The 2021-2022 budget has ambitious targets: 4.8 percent growth rate, Rs 5,829 billion in FBR revenue, Rs 964 billion for development works, an export target of $26.80 billion and import target of $55.30 billion, growth in large scale manufacturing 6 percent, agriculture 5 percent, cotton 10 percent, services sector 4.7 percent and construction 8.3 percent.
It is a growth budget which raises two important questions. Will the government succeed in spending the huge amount allocated for development? The question is relevant because in the last two years the government managed to spend only a fraction of the allocated amount and most of the projects remained in the pipeline. A perception was created that big development figures were aimed at gaining political mileage. Another question is whether the growth being promised will be both sustainable and inclusive?
While both the IMF and the Pakistan government agree on the need to considerably enhance the country’s revenues, there are differences over the way to raise them. The Fund insists on automaticity in the hike of electricity charges to get rid of the circular debt. It also wants an increase in taxes. The government maintains it has worked out alternate ways of raising the finances that would not burden the man in the street. What are the measures the government has in sight?
If it is really a people-friendly budget as claimed by the government, it would not be enough to raise the salaries and pensions of government employees or to refrain from imposing any new tax on the salaried class. Prime Minister Imran Khan had promised to raise the purchasing power of the common man. This requires providing jobs to millions who are unemployed. For this, the SMEs which are major job providers should have been given sufficient stimulus to expand their activities, which is missing in the budget. Similarly, Kamyab Pakistan schemes that are aimed at providing gainful employment should have been allocated sufficient funds.
The budget recognizes the need to concentrate on the agricultural sector to bring the prices of food items under control. Besides providing farmers subsidies on inputs there is also a need to help them adopt modern agricultural practices that not only increase production and reduce costs, but also control wastage of water.