Trade Deficit Everyone at Least for a Time Being
Total Page：16
File Type：pdf, Size：1020Kb
The Business | EDITORIAL/OPINISOunday N , June 130, 24021 Budget 2021-22: A story Chief Editor of uncatchable dreams out of which 369 billion will be from in - disappointed as development spending do not address the issues of lack of Irfan Athar Qazi ternational financial institutions. The has been hiked by more than 40 percent water, huge price hike of inputs and no E-mail: [email protected] tragedy is we are deep down muddled marked as Rs 1370 billion. The ex - subsidy on inputs. Therefore, more im - into circular debts already and we never penses planned to be incurred on the ports of food items which by the way [email protected] able to cut down debt servicing but we armed services constitute 16 percent of will face increased excise duties as well. are again planning to hike the load of the total outlay of the budget, which is So practically the expenditures without debts. Rs 8.48 trillion. Moreover, the alloca - revenues like dreams without outcomes. Tijarat House, 14-Davis Road, Lahore In terms of real growth the deficit tion is 2.54 percent of the GDP. The The aim behind such exemptions is to should be financed by growth not by debt servicing has been marked as of Rs promote the assembly of mobile phones 0423-6312280, 6312480, 6312429, 6312462 loans and we don’t see the practical poli - 3060 billion which comprised 38 per - as well as encourage investments in re - Cell # 0321-4598258 cies to implement growth since this gov - cent of the GDP. The PSDP budget is of fineries. Capital gains tax on stocks has ernment has taken the charge. This is Rs 964 billion out of which Rs 900 bil - been reduced by 2.5 percent in an effort also notable that growth should not be lion is for federal development expendi - to boost volumes further. Turnover taxes infused by consumption of mobile, mo - tures. The government kept the promise have been reduced across the board and 1270-B, Peoples Colony No I, Off: Chenone torbikes, cars and property as this widen of no new tariffs on utilities especially eliminated for all enterprises in Special Road, Faisalabad, Ph: 041-8555582 the gap of income inequality. The real electricity. Development spending has Economic Zones. Automobiles of PROF. KHAULA WALAYAT growth means that the living standard of been hiked by more than 40 percent. smaller size have also seen reduction in people should be raised by real wage in - Virtually every category of business, es - sales tax, or elimination of the Federal ISLAMABAD / RAWALPINDI he budget 2021-22 is a story of crement, lower inflation, more employ - pecially manufacturing and financial Excise Duty (FED) altogether. But what expenditures without revenues ment and increased per capita income. services, has received tax cuts. The lat - about the purchasing power to buy all N-125 Circular Road, Ph: 051-5551654, and approval of the IMF, so the The minimum wage for daily wagers ter is important because they tend to set these. So, in short, the exemption for in - 5532761, Cell # 0300-8567331 real budget is still to come. has been increased by more than 20 per - the bar for salary increments for many dustries will boost the capital regime as KARACHI T The acclaimed bundle of happiness cent, while salaries for civil servants private businesses too. Industry has been capitalists will be benefitted. Already 3rd Floor Kehkashan Mall 172-I Block II PECHS for everyone is delivered on Friday. Ap - have been raised by 10 percent. But if stuffed with numerous tax and custom corporation paid Rs 500 billion less tax. Opp Rehmania Masjid Main Tariq Road parently, this budget is very fancy theo - you incur the rate of inflation which is duty exemptions, ranging from raw ma - The regime which is totally surrenders Ph: 021-34524550, Cell # 0300-8251534 retically but when it comes to practical raised by six percent and salary raise is terials for textile exporters, paper and to mafias how will growth be insured. implication, I have some reservations almost four percent on average the dif - board, steel, pharmaceuticals, paints, Taxing commerce is a cruel towards based on previous records and the ques - ference is of two percent which is nega - chemicals, leather, electronics, cables small entrepreneurs who are the repre - tionable will and power of current state. tive growth in real wages. Also, notable and fiber optics and automobiles and on sentative of middle and lower class of The budget seems to give smiles to that hike in prices in international mar - and on. Hardly any industry is left out country. In my opinion not the cost of Trade deficit everyone at least for a time being. kets are going to be reflected in the of the bag when the tax cuts are all con - doing business should come down but According to a report, the trade deficit has widened by The total volume of the budget is of prices in domestic market means more sidered. Subsidies have been pro - ease of doing business by reforms which a whopping 30.56 percent to $27.488 billion July-May Rs.8.48 trillion while the revenues are inflation. If the government would be grammed at Rs 682 billion, of which a are impossible without addressing 2021 compared to $21.054 billion in the comparable pe - targeted on Rs.5.8 trillion of remarkable failed to address this upcoming pressure, giant share of Rs 596 billion is for the mafias and corrupt bureaucracy. riod of the year before - 27 percent lower than the $37.6 figure. Don’t forget that last year the ini - then everything will be in dump again. If power sector, an area of specific concern While concluding this budget raise billion in 2017-18 and only 13.5 percent lower than the tial target was set on Rs7 trillion which this genie of international hike in prices for the IMF. Likewise, the budget pro - many questions. First from where they $31.8 billion in 2018-19. Critics of the severely harsh up - was revised many times and finally set - will come out of bottle it will be near to vides massive power subsidies to K- will collect the revenues without re - front monetary and fiscal policies agreed with the Interna - tled at the target of Rs 5.5 trillion and impossible to catch it. The government Electric for both industrial support (Rs structuring the FBR. Without proper tional Monetary Fund on 12 May 2019 argue that the still was not achieved. In last fiscal year has targeted the 39 civil and military 22 billion) and for tariff differential reforms in industry, agriculture and containment of the historically high current account deficit we collected the revenues of Rs 4200 pensions as of Rs. 480 billion, including (Rs56 billion where last year’s spending FBR the brave and fancy incurs of of $20 billion inherited by the present government to a billion which remained Rs 3800 billion the raise of 10 percent in pensions. Isn’t on this was Rs16 billion). The prime budget will not be able to imple - trade deficit of $27.488 billion today reflects a need to re - after adjusting refunds. Now the ques - it the high time that military pensions minister’s promise that power tariffs mented. The most important factor is visit some of the earlier claims. First, the record high dis - tion is where did they adjust the deficit should come out from defense budget so will not be raised has put a lot of smiles they have not negotiated with IMF be - count rate (13.25 percent) and massive rupee depreciation of Rs 100 billion in setting next revenue less pressure will be on civil budget? on people’s faces, but now the govern - fore giving these exemptions and not in 2019-20 led to an undervalued rupee and stifled do - target. So, if include this amount of Rs The civil government expenditures are ment faces two key challenges in seeing increasing tariffs. mestic output while raising the budget deficit to an unsus - 100 billion then the deficit will be in - Rs 479 billion which is not so much as this promise through the first is to con - I am just surprised at the childish in - tainably high 8 percent of GDP. Sadly, the usual linkage creased. The next year targeted deficit is compared to the non-development ex - vince the IMF that these allocations are fused optimism of the government that between an undervalued currency and exports is not ap - Rs 3990 billion out of Rs 3420 billion penditures of Rs 7523 government necessary and there is no way around they will agree the IMF on such steps. parent in Pakistan as our major export items are heavily will be provided by the provinces. The which again is not a healthy proportion them. And if they succeed in this, then Is our government thinking that the US reliant on imported raw materials and semi-finished prod - government is planning to take domestic to development expenditures. second will be to ensure that taking on has adopted us again in exchange of air ucts that were rendered too expensive due to the rupee de - loans of Rs 2417 billion out of which We the economists divide the budget these spending responsibilities will not and military bases (proposed) and the preciation and the high borrowing cost made most national saving schemes will provide usually in 3 Ds. Development, Defense lead to further accumulation of the cir - US will influence the IMF and FATF? productive activities economically unviable.