LICHÉS are an essential part of political rhetoric. But when repeated often, they lose their impact. So when Finance Minister Muhammad Aurangzeb recently wrapped up the National Assembly debate on his ‘relief and growth’ budget his third his words sounded uninteresting if not outright boring. No doubt, there are plus points. The budget gives tax relief to highearning salaried individuals and concessional loans to farmers, and contains fertiliser subsidies and reduced duties on farm equipment. Individually, these populist measures are welcome interventions, even if none offers relief to lowto middle-income households and salaried people. Mr Aurangzeb’s commitment to removing direct taxpayer-officer interaction through automation addresses one of our most persistent structural complaints: that the tax system harasses compliant taxpayers while leaving noncompliant ones largely untouched. And yet, a budget is not merely a list of relief announcements. It is a statement of priorities that the government feels will move the economy forward. In light of this factor, the budget raises questions that Mr Aurangzeb did not quite answer.
The minister’s main claim is that the budget for FY27 will lay the foundation for ‘sustainable, export-led growth’. It is a phrase successive governments have used, and it deserves more scrutiny than it typically receives. Export-led growth is not achieved through subsidy packages and loan schemes alone. It requires, above all, productivity and improvements in how firms produce goods and services that the world wants to buy. On that front, the budget is conspicuously thin. There is no serious, coherent industrial policy directed at moving exports up the value chain.
Development of downstream agricultural infrastructure and Chinese cooperation is welcome but there is no roadmap for increasing farm productivity for exports.
What the document does contain is a familiar reliance on real estate as the engine of near-term growth. This is not a new instinct in Pakistan’s economic management; it is, in fact, the default growth policy theme. Real estate generates activity, creates downstream demand and delivers the kind of growth that sounds good in a speech. The problem is that we have been here before more than once, and it has never ended well.
Property-driven booms in Pakistan have a consistent history they inflate, they crowd out productive investment and they eventually correct and leave behind the same structural weaknesses that made the boom necessary in the first place.
Mr Aurangzeb and others in the government have repeated theirintent to broaden the taxbase so often thatit has lostits meaning. What value do such words have when policies are drafted to offer the untaxed real estate and retail sectors yet another way around the system. This is not to say the budget will not deliver growth. Only that it will not be sustainable.