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Question of real economic growth

Question of real economic growth

 

According to newspaper reports, a group of independent economists have challenged Finance Minister Ishaq Dar’s claim that the country achieved 4.7 percent growth in its gross domestic product during the fiscal year 2015-16. The group believes the country’s economy grew at the rate of 3.1 percent instead of 4.7 percent during the year. Another research institute has claimed that the government has been understating the real inflation rate in the country. The questions about the government figures are valid in a situation where most of the economy is undocumented and no one exactly knows the real income, real growth, real exports, real savings, real deficits and real challenges to the economy. All the country’s economy is a guesswork as there is no centralized system to record all the data as one document. In a population of 200 million, less than one million pay taxes and most of who are from the salaried class and their tax is deducted at source.

On another note, a parallel economy is thriving in the country in which alarge number of business and trade concerns are making profit with both hands but are out of the bounds of tax net and no record of their earnings is available with any of the government department. The tax authorities only run after those small and medium-level organizations which have names in the market and are already listed with the income tax department, but there are millions of others which are using every facility of this country but pay no tax. The first challenge facing the government is documentation of the economy. However, the government is not ready to accept this challenge on one pretext or the other and even refusing to learn from other countries experiences. A study of the modern economies is indispensable for the government ministers and bureaucrats to understand how potential taxpayers can be brought into the tax net without inviting chaos, fuss and trouble.

The government has not allocated any fund for the introduction of a system to improve tax collection, start work on the documentation of the economy and gain the trust of the small and medium-level entrepreneurs so that they should willingly come into the tax net. Fortunately, basic elements for the documentation of economy are already available in the shape of chambers of commerce, trade organizations and industrial associations. There is a lack of liaison within the government departments which also needs to be improved. It is good omen that the country is producing thousands of software developers every year and their expertise can be utilized not only to keep track of the business activities, but also streamline the economic affairs.