A survivalist budget | Political Economy

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He has a federal budget for the financial year 2025-26, which was presented by the Finance Minister in the National Assembly on June 10, a financial framework for maximizing revenue policies, simplicity expenditure management and strategic loan.

The document, along with the current economic pressure of the International Monetary Fund, has targeted a total of Rs 19,278 billion compared to a net federal tax of Rs 11,072 billion, which revealed the financial deficit of 6,501 billion or 3.9 % GDP. Financial mathematics reflects permanent imbalance. The government continues to rely on domestic loans and external aid to financing its expenses.

The total revenue projection is Rs 19,278 billion. Of this, Rs 14,131 billion will be deposited by tax, mostly through the Federal Board of Revenue. It is expected that non -tax revenue of tax will be contributed to Rs 5,147 billion. Under the 7th Finance Commission award, the federal government will share Rs 11,072 billion after transferring Rs 8,206 billion in the provinces. Projection assumes the benefits of optimistic implementation and compliance, though historically his understanding has been contradictory.

The expenditure framework is very high – Rs 16,286 billion is allocated for current expenses, which is more than 84 % of the total cost. The interest payment is Rs 8,206 billion, which eclipses the category of any practical spending, highlighting the burden of increasing loan service. The defense has been increased to Rs 2,550 billion. Pension responsibilities have increased by Rs 1,928 billion. The rising increase in non -development costs has led to crowds in the most essential financial site for development priorities.

The budget for development expenditure through the Public Sector Development Program is Rs 1,000 billion, which is 10 % lower than last year’s Rs 1,100 billion. This reduction will restrict infrastructure investment, human capital development and increase in regional contact projects. Higher education, water resources management and reduction in the fields of science and technology indicate a policy priority that sacrifices long -term productivity for short -term solvence.

The financial support strategy is anchor in borrowing heavy domestic loans. There is a possibility of borrowing Rs 6,309 billion, including TB, Pub and Sukox. Non -bank loans through national savings schemes and other equipment are Rs 2,492 billion. The external borrowing component is relatively modest with Rs 1,287 billion, which contains multilateral and bilateral arrival. Depending on domestic markets, interest rates can be put on top, which can complicate private sector credit access and investment dynamics.

The tax policy supported by the finance bill indicates indirect taxes, and will continue to reactionary structures that put the burden on the low -income sections of society. Sales tax is the dominant source of income. It is estimated to earn Rs 6,902 billion, followed by customs duty (Rs 1,588 billion) and federal excise (Rs 888 billion). Direct tax collection, mostly through income tax, is targeted at Rs 6,811 billion. The high share of indirect taxes increases inequality and eliminates the actual income of the working class.

Non -tax revenue is very agitated on petroleum levies, State Bank of Pakistan and profits. Only the petroleum levy is estimated at only Rs 869 billion, which reflects the growing dependence on the tax measures around the government. The SBP profit is expected to be Rs 1,468 billion. It assumes a stable macro financial environment and over -producing operations. Public sector enterprises (PSES) profit is Rs 138 billion. However, in view of chronic incompetence and financial problems in the key pses, the target seems to be proud.

The amount allocated for subsidy has been fixed at Rs 1,186 billion, which is less than a modified estimate of Rs 1,378 billion in the financial year 2024-25. Most subsidy has been made towards the power sector, (Rs 400 billion for tariff discrimination and Rs 125 billion for IPP payment). Fertilizer subsidy will be Rs 24 billion and wheat subsidy will be Rs 40 billion. Planning reduction, though irrational, is endangered by inflation and food insecurity among weak populations.

The tax policy supported by the Finance Bill 2025 emphasizes indirect taxes, and continues a reactionary structure that puts a burden to the low -income sections of the economy. Sales tax is the dominant source of income.

There will be a moderate increase in the cost of social protection, which will allocate Rs 734 billion under various heads, including Rs 140 billion for the Benazir Income Support Program. It is inadequate against the backdrop of massive, increasing poverty, high -food inflation and stable real wages. The health sector has been allocated Rs 31.9 billion and education Rs 112.6 billion, which is lower than both global development standards.

Under the NFC Award, the provincial shares have been calculated at Rs 8,206 billion, which has increased from Rs 6,997 billion to 17 % in 2024-25. Equal division has been declared constitutionally compulsory. However, vertical financial imbalance is causing friction in financial federalism. The provinces depend on the federal transfer indicating their limited income sovereignty and accountability of costs.

The green component is modest in mobilizing revenue and planning costs. Their estimate is only Rs 1.468 billion, mostly of petroleum related Levies. Green subsidy for Rs 587 billion has been classified under energy and agriculture, but their effects on climate flexibility are weakly described. Tokens allocated about diminishes and adaptations fail to comply with Pakistan’s international climate promise and dangerous profile.

The overall macro-financial theory painted by the budget is cautiously but structurally fragile. The basic additional loans of Rs 1,217 billion are likely to decline. However, it is permanent in achieving tax goals and preventing costs.

The prediction of the nominal GDP is Rs 129.6 trillion. The fiscal deficit is 3.9 % of GDP, which is less than 5.6 % revised in 2024-25. Estimates are on the joy and discipline of revenue.

The long -term implications of this budget have been mixed. The continuity of high interest payments, inadequate development costs and indirect taxes are described as a growth environment. Social sectors, especially low investment in education and health, endanger human development and economic participation. The impact of a public borrowing crowd on private investment poses a threat to production capacity and employment production.

The common man is unlikely to observe solid relief under this budget. Increasing payment of utility, indirect taxes and shrink subsidies will potentially accelerate the life crisis. The real wages, combined with inflation pressure, will further worsen the purchase option. The net extension of limited social safety will fail to reduce the effects of low -income households, which will lead to financial stability.

The institutional reforms needed to relieve structural financial imbalance are ridiculous. The budget is not properly dealt with tax evasion, PSE disqualifications or public financial management weaknesses. Financial policy is a reaction rather than changing the balance sheet over elasticity than elasticity. Reduces the development vision of a clear road map for growth, investment facilities and employment production.

Financial federalism architecture requires immediate recovery. The 2009 NFC award is outdated and a vertical imbalance between federal and provincial financial responsibilities is hindering the delivery of service. Without the same tax authority, expenditure functions create disqualification and accountability differences. The budget has failed to initiate dialogue or reforms in this regard.

The private sector is in accordance with the budget strategy. Limited incentives for small and medium -sized businesses, export -based industries and digital economy players reflect the direction of a stagnation policy. The absence of bold reforms to uphold private investment and business capabilities limits economic dynamics. Depending on the traditional sectors and renting industries, it relieves innovation and competition.

The macroeconomic stability agenda, although well intended, should be helped because of structural change. Budget for the financial year 2025-26 provides a sign of financial tactics, but it lacks the vision of vision needed to chart the flexible and comprehensive development path. Economic rhetoric should lead to sustainable prosperity from financial survival. The policies should be engaged in equity, performance and empowerment.

Policy makers will have to review this financial framework, with a look at the generation of generations, climate, climate and institutional integrity. Economic strategy should prefer productivity, more investment than insulation and rhetoric reforms than populism. Financial space should be created not only by efficiency but also by increasing the tax base, increasing performance and democratic economic opportunities.

The Federal Budget represents the lost opportunity to initiate 2025-26 changes. The path to financial stability should be fake through comprehensive development, institutional reforms and economic innovation. Pakistan’s economic sovereignty depends not on the budget for survival, but on the leadership.

Dr. Ikramul Haq, author and lawyer of the Supreme Court, is an affiliated teacher at the University of Management Sciences.

Abdul Rauf Shakuri is a corporate lawyer based in the United States.