The economic survey to be released today will give snapshot of Pakistan’s economy in the outgoing year. The survey will indicate whether the Government’s targets have been met or not. The name of the game in the development of the outgoing year, during which Pakistan missed its annual target goal, has been the services sector, whereas manufacturing and its contribution to trade has decreased from last year. The confidence in business has also dwindled in the wake of ongoing regressive taxation regime which is much higher than the rest of the world. Adding to these are tax evading behemoths in the country, who continue to dupe FBR by either not submitting taxes or misreporting their earnings.
During the last year, Pakistan’s economy has grown by 5.3 percent just shy of the stated target of 5.7 percent. Although, growth rate during the outgoing year which has been highest in decade is laudable but the numbers have different story to tell while delving into the details of it. The services sector’s contribution to the economy has been the major chunk of the above stated growth. As the manufacturing sector’s result continues to disappoint, the exports trade has also declined substantially. The agriculture sector however saw a relatively positive incline, compared to last year but that was not a result of Government’s effective policy per se but rather a result of natural viability for the agriculture. Exclude the services sector, the overall economy has cumulatively increased by 1.9%. Adding to the mix is the lack of private sector investment, which should have arisen owing to huge developments under the CPEC umbrella projects. Private investments to GDP have stayed at 9.9 percent down from the government projected level of 12.2 percent.
Confidence in business is also an all time low, with OICCI’s confidence survey reporting a decline from 36 percent to 13 percent in their second report during the year. Confidence in manufacturing sector has also declined to a low level of 9 percent; following on these experts see a substantial decline of investments in the manufacturing sector during the first half of the incumbent financial year. These, according to the survey have been a result of the regressive taxation policies under the Finance Minster, Ishaq Dar. At a stage where Pakistan’s economy is right now, government’s policies should be giving impetus to growth by easing taxes on the business sector. The taxes of paid by the Pakistani businesses are much higher than the industry average around the world. The government continues to burden business community with higher taxes.
Adding to the worries is the taxing mechanism and its efficiency in the country. Pakistan’s major chunk tax revenue is extracted from the middle class, which pays the tax on their earnings before they collect their monthly pay, whereas the richest in economy continue to avoid the tax net. Adding to their worries is the lack of Government services in education and health. In a country where education and health costs continue to grow at a face pace, the government has not been able to provide relief to the salaried class in terms of effective policies to ensure availability of health and education in the country. The lack of policies and thereof has become a humongous burden on the middle class, which is under yoke from both ends; taxes and lack of government services.
Although, touted as a “pro-growth” and “investment friendly” last year, the previous budget has failed to achieve much as the Government ever since its inaugural has made numerous failed attempts at uplifting the manufacturing sector and export trade.
The Pakistan Economic Survey to be released will sure be sold by Finance Ministry and sitting government as a one of a kind achievement in the past decade. But for people it has not delivered on any of the promises it made during the inaugural.