As the DAWN”s headline summarizes it all – “Most Targets Missed”; it was the raw strength of the economy that showed progress, whereas, the Government failed to implement the proposed economic reforms, perhaps due to its untimely fixation with the RGST (Reformed General Sales Tax – just like the Value-Added Tax) proposal..
Economic growth (real Gross Domestic Product – GDP) was restricted at 2.4 per cent during Fiscal Year 2010-11 against a target of 4.5 percent. Finance Minister blamed floods (adversely hitting agriculture sector – total losses worth PKR855 billion & PKR429 billion lost only by agriculture sector alone), rise in international oil prices (restricting economic activity and increasing inflation), energy crisis (hitting manufacturing sector), cut in Public Sector development Projects (PSDP – resulting in low economic activity) and precarious law & order situation (cause for low investment to GDP ratio apart from other phenomena) etc., as the main factors due to which the target could not be met..
It clearly shows that Government does not take into account risk factors while
planning for budget; rather it is just an addition, multiplication and division job as per agreements with International Monetary Fund (IMF) and political maneuvering.
In absolute terms the size of Pakistan”s economy is estimated at US$210 billion or PKR18.1 trillion.
The Government took
a PKR50 billion hit in revenue by not fully passing it on to the consumers. Even though Government would most likely miss the revenue collection target (called tax gap), but still it contemplates a record collection of around PKR1.58 trillion provided it collects PKR272 billion this month i.e., so far collected PKR1.3 trillion..
For budget financing the Government has so far borrowed PKR544 billion, which is PKR114 billion more than last year”s borrowings.
The statement of Finance Minister (FM) looks ridiculous when he says “Our stand is that everybody earning income beyond a certain level should pay the taxes irrespective of the
source (of income),” when particularly he himself evades taxes. Geo TV repeatedly showed tax returns of top politicians including that of the President; PM; Chief Ministers and the FM in which either ‘Nil’ or few thousand rupees were paid in tax dues.
Even though FM explained that the fiscal deficit at one time was anticipated to touch 8 per cent of GDP
this year against a limit of 4 per cent; the government brought it down to 5.1 per cent by controlling expenditure and mobilizing resources in March, but according to the Economic Survey 2010-11, the deficit increased to 5.9 percent from 5.3 per cent in recent times..