Budget 2012-13: inflation on the rise
June 01, 2012
The government of Prime Minister Yousuf Raza Gilani, who has made history by becoming the first prime minister to hold the office for more than four years, is poised to present the fifth and last federal budget of his tenure. The fears of further prices hike and hoarding haunt the people, especially the poor.
The federal budgets, over the years, have lost their significance because of the number of mini-budgets presented throughout the year but tax measures set the tone for the whole year leading to price escalation or deceleration.
Inflation control through budgetary measures has failed because of external factors such as rupee appreciation or depreciation which shifts the cost of input. But in Pakistan’s case fiscal management also plays a vital role in controlling inflation. During last four years, the government has failed to address the energy crisis, bringing huge financial losses and rendering thousands of workers jobless.
Inflation is stubbornly high in Pakistan (double digit) despites government’s claims to bring it into single digit. As the budget approaches the prices of essential commodities have increased which is evident from the weekly data released by the Federal Bureau of Statistics. Those earning between Rs8,000 and Rs12,000 have suffered 2.66 percent rise in prices.
The reason for high prices is that the power tariff has been raised by the government almost up to 16 percent in May. The electricity weighs about 9.36 percent in the basket of sensitive price index. For the last four years the people of Pakistan have been suffering from acute shortage of electricity leading to the closure of industrial units, job cuts and violent protests countrywide, particularly in the Punjab province.
The financial condition of the working class is deteriorating day by day, while unemployment has limited the income of many households. They have been forced by circumstances to earn meager income to keep body and soul together; they can’t even think about the education of their children. The law and order situation is like rubbing salt into wounds; Karachi being the largest livelihood provider has been turned into a killing field where rival groups are battling to control resources with the backing of political parties.
The economic managers are indifferent in the current situation as the masses are getting no relief. This was manifest in the remarks of Finance Minister Hafeez Sheikh when he said “mutton price hike is not the issue of masses” at a ceremony organized by the FPCCI. Whatever the intention was but the remarks showed an elitist mindset, meaning that the masses must restrict themselves to daal and roti only.
After four years, Premier Gilani says poor and commoners are the top priority of his government and vows to put poor-specific projects at the center of development process. Gilani says he will allocate Rs863 billion for development in the upcoming fiscal budget. Though the amount is substantial, utilization of funds still remains the question. The prime minister told the participants of National Economic Council that during the last four years National Development Expenditure has been Rs2.2 trillion, including Rs 1 trillion by the federal government. The total outlay of the upcoming budget would be around Rs 4,000 billion.
Experts term these allocations mere a jugglery of figures. The fact is that corruption that topped during the last four years has prevented the commoners from benefitting from the huge public sector spending. The figure does not reflect in true sense what was allocated and spent on development. Despite huge potential, the energy sector remained neglected. Though, the PM tries to raise hope for the poor, historical facts deter them to believe in what rulers tell them.