Pakistan People Party's government preoccupied with     overwhelming political occupations, last week     presented its first Budget in the National Assembly     for the coming financial year with an ambitious     target to contain the yawning fiscal deficit at 4.7 per cent from the its abnormal level of over seven per cent for the outgoing financial year. Contrary to its pre-election as well as post election promises and pledges to provide relief to the commoners of the country having the so-called democracy restored from the military rule of General Pervez Musharraf, the government simply toed the capitalist polices in place for the last over eight years. Rather relieving the commoners from their hard pressed position under the onslaught of unprecedented price hike, the government in the budget 2008-09 has further taxed the commoners by increasing the general sales tax rate by one per cent across the board. Addressing the post budget press conference Finance Minister Syed Naveed Qamar admitted that the government's hands were tied and it was unable to protect the public against the energy and food crises in the country. Launching of the Economic Survey of Pakistan, the Budget Speech, and the post-budget press conference by the Finance Minister made it clear that the people should not stay with nave anticipations that the government would protect them against the market economy mechanisms. Even the political analysts more than the economic pundits understand that the outside Public Sector Development Program spending on the people's uplift would hardly prove to be an-adhoc relief for the masses. It is universally accepted principle that the long-term investments and far sighted development projects could only dent the rising menace of poverty against the ever rising inflation. The government on the other hand was not able to, as described by the Finance Minister, even to maintain the level of development spending through the PSDP. That is why the government has shown as much as Rs 77 billion operational shortfall in the PSDP of Rs 549 billion leaving the practical size of the SPDP at Rs 472 billion, at least Rs 13 billion less than the last year's PSDP of Rs 485 billion. It was just the allocated figure of the outgoing year's PSDP that too had faced Rs 65 billion's operational shortfall leaving the actual development spending of around Rs 400 billion. Now if the government increased the development budget, it would further lose control over the ever increasing inflation that stood at 11 per cent for the outgoing financial year. Even if the government has applied cuts on the outgoing PSDP, it would have fixed the inflation target at 12 per cent for the next fiscal 2008-09. Independent estimates including that by the central bank have already warned that the inflation figure would touch 17 per cent by the end of the outgoing financial year. The perforce check of inflation, and fiscal deficit have simply barred the government from allocating anymore funds for the development budget. Whatsoever development allocations, the government has vaguely described the arrangements for the corresponding investments. The foreign investments are already on hold for the continued political uncertainty and the law and order threat across the country. At the same time, the local investor were also double minded in taking fresh decisions on long term projects due to the unpredictability of the political scenario in the country in the wake of anti-Musharraf and pro-judges movements in full swings. Yet another ad-hoc move of the government in the budget to increase the interest rate on the saving schemes could hardly gear up the saving rate on the downturn for the last five years or so. The saving schemes were given a major blow by the Shaukat Aziz government that gradually brought down the saving return rates from nearly 20 per cent to less than ten per cent. It was a calculated move of the Aziz administration to divert the funds from the savings to the stock market eventually accelerating consumerism at the cushion of heavy returns on short-term investments. Paradoxically, the government has to follow a tight monitoring policy to contain inflation by increasing deposit rates exactly one eighty degree opposite to Shaukat Aziz's approach of cheep money, yet it is bound to maintain the policy consistency. This speaks volumes of the crippled economic independence of the government. In the first place, it has not political free hand on the economic policy management having the all powerful umbrella of Musharraf's presidency. Secondly, requiring external budgetary support to keep the fiscal deficit even for the outgoing financial year at 7 per cent, the government is bound to put its economic sovereignty at collateral for the budgetary foreign support required nothing less $3 billion. On the current expenditure side, the government was already in a fix to adjust the supplementary grants required by the various organs of the state during the outgoing financial year. As against Rs 1835 billion consolidated outlay for the 2007-08, the actual spending is to cross the mark of Rs 2200 billion a little short of the next year's consolidated outlay of Rs 2300 billion. Naveed Qamar had already confirmed the reports of The Nation on the shortage of funds with the government to finance current expenditures of the current financial year beyond May 25, 2008, even for payment of the salaries so on and so forth. Although the government was in dire need of increased revenue collection during the next financial year, it has failed to tax the sacred cows of the private sector including the stock market players that in advance won the exemption on the capital gain tax. Out of the estimated Rs 71 billion new taxation, most of the brunt would be faced by general public as against the affluent classes of the society due to increase in the indirect taxes. Last but not the least the government is also tied by the divergent pull of its desire to address the popular demand of public safety net through subsidies, as against the international financial institutions preconditions to withdraw even the existing subsidies. Therefore in the budget 2008-09, the government has withdrawn 28 per cent of existing subsidies. The cut on subsides from Rs 407 billion to Rs 295 billion would naturally result in increased prices for the consumers that again falling prey to vicious circle of inflation. With all its vows to meet the economic challenges ahead to achieve GDP growth rate of 5.5 per cent, the government has presented a budget without any clear direction for the growth. The government has maintained over 60 per cent of the policies of Shaukat Aziz, while it claims to re-direct the growth to not only long term but also to a pro-poor one. Finance Minister Naveed Qamar while admitting that the economy remained on the growth trajectory for the last five years or so, vowed to achieve pro-poor growth. But on ground the government was unable to introduce any of the pro-poor policy that could materialize the planning of such a growth that could trickle down to the masses. Thus the anatomy of the budget reveals that it was mere a stop gap arrangement on part of the government rather than presentation of a well directed and well thought out fiscal policy for the country which is in the middle of politico-economic turbulences. The need of the time on other hand was to take critical decision through the political will that seems to be non-existent on part of the government keeping in the view topsy-turvy state of the ruling coalition itself. The budget lost directions again due to the sharp turns in the politics at the juncture of the fiscal policy presentation. Initially the budget making was initiated by the former Finance Minister Ishaq Dar who had his party line directly opposite to policies of General Musharraf. Dar's departure along his party's withdrawal from the government, left the budget making exercise half-way done on in one direction, while Naveed Qamar could merely ensure the formality of the budget to be fulfilled one way or the other.