Gigantic Economic Challenges and Upcoming Budget

Currently government is facing four big problems i.e. surging inflation, unemployment, recovery of economy after the covid-19 and fixation of budget deficit

M. Umar Farooq

Current government is facing real economic challenges for implementation of a viable economic plan for sustainable growth of economy and it has a great opportunity to this end through upcoming budget.

Currently government is facing four big problems i.e. surging inflation, unemployment, recovery of economy after the covid-19 and fixation of budget deficit.

Inflation rates are all time high for last three years. Current inflation rate is10.74%. Surging inflation is one of the reasons of rise in poverty and it is becoming increasingly difficult for the poor segment of the society to maintain their life. So rapid action is required by government in current budget to control surging inflation by taking appropriate measures. Government should also give subsidies on items of common use, so the poor may get some relief.

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Second biggest problem current government is facing is unemployment. Current unemployment rate is 4.45%. Similarly, nearly 50% of the population is under the age of 30. Government has already launched big projects like CPEC and Prime Minister housing schemes, which are generating new jobs for unemployed. However, it still needs to allocate more funds in current budget for creation of new job opportunities for unemployed.

Government can start mega projects and can give incentive for labor incentive industries for creation of new jobs. Similarly, government needs to allocate more funds for vocational training of youth for creation of self-employment opportunities for youth.

Third big challenge the current government is facing is recovery of economy from adverse effects of covid-19.

Also Read: When Will Pakistan Have A Pro-people Budget?

During covid -19 some sectors remained partially or completely shut down. As covid-19 pandemic still going on, they are still facing the impacts of partial restrictions. So the Government should give immediate relief to entertainment, travel, hotel and other related industries for partial relief from adverse effects of covid-19.

Forth big problem government is facings, huge budget deficit. To fill the gap between revenue and expenditures, government has to revert to loan financing from IMF, Asian bank or local sources. Major sources of government spending are in three to four big heads i.e. Loan and interest payment, Defence expenditures, salaries and pension of Government employee.

Government has taken some steps to rationalize the performance of government institutes and government own entities. Similarly pay and pension committee has also formulated to give solution to rising pension expenditures.

Also Read: The Emerging Concept of Digital Payment During Pandemic

Government should rationalize the manpower in government organizations and surplus manpower may be shed off to relieve the burden on government exchequer.

Pay and benefits should be linked with performance of government employees. Government should also privatize the government own organizations on priority basis.

Government should give more emphasis to increase its revenue generation through inclusion of new tax payer in tax net.

Also Read: FATF And Pakistan

Hardly one percent of population of Pakistan is active tax payer. This ratio is also lowest among neighboring countries. FBR report (biannual review 2019-20) revealed that the overall tax-GDP ratio of Pakistan during the last five years was between 11.4 percent and 12.6 percent.

Government can take numerous other steps in upcoming budget to address the above mentioned problems. A balance budget is need of the hour and can lead to prosperous Pakistan.

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M. Umer Farooq is MS student at SZABIST Islamabad. 

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