As usual in the annual budgeting ritual, the 2010-11 Budget was preceded by the Economic Survey of the year, covering the preceding financial year, 2009-10, to make sure that the Budget was placed in some sort of context. The Survey said that GDP growth had been 4.1 percent, which was anemic unless one kept in mind that it had only been 1.2 percent the year before that. Presenting the Survey, PMs Finance Adviser Hafeez Sheikh blamed the growth situation on the USAs War on Terror and the energy crisis. Perhaps the most dangerous aspect of the Survey was the increase it showed in unemployment. In an economy supposedly growing, such an increase is a highly negative indication. Though it was not mentioned, this explains where the militants find recruits in the War on Terror. In a growing population, that is a highly problematic situation. Dr Sheikh also said that the biggest challenge in the coming year would be to keep the recovery going. However, the Budget did not indicate that the government was taking any such steps. The first issue is whether there is a recovery or not. For the great mass of Pakistanis to believe that one is taking place, their economic reality would have to change, which it has not. The Budget has not really taken any measures that would cause a recovery to take place, or even give people confidence that one would in the near future. Presented by Dr Sheikh, who had taken oath as minister earlier in the day and thus himself become qualified to do so, the main feature of the Budget was the careful avoiding of the name of Value Added Tax (VAT), and instead speaking of the reform of the sales tax - effectively VAT under guise The government acknowledged that there was a need for austerity, but apart from the announcement of a freeze on government non-development expenditures, there was no such measure. Though Dr Sheikh laid a lot of emphasis on the end of debt, which he said had reached 60 percent of GDP, practically he still presented a Budget with a huge deficit of Rs 685 billion. Though government servants received a substantial pay increase, the deficit will be met only through raising debt. While some relief has been proffered to the salaried in the form of an increase in tax exemption, the rise in inflation, because of the sales tax reform, and the planned imposition of VAT in October, will act to wipe out any relief afforded. Though the intention exists behind the Cabinet decision not to have the salary increase for government officials apply to its members, the saving will be negligible. Also, a ministers salary is the least expensive of his privileges, on which there is going to be no cut. Though there was no real measure towards austerity, acknowledgement that measures are needed was also a good omen for Dr Sheikhs first day as a minister. Though specific measures have not been announced for public sector enterprises, where individual enterprises were identified as demanding subsidies more than the governments spending on itself, the acknowledgement itself was a healthy recognition of the realities of the situation. Dr Sheikh also accepted that the government needed to tackle inflation. This was not paid more than lip service. The only measure taken, increases in salary, does not even counterbalance the effects of the VAT, which has been put off only until October 1, let alone meet the overall effects of inflation as it has raged so far. Despite the information in the Survey, Dr Sheikh has been unable to present a Budget which has come up to the peoples expectations of relief and prosperity.