Govt’s expenditure underestimated in the budget: PEW

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Development budget may be slashed to boost savings
Emphasis on stabilisation to discourage development, delay reforms
The Pakistan Economy Watch (PEW) on Sunday said reduction in the development budget has become imperative as government’s income has been overestimated while expenditure has been played down in the budget 2014-15.
The government’s focus on savings pushed it to cut last year’s development budget by Rs 115 billion due to missed revenue targets. There was little success in curtailing expanses as expenditure allocations were enhanced by Rs 83 billion in 2013-14.
The situation may not change this year forcing government to slash current Public Sector Development Programme (PSDP) worth Rs 525 billion, said Dr. Murtaza Mughal, President PEW.

Such a decision would be unfortunate as it will have serious implications for the economic development and image of the government, he added.
Government’s excessive focus on stabilisation through increasing taxation and austerity can hit the growth as economy is in an early recovery phase and need stimulus which is missing in the budget save textile and few other sectors.
Dr. Murtaza Mughal said that the IMF-backed stabilisation of the economy has diverted government’s focus from structural reforms which is resulting in higher utility costs, inflation and unemployment with serious political consequences.
Economic revival require immediate shift from indirect taxes to direct taxes, from undocumented to documented economy, from little useful services sector to agriculture and industrial sectors and from thermal power generation to hydel power.
FBR must develop capability to identify tax-evaded income to phase out excessive reliance on foreign and domestic loans and withholding taxes, said Dr. Mughal.
It is very difficult to pin high hopes from a budget which is entirely focused on reducing deficit at any cost.

In: UncategorizedAuthor: host