An over­view of 2016-17 Bud­get

Pakistan Observer - - OPINION - — The writer is ex-Chief of Army Staff, Pak­istan. Gen Mirza As­lam Beg Email: friends­foun­da­tion

THREE years back the gov­ern ment de­cided to “beg and bor row”, to cor­rect the economy and save the coun­try from go­ing into de­fault. They did suc­ceed in achiev­ing the pri­mary ob­jec­tive but this sim­ple an­swer to the com­plex is­sue has cre­ated myr­iad prob­lems as one can judge from the com­ments of our em­i­nent an­a­lysts:

“Aid re­liant Pak­istan has purse strings con­trolled by IMF/USA. For­eign aid does not re­duce poverty; it of­fers lit­tle in terms of pol­icy de­sign and as mon­e­tary pol­icy runs out of bite, it will take a fresh cri­sis to force new think­ing to emerge; this bud­get is pol­i­tics by the means re­peated year af­ter year; it is busi­ness as usual; it has failed to adopt an egal­i­tar­ian ap­proach that de­plores ex­tremes of wealth and poverty, thus un­bal­anc­ing the so­cial or­der; bud­get is an in­stru­ment of so­cial change through ed­u­ca­tion and health, but it prom­ises lit­tle for the over 2 mil­lion job­less youth and debt free economy; bud­get is sim­ply a rev­enue and ex­pen­di­ture nar­ra­tive, pro­mot­ing not growth but fis­cal con­sol­i­da­tion; no re­forms, no tax struc­tur­ing; it is a bud­get by the elite, and for the elite, of the po­lit­i­cal or­der sup­port­ing oli­garchic or­der; they “claim high growth tra­jec­tory” but there is neg­a­tive growth in agri­cul­ture, which con­trib­utes 6% to GDP; drop in ex­port and in­vest­ment, and all tar­gets missed. How­ever it is a good bud­get for the poor par­lia­men­tar­i­ans whose present Rs. 80,000 a month pay and perks go upto Rs. 470,000 a month. Con­grat­u­la­tions.”

The strat­egy for so­cial change, driven by for­eign debt, dole and aid, places se­ri­ous strains on our economy while the stress is on fis­cal con­sol­i­da­tion, than growth. The bud­get thus re­minds me of Ghalib, who said: “Qarz ki petay thae mae aur ke­htey thae kae haan, Rang lae gi hu­mari faqa masti aik din”. The im­plo­sion ef­fect of our

faqa masti will show its colour. Let us ex­am­ine.

The vol­ume of the bud­get is Rs. 4400 bn, out of which we pay, Rs. 1800 bn, as debt ser­vic­ing, which is 41% of the bud­get, leav­ing only Rs. 2600 bn to “mas­ter­mind the bud­get plan”, be­tween the rich and the poor. Those liv­ing un­der the poverty line are 30% and above this line are 40%; 25% are the lower and up­per mid­dle classes and the re­main­ing 5% are the priv­i­leged class. For poverty al­le­vi­a­tion, al­lo­ca­tion is 2.6%; ed­u­ca­tion 1.8% and health 0.27% — a to­tal of 3.4% is the very gen­er­ous al­lo­ca­tion for the 80% un­der priv­i­leged Pak­ista­nis. Agri­cul­ture gets Rs. 700 bn which is 15.9% of the bud­get and likely to fall in the hands of the big land­lords, hold­ing “bainami khatas”, leav­ing very lit­tle for the gen­uine land hold­ers.

De­fence gets Rs. 860 bn, which is 19.55% of the bud­get and 2.62% of the GDP which stands at Rs. 32,700 bn. Our de­fence bud­get at 2.62% of GDP is much lower than, 4.70% of the In­dian de­fence bud­get. The rule of the thumb is that, the de­fence bud­get must re­main within 2% to 2.5% of the GDP. Our de­fence bud­get is well within these lim­its, main­tain­ing more than 650,000 foot sol­diers at a min­i­mal an­nual cost of Rs. 0.8 mn per sol­dier; India is Rs. 1.7 mn; Saudi Ara­bia Rs. 2.7 mn; Turkey Rs. 3.0 mn and USA Rs. 42.5 mn. Yet Pak­istani armed forces are one of the best in the world, pay­ing the debt to the na­tion with their blood, rais­ing the level of per­for­mance to heights, ac­claimed world wide. Thus our armed forces, through their de­mon­strated ca­pa­bil­ity are main­tain­ing a level of de­ter­rence, by means of a “knowl­edge based de­fence pol­icy of de­velop- ment and strat­egy to fight out-num­bered.” This phe­nom­e­non I have ex­plained in my ar­ti­cle, “China Pak­istan Strate­gic Pivot”, pub­lished a few weeks ear­lier.

This year bud­get has come hard on our nu­clear pro­gramme by cut­ting down the al­lo­ca­tion to Rs 27 bn from Rs. 54 bn of the year 2014, while India has al­lo­cated Rs. 1000 bn (one tril­lion) for its nu­clear pro­gramme devel­op­ment. Whereas the Full Spec­trum Nu­clear De­ter­rence Regime, that Pak­istan has achieved by means of a unique nu­clear sci­ence and tech­nol­ogy tech­nique devel­op­ment by Dr. Ab­dul Qadeer Khan and his team of ex­perts. It is a suc­cess story of ded­i­ca­tion and sac­ri­fices, sup­ported by strong po­lit­i­cal will. My re­cently pub­lished ar­ti­cle, ti­tled “Full Spec­trum Nu­clear De­ter­rence”, ex­plains this phe­nom­e­non.

Our de­fence forces achieve­ments and the nu­clear de­ter­rence ca­pa­bil­ity de­vel­op­ments are the two suc­cess sto­ries de­mand­ing sim­i­lar ap­proach from our eco­nomic plan­ners to cre­ate a knowl­edge-based economy, “be­fore our mon­e­tary pol­icy runs out of bite, it will take a fresh cri­sis to force new think­ing to emerge.”

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