Pakistan can never come out of fiscal mess unless wasteful expenses are drastically cut and tax leakages are plugged
Senator Ishaq Dar, in his budget speech of 2013, while emphasising the need for austerity, said: "The prime minister has decided to start the exercise from his own office. His office will be lean and mean……. From the budget of Prime Minister’s Office, against a revised expenditure of Rs725 million during 2012-13, the budget estimate for 2013-14 is only Rs396 million showing a decrease of 45 per cent……." The facts contained in White Papers [Demand for Grants & Appropriations] Budget 2013-14, 2014-15 and 2015-16 belie this claim.
The revised estimate for 2013-14 was Rs755 million, for 2014-15 Rs801 million and allocation for 2015-16 is proposed at Rs842 million! The PM office is not "lean and mean" -- it is fatty and fringe. Painfully and regretfully, it is the case in a country where according to latest report of World Bank, 50 per cent of Pakistan’s population is living below the poverty line, 31.6 per cent of children under the age of five are suffering from malnutrition and are underweight. Mortality rate under five is 86 per 1000 birth-rate and maternal mortality ratio is 170 per 100,000 births, and millions are deprived of basic facilities like health, education and clean drinking water.
In his speech on budget, Asad Umar of Pakistan Tehreek-i-Insaf alleged that millions were spent for "refurbishing" of the PM office, aircraft in his use, buying expensive cars, on foreign visits with large entourage etc". He lamented that additional grants of millions are sought post-fact in budget 2015-16 for these are other expenses of PM office/House that were not budgeted and approved in last budget.
Regardless of Pakistan’s poor economic growth, rising poverty and inequalities, internal and external security threats and energy crises, extraordinary funds are made available to ensure that our rulers appear at par with leaders of wealthy nations. The "Supplementary Demands for Grants and Appropriations" for the last three years show more funds allocations for non-productive purposes, millions for renovating of places of abode of the prime minister, president, governors, ministers. This extravaganza hurt when regressive taxes are collected from the poor and wasted ruthlessly. Our rulers live lavishly while Pakistan ranked 144 out of 187 countries in the latest Human Development Index (HDI).
25 million children out of school in Pakistan are in denial of fundamental right under Article 25A of the Constitutions that says "The State shall provide free and compulsory education to all children of the age of five to sixteen years in such manner as may be determined by law". World Bank report, World Development Indicators (WDI) 2015, shows that 12.7 per cent of Pakistan’s population lives below $1.25 per day, which is categorised as extreme poverty, people are dying of hunger and diseases, deprived of basic facilities of life.
In the face of these grim realities, daily expenses of the Prime Minister’s Secretariat are Rs2.2 million. In 2008-09, it was Rs600,000 per day -- an increase of nearly 250 per cent over a period of five years!
During electioneering, every political party promises reduction in wasteful expenses, austerity, fiscal reforms, economic growth, employments, and social protection for the poor, but on assuming power extracts more taxes for the "luxuries" of ruling elites -- militro-judicial-civil-complex and businessmen-turned politicians. What makes the situation more painful is the fact that their leaders and rich members pay paltry taxes (Tax Directories of Parliamentarians for 2013 & 2014 testify to it). Yet the Federal Board of Revenue (FBR) and National Accountability Bureau (NAB) take no action.
It is shocking that revised estimate for current expenditure for 2014-15 is Rs3480 billion against budgeted amount of Rs3463 billion -- demand for 2015-16 is Rs3482 billion. For development, total allocation in 2013-14 was only Rs416.8 billion, but in revised estimates it was slashed to Rs378.8 billion! In 2015-16, sanction is sought for only Rs506 billion that is 14.5 per cent of current expenses! It should have been the other way around! But the question is how? It is possible only if the gigantic size of government machinery is drastically reduced and all their perquisites and benefits in kind are monetised -- total employee related expenses in budget are Rs597 billion exceeding development budget by Rs91 billion!
The successive governments -- both civilian and military -- have never bothered to tap real potential tax of Rs 8 trillion at federal level alone (target fixed for 2015-16 is just Rs3103.7 billion), and reduce wasteful expenses by downsizing the gigantic administrative machinery (to run it per day cost is in billions met from borrowed funds, Rs1 billion per day, Dr. Farrukh Saleem).
The government is ready to borrow more and more to meet its day-to-day current expenditure -- largely meant for foreign tours and lavish lifestyle of our politicians and high-grade officials. A big chunk of the borrowed money is expended for the comfort of militro-judicial-civil complex, entertainment at the President, Prime Minister and Governors’ Houses -- the total outlay for these exceeds the entire budget of judiciary in the country! Budgetary allocation for Presidency is nearly rupees one billion though the office is considered ceremonial!
The massive current [non-developmental] expenses of Rs13,029,701,000 contained in Demands for Grants and Appropriations for Budget 2015-16 are:
Employees related expenses (Rs556,957 million), project pre-investment analysis (Rs107 million), operating expenses (Rs652,595 million), employees retirement benefits (Rs252,891 million), grants, subsidies & write off loans (Rs752,904 million), transfers (Rs5,928 million), interest payment (Rs1,280,245 million), loans and advances (Rs400,757 million), physical assets (Rs180,141 million), principal repayments of loans (Rs8,764,035 million), investments (Rs53,573 million), civil works (Rs115,718 million) & repairs and maintenance (Rs13,850 million).
The above spending would not improve the plight of masses, majority of whom are deprived of basic life amenities guaranteed in Article 9 of the Constitution as inviolable fundamental right discussed in detail in the famous case of Ms. Shehla Zia v WAPDA [PLD 1994 Supreme Court 693]. This confirms extreme apathy of rulers towards the citizens and voters.
According to holders of public office, cuts in their expenses will not make any difference in improving economy as their share is very small. They forget that their priority should be the masses and not self-comfort from taxpayers’ money. They should read Article 3 of the Constitution which says: "The State shall ensure the elimination of all forms of exploitation and the gradual fulfilment of the fundamental principle, from each according to his ability to each according to his work". If this promise is not fulfilled how State can ensure obligation imposed under Article 5(1) that "loyalty to the State is the basic duty of every citizen". The Constitution is a social contract between the State and citizens. Any infringement on the part of Legislators cannot be taken lightly.
It is a pity that successive governments have failed to bridge the gap between expenditure and resources (in coming fiscal year, 2015-16, total resources of Rs5549 billion versus total expenditures of Rs13029 billion). Pakistan can never come out of this mess unless wasteful expenses are drastically cut, and tax leakages are plugged.