Every year, whenever the budget is announced by any government in Pakistan at the assembly floor, there are always emanating heebie-jeebies in the wake of Budget Announcement; both among the opposition parties and the common citizens.
However, the budgets in Pakistan have somehow always been of similar proportion in manner and matter as being followed and promulgated by the incessant civil-military governments for 71 years in Pakistan.
Although, by academics, the common populace of Pakistan – especially the youth – has myriad degrees/specializations or educational background. Yet, to be fully aware of the political and economic condition or situation of Pakistan, it is indeed a prerequisite to comprehend the economic jargon and ploddingly understand concepts encompassing the very field of economics. Just to have meticulous, analytical, insightful and lucid command and apprehensions of Pakistan’s and world affairs as a whole.
Nonetheless, there have always been economic terms or jargon on the media while discussing the current affairs, economic condition and the budget of Pakistan. The economic jargon like Foreign Reserves, Import duties & Tariffs, Inflation, Budget deficit, current account deficit, exchange rates and a jumble of others alike always remain the talk of politics in media.
This blog is basically for those common citizens of Pakistan who are, who were, and who have been gulled by the hocus-pocus of budgetary announcements since the inception as for 71 years. This piece of writing aims to raise awareness among the masses of Pakistan by elaborating on ‘how a budget is made’ in very simple words, so even a layman could interpret and comprehend the economic terminologies used while announcing the budget.
Making a public-friendly budget is a hefty task for any government in Pakistan. In this country, keeping in mind the worst economic condition, designing a budget and then tailoring it according to the modern-day needs is a wild-goose chase. Many economic giants, big business czars, and industrial tycoons have time and again been holding the office of the Ministry of Finance in Pakistan; but, unfortunately, none of them ever been able to device a budget which could nurture economic growth in true sense.
Whether the politicians or the technocrats, whosoever hold the office of Ministry of Finance, used whimsically the jury-rigged knowhow to make a budget. Henceforth, it failed to offer the citizen of Pakistan an appreciable and prolific budget since the very inception.
And, as soon as the budget is announced by any government in Pakistan, a hullaballoo is created by the opposition parties, not for the public but for propitiating the convention and trend which has been followed for years by any opposition whosoever.
However, almost always the sooner budget is announced, the sooner prompting the debate over any media available in Pakistan- be it on the assembly floor, television talk-shows, streets or in the shops. An unending cycle of analysis by almost every citizen of Pakistan is the talk of every corner and every home.
And, it is almost always with everyone in Pakistan that the women who are usually responsible for care-taking, maintaining and the management of the households will be found annoyingly blaming the politicians for increasing prices.
These are the clichés that reach by the ears of almost every Pakistani. And, the instrument they use to analyze and judge the budget is almost always based on the following parameter that the government servants are only interested in the percentage rise in their salaries. Henceforth the greater the percentage rise, the better the budget. Nonetheless, the comments could, by contrast, also take an awkward twist into incendiary oratory because it seems to by-pass the rational faculties of the audience.
The chain-smokers are only interested in the rise in tobacco product prices because of the taxes. So the less the taxes on tobacco products; the better the budget for them.
Businessmen/traders are concerned about the new taxes, import duties and tariffs imposed by the government over concerned goods and services to the different products.
Stock market handlers are at the monitor to see to rise and fall in the stocks because of market trends and trade. They usually are the much aware citizens, who are almost fully aware of the details of a budget.
The investors are focused upon the vagaries of the stock market as soon as the budget is announced. And, they are the well-off echelons of the society, so they don’t care about any rise, for instance, in vegetables or any increase in kids’ school fees.
So, above are the myriad mentalities that are found in our society who become the active players and opine at the budget according to their interests, apprehensions, and deliberations. But, why any layman and a common Pakistani ought not to be aware of the subtleties of a budget? Our literacy rate hovers around 60% in urban areas, but, still, by rough analysis, there could only be a little percentage of Pakistanis who know how a budget is made and how it works.
Almost every Pakistani, especially those belonging to the lowest echelons, lower-middle-class and middle-class, have probably heard about the word ‘budget’ after the very start of any month. And, as usual in Pakistani culture, the women make budgets at homes. So, for the same purpose, they divide earnings or salaries into small chunks.
The “revenues (salaries/earning)” and “expenses (spending)” are two major chunks of every budget. So the people try to come up with a budget which could comfortably meet the expenses out of revenues.
Moreover, the need to save for future needs amongst the budget is known as “savings”. But, if the earning is less and expenses are more, then the budget-maker must borrow from somewhere, which is known as “loan”. Similar is the case when the budget of a country is made.
To make a budget, a country first needs earnings. Earning is the money which a country as a whole earns by providing goods and services to other countries and in many other ways. Similarly, as we provide goods or services to others to earn money in the form of salary through our job or directly through business. The ways of generating revenue for a country are majorly through taxes, import duties, exports, and remittances. So, after a country has earnings, it then has to spend it for the sake of livelihood or more specifically to acquire goods and services for itself now. For the very purposes, a county has expenses. Expenses could be vast and varied per the priorities of a nation; some nation-states’ expenses are spent more on education, some on health, some on civic services, others for country’s administration and on defense rather than on public. Pakistan’s revenues –which are already very less- is spent mainly on political administration and governance, defense, returning of Interests on previous loans and a lesser portion on health, education and civic services
So, generally, this is the very basic mechanism of “revenue collection” and “spending expenses” in the known world. Pakistan’s misfortune is that the priority is given to expense on non-productive activities.
Hence, Pakistan’s economic growth has remained very less as compared to other nation-states around the world. The country’s expenses are much more than its revenues; creating a “budget deficit” and balance of payment issues.
Its imports are much more than its exports; causing a huge “trade deficit” and creating myriad economic problems for the country. Currency devaluation, exchange rates, and inflation are some of the other impacts of all these malpractices. To pay the interests of previous loans, new loans are constantly been taken all along; this marry-go-round is seemingly never-ending.
Stock-exchange devaluation, lack of FDI (foreign direct investment), money-laundering, corruption and many other problems facing Pakistan are all entangled with each other; and malpractice and devaluation in one mean the disturbance in others. There is somehow a dire need for ample overhauling suggestions for the economy of Pakistan.