Budgeting for 2014-15—more of the same

We are a nation that spends vast amounts on weapons when a large proportion of our population is illiterate.

Editorial June 03, 2014
Finance Minister Ishaq Dar (R) delivering the budget speech, while Prime Minister Nawaz Sharif reading the Budget proposal. PHOTO: PID

There were no surprises really in the budget for the forthcoming fiscal 2014-15, notwithstanding Finance Minister Ishaq Dar's speech before the National Assembly where he tried to impress upon his listeners that the present PML-N government had made considerable progress on the economic front. The following will hopefully explain why.

The projected budget of Rs4.302 trillion ($43.5 billion) for 2014-15 is around seven per cent higher than the Rs3.985 trillion that was budgeted for 2013-14. If one takes inflation into account then the budgeted figure for the forthcoming fiscal year is in fact marginally lower than that of last year. As is the unfortunate practice in practically every fiscal year during the past several years, the biggest chunks of the federal budget are spent on defence and debt servicing; 2014-15 will be no different with over 51 per cent of government spending going to these two heads. In fact, the defence budget of Rs700 billion ($7.1 billion up 8.8 per cent from the figure that was budgeted for 2013-14) does not include Rs163 billion in military pensions and that understates the actual size of the defence budget. Furthermore, if one looks at the split between development versus non-development expenditure then almost four-fifths (79.1 per cent to be precise) will be spent on current or non-development expenditure.

Interestingly enough, the finance minister's speech, made no mention of the defence spending figure and all it said was that the needs of the Armed Forces had been duly provided in the Budget.

As for the Public Sector Development Programme (PSDP), the government?s flagship social-sector development driver, the finance minister took pains to point out in his speech that the figure of Rs525 billion for 2014-15 was substantially than that for the outgoing year. Perhaps Mr Dar forgot to mention the fact that the actual PSDP figure for 2013-14 ? when its budget was announced ? was in fact Rs540 billion and that in fact midway through the fiscal year the PSDP allocation was slashed; so to claim as if the present government had in fact substantially raised it is disingenuous to say the least. Moving on to tax collection, the target set for 2014-15 is quite an ambitious, nay unrealistic, one especially given that tax collection in 2013-14 yet again fell short of the target set for that year.

Not only that, most of the new taxation measures that have been introduced for 2014-15 are indirect in nature and hence generally regressive. One positive thing that was perhaps evident in the figures for 2014-15 is the significant increase in the allocation set aside for the Benazir Income Support Programme which will now be allocated Rs 118 billion, with each target family receiving Rs1,500. It is good to see a government continue and in fact increase coverage of a programme begun by a previous government, especially since it targets the very poor and impoverished.

That said, it would be instructive to keep in mind that much of the funding for this scheme comes from overseas governments.

As a state Pakistan's spending priorities have not changed, and the 2014-15 budget is further proof of that. We are a nation that spends vast amounts on weapons when a large proportion of our population is illiterate, has no access to quality healthcare and no hope of drinking clean water that will not make them ill. One would have thought that with its heavy mandate in Parliament, the PML-N government would have been able to make some significant changing in the state's spending priorities that are reflective of its poor status and which satisfy the very real need of many of its people for schools, hospitals and in general increased provision and better delivery of social services and basic amenities. That, unfortunately, has not happened and we are compelled and saddened to say that it more of the same.

Published in The Express Tribune, June 4th, 2014.

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