Notwithstanding the bitter criticism of the opposition parties, an overwhelmingly polarised and biased media, and a bunch of “very senior” economists, most market players, and business organisations have given the thumbs up to the Pakistan Tehreek-e- Insaaf’s (PTI) budget for the fiscal 2021-22 (July-June). After two years of severe belt-tightening measures under the International Monetary Fund’s (IMF) programme, aimed at stabilising the economy, the PTI government now appears all set to focus on economic growth and expansion.
Accordingly, the new budget proposes incentives and subsidies from the agriculture sector to the manufacturing and capital markets. Among other steps focusing on growth, the budget increases the Federal Sector Public Programme to Rs. 900 billion — a 38 per cent increase compared to the Rs. 650 billion allocated for it in fiscal 2020-21. Already better than expected growth numbers in the outgoing fiscal year have not just boosted the morale of the government, but also created a feel-good atmosphere, which the policymakers want to carry forward in fiscal 2021-22.
Through his words and actions, Finance Minister Shaukat Tareen is signalling confidence and strength — vital to create and sustain the positive sentiment. All this is good, and now the government’s media managers and cabinet members have enough ammunition in their arsenal to go into the top gear of an aggressive image-building campaign to propagate the “success story” of Prime Minister Imran Khan and his team.
Similarly, the opposition parties will leave no stone unturned in their attempt to malign the government and continue with the propaganda drive aiming to declare Khan and his men a “failure” on the economic front.
Ironically, an overwhelmingly sensational media, specially the electronic media, is adding little meaning, balance and objectivity to the debate on economic issues. It is merely serving as a mouthpiece of this or that political or interest group. The problem is compounded by the lack of expertise of those driving the news and current affairs agenda.
In this scenario, it is a Herculean task for any government to put the economic issues into context, win public opinion on its agenda of reforms or change, and incorporate meaningful suggestions from the criticism of critics, experts and even political opponents. Ideally, the PTI government, while remaining committed to its growth goals and strategy, should at least keep political rivals and critics engaged and where possible, listen to good advice, if it benefits the country. Many of the budgetary proposals, though they look good on paper, would be challenging to implement, so keeping the political heat to a manageable level remains a prerequisite.
The government will have to perform a high-wire act in its talks with the IMF to keep its growth strategy on track as well as satisfy the global lender about its demands of doing away with subsidies, increasing utility rates and keeping the demand side in check. How Finance Minister Tareen will manage to create a balance between the two divergent views will be interesting to see.
Digging deeper into the budget reveals that the numbers quoted for Federal Board of Revenue (FBR) collection (Rs. 5.829 trillion), expenditure (Rs. 8.487 trillion) and deficit (6.3 per cent) if not totally impractical, are a difficult set to achieve. A revenue collection shortfall, as happens every year, would easily torpedo the expenditure and deficit targets. One can only hope the government achieves the feat of meeting the revenue targets in the new fiscal. Asking the provinces for a Rs. 570 surplus is also a hard-sell, especially in the PPP-run Sindh province and the coalition-run Balochistan. Even Punjab and KP provincial governments would like to spend more, as general elections are just two years away.
As in every other budget, the loss-making state-run enterprises have been put under the hammer. And for this a new-look Privatisation Board is being constituted. But given the current toxic political atmosphere, any development on this vital front will be difficult.
The proposed increase in petroleum levy will have an inflationary impact and provide an easy target for criticism, but the federal government has few other options to raise money for the centre. So, Pakistanis will have to accept the measure, like it or not.
All in all, the new budget offers more hope than disappointments — given Pakistan’s economic troubles which the PTI government inherited, including the balance of payments crisis. And then the pandemic made the situation more complex. Therefore, in these uncertain times, Pakistanis can at least bet on the PTI government’s third budget.
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