Budget, the economy and COVID-19.

The budget speech for FY 2020-21, followed by the press conference of the economic team needs a careful analysis to assess the manner in which the government intends to handle the post-COVID economic scenario. A cursory look at the budget reveals that it only attempts to balance the country's financial balance sheet with a colossal deficit of Rs3700 billion to be met through unknown and unrealistic resources. It lacks planning, policy intervention and strategic measures to revive the COVID-hit economy. Despite the fact that Pakistan registered a negative GDP growth, the global concern of the recession turning into depression after about a hundred years and the cautions by the World Bank and IMF, in this regard not a single word has been said on it in the speech. On the contrary, economic managers are taking pride in paying off the interest on foreign debts and reducing government expenditure.

The government's claim of the tax-free budget has to be perceived in the correct perspective. Implications of direct and indirect taxes and duties on domestic production is a source of revenue and is paid by the consumer, whereas adequate levy of taxes and duties on imported equivalents not only increases revenue but enables the domestic industry to utilise its idle installed capacity to an optimal level, reducing the per unit fixed cost, ensuring productivity and competitiveness.

A number of changes have been made in direct and indirect taxes. In the customs tariff structure, there has been a reduction in customs duties on ninety tariff lines from 11 percent to 3 percent and on two tariff lines from 11 percent to 0 percent. Moreover, the industries for which customs duty on some of the raw materials have also been reduced, inter alia, include butyl acetate, infusion sets, buttons, interlining/buckram, wire and rods, internet cables, beverage cans, and the food packaging manufacturing industry. Apart from the above, some changes have been made in regulatory duties for reducing the cost of doing business, the details on this account will surface with the commencement of the new fiscal year. Improving the level of protection/reducing the cost of doing business through levy/reduction of regulatory duties undermines economic principles and the functions of the NTC contained in Section 8 of the National Tariff Commission Act, 2015. Dr Hafeez Shaikh's statement that tariff reductions are being made on thousands of tariff lines is incorrect and misleading, as...