Finance Minister Ishaq Dar has presented Rs 4.394 trillion federal budget and has set an ambitious growth target of 5.7 percent for the fiscal year 2016-17. This is probably the first time in the history of the country that the government has presented a pro-agriculture budget after this vital and major sector recorded negative growth of -0.19 percent during the outgoing fiscal year, dragged all the economic gains down to earth. In September last year, the prime minister announced a Rs341-billion package for the farmers after the agriculture sector suffered floods and depressed prices. The government has allocated Rs 700 billion for agricultural loans with markup brought down to 2 percent this time. At least 7 percent tax on pesticides has been revoked, fertiliser price are cut down to Rs 1,400 per bag from Rs 1,850 as well as off-peak electricity tariff for tube-wells are slashed from Rs 8.85 per unit to Rs 5.35 per unit which will cost the government Rs 27 billion during the year.
The budgets, prepared by the bureaucracy, often suffer failures and disappointments as the government has never been able to implement it in letter and spirit. As a result, a trail of mini-budgets haunt the economy and the nation during the whole year. The government has so far failed to give a road map for the development of the economy and has adopted adhoc measures to resolve the pressing issues. As a result, a status quo remains intact without any practical steps to revolutionize or stimulate the economy. The budgets are often ditto copies of the previous budgets with minor changes in figures and policies. However, the government’s thrust this time is on the agriculture sector but it will be difficult to reap the benefits of concessions in the absence of a road map. The government had the whole year to do homework and develop an administrative set up and prepare a road-map for the economy which not only cover agriculture, but also industrial and service sectors.
It is unfortunate that after announcement of the budget, the government often goes into the sleeping mod and fails to understand the changes which the economy requires in the changing global perspective. Out of the Rs 4.394 trillion budget, the government has earmarked a huge amount of Rs 1.8 trillion to retire public debts and pay interest on the huge borrowings during 2016-17. The finance minister stated the government is targeting to restrict the fiscal deficit at 3.8pc of the GDP next year, which would be further narrowed to 3.5 percent of the GDP by 2017-18. The government has raised tax collections by 7 percent and has set a target of Rs 3.96 trillion for the coming fiscal year. The government claims the step will increase the tax-to-GDP ratio to over 10 percent, but how the business community will react to it has been ignored. Tax relief brings more taxes.However, witch-hunting and persecution of the business community could bring short-term successes, but ultimately long-term failures.