• No products in the cart.

The Express Tribune Editorial 13 June 2020

A rolling budget?

 

What was supposed to be an extraordinary budget, given the unprecedented economic misery brought about by the Covid-19 pandemic, has turned out to be a mere accounting exercise. The Budget 2020-21 has a total outlay of Rs7.13 trillion as against Rs3.70 trillion worth of net federal revenue, leaving a deficit of Rs3.43 trillion which comes to something around 7% of the GDP. That the net federal revenue is not even enough to cater to two major liabilities of the federal government – defence Rs1.28 trillion and debt servicing Rs2.94 trillion, equalling Rs4.22 trillion – speaks of the hollowness of the government coffers as well as Hammad Azhar’s pledge of a “no new-tax” budget.
The total revenue, however, is estimated at Rs6.57 trillion, including Rs4.96 trillion tax revenue and Rs1.61 trillion non-tax revenue. It’s the Rs2.87 trillion worth of provincial transfers under the NFC Award that reduces the federal revenue to Rs3.70 trillion. This estimate is, however, subject to how good the FBR turns out to be in meeting the tax target. While the revenue board’s performance during the outgoing fiscal year raises a genuine concern, the Rs4.96 trillion tax target is itself hugely unrealistic, given the fact that we are in corona times when the businesses are finding it hard to survive, let alone pick up momentum.
And then the government has not been found either to work on genuine fiscal stimulus packages to be announced as part of the budget, meant to lift the economy out of the Covid-splattered mess. The one announced in March, of Rs1.3 trillion, included a big amount the government was already liable to spend in terms of public welfare and pay back to the business community. Even the interest rate is still as high as 8% even though the same has come down to naught in many western countries or been a mere 1-2% in the wake of the coronavirus onslaught. Not to mention the continuing high cost of utilities that flies straight in the face of the PTI pledge of ensuring ease of doing business.
Besides, there were no structural reforms in the FBR during the PTI’s two years in power to ensure that tax targets are routinely met; none of the sick industrial units underwent any restructuring to bring their deficits down; circular debts in the energy sector still stand tall and threatening for want of meaningful intervention from the state; and no development projects were introduced with special focus on mitigating the impact of the rampaging coronavirus.
The budget clearly makes an effort to keep the IMF programme afloat by setting a high revenue target and allowing no genuine relief to the masses or to the business class. Even the government employees have been denied a raise in salaries for the first time in very many years.
The development programme is yet another disappointing story – one that also runs contrary to efforts for meeting the tax target. At Rs1.34 trillion, the development spending estimates are 18% less than in the outgoing fiscal year.
Can one, under the circumstances, expect the government not to come up with additional budgetary measures or a mini-budget later? In fact, with the financial impact of the Covid-19 pandemic merely based on assumptions, the Budget 2020-21 is sure going to turn out to be a rolling budget – one that has to be updated with time because of the fluctuating estimates relating to revenues and expenditures. The budget, in that sense, appears immaterial at this stage – a mere formality.

 
 

State of railways

 

Like most public-sector organisations, the Pakistan Railways too is running into losses. Yesterday, during the hearing of a petition, Chief Justice of Pakistan Justice Gulzar Ahmed severely castigated the Railways Secretary for the unsatisfactory performance of his department. Replying to a question from the Chief Justice of Pakistan about the number of railway employees, the secretary informed that 76,000 people worked for the organisation, upon which the top judge expressed surprise that with such a huge manpower the department’s performance was disappointing.
The Chief Justice observed that the railways seems to have employees far in excess of its requirements, and that most of the railway systems and factories were lying idle, so 10,000 employees would be sufficient for efficient functioning of the department. The honourable judge implied to say that overstaffing is one of the causes contributing to the railways’ swelling losses. He asked the secretary to go out in the field and see things for himself and simply not do only paperwork inside his office. The top judge also took railway officials to task for the increasing number of accidents. During the hearing it was revealed that there was no computerised record of railway employees. This is surprising and shows the state of neglect prevailing in the Pakistan Railways.
A day earlier during the hearing of a petition seeking regularisation of railway employees, the counsel for the petitioner told the Supreme Court that employees seeking permanent status had been working as temporary employees for the department for more than 20 years. He said such employees were more like daily-wage workers working against permanent posts, and vacancies or these posts were never advertised. The Chief Justice expressed astonishment that there was no clue as to what projects workers were hired for and who appointed them. Justice Ijazul Ahsan, another judge on the bench, expressed displeasure that inexperienced hands were being hired for jobs that need expertise.
The government has lately been taking steps to put the railways back on the rails. As part of the strategy, Prime Minister Imran Khan has instructed the Pakistan Railways to expedite the process of handing over the management of 15 trains to the private sector.
Template Design © The CSS Point. All rights reserved.