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Huzaima Bukhari & Dr. Ikramul Haq
The Pakistan Tehreek-i-Insaf (PTI) that was formed to provide socio-economic justice to all and work for social mobility of less-privileged, in its first budget for fiscal year 2019-20, proved to be an utter disappointment on this front. Much has been written about numbers contained in the budget and tax proposals made through the Finance Bill 2019. We do not want to repeat the same and write yet another conventional budget review. Our emphasis is on the model under which the budget is prepared. By allocating few billions for the poor in different programmes, the goal of establishing an egalitarian society cannot be achieved.
For our economic managers, budget is a number game, just to balance the books and show greater fiscal deficit every year and then endless and reckless borrowing. They are least concerned to prepare short-term, medium-term and long-term policies to emerge as a self-reliant country, where emphasis is on education, vocational training, innovation, research and knowledge-based economy. They are not bothered about investing in people. If we train them, empower them, give them opportunities to innovate, many problems can be solved automatically. Spending on education, health, imparting skills etc is not merely an expense, it is an investment. No society can progress without investing in human capital. Our economic managers have a different concept of “development” (physical infrastructure alone). Their development projects exclude the masses, the common people remain poor and uneducated so that their dependence on politicians remain intact to serve as their ‘vote bank’.
Budget 2019-20, based on market-driven economic model and lacking redistributive fiscal policies, is bound to widen the already terrifying rich-poor divide in Pakistan. Taxes proposed will affect the middle class, fixed-income group and the poor. Obviously, our budget-makers have never cared to study the economic models of countries that deplore the very idea of seeing people mired in poverty. Our budgets are ritualistic ones, lacking any welfare programmes to help those lagging behind, enabling them to move up economically and socially. Budgets of welfare states ensure redistribution of wealth and income so that fundamental needs of everyone can be fulfilled. On the contrary, our successive governments, military and civilian alike, through their pro-rich tax policies and elitist structure of economy have been giving unprecedented opportunities to the rich to amass more wealth, and this year’s budget is no exception. Coming from PTI Government that claims to be the champion of cause of the poor and middle class, is rather shocking!
Budget is not just a book-keeping exercise. It is an exposure of socio-politico-economic policies of a government. After coming into power for the third time in 2013, Nawaz Sharif (now a convict) and his economic team, led by a close relative (now a fugitive), paid no attention whatsoever for structural reforms for overhauling dysfunctional judicial and administrative apparatuses, and dismantling elitist structures. And, yet Ishaq Dar predicted to make Pakistan member of G20 by 2030! The same was the case with PPP that ruled from 2008-13 and it appears PTI has also no desire to undertake much-delayed fundamental reforms in all spheres of governance.
The PTI appointed Dr. Abdul Hafeez Shaikh as Advisor to Prime Minister on Finance, Revenue and Economic Affairs ousted Asad Umar with the hope to achieve better results. Things have not improved, rather we are heading towards more miseries for the common people as many new taxes will hit them but not the rich. One wonders while making budget, how Dr. Abdul Hafeez Shaikh and his team could ignore that 80 million women are illiterate, 20 million children are not going to school, 40 million are undernourished and over 60 million Pakistanis are living below poverty line—just to mention a few.
Everybody loves to quote figures about burgeoning fiscal deficit, unsustainable public debt, monstrous government expenditure, declining exports, rising imports, record trade deficit, immense pressure on foreign reserves, widening current account gap, injudicious indirect taxes etc. But nobody is interested to talk about equitable growth, jobs and decent wages for all (Rs. 17,000 is just an ugly joke). There is no debate on any TV channel about Article 3 of the Constitution as cornerstone of our economic policy. It says: “The State shall ensure the elimination of all forms of exploitation and the gradual fulfilment of the fundamental principle, from each according to his ability to each according to his work”.
Budget 2019-20 has nothing to fulfill the promises made in Article 3 of the Constitution. It is not possible as today’s Pakistan is captive in the hands of greedy and tax-lax legislators, militro-judicial-civil complex, landed aristocracy sitting in assemblies and industrialist-turned politicians—they have an unholy alliance against the common people. These elites openly indulge in vulgar ostentation of money and power and flout the rule of law. They do not pay taxes and get generous tax amnesties and asset whitening schemes. The poor even do not get the promised minimum (shamelessly-fixed) low wage and judiciary stays mum.
Knowing our disgust about writing a routine analysis of budget, a friend presented a challenge, “then outline as to what should be an ideal budget for Pakistan”. Our answer was simple: “the one that has short and long term goals to deal justly with all economic classes within the society and having emphasis on social mobility”. We should not waste precious man-hours on quoting and analyzing meaningless figures and indices presented every year as “Economic Survey” and “Budget Documents”—when most of them are unreliable or tinkered. We need a new policy framework for a budget that can ensure prosperity for all and not for the privileged classes alone. Our friend readily agreed. This is no occasion to debunk Hafeez Shaikh et al for what they presented. They are trained and directed by lenders/donors to crush the poor and enrich the rich. They are paid to protect the status quo. Let us discuss what they did not present—their main sin is omission of what they should do.
Pakistan’s economy serves the privileged classes—representing less than 1% of entire population but enjoys unprecedented perks, perquisites and benefits at the expense of taxpayers’ money. The mighty landowners exploit labour of landless tillers and unscrupulous industrialists and traders exploit poor urban workers to amass more and more wealth. Additionally, they create artificial hike in prices of essential items to snatch back whatever little is earned by the poor and the fixed-income classes.
Way back in 2006, The Economist (May 27-June 2, 2006) published two studies showing how the Nordic countries achieved social mobility and economic justice by taxing the rich to raise money for a welfare state. These countries “help the children of the poor to do better than their parents”. Of course, redistributive fiscal policies alone cannot bring such results. If they could, Nordic countries would not do as well as they do (their welfare states are not appreciably more generous than Britain’s). One explanation is their superior education systems. Education has long been recognised as the most important single trigger of social mobility—and all four Nordic countries do unusually well in the school-appraisal system.
Our budget makers, both at federal and provincial level, after insertion of Article 25A in the Constitution in 2010, have failed to establish education systems that can uplift those at the bottom. In a State where the Constitution guarantees fundamental right of “free and compulsory education to all children of the age of five to sixteen years”, there unfortunately exists exploitative “education industry”—expensive, pathetically poor in quality and class-ridden. If we judge economic policies of federal and provincial governments in the perspective of Article 3 and Article 25A of the Constitution, these are simply loathsome. PTI’s rule in Khyber Pakhtunkhwa since 2013 and now in centre since August 2018 is no different for implementing Article 3 and 25A of the supreme law of the land.
Our governments—federal and provincials—are totally oblivious of redistributive fiscal policies and social welfare programmes for social mobility. The poor are given so-called “economic relief package” by way of mercy—now under new name Ehsaas. The relief (sic) is only of cosmetic nature and there is nothing in the policies or budget that aims at helping the poor to move upwards. The federal and provincial governments must realise that it is not only spending more money on education that matters but how to use the entire system as an effective tool for social mobility. There is a complete lack of understanding of this perception on their part and the result is that poor segments of society are condemned to remain trapped in abject poverty and their children will have no chance to move up as education is either not available to them or is of no practical use.
From the above perspective, budget 2019-20 is yet another routine exercise of balancing the books. Pakistan needs equitable and accelerated growth with meaningful redistribution policies that can uplift the downtrodden. There is nothing in this budget towards this goal—like all previous ones, it is an utterly disappointing document.
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The writers, lawyers and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS).