The Rs2 trillion budget 2008-09 will be remembered for a desperate attempt to reduce fiscal deficits through measures that are likely to aggravate the same variables that the budget is ostensibly trying to control.

Passing on the burden of rising energy and food prices to the people is likely to feed back into inflation that might adversely affect economic activity, government revenues, and thereby fiscal deficits once again that will then have to be controlled through measures that time alone will reveal.

With top 10 per cent of the population securing almost 27 per cent of the income, direct tax payers remain abysmally low at 1.38 per cent of the population. This is gross inequity coupled with lack of responsibility at both the micro and the macro levels. Rate of highly regressive sales tax has also been increased by one percentage point. The burden of indirect taxation falls disproportionately more on the voiceless and the cloutless lower income segments.

Common people stand more burdened than was the case thus far. As pain increases, relief is sought. Relief is contemplated for the poorest only. An income support programme of Rs34 billion is proposed for the poorest of the poor. While many of the poor and other low income groups are left out, the sum allocated for the poorest is a mere 1.7 per cent of total budgetary outlay as opposed to over 60 per cent allocated for debt-servicing, defence, and government expenditures.

Each qualifying household will be given a cash grant of Rs1000 per month that will amount to almost Rs167 per head per month for a family of six. One wonders how it will help even the poorest as the amount is insufficient for even the basic food needs of a family.

Secondly, CNIC holders will be eligible for this scheme. The poor usually do not have national identity cards. So, they will be required to get one. Will they be inclined to go through the hassle when the poorest can beg and get almost Rs100 a day in populous cities? Since all cities are not large enough, the poorest in other parts of the country should avail this cash grant.

The poor are the ones below the poverty line that comprise almost one-third of the population. Actually, another one-third or more are also poor due to the various deprivations that they experience much more than the middle and the upper middle income groups do. The income support scheme is for the poorest who arithmetically would comprise a target group of some 2.83 million households. That is a population segment of roughly 17 million people that is almost 11 per cent of the population only.

This means that not all of the population below the poverty line is targeted. Only one-third of the one-third poor are being targeted. The scheme is grossly inadequate even for the poor in terms of both coverage and intended benefits.

So, what about all the poor who are not covered by the income support programme, however, inadequate it may be? They are left to the mercy of the marketplace that has no space for the needy, the poor, and the low-income groups. A display of care for the poorest is something that will help the rhetoric more than the cause of all the materially poor there are.

However modest the scheme may be, it intends to touch the bottom 11 per cent. The implementation plan of the scheme requires clarification. How will the government reach out to the poorest spread far and wide? How will it be assessed that the ones reached are indeed from the bottom 11 per cent and not from amongst the 22 per cent above them who might try to avail the scheme due to their own poverty levels?

What will the administrative costs be? And, what will the scheme cost in all? How will favouritism and other malpractices be guarded against? An assessment of overall effectiveness of the scheme cannot be gauged by mere allocations.

Economic policy is not just about the dole. It is about engagement of the people in a manner productive enough so that they are eventually able to generate their own incomes and are on their own. The budget envisages revival of People Works Programme and proposes to allocate Rs28.4 billion. Exact impact on employment remains unknown except for a vague, “sizeable employment opportunities” statement.

Reliance on infrastructure projects for employment generation may not have a lasting impact on employment if opportunities are not created in the real sectors following the completion of the infrastructure projects. Given the inflationary environment coupled with the situation on terror and law and order, it is the creation of employment in the real sectors that remains a big question mark.

While the rest of the low income population segments are expected to fend themselves, a soother is provided in the form of 20 per cent raise in government employees’ salaries. First, this raise is usually based on the basic salary that is a pittance for most low-paid government employees. It is little wonder that these employees are unhappy. Second, most of the employed are not with the government. So, how would they get an inflation-indexed raise? In some autonomous organisations in the public sector, government-granted raise is denied.

As far as the formally employed segment is concerned, the issue is one of intra-organisational disparity in compensation. Unless the concept of equity is introduced within the organisations, some will continue to appropriate a chunk of the pie that might be too large in relation to their marginal contribution. As a result, many stand deprived and are offered peanuts in terms of inflationary-indexed raises. Intra-organizational compensation disparities need to be ironed out to ease some of the burden faced by low-income groups.

The Budget 2008-09 rests on World Bank’s advice of subsidies’ withdrawal and to let the users pay. It, however, remains a short-term solution to the issue of fiscal deficits. As said time and again, the international financiers only have symptomatic solutions for us as that jibe with their own interest in our fiscal stability in the interim. And, their interest must stand served even if our population is overburdened. The IFIs lack vision and interest in our transformational change. So, they do not have any long-term solutions for us.

Nor should we look upon them for meaningful changes that will make a difference. For, our difference is not their priority area. We go to the polls to elect national leaders for national decision-making and not IFIs’ policy advisers who should cease to determine the course of our destiny. It is time that the elected leaders take charge and steer the course of this country in a way that pleases our people more than the representatives of people overseas.