Saturday, June 10, 2006

Budget 2006: Senator Javaid Laghari

The 2006-07 budget like a bikini. What it reveals is suggestive. What it conceals is vital.
The budget is definitely not for the 70% poor of Pakistan.
The country will be obtaining Rs. 213 billion in loans next fiscal year, which is Rs. 23 billion more than in the current fiscal year (190 billion), while Grants are going down from Rs. 44 billion to 25 billion (19 billion less).
The Government claims to have returned $ 5 billion in loans, but has just received $ 6.2 billion in new loans.
Bank borrowing is at Rs. 140 billion, which is 45% higher than current year's estimate of Rs. 98 billion. Total External Debts, which stood at $ 28 billion in October 99, have now exceeded $ 31 billion.
The government calls it 'breaking the Keshkul.' After receiving $ 6.2 billion in new loans, and crossing external debts by $ 31 billion, it is instead 'widening the Keshkul.'
Domestic Debts have increased by $ 13 billion (i.e. Rs. 814 billion) from Rs. 1.4 trillion to Rs. 2.2 trillion since October 1999, which is coincidently equal to the Foreign Exchange reserves.
Reserves from Investments have now reduced to Rs. 16 billion, down from Rs. 51 billion of current year's estimate.
Indirect Taxes are estimated at Rs 569 billion, about 20% higher then current year.
Foreign Direct Investment (FDI) today means "acquiring state resources" rather than investment in new projects. FDI is not creating new jobs, but eliminating old jobs.
Examples are the Pakistan Steel Mills fiasco, the KESC fiasco, the HBL fiasco and the PTC fiasco.
Privatization was meant to retire loans, as was done under two previous governments.
Today, it means selling the family silverware to fund the budget deficit.
Rs. 141 billion of the privatization proceeds have been utilized since 2001 to finance the budget deficit.
Now again in 2006-07, Rs. 70 billion from privatization proceeds will be used to finance the budget deficit.
Once all profitable state resources are sold off by the present government at questionable prices, our children and the future generations will go broke & bankrupt.
While privatization and free market enterprise is good for the economy, we are living off the wealth of our children and future generations. It is a crime against humanity.
Economic Survey of Pakistan 2006 acknowledges the country failed to achieve target of 7% growth rate.
The GDP growth went down from 8.6% to 6.6% this year.
The Agriculture growth, which has a GDP share of 23%, fell from 6.7% to 2.5%.
The 2005 - 2006 Fiscal Deficit is now 4.2%, as claimed by the Minister of State for Finance against the target of 3.8% which the government failed to achieve. In fact, the fiscal deficit could be even higher at the end of the current fiscal year.
Total Deficit of this government. from October 99 to present is Rs.1.4 trillion! It amounts to 'Externalizing the Deficit for future generations.'
Rise in Per Capita Income is very questionable. The results can be fudged easily by using statistical methods and sampling of one's choice. These results perhaps reflect more of the middle class and the benefits received by the rich. The poor have continued to receive only crumbs , while the rich are served with icing on the cake.
The Defence budget is now an astonishing Rs. 250 billion, or 28% out of total non-development expenditure of Rs. 880 billion. This is a 12% increase over last year.
The Defence budget of Rs. 250 billion does not include the amount for the construction of the new Army GHQ in Islamabad, and has been classified under Development budget.
This amount of Rs 250 billion also does not include the amount of Rs 35 billion for military pensions, which has classified under General Public Services.
This amount of Rs. 250 billion also does not take into consideration the billions spent on Rangers (Rs. 4.6 b), Civil Armed Forces (Rs. 8.75 b), FC (Rs. 1.8 b), Defence Production (Rs. 1.44 b), cantonments, Garrisson Educational Institutes, and other Institutes and Foundations established for the personnel of the armed forces.
Total Defence Allocation under all heads may well exceed Rs. 300 billion.
As Confidence Building Measures (CBM) are introduced with our neighbours, there is little justification to increase the military budget at the cost of development.
Poverty Alleviation and Education must be at the forefront of our priorities.
The Economic Survey 2005 - 2006 claims the number of people below the poverty line have reduced by ten percentage points. These numbers and the methodology used are again highly questionable.
The sampling is clearly non-representative and includes only a very small segment of society. These numbers, including the claim of a rise in the per capita income, need to be verified by independent sources. The Federal Bureau of Statistics needs to be an autonomous body.
Today, more people are living below the poverty line than ever before, and the poor are getting even poorer. One only needs to travel to the slums and ghettos in Karachi, and to the rural areas of Sindh, Balochistan, NWFP and Punjab to see for themselves.
For the first time in Pakistan's history, today people are dying of hunger. Even Daal, tomotoes and onions are non-affordable to the poor today. Have we ever wondered why?
It is a documented fact that the prices of all kitchen items have registered a 250 % increase since October 1999.
Suicide rates have gone up drastically due to poverty. There were 8845 reported suicides in Sindh alone during last 5 years. I am sure the situation in other provinces is no different.
We need to control inflation on war footing. We need to control price increase on all kitchen items. This may be possible if the price of oil and power are reduced by reducing the taxes and surcharges on these items.
No wonder Pakistan is now classified among the Top 10 failed States, joining the ranks of Sudan, Congo, Zimbabwe, Chad, Somalia and Haiti.
Failure: Yes, we are a nation of drop-outs and failures.
The Federal Minister of Education only last week admitted at the National Education Convention that 45% of the students quit going to school at some stage.
He also admitted that 40% of the Children do not attend or have no school to go to.
In the Pakistan Economic Survey 2006, Jacobabad, the home district of the honorable Senate Chairman, is cited with the lowest Gross Enrollment Rate (GER) for primary schools in Sindh, while Thatta, once called the city of madrassahs and institutions in the middle ages, is cited with the lowest Gross Enrollment Rate (GER) for middle school and Matric in Sindh.
The figures for Balochistan are even lower, the lowest in Balochistan being the home district of our honorable Deputy Chairman , as per Pakistan Economic Survey 2006.
Have we ever wondered we are not spending enough on primary and secondary education?
We have less than 50% literacy rate. It is even lower than the PRSP target of 58%, which was to be achieved two years ago.
The United Nations Millennium Development Goal (MDG) requires a target of 80% literacy to be achieved by 2015. This is clearly not possible at the current growth rate, unless there is a major shift in policy, budget, and implementation.
This is not happening with the current budget and the current policies of the government. If at all a White Revolution is needed, it needed for lower education not higher education.
We need to drastically increase the number of primary, secondary, and middle and high schools, particularly in rural and tribal areas, and to send more girls to school if we are to achieve the literacy rates of the MDG.
We need to recruit more school teachers, and we need to pay them better.
While the Higher Education with only 0.5 million students gets Rs. 16 billion in the current budget, Lower Education with 28 million students gets only Rs. 6 billion from federal funding. We however need to understand that there may be additional funds at the provincial level.
What good is higher education if the foundations are weak. The whole structure will come tumbling down like the World Trade Towers if we do not invest more in lower education.
What this country needs is a Lower Education Commission, not a Higher Education Commission. We have 21 pages of budget on higher education, but only 4 pages of budget on education.
The priorities of this government are clearly reversed. The Minister for State for Finance made no mention of primary & secondary education in his budget speech, but only spoke about the thousands of PhDs to be produced. What to speak of government accomplishments in this field.
While school teachers will be getting raises of Rs. 50 to 1000 per month, the PhD under the Foreign Faculty program of the HEC will be getting salaries of of upto Rs 250,000 per month! My recommendation would be to shift some of higher education allocations to lower education and double the teachers salary over the next three years.
A comparison can also be made between Education and Defence. While Defence is certainly important from a security standpoint and external threats, defence with under 1 million personnel will get Rs. 250 billion which is Rs. 250,000 per soldier.
On the other hand, 28 million student receiving primary, middle and secondary education will get Rs. 6 billion from federal funding, which is only Rs. 214 per student That is an astonishing 1000 times less than the allocation for each soldier.
Perhaps it is not too late to correct the budget and put more money for lower education.
Let us spend more on the welfare of our children, and our future generation, then on glory of the present.
Let us invest more in Lower Education. Let us think of the future rather than the present.
Let me end by quoting from our prophet, "The ink of a scholar is more valuable then the blood of a martyr."

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