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Revised growth target

Revised growth target

According to newspaper reports, the federal cabinet has set the growth rate target of six percent to the gross domestic product for the next fiscal year and has approved the increase in development budget despite falling exports and declining remittances sent by expatriate Pakistanis. When exports are falling and imports are increasing, the government incurs billions of rupees trade deficit and is unable to arrest the situation. Despite the worst economic performance during the Pakistan People’s Party government, the country’s exports had crossed the $25 billion mark. However, the overall economy has improved during the current government, but exports could not be increased to the desired level. The six percent target set by the cabinet falls short of the anticipated target of nearly seven percent which was earlier perceived by the government. However, it is higher than the current year’s growth. One of the main reasons behind lowering the target than anticipated is said to be energy crisis. The government, despite tall claims from the day one it took the rein of the office, could not improve power supply. As the summer season is set in, the demand for domestic consumers has also risen and short of electricity is foiling all attempts to achieve the desirable growth target.

The government is now planning to increase customs duties to curb imports without realizing that it will open floodgates of corruption and illegal trade.The customs department is already fighting on many fronts and has allocated a big chunk of its staff to curb smuggling. The higher rates of duties and taxes will increase illegal trade to disproportional levels and will adversely affect the business of genuine importers. Experts believe increase in the slab rates will reverse the tariff reforms that the government had introduced under three-year extending facility programme of the International Monetary Fund. As a matter of fact, the Customs Department should not be used as revenue generator as this idea would create hurdles in the way of business growth in the country. The original size of the next federal budget is expected to be around Rs4.8 trillion, nearly 7 percent more than the current year’s the budget. In a country like Pakistan, this outlay is peanuts as the government will hardly be able to earmark Rs 1 trillion for the development programmes. The government, most of the time, works on speculations without real money in hands. It has to take loans to run the affairs at the end. A drop in the earning of foreign exchange through exports will create budget deficit of 3.9 percent of the GDP or nearly Rs1.4 trillion, adding insult to injury to the economic situation.

It is hoped the government will adopt rational approach in the preparation and presentation of the federal budget and will come up with a concrete plan to bring the country out of economic woes.