Budget ‘bomb’

People know that they are only going to be burdened with more taxes in the new mini-budget

Already struggling to make ends meet, the masses are braced for yet another mini-budget, a second by the incumbent government. Finance Minister Asad Umar says the mini-budget, to be unveiled on Jan 23, will facilitate businessmen and carry ‘good news’ for the stock exchange. But with the government already struggling with crises such as those relating to fiscal deficit and balance of payments, expecting good news is like expecting the unexpected. And since a budget is all about generating money, people know very well that they are only going to be burdened with more taxes in the new mini-budget.

The ‘tsunami of change’ has transformed into a ‘storm of inflation’ in just five months of the new government. Economic indicators, both at the maco-and the micro-level, are nothing to write home about. The rupee has plummeted to an all-time low against the American dollar; foreign exchange reserves are alarmingly low; exports have only marginally increased despite a massive depreciation of the rupee; bears continue to dominate the stock market due to uncertainties over the government’s economic policies and in the political arena; the central bank’s interest rate has gone up to 10%; a cut in the development outlay in the first mini-budget is feared to bring down the economic growth from 5.8% in the last fiscal year to something around 4 in the ongoing one.

Household budgets too have taken a huge hit. While power and gas tariffs have undergone big hikes, the trickle-down effect of the falling oil prices in international market has been too small. The rise in the value of dollar has its effects too: the prices of medicines have already gone up by up to 15%, and those of many other imported items are anticipated to rise. Adding to all that is the government’s anti-encroachment drive that has resulted in huge unemployment, and that too at a time of increasing hardship.

Published in The Express Tribune, January 13^th, 2019.

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