Member, Economic Advisory Council
The budget has been favourably received. Revenue targets are a challenge, but clearly, widening the tax net is a tangible objective, and the strategy for this has been described. The most encouraging aspect of the budget is the inclusion of support measures for the bottom and the middle of the economic pyramid, which has been long neglected in the expectation of growth trickling down from the top, through the creation of supply chains — which has not happened. It seems a start, not only through the expansion of social alleviation programmes but also tangible infusion of finance at the economic base of the country, that could help ignite the broad-based growth that we have missed for some decades now.
Director Policy, Mahbub-ul-Haq Research Centre
This is a critical budget as it comes after the country has braved three lethal Covid waves. The economic activity needs an impetus, the vulnerable classes need expanded social protection programs with guaranteed employment. The budget provides an impetus to various industries with several tax cuts and rebates. The reduction in
duties of import of raw materials will be particularly beneficial for the manufacturing sector. It has also increased the minimum wage to Rs20,000 and increased pensions and salaries for civil servants by 10pc. What remains to be seen is how many of these provisions will achieve the intended impact. A long-term strategy is needed to sustain the ‘growth.’ What are the frictions and structural bottlenecks that need to be innovatively transformed? How can we ride on this optimism to ensure long term prosperity? Critical to ensuring long term recovery will also be accompanying reforms and focus on human development.
Dr Iqrar A Khan
Former Vice-Chancellor Agriculture University (Faisalabad)
Dr Iqrar A Khan, former Vice-chancellor Agriculture University (Faisalabad)
“While credit is due to Prime Minister Imran Khan for his interest in agriculture, the budget looks more like old wine in a new bottle. Similar to previous ones, it is a five-crop budget that should have been 50 crops with efforts that extend to new areas, new crops, investments in their value chains, cleaning supply chains, making markets efficient and encourage the private sector to bring in money. Official planners are still stuck in the decades-old frame of mind. Even among those five crops, the missing plan for cotton revival will go a long way to hurt the economy.
By making meagre allocations itself, and promising to force provinces to spare more money, the centre seems to have reduced itself to more of a coordinator than a leader. It should have been the other way round; federation leading and the units following — leading from the front as the prime minister is so fond of claiming. Provinces are executioners in most of the agricultural cases, following the federal policy. If the federal policy goes missing, the role of the federating units would automatically be compromised. Here, the federation seems guilty of compromising its role and deflecting responsibility to its units, which it knows won’t follow, especially Sindh for its own reasons.
Terms like value chain improvement, revamping research and improving genetics now enjoy the status of clichés in independent policy circles. All budgets in the last three decades have used them, overused them, and abused them. Better find some new ones. —AFK
Dr Durre Nayab
Joint Director, PIDE
I am happy to see the allocation for the 7th Population and Housing Census. With the controversies attached to the 2017 census lingering on even after 4 years, the prudent thing was to conduct a new census. The Rs5bn allocation suggests that the census is not planned to be completed in FY22. The cost of the previous census was over Rs14bn so I assume that the government intends to do the groundwork in the year ahead. This is where we went wrong the last time. The census process needs to be inclusive to develop trust and ownership, the questionnaire should have clear definitions and purpose, enumerators should be well-trained, and the results should be out swiftly. The preparation should include educating people about the benefit of the census. I hope this allocation is efficiently used and we would get it right this time around.
Nabi Bux Sathio
Sindh Chamber of Agriculture
“The federal government needs to reduce taxes on tractors, the only source of mechanisation in the agriculture sector in Sindh. Its prices have increased from Rs1.6 million to R2.6m,” he said. Every second farmer uses a tractor during land preparations that are the key to growth in per-acre yields. The package of Rs292 billion for the farm sector excludes farmers as their input cost is not subsidised. He said DAP fertiliser was Rs3,300 last year which is now being sold for Rs5,600 though the rupee has gained against the dollar. Furthermore, Pakistan’s seed sector is in shambles. “Farmers are focused on Bt cotton excessively due to higher yields. It has degenerated and a solution is not in sight”. He proposed growers should be allowed to import better cottonseed privately and its duty should be withdrawn. “Government should announce a subsidy for the provision of drilling machines used in wheat sowing to improve per acre yields”, he said. —MHK
Mansoor H Khan
“An operating system (OS) is the software that controls a computer’s hardware and peripheral devices and allows other programs to function”. Without an OS, like Windows, a computer does not work. An effective legal system is the OS of an economy — one cannot imagine economic growth without a robust justice system that protects property rights.
Banks don’t lend, people don’t enter into partnerships, foreigners don’t invest in Pakistan, because our legal system provides no protection to property rights. The concept of enforcement of a contract is quite alien to our legal system.
As a nation, we have learnt to thrive on slogans and clichés. In the current budget, it’s agriculture. Previously, it was education, or health or infrastructure. In the finance minister’s budget speech there should have been a clear focus on reforms on a war footing in our court and legal systems. There was none. In the budget, there is an allocation of a mere Rs7.9bn for law courts — there is however a staggering allocation of Rs165bn for police and civil armed forces. This provides a clear indication of what are the priorities of our rulers.
There were more than 200 tax exemptions or reductions in Schedule II to the Income Tax Ordinance obviously for the rich and the powerful. In the current budget, there are 15 additional exemptions or reductions. Now the income of political parties is tax-exempt, something the whole nation was yearning for the longest time!
Published in Dawn, The Business and Finance Weekly, June 14th, 2021