The government claims an achievement of the economic stability again and again, but facts do not confirm these claims.
The debt of our national economy is consistently increasing. The public debt was Rs22.5 billion in the end of June 2016, out of which Rs2.8 billion was non-government debt (the loans that have been taken from public sector enterprises and commercial banks). The loans were Rs19.7 billion, out of which 13.6 billion was internal loan and 6.1 billion was external loan. This is 23.2% of the GDP. Now public debt is more than Rs24 billion. The government has taken foreign loans of $24 billion from 2013 to 2016. $1.15 billion were paid as an interest in the first 3 months of the current fiscal year. The total debt is nearly 66% of the GDP. According to the Fiscal Responsibility and Debt Limitation Act, the debt cannot be more than the 60% of the GDP.
Economic stability is in great danger due to spending a lot of money on the payment of the loans. Only a small amount is available for the social sector (education, health) and infrastructure. Every Pakistani is liable to pay the debt of Rs100,000. Internal income is low but the expenditures are high. Exports are less than imports in foreign trade. The revenue is approximately 1.5 billion less than the expenditures, while imports are $20 billion more than the exports. The government has taken few steps to meet the challenge. The most important is to take loans. The 47% of the revenue is spent on the payments of the loans. The total debt is almost 600% of the annual revenue.
In the first ten months of the recent fiscal year, the current account deficit is $19.936 million. It is 2.7% of the GDP. A meeting of the National Economic Forum was presided over by the PM in the previous week. The deficit of the current account was estimated as 10.4 billion for the year 2017-2018. Similarly, in the current fiscal year the Federal Board of Revenue (FBR) has collected the revenue which is Rs157 billion less than its target (Rs3.6 billion annually). It is an estimate that this deficit will be Rs300 billion by the end of the 2017. Loans are taken to cover these deficits. Then more loans are taken to pay these loans. The money which was sent by oversees Pakistanis was sufficient to a certain level to cover both deficits till the previous year. But in this fiscal year it is reducing continuously. It is 3% less than the last year. Foreign investment serves the purpose to some extent in this regard, but CEPEC is the only foreign investment that can be mentioned. The smartest solution is to increase the exports so that the revenue can be generated. The PM announced a package of Rs180 billion in January 2017 to enhance the exports, but it proved fruitless. The reduction of 3.9% in exports was noted from July 2016 to March 2017.
In spite of all development programmes, the government wants to take it up to $1 billion in its 5th budget because of the coming elections. The government has a programme of giving Rs50 million each to its elected members, to bear the expenses of the elections easily. This will increase national debts.
The government should bring some basic changes in the tax system. The rich can be brought in the tax net. Resultantly, the government will have more resources for the poor people of the society. It is admitted that direct tax system can turn the flow of resources towards the less developed areas and people. But in our country the indirect tax is combined with withholding. This amount is 66% more than the amount of the direct tax collection. A large number of rich people are not in the tax net. More than 60 million people who keep mobile phones pay 14% income tax in advance. Not considering that their annual income is 400,000 or not. Similarly they pay 19.5% sales tax. 1.8 million people travel abroad frequently. Nearly 700,000 Pakistanis have more than one bank account. More than 100,000 Pakistanis live in developed areas. They have more than 80,000 luxury cars. 90,000 people pay heavy utility bills. There are more than 200,000 professionals (doctors, engineers, lawyers, CAs), but majority of them do not submit the tax returns.
Very little resources are allocated for the social sector (education, health) as comparison with other countries of the region. For example, only 2.2% to 1.8% of the GDP was spent on the education in the years 2011-2015. The present government is spending huge amounts on the construction of the motorways, underpasses, metro bus, highways and trains. But education and health sectors have never been the priority of the government in spite of all its claims. The priorities of the government at regional level are based on total injustice. 58% of the development budget of the districts has been spent only on Lahore. 3% has been allocated for Multan. Less than 3% has been allocated for all other districts. There is a great inequality in the division of income at regional level and among different sectors due to these policies.
70% population of the country is associated with agriculture directly or indirectly. The share of agriculture sector in the national income is 21%. 44% of the total labour force is working in this sector. The agricultural products are the 66% of our total exports. In spite of all these facts, the sector of agriculture has never been in the priorities of any government since 1947. This sector is facing the serious problems of low production, lack of water, no access and awareness of modern technology, seasonal changes, and increase in cost of production and inequality in international market. Special attention should be paid to research and development, so that seeds on cheap rates can be provided to the farmers. The problem of the shortage of water should be solved. Sales tax on agricultural items used in the production, should be abolished so that the cost of production can be reduced. The farmers should be made aware of modern technology to adjust themselves according to the seasonal changes. High level of agricultural production should be achieved and exported. High prices of important crops should be fixed and paid to the farmers.
It is the need of the hour that government should cut short its current expenditures. The prices of gas and electricity should be lessened to increase the exports. Low cost of production can be helpful in this regard. Foreign markets should be explored and items should be prepared according to the demands of the market. We should not depend on traditional trends but adopt the new fashion. Items should be prepared according to the taste of the people abroad. The crop of cotton should be focused especially in agriculture sector. Its production is decreasing day by day, yet it is being imported. The export of fruits should be increased by improving the standard of mangoes, guavas, oranges and vegetables. The refunds of exporters should not be blocked in order to give the impression of an increase in revenue.