WITH the inaugural address behind us, the next big moment when the newly minted government of Nawaz Sharif will speak will be the budget speech. In between there are likely to be various addresses and chats with the press corps, but it is the budget speech where the team will, for the first time, unveil its mettle. It’ll be in the budget speech that we will hear how far its ambitions extend, how much its thinking is out of the box, as they say. All eyes and thoughts are now going to steadily swivel towards the team working on the budget, and the macroeconomic challenges as well as the power crisis, to see what it has come up with.
The immediate danger is that after all the hype, after all the build-up and all the talk of a stable mandate and taking the bull by the horns rhetoric, the government will pull little more than a few rabbits out of its hat on that momentous occasion. A tweak or two to federal excise duties, an adjustment in the sales tax rate or other tinkering will only hasten the day when people start to ask aloud, “what’s the difference between this government and earlier ones?” On the other hand, a bombastic approach, signalled perhaps by an overambitious revenue target and an equally pie-in-the-sky expenditure target, will draw groans of disappointment. People are looking for both from this government: realistic promises as well as solutions to enormous problems. Living up to both ends of this bargain pulls the government in two opposing directions.
Therefore, it is important that the planners drawing up the budget realise the complexity of the task they face. They need to slowly dissipate the ballooning expectations, without letting the populace down too hard. Towards this end, they should focus first and foremost on the revenue side and ensure that at least one new revenue measure is introduced to send the message that new ground will indeed be broken in the pursuit of macroeconomic stability. They should also announce the beginning of public sector enterprise reforms, and signal their seriousness by bringing down the allocations for untargeted subsidies. Further, they should use the opportunity to send a signal on normalising trade ties with India. With realistic and visible adjustments on both the revenue and the expenditure side, the government can then claim that its budget will be the benchmark by which to measure its success, and real change may finally be upon us.