Friday, May 16, 2008, Jamadi-ul-Awwal 9, 1429    

Budget may be delayed

Amanullah Khan

Karachi—The Federal Budget 2008-09 is bound to be delayed at least for a fortnight due to resignation of PML (N) backed ministers including Finance Minister Ishaq Dar who was supposed to present the budget during first week of June in the National Assembly.
Though the portfolio of the Federal Finance Minister has not yet been assigned so far yet the informed sources were of the considered opinion that budget will be presented by Naveed Qamar, currently holding the portfolio of ministry of privatization.
The compilation and presentation of the federal budget would be uphill task this time especially on the back of sharp and persistent political swings which have weakened the otherwise strong, economic fundamentals besides unusual rise in food inflation and extra ordinary rise in oil prices in the economic history of Pakistan.
The cost of production which has gone up manifold due to high cost of inputs especially inflated cost of electricity, gross mismanagement in electric supply to the consumers not only to the domestic and commercial but the export oriented industry, may, consequently result in a drastic cut of GDP growth target from 7.2 percent to 5 to 5.50 percent in the financial year ending June 2008.
The financial experts attributing to cut in GDP growth target on the back of weak industrial activity, and slower export proceeds which can lead to lower demand for services.
It may be noted that visible slow down in domestic consumption is reflected in the negative trend of real import growth for the bulk of consumer durables.
To give an idea of economic growth across the border in India, it may be mentioned that the dollar costs rupee 42 in India as against Rs 69-68 to a dollar in Pakistan, the inflation rate running in double digit in Pakistan against the contained inflation around 4 per cent in India.
While, India has put a ban on export of rice to keep commodity price within reach of the consumers, the rice prices have jumped even to over Rs100 in Pakistan.
The power crisis compelling the consumers to experience loadshedding and shutdowns of 6 hours a day were being punished by inflated bills due to heavily taxed electricity bills and unexplained overcharging by the private sector management of the KESC.
Though the people hope for a relief with the arrival of the peoples government but the ground realities are quite different in view of unabated increase in cost of living after Feb 18, when people exercised their right of vote to choose their representatives.