June 12, 2006	Monday	Jumadi-ul-Awwal 15, 1427

THE budgetary proposals for 2006-07 are full of tall claims and taller promises. Of course, every government has the legitimate right to score political points while announcing its annual economic balance sheet. But if you turn the event into an election circus, you are only doing disservice to yourself and your economic team which authored the budgetary document.

In fact, the speech writer made Omar Ayub Khan drown some of the welcome relief measures proposed in the 2006-07 budget in an avalanche of pompous declarations, self-serving claims and contrived denigration of an imaginary opposition. And perhaps the speech writer and its presenter succeeded in losing many votes winning none.

Just imagine the extent of pain the millions over millions of jobless and millions over millions of poverty stricken people must have felt when they heard the youthful Omar Ayub Khan asking rather naively: “If the small scale industrial units have increased by the thousands, their number having jumped by 70 per cent, if TV set production has gone up by seven times, if cement production had increased by 72 per cent, if cotton yarn production has gone up by 70 per cent, if motorcycle production has gone up by five times, then who is doing all this work?”

“ I am sorry to say that some people do not want to see any ray of hope in Pakistan. They want to see darkness in this country and report about the darkness. But the brightening glow of progress will ultimately light up their darkened hearts and they will have to accept the success of the Pakistan’s toiling people.” It seems like a statistical story lacking any credibility.

Every one from the top to the bottom in the official hierarchy has been declaring year after year that Pakistan had reached the take-off stage. But at the end of each year we seem to get bogged down further and further in our man- made economic crises.

Go back to all the budget books of the last seven years and you will find almost the same kind of tall claims and taller promises without the country making any meaningful progress on the social and physical infrastructure fronts; and the perpetual shortages of all kinds of goods in an environment of liberal consumer credit makes it impossible to control prices without resort to indiscriminate imports.

And it does not behove those who are sitting in the cabinet along with cartel makers to say that, ”we did not fill our pockets, we filled the national treasure.” Those who are still sitting in the cabinet and could strike again in their self-interest. And who is getting permission to import luxury cars in CKD and CBU conditions at throw away duties?

Perhaps, Omar Ayub Khan was not even born when his grandfather’s 11-year old high and mighty regime was being thrown off its high horse of ‘decade of development’ by an increase of mere 25 paisa in the price of sugar. That could perhaps be one of the reasons why 40 years down the line on Monday last while making an election speech out of the annual budget presentation routine, the youthful grandson did not feel any qualms in taking the nation on a ride on the matter of an almost Rs25 rise in the price of sugar during the seventh year of military-led government.

He was talking about the government’s treasury being full as compared to the empty coffers that rulers of the decade of 1990s had left. And he was promising to use this 9/11 driven bonanza at last for the welfare of the people at large. But why hasn’t this already happened? Even extremely conservative estimates put the total foreign exchange inflows of this government in the last five years at not less than $40 billion including almost half of it from remittances and the rest having been contributed by the US, the many write offs, conversion of a significant part of debt into grants and hefty proceeds from privatization.

During the 11-year military rule of General Zia, at least about $50 billion, all unencumbered, is estimated to have flowed into Pakistan. But when he died in August 1988, there was nothing on the ground to show where all these billions had gone.

Similarly, if you take a deeper look at the economy of the past seven years, you will come to almost the same conclusion. The darkened cities led by Karachi present the most glaring evidence of this extraordinary situation. Between the year 2000 and how a mere 10 per cent of additional power production capacity has been added by the government when the demand has been increasing an annual average of eight per cent.

And why are there shortages of essentials all around forcing the government to use the precious foreign exchange to finance imports to meet these shortages and that too always on an emergency basis? What has happened to the agriculture package announced with so much of fanfare a couple of years back? And to add insult to injury, in the years since 2001, the last year of three-year drought cycle, we have had the best of weather. Still in the outgoing year the agriculture sector is estimated to have grown at an insignificant 2.5 per cent.

In fact, if the performance in the livestock sector had not been artificially inflated, the agri-sector would have shown negative growth. Even. in the manufacturing sector, the growth rate in the current year has been seemingly artificially enhanced by doctoring the estimates in the small-scale sector.

But there are cars and cars all over the country. Roads are jammed with four- and two-wheelers purchased on costly leasing system. Unhindered consumerism, similar to the pattern promoted in the days of Ayub Khan following the Korean War related bonanza is being promoted by the government in which his grandson is the minister state of finance.

Liberal leasing of cars, costly cell phones and other white goods has caused a jump of as much 23 per cent in the growth rates of banks and insurance sector. This has added respectability to the growth rate in the services sector and which, in turn, has made it possible for the government to show a growth rate of 6.6 per cent in the outgoing year.

There has been no improvement in the real economy other than the advent of about half a dozen of cell phone operators which are now all set to start repatriating their profit in the foreign exchange to their mother countries abroad. The 9/11 backed bonanza is also reflected in the expanding casino culture led by the stock exchanges and the real estate. About half a dozen brokers are swimming in tax-free billions. The proposal of a two per cent tax on real estate transaction is hardly the answer to the public clamour to bring the real estate sharks into the tax net.

Most of the relief announced in the name of reducing the inflationary burden of the common man appears to be an eye-wash. The 15 per cent increase in the dearness allowance and the reduction in the tax rate for the salaried classes have been announced specifically to favour the higher salary bracket people rather than the lower graders.