At a time when Pakistan is facing nerve-wracking political challenges and economic hold-back, the coalition government presented a Rs2.01 trillion national budget that offers relief measures to the poor and the salaried class, imposes new taxes and slashes food, fuel and power subsidies. “Certainly it is a challenge to present the budget in these harsh and difficult circumstances when international donors have been demanding the abolition of all subsidies for a long time,” said Anwar Razi, an accountant in Jeddah. Pakistan targeted 6.5 percent growth in the 2008/09 fiscal year (July/June) through better macro-economic management and expected growth in the farm and manufacturing sectors. Razi said the government had to make painful adjustments to achieve 25 percent growth in revenue, targeted at Rs1.2 trillion in the new budget. The rationale behind the harsh decision is said to be an attempt at cut back fiscal deficit from 7% to 4.7%. Government seeks to meet a budgetary deficit of Rs582 billion by rationalizing taxes, mainly by increasing indirect General Sales Tax (GST) from 15 percent to 16 percent. “This move is likely to push already surging inflation further up,” said an economics teacher Luqman Ali Baksh, while commenting on the move to reduce fiscal deficit. “A drastic cut announced in the budget on food, fuel, electricity, and fertilizer subsidies from Rs407.48 billion to Rs295.20 billion would hurt the poor already reeling under price-hike, inflation and food shortage,” said Baksh. “Particularly on the expenditure side, there is some effort to reduce the subsidy burden,” said Tahira Jabeen, who is an MA in economics. Muhammad Yar Nangiana, a banker, criticized the budget for being against the wishes of the masses. “It is a budget for landlords and feudal lords.” Architect Reza Mehdi agrees with Nangiana's views. “This budget would create more problems for the middleclass.” President of Kashmir International Writers Club Raja Pervez Akhtar Shaheen thinks that food subsidy or “cash card for the poor” schemes are no substitute for creating jobs for all and ensuring judicious distribution of national resources amongst all the level of society. “There is no program for improving the economic lot of the poor.” This is the first time that defense spending has been publicized since 1965, when war with India led to it being classified. “It is not clear whether the increased budgetary allocation would go towards employees' expenses or purchase of defense assets,” commented Luqman Ali Baksh on defense budget, adding that “the government seems to go into reverse on the claim of freezing the defense budget because the budget proposes a nearly 7 percent increase, from Rs277 billion spent last fiscal year to Rs296.07 billion in 2008-09. Rehana Shazel, a home economics professor, said the people who are criticizing the current budget should understand that Pakistan was never confronted with such grave problems. “In the present economic situation of the country, the government has presented an ideal budget which reflects true efforts of providing relief to common people,” she said. __
