The PPP-led ruling coalition is faced with multiple challenges, ranging from political to constitutional to social to economic, making budget formulation an onerous task. These challenges were exacerbated by the floods last year that affected more than 20 million people and put a burden of $10 billion on the economy. Considering this, no one was expecting miracles in the Federal Budget 2010-11. However, this did not hinder the governments economic managers from resorting to populist measures. Coming to specific details of the Budget 2010-11, one cannot help saying that the revenue targets have been set ambitiously, while the expenditures have been underestimated. But this is not something unusual in Pakistan. Every government repeats this 'mistake in the hope that it would be able to clear the financial mess before the next budget. However, success is rare and the next fiscal normally comes with problems of its own, forcing the government to resort to more borrowings from foreign and domestic sources, and depriving it of any opportunity to exercise economic sovereignty. The outlay of the Budget 2010-10 is estimated at Rs2.767 trillion, implying that the government proposes to spend about Rs 15,372 per person annually or Rs 42.11 per person daily. This shows a marginal decrease over the outgoing fiscal, in which the government planned to spend Rs15,615 per person annually or Rs42.78 per person daily. As far as the positive features of the budget are concerned, 15 percent increase in salaries and 15-20 percent increase pensions of government employees stands out. However, unfortunately, the minimum wage of workers has not been increased. Another positive aspect of the next fiscal years budget is that the defence expenditure has not increased as a percentage of GDP. Even in terms of numbers, the defence budget has been increased by only about 12 percent from the outgoing fiscal years Rs422.0 billion to Rs495.0 billion. This increase seems to be justifiable, considering the high inflation rate and the fact that Indias defence expenditure alone is more than the total outlay of Pakistans budget. However, many items that were earlier part of the defence budget are now financed from the civilian budget: pensions of retired armed personnel to cite just one example. In short, one can say that despite all the good intentions of the government, the budget will only add to the existing problems of the masses. The government wants to curtail the fiscal deficit, which it must do, but acquiring more permanent and floating debt through sale of prize bonds, floating of new bonds and encouraging the people to invest in various savings schemes is not the right way to go about it. Ultimately the interest on the newly acquired debt will have to be repaid by the people of this country and the poor will have to bear the major brunt. Moreover, encouraging the people to deposit whatever money they have with the banks and financial institutions instead of investing it in productive ventures may result in economic stagnation and, ultimately, unprecedented unemployment. In a bid to woo the disenchanted masses, whose votes count for much, and present a populist budget, the government has made many promises that it will find difficult to keep as the year progresses. This becomes evident if one analyses the governments economic performance in the outgoing fiscal year, which ends on June 30. Because of an enormous increase in the current expenditure, the government has not only failed to ensure full utilisation of the funds allocated for development, but it also had to borrow heavily from both domestic and foreign sources to cater to the increasing current account deficit. Whenever there is a massive shortfall in revenue generation or an abnormal increase in the current expenditure, the government is left with no choice but to curtail subsidies, the safety nets for the poor and the development expenditure. This has been a common practice in Pakistan for the last many years, but it has not stopped successive governments from allocating more and more resources for the uplift of masses under the banner of the PSDP. The development budget in the budget is estimated at Rs730.0 billion, while the government is all set to fail to even spend Rs450.0 billion in the outgoing fiscal year. The additional money spent for the peoples 'development in the last few years has so far not shown any tangible results. In this perspective, the government needs to lay more emphasis on quality than quantity. What is required is proper utilisation of the allocated resources and quality service-delivery for the downtrodden, not a mere increase in numbers. To sum up, the targets set in the budget 0can at best be described as ambitious. The government would have to perform really well; otherwise, very soon the shortfall in revenue would lead it to resort to anti-people measures, such as overburdening taxation. Even if the government meets the revenue shortfall through bank borrowings, the people would have to suffer, as they would have to pay the interest on the borrowed money in the years to come.