The PML-N government’s fourth budget contains some good features, and has tried to boost agriculture production and exports. On both counts though it has come up with essentially a single solution: cost reduction.

Are the proposed solutions sound and sustainable, coming from long-term plans? Or are they temporary measures to wade through murky waters? Do subsidies really assist the poor? - These subsidies are not well targeted and often result in the rich reaping more benefits than the poor; and yet the issue of subsidies has never been seriously addressed.

Why is there a zero-rating given to five export industries? Is this what makes them competitive on a sustainable basis? What about the level of skills and innovation in these industries?

Firstly, take the example of the government’s ever-increasing reliance on withholding taxes, turnover taxes and transaction taxes. Why are both the income tax and sales tax not working properly? Why is the tax administration not being improved? One sees no strategies in the budget for improving the tax regime. The government needs to realise that merely tweaking the taxation system will not relieve our pains; rather, an overhaul of the whole system is imperative.

Why is there a zero-rating given to five export industries? Is this what makes them competitive on a sustainable basis? What about the level of skills and innovation in these industries?

Secondly, one wonders why it takes a negative growth in agriculture to make the government realise that the rural population is in distress, and that the export based industries are struggling?

Both points shed light on fundamental problems in governance, in general, and budget-making, in particular. There is a growing consensus amongst economists and political thinkers that the main problem is not being faced with a fiscal deficit, or tax collections, or fertiliser prices, or the zero-rating of textiles; it is being faced with bad governance. Such governance is plaguing every sphere of public policymaking. As long as governance is poor, more money will not solve the problem. If the pipes are leaking, pumping more water will not do any good.

The budgets should incorporate the government’s vision for a better Pakistan and what it is doing to realise that vision through fiscal measures. Unfortunately this is not the case in Pakistan.

There are three kinds of failures. First is a lack of presence, and lack of ownership of, sound long-term socio-economic policies. Second is a lack of properly functioning monitoring and evaluation systems that track and review government performance. Third is a failure of the budget to take policy documents and lessons learned through monitoring and evaluation, into account.

As active citizens, we should demand that the government update its policy documents pertaining to various sectors of the economy. There are some updated documents already in place, such as the prominent development policy document ‘Vision 2025’. But what is its value for Ishaq Dar? Did he mention ‘Vision 2025’ even once in his budget speech? These policy documents are inconsequential if budget makers do not care for them.

A reliable and robust data collection mechanism must be in place. Good quality, meaningful data will enable researchers and policy makers to draw conclusions about what is working and what is not. The current situation is such that even basic indicators, such as the GDP, are called into question by independent analysts. The SPDC has recently estimated that the GDP growth rate in 2015-16 was 3.1pc instead of the claimed 4.7pc. Not only does bad data lead to bad policy recommendations, it makes one question whether national accounts and tax collection figures are fudged.

In this regard, independent research institutions are ready to give policy advice and reviews to the government. There are already some good research institutes in the private sector which provide independent feedback to the government that it needs to consider seriously.

Governments all around the world are now relying increasingly on evidence-based policies; moving away from traditional before-after comparisons of development outcomes, to more rigorous experimental designs, to review and formulate their policies. It is time our government consider doing the same.

Published in Dawn, Business & Finance weekly, July 4th, 2016