Javid Husain While listening to the budget speech by our new Finance Minister and later going through the budget documents for 2010-11, I was reminded of the well-known French saying: Plus a change, plus cest la mme chose. (The more things chan-ge, the more they remain the same). This budget like the earlier ones is again marked by deception, hypocrisy and misplaced priorities. The economic situation of the country requires a paradigm shift or a fundamental restructuring of the economy. What this budget promises is more of the same. The downtrodden and the poor of the country need immediate relief from the exploitation to which they have been subjected for decades. What this budget dishes out is worn-out and empty promises while preserving the privileges of the elite. At the regional level, this budget and the accompanying medium-term budgetary fram-ework are likely to pull us back further in the race for economic development. In short, the third budget by the present PPP-led federal government is a huge disappointment for which it cannot blame anybody else but itself. Let us start with the deception part with a look at the Economic Survey for 2009-10 which provides the economic background for the preparation of the budget. Earlier projections by the State Bank of Pakistan and even by the government planners had indicated a likely GDP growth rate of 2.5 to 3.0 percent for the current financial year. Compelled by the necessity to show an improvement in the performance of the economy and through a sleight of hand, the GDP growth rate for 2009-10 has been raised to 4.1 percent. This was done simply by reducing the growth of the preceding year from 2.0 percent to 1.2 percent. No wonder that the IMF website shows the GDP growth rate of 3.0 percent for the current financial year. So much for the sanctity of our economic statistics Coming to the budget itself, the budgetary documents cle-verly disguise the massive transfer of resources from development to defence that took place during 2009-10. The documents show that as agai-nst the initial allocation of Rs 343 billion for defence for the current financial year, an amount of Rs 378 billion was actually provided for the defence sector. According to later reports, however, an additional amount of Rs 200 billion was also allocated to the defence sector for military pensions and for the war on terror. Thus, the actual allocation for defence amounts to about Rs 578 billion. In fact, the IMF figures show that the defence allocation during the outgoing financial year would be Rs 593 billion. This hefty increase of approximately Rs 250 billion in the defence budget was brought about primarily through a massive reduction in the allocation of resources for development from the originally earmarked sum of Rs 763 billion to Rs 568 billion in 2009-10. The neglect of economic development has inevitably lowered our annual economic growth rate to about three during the past few years which is far below the comparable growth rate of about eight percent registered by India. Our deplorable economic situation calls for a paradigm shift in economic planning and a fundamental change in priorities to accelerate our economic growth rate and enhance the welfare of the common man. What the federal budget for 2010-11 and the medium-term budgetary framework for 2010-13 offer instead is the continuation of status quo, that is, a low growth rate trajectory (even in 2012-13 the target GDP growth rate would be only 5.5 percent) and the continued grinding poverty because of the low-level of per capita income, wide inequalities of wealth and income, and the high incidence of indirect taxation on the common man. The budget for 2010-11 ostensibly allocates an amount of Rs 442 billion for defence as against the sum of Rs 766 billion for development. In reality, the actual allocation for military expenditure is likely to be around Rs 700 billion if one takes into account the military pensions, the projected expenditure on the war on terror and the expected demand for additional funds by the military during the next financial year. On the other hand, in accordance with the past practice, the development budget is likely to be subjected to a cut of Rs 100 billion if not more reducing it to about Rs 666 billion. We would be lucky to achieve the target GDP growth rate of 4.5 percent for 2010-11 with this low-level of allocation for development, our low national saving and investment rates, the continuing energy crisis and the difficult security situation. Ideally the current expenditure of the federal government should be less than its net revenues so that the surplus revenue and loans obtained through internal and external sources can be spent exclusively for developmental purposes. Unfortunately, as in the past, the projected current expenditure for 2010-11 amounting to Rs 1997 billion far exceeds the net revenues estimated to be Rs 1377 billion. The situation calls for bold initiatives to reduce the governments current expenditure by adopting stringent austerity measures, curtailing the military expenditure, improving the efficiency of public sector enterprises which claim about Rs 230 billion in the form of subsidies annually and eliminating corruption in government departments which costs the national exchequer about Rs 223 billion according to a recent survey. Predictably the education and health sectors have suffered the most because of our upside-down priorities. Our national expenditure on education as a percentage of GNP declined to 2.0 percent during the current financial year as against the international norm of 4.0 percent. In the case of health, it was as low as 0.5 percent of GNP. One does not notice any change of priorities in the plans for the next financial year. So much for the tall claims of the present government of assigning high priority to education and health There is little hope for the future progress and well-being of a nation which neglects these vital sectors. The overall economic and security situation of the country demands a marked increase in our development expenditure to raise our GDP growth rate substantially, enhance the welfare of the people and ensure the long-term security of the country since rapid economic growth and improvement in the peoples economic well-being are essential ingredients of a comprehensive security strategy. By neglecting the development and welfare aspects of the governments responsibilities, the budget for the next fiscal year not only consigns the country to the prospect of a low GDP growth rate in the coming years, but also endangers its long-term security. Pakistans political leadership, the military establishment and the top civilian bureaucracy would have to decide whether the survival and progress of the country or their vested interests are more important. The answer to this question will decide the destiny of our country. The writer is a retired ambassador. Email: javid.husain@gmail.com