Budget Mirch Masala.

The budget estimates of 2020-21 are out. It is a kind of festival in Pakistan. Every year announcement of budget creates panic in the economy and its players. Stock market behaved vaguely one week before and after the budget. Majority remains unhappy and few have positive opinions. These opinions also depend on the loyalty with the sitting government. The opposing party always opposes to it and give their own interventions. These interventions show the priorities of each political party sitting in the parliament. Nevertheless, the masses do not see these priorities while voting for their candidate in elections. Choice of vote is dependent on several other important factors.

Time has changed. A few decades ago, when centralisation and nationalisation were the main policies, the budget had extreme importance. The degree of centralisation and nationalisation has declined now. Privatisation was started in late eighties and it never stopped after that. Eventually, centralisation was partially killed by the 18th amendment in 2010. Nonetheless, Federal government is having numerous problems in doing several tasks after that. Nevertheless, the system needs to be rationalized. The power needs to be devolved at the lowest level to get maximum benefits. Hence, the provincial budget has more importance than the federal budget. Interestingly, 75 per cent of the SDG targets come under the provincial domain.

NFC gives approximately 58 per cent of the tax revenues to the provinces. In this budget, Rs2874b will be given out to provinces out of Rs4963b. The royalties on gas are not included in this amount. The rest of the tax revenues are Rs2089b.

Here is an interesting facts-based story; Federal government has Rs2089 billion from rest of the tax revenues. Debt servicing for this year is Rs2946 billion i.e., deficit starts by Rs857 billion; defence expenditures estimates are Rs1289 billion; deficit increases to Rs2146 billion. Adding civil and military pensions of Rs480 billion moves the deficit to Rs2626 billion. While adding Federal PSDP of Rs650 billion increases the deficit to Rs3276 billion. Besides these bigger heads several other heads contribute significantly to the budget deficit. There is no doubt that all the above-mentioned expenditures are essential. Although the deficit is reduced using non-tax revenues, i.e., Rs1109 billion and Rs100 billion privatisation proceeds, nevertheless, the deficit is still Rs3427 billion.

These numbers are just...

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