Positive and Negative Features of the Pakistani Federal Budget for 2024–25

Positive and Negative Aspects of the 2024–25 Pakistani Federal Budget


There are both good and bad ideas in Pakistan's Federal Budget for 2024–25. It tries to find a middle ground between smart spending and growth in the economy. Social welfare programs that try to help people who are less wealthy are also getting a lot of money in the budget. The government has promised to improve human capital by giving 15% more money to schooling and health care.
 A 20% increase in funding gives infrastructure projects a big boost. This is supposed to create jobs and get the economy going again.

On the other hand, the budget also brings up some problems. People might not spend as much money if taxes go up and new taxes are added. Lower income people could be hurt by this. It gets harder to pay back debt when the gap grows to 7.2% of GDP. Reducing essential commodities subsidies could exacerbate inflation, hurting low-income people.  This budget's development and non-development spending increased over last year's, showing a strong fiscal stance amid economic uncertainty. This piece goes into more detail about the good and bad parts of the 2024-25 budget and how they might affect Pakistan's economy and society.


Positive Aspects

  • The budget significantly increases social welfare funding. With 20% more for the Benazir Income Support Program (BISP), the government wants to support more low-income households. As living costs rise, this boost will aid 1.5 million more individuals, which is crucial. The budget includes PKR 600 billion for health, education, and social welfare projects. This is up from PKR 480 billion last year. 
  • The budgets for healthcare and education are going up by a total of 15%. To improve public health services, the health sector receives PKR 100 billion for infrastructure and medical supplies. A PKR 150 billion boost in education spending on facilities and teachers is expected to improve national school outcomes. Social welfare services like health and education receive PKR 600 billion. This is up significantly from PKR 480 billion last year. Education gets 500 billion and healthcare 400 billion. Increased from PKR 400 billion for education and PKR 350 billion for healthcare last year. 
  • Projects that build infrastructure get a big boost with an extra 20% in funds. This incorporates cash spent on building streets, public travel, and energy projects. By putting PKR 1.2 trillion in streets and public travel, the public authority desires to create 500,000 jobs and diminish joblessness. The amount given was PKR 900 billion in 2023.  
  • Agriculture is funded more to modernize and increase output. Fertilizer and seed subsidies and interest-free loans for farmers in a PKR 50 billion package boost agricultural output and food security. Agriculture subsidies and financial aid increase from PKR 200 billion to PKR 250 billion.  
  • The industrial sector will get tax breaks and assistance worth PKR 300 billion. Incentive value was PKR 250 billion last year.  
  • Intentions to widen the tax base seek to boost revenue by 15%. A 10% increase was made last year.  
  • PKR 200 billion for projects that use clean energy. This is more than the PKR 150 billion that was in the last budget.  
  • PKR 100 billion has been set aside for a number of projects that aim to create jobs. The amount given was PKR 80 billion last year.

Negative Aspects

  • The budget raises taxes (new and existing) that may affect the middle class. The GST has been raised from 17% to 18%, and luxury products are now taxed. This may lower disposable income and consumer expenditure. Higher middle-income tax rates. This might mean that people have less money to spend and can't afford to.  
  • The subsidies on vital goods, such as fuel and electricity, have been decreased. This action may raise commodity prices, straining low-income households. Reduced subsidies may raise inflation when the government decreases the fiscal deficit.  
  • The normal 2024-25 financial deficit is 7.2% of Gross domestic product, up from 6.9% last year. Government debt sustainability is questioned. Big fiscal deficits may boost government borrowing, debt servicing, and spending. Estimated fiscal deficit: 7% of GDP.  That's up from 6% last year.    
  • Raising taxes and cutting back on handouts may make inflation rates go up. Because of these steps, the Consumer Price Index (CPI) is predicted to go up by another 2%. This could make it harder for people to buy things and make living costs go up. If energy handouts are cut back, prices may go up. Already at 9%, this could make inflation even worse.  
  • The steps taken to help people with low incomes might not be enough. The gap between rich and poor could keep getting bigger.  
  • Businesses may have to pay more because of new taxes and rules. This could make people less likely to spend and lower profits.  
  • Relying too much on loans and outside funding. makes the economy more vulnerable to changes from outside. 
  • Not enough attention paid to protecting the environment. Could be bad for the earth in the long run. 
  • People might not be happy with higher taxes and fewer assistance. This could cause trouble in society.

Comparison with Previous Budgets

Development and non-development spending increased significantly in the 2024-25 budget. The government's concentration on infrastructure and social welfare initiatives has raised development spending by 20%. Non-development expenditure has grown 10% due to debt servicing and administrative expenditures. 

 Suggestions for forthcoming budgets

  • Future budgets should prioritize tax base expansion and efficient collection. Progressive tax policies can ensure high-income individuals and corporations pay their fair share, relieving the middle class.  
  • Increasing social safety net allocations can reduce the impact of economic shocks and inflation on low-income households. Economic stability can be improved by expanding BISP and subsidizing necessary items.  
  • Sustainable projects like renewable energy and green infrastructure support long-term economic prosperity. These projects can boost energy security, employment creation, and environmental protection.  
  • Promoting economic discipline and reducing wasteful spending is essential. Public leaders must be held accountable for financial malfeasance, audited regularly, and transparent. 

Bottom Lines

The 2024-25 Pakistani budget includes various supportive economic and social programs. However, it may increase taxes and inflation. Balanced policies and smart planning can help future budgets support economic growth and protect vulnerable populations.








 

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