HIS voice is likely to be drowned out by the (symbolic) protests of the opposition, but the federal minister for finance will nevertheless present the budget today in the National Assembly.

Much has been made of the fact that this elected government will be the first of its kind to have completed the (highly overrated) budget formalities five times. I concur with those that emphasise the political significance of this exercise. Its economic significance is much less clear.

The story is a familiar one — Pakistan’s macroeconomic situation is dire, the chief executive believes in printing currency for fun and there is no respite on the horizon. When such circumstances become the norm rather than the exception, the budget scarcely matters; or at the very least, its significance lies in how well those putting it together can dress up the old as new.

I am not suggesting that the exercise is useless, only that the limited fiscal space that has been afforded to the government since the first structural adjustment programme in 1988 — and arguably since finance minister Ghulam Mohammad announced in the Constituent Assembly in 1948 that 70 per cent of outlays would be dedicated to defence — allows for very little in the way of policy shifts from one year to the next.

In any case I am of the opinion that the subject of the budget exercise — the formal economy — is of far less importance than what I, following an increasingly large number of writers, prefer to call the ‘real’ economy. In much of the world (and here I include the countries in which advanced capitalism reigns) scholars and policymakers alike now recognise that real markets, real producers and consumers, and real notions of well-being cannot be understood without interrogating those economic activities that are otherwise not included in formal accounts.

What is otherwise known as the ‘informal’ economy is estimated by some to be that where not only the majority of people engage in economic exchange but also where the majority of economic activity takes place. The informal is part of popular and mainstream political discourse in Pakistan only vis a vis discussions of our puny tax net. In fact, tax evasion is just the tip of the iceberg.

Most of our daily experiences take place in the real economy; our exchanges with the pakora vendor, domestic servant and wagon conductor are very real, and amongst the large number of economic activities that are neither accounted for nor, perhaps more importantly, the subject of government policy.

Other countries have not necessarily devised ingenious ways to provide support to informal economic activities per se or even more crucially to the millions who toil in the real economy without recognition, living wages or humane working conditions. However, we have not even started the long process of accounting for these activities and the workers who perform them.

Next door in India the government created the National Commission for Enterprises in the Unorganised Sector (NCEUS) in 2004 to map the scale and nature of the real economy. A substantial budget was allocated to a distinguished panel of social scientists — not just economists — and a series of comprehensive reports followed over the next five years or so. The NCEUS estimated that 93 per cent of India’s total workforce is located in the informal economy.

Similarly serious initiatives have been taken by governments and academics across much of the world in recognition of the fact that the ossified theoretical models found in mainstream economics textbooks tend to obfuscate more than they illuminate. There is also now more than anecdotal evidence that multinational corporations prefer to hire workers who are not legally protected so that they can fleece them in ways that the trade union movement at the height of its powers three decades ago simply would not have countenanced.

But in Pakistan, the real economy concerns very few policymakers and academics. This is, sadly, the case with a host of vitally important issues, so in this sense the paucity of information on the real economy in Pakistan is hardly surprising. But the case of economic policy is perhaps most indicative of the complete lack of concern of our ruling classes with the fate of those who make this country tick.

In a rather circuitous way this brings me back to the budget: given that our holy guardians decided long ago that we would use our ‘strategic’ location to generate rent from the American Empire, our economic managers — trained in the best international financial institutions the world has to offer — are quite content to not concern themselves with the millions that are being ruthlessly exploited in the informal economy. It’s just much easier to attract foreign direct investment if one can guarantee the money men that they will not have to contend with a restive labour force harbouring pretensions of constitutional rights.

So to those who will tune into Finance Minister Hafeez Shaikh’s speech later today, I would advise a critical think about all of the figures that are presented and attendant promises made, and not because politicians are inherently corrupt. It is not just politicians who thrive on tired and repetitive shows of expertise and evince little concern for the people and processes that actually constitute this society.

I wish to make one last point: understanding the real economy is necessary not just to address the plight of the long-suffering working people of this country, but also to account for those that are quickly rising through the ranks. Estimates of the number of Pakistanis who can be categorised as ‘middle class’ now range from 40 to 70 million. Yes, we know that there has been a consumption boom in Pakistan over the past decade or so. But we also know that very few jobs are being created and very little real (as opposed to speculative) investment is taking place. So where is all the money coming from?

Those who are consuming more and more are surely not making all their money abroad and simply spending it here. Pakistan is awash with cash and it is high time we put some time and effort into identifying its sources and its mode of circulation. That the new high rollers do not pay taxes we already know. Where they are getting it is what really matters.

The writer teaches at Quaid-i-Azam University, Islamabad.