Saturday, June 15, 2013

FEDERAL BUDGET 2013-2014



Hopes were up and still are but as the budget unveiled itself upon me, It reminded me of Abdul Hafiz Sheikh (former Finance Minister of Pakistan), who figures of expenditures were always lower then the reality and the income targets were highly optimistic and the dept was always more than a trillion Rupees, which always lead to the condition that the government had to print money, which lead to Inflation. A budget that use to get obsolete the next day it was implemented.
Similarly the new Government has decided to keep its expenditures up to 3591 billion Rupees and its income is 1918 billion Rupees, to cover the 1500 billion rupees expenditures gap, the Finance ministry is going to borrow 1 trillion from the banks and 500 billion are expected from foreign aid, 3D licenses selling and some other resources.
What the Ministry doesn't understand is that they are not facing a gap of 1500 billion between Income and Expenditures, its 2000 billion, this year the circular dept is 500 billion Rupees that and the government will have to pay that as well. And it not defined how they are going to pay. Where are they going to get that the extra 500 billion rupees?
So for a lay man we have income of 1918 billion and our expenditures this year 2013-2014 are 4000 billion (after the addition of the circular dept).They will have no other choice but to go to the State bank and print money, which economic experts say, could lead inflation to double figures.
Now moving on they have decided to increase sales tax from 16% to 17%, which is going to be implemented on every product, its directly going to affect the poor, and will increase the prices of all basic necessities of life, and the combined effect of this tax and the inflation generated through money printing could cause a high rise in prices and hence calling it a friendly budget is nothing more than a day dream.
The budget is a purely conventional one, such sorts of budgets have a few objectives, firstly not to touch those elites (land lords, industrialists, lobbies and mafias) who are a part of the political system. Feudal are in every party, and no matter who comes, no one can expect revolutionary reforms in tax. Secondly to make it dept based, so that we always have remain in the addiction of begging and borrowing. Thirdly to squeeze as much as the government can from those who are paying taxes.
And such budgets are not prepared by our political parties, they don’t have the competency at first, they are only to approve it in assembly with a few minor changes that they can get their hands on.
It’s the bureaucracy  of the Finance Ministry that gives 80% to 90% input on such conventional budgets, their structures are same with some minor changes of names and numbers, such as in this budget he name of Benazir Income support program is changed to Income support program, which increasing its budget cut from 40 billion to 87 billion.
These budgets have been tried several times and resulted in nothing but making the economy more weaker, education and health are only given pennies, defense is from 550 billion to 670 billion this year(which due to weak currency is lesser than before),
Unless the political parties don’t create the competency of creating budgets by them selves, don’t get the guts and leadership capability of making strong and beneficial tax decision, such as implementing agriculture tax, and increasing the net of taxation rather then increasing taxes, nothing will change, the trends will follow on, the school, electricity and food bills will keep on incrementing, due to inflation caused by our conventional budget pattern.
But all these decisions can only be expected from those who can disturb the lions, have the ability to take on huge lobbies and mafias, who have the courage to take risk and putting their country above their lust for power, those who don’t play safe, those who prefer principles and values above materialistic gains. Only then will we be able to see a budget that would change the dynamics of this dept based crippled economy.

    
To View the budget CLICK.


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