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Budget Speech 2006-07


Mr. Chairman

You know I am an academic at heart, so I will speak today as a teacher and a researcher.

The ‘Nation’ describes the budget like a bikini.  What it reveals is suggestive.  What it conceals is vital.

My analysis is that this budget is definitely not for the 70% poor of Pakistan.

The country will be obtaining Rs. 213 b in loans next fiscal year, which is Rs. 23 b more than in the current fiscal year (190 b), while Grants are going down from Rs. 44 b to 25 b (19 b less).

The Government claims to have returned $ 5 b in loans, but has just received $ 6.2 b in new loans.

Bank borrowing is at Rs. 140 b, which is 45% higher than current year’s estimate of Rs. 98 b.  Total External Debts, which stood at $ 28 b in October 99, have now exceeded $ 31 b.

The government calls it ‘breaking the Keshkul.’  After receiving $ 6.2 b in new loans, and crossing external debts by $ 31 b, it is instead ‘widening the Keshkul.’

Domestic Debts have increased by $ 13 b (i.e. Rs. 814 b) 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 b, down from Rs. 51 b of current year’s estimate.

Indirect Taxes are estimated at Rs 569 b, 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. 75 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.

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 b, or 28% out of total non-development expenditure of Rs. 880 b. This is a 12% increase over last year.

The Defence budget of Rs. 250 b does not include the amount for the construction of the new Army GHQ in Islamabad, and has been classified under Development budget according to the Nation.

This amount of Rs 250 b also does not include the amount of Rs 35 b for military pensions, which has classified under General Public Services.

This amount of Rs. 250 b also does not take into consideration the billions spent on Rangers, Civil Armed Forces, Cantonments, Garrisson Educational Institutes, and other Institutes and Foundations established for the personnel of the armed forces.

The defence personnel has also penetrated the civilian service sector, and today there are more than 1200 officers of the military serving in senior positions in the civilian sector, including Chairman FPSC, Federal and Provincial Secretaries, Heads of autonomous organizations, etc.

Total Defence Budget Allocation under all heads may well exceed Rs. 310 b.

Above and beyond the allocated budget, Defence has a track record of spending more than the allocated amount.

For example, in 2002-03, allocated budget was Rs. 146 b, actual expenditure was Rs. 159.7 b; in 2003-04, allocated budget was Rs. 160.3 b, actual expenditure was Rs. 180.5 b; in 2004-05, allocated budget was Rs. 193.5 b, actual expenditure was Rs. 216.3 b; in 2005-06, allocated budget was Rs. 223.5 b, actual estimated expenditure to date is Rs. 241 b.  That is an average of 8 to 10% more spent that budgeted amount.

At this rate, by the time 2006-07 ends, defence expenditures may well exceed Rs. 330 billion. That is an 38% out of total non-development expenditure of Rs. 880 b.

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 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. There have also been earlier recommendations that the Federal Bureau of Statistics need 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?

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. 

Have the Honorable Chairman and Deputy Chairman read the Pakistan Economic Survey 2006?

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 m students gets Rs. 16 billion for development and Rs. 11.2 b for recurring expenditures for existing universities in the current budget (total Rs. 27.2 b), Lower Education with 28 million students gets only Rs. 6 billion. 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 b which is Rs. 250,000 per soldier.

On the other hand, 28 million student receiving primary, middle and secondary education will get Rs. 6 b 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.

I end my speech with a quote from our prophet, “The ink of a scholar is more valuable then the blood of a martyr.” 

Thank you Mr. Chairman.