ISLAMABAD: Renowned economist Dr Ashfaque Hasan Khan, addressing a seminar, organised by the Institute for Policy Reforms, has urged the federal government to move towards job-rich growth from stabilisation.
The former advisor to the ministry of finance said that the move would increase spending on social sectors like education, health and other basic facilities.
Dr Ashfaque Hasan Khan, who is currently the Dean and Professor at NUST Business School, said that job-rich growth should be the slogan of the government and the time has come to move from stabilisation to growth.
The country is in IMF programme from last six to seven years, which focuses only on stabilisation by curtailing the budget deficit but it also increases the spending on the social sectors, he added.
He further said that government spent only 4 percent on social sector like education, health, drinking water and other as against 12 percent spent on the infrastructure during outgoing financial year 2014-15.
“The country’s average GDP growth remained at 3-3.5 percent in last seven years as against the annual population growth of 2.1-2.2 percent, which means real per capita income increases by 1-1.5 percent per year”.
Former Federal Board of Revenue (FBR) chairman Abdullah Yusuf recommended conversion of FBR into an autonomous organisation, as the revenue division should devise strategy and FBR should implement the policies. He particularly referred to weak governance and enforcement by tax authorities.
He said that inequitable policies (including exemptions and amnesty) along with an undocumented economy have led to the low revenues. He called for withdrawal of exemptions and broadening the tax base. It was important to rationalise corporate and individual income tax rates and to phase out fixed and presumptive tax rates. To improve compliance FBR must simplify tax returns. It must make non-compliance expensive. Tax policy must also incentivise investment in the country. He called for a more prominent and rigorous role for provinces.
Noted economist Dr Pasha reiterated that economic stabilisation has brought low economic growth. Government failed to achieve GDP growth target last year and will fall short this year too. The time has come to switch from stabilisation to revival. However, the Government has yielded to IMF pressure to carry on with stabilisation in 2015-16. They have agreed to reduce fiscal deficit again to 4.3pc GDP in 2015-16 from 4.9pc this year. FBR’s estimated revenue of Rs 3.1 trillion for next year requires a growth rate of over 19 per cent, not achieved in the last two years. GIDC has been imposed and Government has agreed to reduce power sector subsidy.
