen shared their views on condition of anonymity for obvious reasons.

There is a consensus that the government will make a budgetary change after January next when the much talked about issue of President's uniform is decided either way.

Businessmen are of the view that the government will take a soft view on fortnight prices fluctuations of petroleum products. These prices are frozen for general public since May this year. A general belief is that the government will correspond market prices with international prices of petroleum products after Eid. "Don't forget when the prices were frozen, the international prices were just $39 a barrel and now it is $55 or may be a little lower," business executive of a multinational said.

He said that the government suffered Rs20 billion loss in revenue in first three months and may endure some more loss for next three months. But this loss is well compensated from increasing revenue from 38 per cent rise in import bill. Imports generate import duty revenue plus the presumptive income tax and sales. The revenue bureaucracy now estimates collection of Rs610 billion revenue in 04-05 as against budgetary projection of Rs580 billion.