KARACHI: Budget must bring down prices, say experts
By Our Reporter
KARACHI, May 30: Economic experts on Monday questioned the government’s claim of macro economic gains and pointed out that if the budget was unable to bring down the prices of essential items, it would not be reflective of the common man’s aspirations. These views were expressed at the pre-budget seminar organized by the Economic Coordination Committee of the Pakistan People’s Party.
Eminent economist Dr Qaiser Bengali, in his keynote address, said that free market was heartless ideology. “Any budget that does not reduce price of flour by Rs2, that does not reduce the transport fare by 50 per cent is not in the interest of the people,” said Mr Bengali adding that despite 8.3 per cent GDP growth its effect did not trickle down to the common man.
There was a great surge in unemployment in both formal and informal sectors, rise in poverty, inequality and suicide incidents, he said alleging that the government statistics were “manufactured”.
Referring to the government claim of above 8.3 per cent growth rate in the economy, he maintained that if that was true there should have more job opportunities for at least four million people, but that was not the case.
Mr Bengali discussed the factors that led to increase in inflation, growing inequality between rich and the poor. He raised the question whether the inflation was demand or supply drive and said that it was due to availability of debt money and hinted at the negative impact on the economy once the debt driven default crept in.
He feared that some smaller banks might fall in the manner in which the Karachi Stock Exchange crashed. He also disputed the government’s claim of increase in foreign direct investment and said it was mere change of ownership.
Former minister V.A. Jaffery refuted the military regime’s allegations that democratic governments had mismanaged the economy, plundered public funds and brought the country to a state of bankruptcy and that Pakistan was on the verge of becoming a failed state. He said that smooth functioning of the political system in the 90s was impeded by frequent dismissal of democratically elected governments under the Eighth Amendment. Even when the elected governments were in power, there were policy areas excluded from their authority.
Mr Jaffery pointed out that the present government had been euphoric about improvements in the macro economic indicators such as reduction in deficit and accumulation of foreign exchange reserves. However, he said that the issue which the government avoided facing was how much of improvement was due to extraordinary factors, such as the massive external assistance and other benefits that accrue to the government’s participation in the US-led war on terrorism and to what extent the basic productive strength of the economy had increased.
He said that the exceptional flow of resources was not a secure base for future sustained growth as the extraordinary aid could diminish or even disappear, if political priorities changed, as had happened several times in the country’s short history.
Mr Jaffery said that the change in the US political priorities in the post-9/11 situation had produced a saving of nearly three per cent of the GDP in favour of the military regime. He said it was ironic that the US, which professed to champion the cause of democracy, denied aid to democratic government.
He stressed the need for integrating economic planning with strategic security environment. In other countries, he said defence purchases were debated in the parliament but unfortunately not in Pakistan.
Former senator Syed Qamaruzzaman Shah criticized the government for charging General Sales Tax on eatables, edible oil and making agricultural inputs costly. He said the growers would not charge more for their produce if the cost of their input was reduced. He said that there should be no duty on seeds and agricultural equipment. He was critical of the government policy of levying import duty on the Belarus tractors used in Sindh to provide protection to the home made tractor used in other parts of the country.
PPP information secretary Taj Haider called for completely changing budget priorities and said that unless economic policies were shaped in accordance with the aspirations of the people, resources of the country would remain in control of a few. He contested prime minister’s claim that Pakistan had broken the begging bowl of the IMF and the World Bank.
Sabihuddin Ghausi was critical of the political party’s role and said that even if the military rule was replaced by political governments it was not possible to change the scenario as the political parties were also dominated by the feudal lords and the vested interest groups.
Leader of the opposition in Sindh Assembly Nisar Khuhro referred to the budget proposal that his parliamentary party had transmitted to the provincial government and expressed concern of the federal government’s failure to give the new NFC award. He said that Sindh was getting far below its entitlement from the federal divisible pool despite a major contribution towards the exchequer.
