Business

A critical look at the 2010-11 budget

Marvi Memon June 08, 2010

Next fiscal year’s budget is certainly not a people’s budget but one dictated to us by the IMF. It is not even constitutionally correct since it doesn’t implement the NFC Award or the 18th amendment. Instead of managing inflation it will end up increasing prices. The increase from last year’s Rs1.38 trillion in taxes to this year’s Rs1.667 trillion is going to be a burden on ordinary Pakistanis who pay their taxes as opposed to the elite. Subsidies are also to be slashed – Wapda’s from Rs147 billion to Rs84 billion and KESC’s from Rs32 billion to Rs3 billion. This means that people better get used to a massive rise in their electricity bills.

Let’s move to the famous austerity drive of the government. Had there been a true drive the budget of the prime minister secretariat would not have increased from Rs428 million last year to Rs484 million for 2010-11. Nor would the president’s have increased from Rs390 million to Rs427 million. The 10 per cent cut on the salaries of federal ministers is just an eyewash. And the president’s allowances were overspent by Rs10million last year. And the prime minister spent Rs25 million last year, both without the parliament’s approval.

In a year where the 18th amendment was signed we should have seen some reductions in the budgets of those federal ministries who are on the concurrent lists – since their operations will move in full to the provinces in the near future. Below is a list of those ministries that are asking for more funds this year. Clearly that is against the spirit of the 18th amendment. The culture division’s budget for 2010-11 is Rs104 million higher than for the outgoing year, sports has asked for Rs30 million more, youth affairs for Rs40 million more, tourism Rs25 million and population planning a whopping Rs516 million.

General Musharraf’s old NFC formula of 23.71 per cent for Sindh and 57.36 per cent for Punjab has been applied instead of the 55 per cent for Sindh based on revenue generation which was agreed to in the 7th NFC Award. And how many projects of the communications ministry are specific to Multan, versus the rest of the country? If one analyses the communications budget closely, one will find that eight projects for the Multan region are ongoing – at a cost of Rs8,510 million – and Rs2,889 have been set aside for three new projects for the district. This means that a quarter of the communications budget will be devoted to the district of the prime minister alone. I have nothing against Multan. It’s underdeveloped and should get a share but surely there are other cities which should be getting sizeable portions?

This is just a snapshot of a budget which is serving our elite versus our poor. Let’s hope the opposition blocks these anomalies in the budget session.

Published in the Express Tribune, June 9^th, 2010.

This article has been revised to reflect the following correction:

Correction: June 09, 2010

The increase from last year’s Rs1.38 trillion in taxes to this year’s Rs1.667 trillion is going to be a burden on ordinary Pakistanis...

COMMENTS (10)

Hamid Sultan Dawoodi | 13 years ago | Reply In my opinion I think our present politicians are not capable to run the democratic norms in the country. They are absolutely failed in their performance to address the grievances of people. When a politician stand in power every think in his view going to be OK when he change his position and become activist against another ruler he go on criticizing the new comers. Repeated personalities of federals are our fate. I want to question with Madam Marvi where were the members of assembly on 9th June, 2010 that only 30 members of National Assembly attended the budget session. .We belong to the society of condemns with no patriotism for nation. Whenever I happen to address students of university believe it they want to get rid from in picture politicians, they need change, civil society crying for change, we are stormed with institutional crisis, nowadays nation is looking towards sky for the mercy of Almighty Allah because our political system is figured with pleasure of power enjoying either in opposition or government in running system no body has any interest with the honour of our FLAG with total patriotism.

Rabia | 13 years ago | Reply where in the NFC award does it state that Sindh would get 55% of the divisible pool? Sindh was supposed to get 24.55%. The issue of VAT is still being negotiated between Sindh and the centre and will be decided in October, so that will also impact Sindh's final revenue share. http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/national/vat-levy-is-subject-to-pa-approval,-says-dr-kaiser-860

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Meekal Ahmed | 13 years ago | Reply Mr. Butt, Lets get over the conspiracy stories. The Finance Minister was not "approved" by the IMF. It is none of their business. However, he is a well known commodity and has been a Minister before. He is educated and well-spoken and knows his economics. If the IMF likes him, that is why.

Murtaza Ali Jafri | 13 years ago | Reply Dear Ms. Political Grand Standing Marvin Memon 'The increase from last year’s Rs1.38 billion in taxes to this year’s Rs1.667 billion is going to be a burden on ordinary Pakistanis who pay their taxes as opposed to the elite.' For starters it's Trillion. And secondly, the Elite and the Elite evil corporations fund the budget, funds your cushy lets negotiate over lassi's Parliament. Logically, most Pakistani's are Poor, so the poor pay no taxes. Fair enough. That leaves the Elite to pay Taxes that run the country. Subsidies are popular Political Gambits, but they are inefficient. If you don't pass on the costs today, you have to do it tomorrow. We can't afford electricity subsidies, and guess what, it is the Elite who consume the most electricity that pay for those too. How about focusing on the misspent billions vs. the documented millions. And how much did your party's government spend btw? Over sized budget requests.....like that never happens. Good for Multan. I sure hope the next Prime Minister is from Karachi then.

M Shahbaz Butt | 13 years ago | Reply we are debtor of IMF and we should follow the rules and restriction imposed on us by IMF and everyone knows that this is dictated budget by IMF and even our finance minister is approved by IMF who is a advisor of X-president Pervaiz Musharaf. then in these circumstances how it is possible to get a AWAM DOSt budget. budget is a game of self interests.everyone is busy to protect their own interests and no one parliamentarian interested in nation's interests including all political parties.

Ammar | 13 years ago | Reply As expected, this article is disappointing. I feel that the entire south Punjab has been marginalized as the rest of Pakistan minus Takht Lahore. 8,510 M development budget is being criticized but the writer wont write or utter a word about 27 billion Rupees Jati Umara Road. She should be ashamed of herself. Q. League is going into next elections with a slogan of Separate South Punjab Province. Are we missing something here? True, there should be a balanced distribution in development budget, but why this reason fails when we see major chunk of the development budget going to LAHORE, Faisalabad, Shekhupura, and Gujranwala. Lahore is my city, but so is DG Khan, Muzaffargarh, Rahimyar Khan, Bahawalpur, Queta, Peshawar, Badin, Thatha, Larkana, and all the under developed cities of this beloved country. The leaders of Q. League should look in to this matter, and think twice before getting this lady elected on reserve seats in the next elections. Her vision is shortening day by day as the volume of her articles. What a pity!

talha | 13 years ago | Reply As usual Marvi mamon spokes like a desperate defender, she has got all the good points and material but it looks more of a criticism rather then a suggestion. The budget is definitely not supporting the poor nation and the taxes will dampen the living standard in Pakistan but infect its the duty of the opposition to stand against the bad points of government. We have seen in the past that all the previous budgets works on the name of IMF and now its time to accept our negligence on the part of non compliance within our fellow politicians. I believe that madam Marvi should arrange better relation with the others parliamentarians for the sake of Pakistan and for the people of Pakistan. It always looks that when we are in opposition we blame government on their acts and in government we argue and justify our position with international standards of begging the money. i request you to please think like a shepherd who maintain an identity and handled bunch of sheep with dignity rather then beating the band.

Fasih Ali Khan | 13 years ago | Reply Mr. Meekal Ahmed, It's great to hear from you about the Insight of these negotiations. Sir, It seems you might be talking about the ''Old Good Days'' but now things seem to be the exact Opposite of what you are saying. Continuous Increasing Inflation to price hike in utilities, Higher Interest Rates, Subsidies taken Off Plus VAT nothing shows that we are 'working hard' in negotiating for the poor of Pakistan. It Indeed is a Budget By IMF.

Syed Nadir El Edroos | 13 years ago | Reply Typo? last year’s Rs1.38 billion in taxes to this year’s Rs1.667 billion is going to be a burden

Meekal Ahmed | 13 years ago | Reply Madam you make some useful points. I applaud you for bringing the issue of wasteful spending into the light. We know about it but the figures when revealed are still very striking. I will take one exception to your article. It is that the IMF made the budget for us or they "dictated" it to us. This is a rather tiresome, boring and wholly inaccurate claim. I have sat through countless pre-budget discussions with the IMF as a representative of our Executive Director in the IMF in Washington spanning more years than I care to recall. I was priviledged to watch and listen to both sides. Pakistan has been fortunate, and we still are, to have very competent negotiators in the economic field (including the State Bank). Some of those figures are now a legend. Some of them now are still very good. They know how to negotiate, they are knowledgeable, and they negotiate hard. Very hard indeed. What you see in the budget is often if not always far from what the IMF wants. Trust me, Madam, I know. To give the impression that the Pakistani side just sits there dumstruck and in awe and listens to IMF "dictation" is a complete fiction. It makes for a nice headline. But that is about it. The truth is that there is hard, stressful and sometimes hostile argument often way into the late evening, and then over dinner and into the next day and the next. There are compromises made and give-and-take. The IMF have their brief from Headquarters as what is minimally acceptable. We have ours too. I would say that, in general, we end up somewhere in the middle. They win some battles; but so do we. In conclusion Madam, this is not the IMF's budget. It is ours. This is Pakistan's budget. It is not perfect (no budget ever is) and there are some rough edges and less-than-optimal measures in it. I would have preferred deeper spending cuts (like you) as opposed to any new taxes even if our tax collection is embarrasing and indefensible and the root cause of our never-ending and ever-enduring fiscal woes.

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