Annual Budget

This article by  non economist appeared in daily the Nation May 9, 2010 issue

Annual budget in democracies is such an important event that involves every one. There is much hype and hoopla before and after. As the fiscal year comes to close and governments begin preparing the budget, economists start debating fiscal issues and policies in the media, pointing out the implications on national economy as a whole and effects on common population. Lots of interest is generated and masses wait for the budget statement with enthusiasm, hoping for the relief mainly. Other stallholders like industries and corporate sectors also try to influence the budget makers by highlighting their needs during the preparatory process.

But not much happens here. At least nothing seems to be happening. No body waits for the budget speech any more. For couple of past years, the federal budgets here have reduced to yet another official exercise devoid of any substance. They neither address long tern development programs nor give any immediate respite to the commoners. All those who have been following the budget promises in the past will testify that whatever was announced can hardly be seen on ground.

People are not interested in the budget because budget exercise is not for the people of the country. There is nothing for us in the budget," says Abbas Khan, a senior citizen," its usual significance is lost over the last few years because of deregulation and privatization that de-links the utility prices (natural gas, electricity, oil, telecom and commodities) from the federal budget. These prices are fixed separately on quarterly, monthly and even fortnightly basis. We come to know when a vendor selling lady fringes (bhindi) tell that vegetable prices have shot up because prices of petrol have increased or when meat seller charges more on account of increase in the cost of iron ore." What has prices of petrol or iron ore to do with the lady fingerer or meat one wonders?

Common citizens are not interested in terms like DGP, GNP, fiscal deficit and debt servicing or even rising levels of foreign exchange and favorable promises by ‘friends of Pakistan’ and other donors and international financial institutions like the IMF and or the Word Bank. "What good are these figures if prices of utilities and commodities skyrocket after every ‘awami’ budget? How much longer can one live on the promises like: "We have to make sacrifices for long term benefits" or "it is due to the doing of previous governments,” says Abbas Khan." And that is precisely what we have been hearing in the past.

It is in this context that common people view conflicting messages, new hopes, and more promises that start pouring in from Islamabad before budget every year. Besides moon and stars, every one in the government gives good news about pay increase of the government employees, relief for common man, reduction in different tariffs, repealing of surcharges, adjustments in tax rates while the populace keeps staggering under an ever increasing burden of living. And empirical observation is that going gets tough after each budget.

Another reason for lack of interest in budget proposal is that like most of the legislations and legal notifications, budget proposals every year are a poorly written, ambiguous, complex and full of loopholes document that only sharp accountants can decipher. The situation is not helped by the technocrats turned politicians who purposely overcomplicate the budget declaration in an attempt to obscure the true implication and impact of the measures being announced. What cannot be easily understood cannot be easily attacked, and the tax payers are left vague and bemused. Which is why not one listens to the budget proposals being presented and prefers to wait for newspapers next morning instead?

That said; let us review the national economy. Pakistan is an impoverished and underdeveloped country, suffering from extensive terrorism, internal law and order situation and political disputes, low levels of foreign investment and above all very costly governance. Pakistan's economic prospects, although still marred by poor human development indicators, continue to improve mainly due to inflows of foreign assistance. Foreign exchange reserves have also shown growth due to increase in recorded workers’ remittances. Long-term prospects remain uncertain as development spending remains low, and political tensions weaken Pakistan's commitment to lender recommended economic reforms.

One of the more farcical aspects of the Pakistani budgets is the element of spin and rude uncertainty that accompanies the lead up to the budget.

So what people do? Instead of waiting for the federal budget they concentrate on their personal budgets and how to make the ends meet particularly when most of the income middle class have is spent on living – education, medical and daily sustenance. There is no saving whatsoever.

This time, instead of trying to predict and analyze the realities I took a chance to see how people make their personal budgets. Or do they, in the first place? I asked people from different segments of our multi-classed society to account for their monthly income and spending. All the accounts were very revealing. This is the story that moved every one.

An old Chitrali woman named Suban, in her late 70s may be (she did not know her age, lives alone with no male member to look her after). Having lived all her life in the remote village Mir Khanni near Drosh in the hilly region of district Chitral (it is an all together different world across Lowar Pass) , her total possession is three goats. She takes them out for grazing every day and also performs other domestic chores single-handed. She is healthy, active and happy with life. I asked her about how she manages her expanses (read budget) and what are her dreams? On lot of coaxing she said, "I will be happier if my goat delivers three lambs this time." Surprised, I asked her to explain. She said, "I don’t have very many requirements. I will sell the lambs and put a new roof on my home and will sell all the milk to live comfortably!" Her budget is simpler but life certainly is tough.