KARACHI, June 5: Although the budget speech of the spirited third generation politician Omer Ayub was loaded with populist overtones, it concealed more than what it revealed. On the face of it the budget 2006-7, which is 19.7 per cent heftier than the last year’s with Rs1,315 billion outlay, sounded to be people-oriented in contrast to last few budgets of the Musharraf-Aziz government that clearly provided more incentives to the privileged.
Minister of State for Finance Omar Ayub Khan, who is a grandson of Field Marshal Ayub Khan and son of Gohar Ayub Khan, opted not to present tax proposals with the budget speech that would have clarified the sources of additional revenue that the government will need to meet its budget commitments. The honourable minister did not feel any compulsion to explain this deviation.
With terrorist strikes at measured intervals and volatile situation in both Waziristan and Balochistan, the government has not particularly been very comfortable politically. With elections on the agenda already, it could ill-afford the perception of an elitist government doing little to address the plight of the masses. A few days ago, therefore, the president himself promised relief to the poorer sections in the budget 2006-7.
Besides, the development partners (World Bank, IMF and ADB) and autonomous bodies, e.g. SBP and the media, have been critical of the economic policies that were termed ‘exclusionist’ as social indicators failed to show a matching improvement with GDP growth rate. It was taken to be an indication that the benefits of growth have not been equitably shared and the inter-class and inter-provincial disparity is on the rise.
The inflation numbers, milk, meat, sugar and cement price scams mounted further pressure on the government despite many favourable macro indicators.
Some of the measures that are targeted to provide relief to the deserving include subsidy on pulses and their availability on controlled rate from utility stores all over the country. A raise has been announced in the minimum wage of workers from Rs3,000 to Rs4,000, the raise in the limit to qualify for the share in the two per cent workers profit participation fund (WPPF) from 6,000 to 12,000. The limit for grants from workers welfare fund for dependents of workers has also been increased.
For the farming community many incentives were announced like exemption from custom duty on imports of agri-equipment, continuation of subsidy on fertiliser etc. The exemption limit for income tax has also been raised from 100,000 to 150,000.
The raise in the rates of saving schemes announced in the budget would also benefit depositors — many of whom are pensioners. The 15% raise in the salary of government employees will give some fiscal cushion to absorb the impact of inflation.
The health and education package also sound egalitarian. What the honourable minister termed the “employment scheme” seems to be an easy credit scheme for micro business in service sector where probably the government will provide the guarantee. Which financial or government department will offer these loans was not clear.
Another remark of the minister that merit attention is his claim that the government has decided to do away with exemptions in the income tax that would be taxed irrespective of the source. The minister in this regard mentioned earnings of high profile lawyers, doctors, architects, etc. He, however, did not mention agriculturist in this regard. The minister did not elaborate how the government plans to go about it.
One hopes the government will fill in the information gaps at the earliest for the benefit of people and its functionaries. Whether the people actually get what they have been promised only time will tell. The experience so far has not been too pleasant.
