The federal budget for the fiscal year 2020-2021 comes at a challenging time when economic growth all over the world has been severely impacted by the coronavirus pandemic. It appears that the government has attempted to create a favourable budget in order to provide some sort of relief to the common people and decided against burdening them with a new set of taxes. This, the government hopes, would contribute in reviving economic activity that has stagnated during the last few months.
That the government did not announce an increase in salaries and pensions of its employees and pensioners clearly shows that it has had to make difficult decisions due to the many constraints presented by the ongoing economic situation in the country and worldwide. This is also why subsidies have been slashed by 40 percent. The focus seems to be on inviting foreign direct investment (FDI) targeting a 25 percent increase and using public investment to create jobs and address poverty. The government is also hoping that it will be able to spend its development budget on areas previously ignored and help remove the vast disparities that exist in different parts of the country. The increase in the budget for defence is expected because of an increasingly aggressive India and the need to improve border management. Perhaps the most unfortunate aspect of this year’s budget is that the biggest chunk, Rs2.946 trillion, has had to be allocated for interest payments and debt servicing. To manage everything else with what is left behind is rather difficult.
Perhaps the government could have introduced a greater increase in the health budget as the healthcare system is under tremendous pressure. Education should have been prioritised better as well. This year, the government has placed immense trust in the FBR’s ability to perform, as the body is expected to achieve a Rs4.963 tax collection target, which would be a significant increase from the preceding year. Let’s hope it can rise to the occasion.