The Finance bill 2014-15 has been presented, nothing extra ordinary was included in the budget. This years budget seems like a stark reflection of last years budget with a few changes.In simple words, the current budget appears like an extension of the last years budget with renewed figures.
Analysis of Key Factors:
This is the allocation of funds for the education sector. Total expenditure on education in the period 2013-14 was 63442 million, the expected figure for 2014-15 period is 64014 million. Not a great increment and considering the fact that according to World Bank statistics approximately 5.3 million children do not even have access to Primary education in Pakistan, the amount of 6079 million allocated for Pre- Primary and Primary education is not sufficient enough. A major chunk of resources should have been allocated towards bringing the out of school children into the National educational stream.
The figures presented in the budget and the stats do not reconcile with each other. Condition of schools in the rural areas is extremely worrying, local tribal elders and influential persons use the schools as hideouts and stables. Forget the rural areas, the condition of schools in a city like Karachi is not different. Many government schools in the heart of the metropolitan city of Karachi have been closed down due to law and order threats and the students forced to either seek more expensive private schools or drop out at an early age ,which leads to a threatening increase in the rate of child labour.
The government has yet again neglected the most important aspect of building up a society. By neglecting the youth, by keeping them uneducated the current social deterioration will not even slow down. The constitution promises that it is the responsibility of the state to educate the children upto secondary level and arm them with required skills to become a respectable citizen of the society. But it seems as if the government is not yet prepared to allocate resources on education of the coming generations.
The budgeted target for FBR taxes in 2013-14 period was 2475000 but the revised budget shows that only 2275000 was achieved, indicating a shortfall of 200000 million. The budgeted amount for the period 2014-15 is 2810000, considering the rate of shortfall of the last year,it is expected that there`ll once again be a shortfall of est. 225081 million. The proposed amount of total collection from income tax is 1163821. Significantly higher than that of last years proposed target. This increment is because of the widening of the tax base,however it must be kept in mind that the prevalent tax system in Pakistan has inherent limitations. It has many loop holes ,given this fact the figure for income tax collection becomes irrelevant. The country is in dire need of income tax reforms. Lahore Chamber of Commerce had previously raised their opinion of having a transaction based taxation system, this is also what Dr. Qadri has been advocating. Because a transaction based system essentially eliminates the corruption at the lower levels thus allowing for better recovery and generation of revenue. Currently out of the total population of 180 million, only 1.7 million are registered tax payers. Even if we extrapolate this amount to 2 million, the resultant revenue will not reflect the true picture, this is because the procedures to file for and pay taxes are too complicated furthermore the rewards outweigh the punishment i-e it is easier to avoid the payment of income tax. Income tax on salary is diligently deducted by the corporations but the real bulk potential for income tax lies under the head of tax from business, unfortunately the government has been unable to introduce taxation reforms to improve the taxation system. Till the time entire taxation system is revamped, we cannot expect to see a betterment in the current situation. One more important point is that people are willing to pay tax, but they are put off by the fact that the tax paid is never used for their own welfare, rather the tax revenue is used to fund the lavish lifestyle of ministers , parliamentarians and bureaucrats. This generates class conflict and anti social behaviour which in turn leads to tax evasion.
Therefore there is not one single factor,which if improved, will result in a better outlook, rather there are a lot of factors which have accumulated and are resulting in a constant weakening of the social structure. There is a dire need to address all the factors immediately otherwise there will be no improvement.
The people should brace themselves for an increase in the prices of Gas and Electricity because the tax burden will like always be transferred to the end consumer.
A decline in the expenditure on Medical products, appliances and equipment ,previously the figure was 252 million, but for the period 2014-15 the figure has been slashed down to only 100 million. Hospital services have seen an increment and public health services too have seen a sharp decline in the allocated resources. It must be kept in mind that the condition of Health facilities in Pakistan is already very poor. In recent years the country has seen breakouts of Measles which turned into an epidemic in the rural areas of Sind. Furthermore the number of Polio cases has also been rising and travel restrictions are being imposed on the country. The rural population suffers from a high infant mortality rate, the people do not have access to basic health facilities. A few months ago the famine of Tharparkar unveiled the unimaginable level of corruption and mismanagement. Only the main urban centres are provided with reasonable health care . Patients from rural areas have to travel for miles to get to the urban centres for costly treatment. It seems as if the government has decided to turn a blind eye towards the health issues. Yes, the overall health budget shows an increase in the allocation of funds, but the bifurcation of those funds reveals a grim picture.
This portion is related to the economic condition,the floating debts and Pakistan Investment Bonds have registered an increment beyond the expectation of the government. This suggests that the people are willing to keep their funds in the form of bonds rather than investing their funds in domestic markets. This indicates that there is lack of confidence in the local population,furthermore it also suggests that the domestic market is not showing signs of promising returns which is why the people are content to keep their savings . It is a general rule that when savings of the people increase, more and more money goes out of circulation as a result the government will have to print more money which will result in inflation. This is something the government will have to look over. However this also indicates that the government has access to more funds which can be allocated to other areas which need more attention. But as we have seen, the two most important areas which needed attention, namely Education and Health sector have been totally neglected.
This is the interesting bit, can you see that the allocated amount for recreation and sports was 6 million rupees, but the actual budget figures for 2013-14 session show a total expenditure of 19 million rupees. This perhaps is the greatest increment in the whole budget, percentage wise. 68.4% increment! What could have caused such expenditure on recreation and sports when the country is struggling from the war on terror,low literacy rate and what not!..The answer is the Punjab Youth Festival. The gala of record breaking attempts, where dedicated students kept breaking nuts with their heads only to realise that the Guinness staff were just a group of imposters.
This was a brief analysis of the key figures in the budget, there are still a lot of things which deserve special attention, but the aim of this article was to focus upon those aspects of the budget which deal with the social sector. There have been a few changes which might turn out to be beneficial for the public sector, but we must keep this in our mind, that no matter how good the policies are, in the end they depend on the social fundamentals to succeed. Our society, in its very essence is facing corruption at every level. The titanic was claimed to be an unsinkable cruise ship, but a single hole in the hull caused it to sink. Similarly, as long as we have this gaping hole in the form of corruption, loot and plunder we cannot expect the policies to yield their true results.
The government must take immediate steps to control and curb corruption and nepotism at every level. Our best wishes are with the government but in the last year, the government has shown absolutely no intent to take care of the core issues.
by Danial Ahmed
Team Operation Pakistan