The Federal Budget

THE presentation of the Federal Budget 2008-9 is the most important thing this National Assembly has done. No legislation has been passed by the House so far. And the decision to end the detention of the deposed judges was an executive decision, not contingent on the House, other than, perhaps its electing, and then giving a vote of confidence to, the man who gave the said order. Many matters seeking the attention of the Assembly have been avoided so far. But the Federal Budget cannot be avoided. Other issues, like the restoration of the deposed apex judiciary, or how to deal with the President, can be deferred, the need for debate and evolution of a consensus being cited for the delay. But not the Budget. Come June, a blueprint of the government's fiscal operations has to be presented. This is because by this time of the year, government departments simply run out of money to keep afloat. Money not just for new development projects but also for ongoing projects and running costs. Salaries, equipment, even stationery. Ironically, the task of presenting the Budget has fallen upon the dispensation that wants to slow things down. It was the PPP's Naveed Qamar who presented the budget, not the PML-N's Ishaq Dar. This was the first bit of actual work, as it were, of the representative government. Expectations were high. The economic situation, after all, was one of the then opposition's most relied upon trump cards. The public, not exactly knowing how the Budget is going to determine the length of queues outside Utility Stores or the electricity bill they get at the end of the month, wanted something to show for electing a representative, responsive government to power. On the government's side, this was it, the opportunity to show everybody the difference in the economic management of dictatorial regimes and the good guys. They could splurge on development; subsidise, even irresponsibly, just about everything and then pose with smiling babies getting free milk for photo ops. Alas, that did not happen. Perhaps because the previous government had been doing some splurging of its own. There aren't enough resources to give the people what they want. And what do they want? A decrease in prices in general and food prices in particular, a sustained availability of food items, sustained provision of the utilities, electricity in particular, and cheaper fuel. The word one gets to hear often at around this time is one that seems to cover all manner of sins and, thus, remains a bit vague: relief. The fiscal deficit had been projected to touch a whopping 9 percent by around this time by Ishaq Dar when he presented his chargesheet shortly after becoming the Finance Minister. He had said he would try to curtail it to 6 percent. The coalition managed 7 percent. This year's target, 4.7 percent, is ambitious. Because it is expected that the Federal Board of Revenue is going to miss its targets. And who knows what unexpected expenditures the government might have to make in this fiscal. There is the wheat crop that they can mismanage; importing the stuff won't be cheap, especially in the middle of a global food crisis. And Swat did cost the government a packet; the turbulence in the NWFP or the tribals isn't about to fizzle out any time soon. It is to bridge this deficit that the government is going to do two things an inflation-averse public does not want: impose newer taxes (which will yield about Rs 73 billion) and let go of many subsidies (which will save Rs 112 billion). The phasing out of subsidies is in line with international pressures from free trade groups to do away with these, though it's the Rs 112 billion the government was eyeing, not appeasing World Bank types. The increment in the General Sales Tax, from 15 percent to 16, is going to bring in some extra cash, but will fuel yet more inflation. To be fair, on the expenditure front, the government has stopped non-development, non-salary increases in the expenditures of government departments. And the defence budget, if one accounts for inflation and rupee devaluation, has been frozen, even decreased, the PM says. Government salaries and pensions have been increased by 20 percent. For those not in the government's employ, the rate of return on the government's investment schemes has also been increased. Though all this probably will not combat inflation the way it was presented. By around this time, comes the Pakistani democrat's oft-recurring jibe: the dictators leave everything in a mess for us to clean up. That might be so. There is an international food and energy crisis. That is correct. But the body politic, being what it is, wants results. And wants them now. Regardless of how things turn out, this budget is going to be blamed for whatever transpires in the purses of households throughout the nation.

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