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This is perhaps the first budget in history which is at the cusp of a mini-budget even before being legislated. The euphoric order that it has laid by forecasting growth at 4.2% – at a time when all plum chips of production, agriculture, exports and FDIs are in disarray and tax collection is stagnated – is nothing but a proposition jotted down in economic non-viability.
Moreover, the Rs17.573 trillion layout categorically suggests that it will come down hard on spending, having already gone to the extent of unduly taxing revenue generating digital marketplaces, solar panels, cars and fuel, as well as agrarian tractors.
The point is that there is a serious flaw in budget-making, and the finance minister's proposal to raise new taxes to the tune of Rs432 billion is in doldrums. The obstacle has come from forces of status quo and they are the parliamentarians themselves!
The warning from the finance wizards that revenue numbers are already locked with the IMF, and in case of non-legislation of the proposed "restrictions on economic transactions by ineligible persons lacking sufficient financial resources", the government will have to impose an additional Rs500 billion worth of new taxes. This is where the supra-mini budget is on the cards.
So, what's next? And what if the IMF refuses to listen to our pathetic post-budget tale? Under a deal, as the second tranche of loan was released, the Fund was assured that at least Rs389 billion worth of new taxes should be raised through "enforcement measures", which is not possible without new legislation. The relevant House committee is already raising a hue and cry, and the prevalent partisanship in the coalition makes it an untenable order.
The government has exhibited selectiveness by unnecessarily appeasing the parliamentarians with a six-fold increase in salaries, and raising their developmental funds to the tune of Rs70 million each. For them, the FinMin acted as the devil's advocate too.
On the other hand, the government slapped a 2.5% deductable tax on the first slab of salaried class and failed to raise minimum wages this year. This waywardness is toiling and pushes the budget to the cliff.
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