Pakistan - Budget 2004-5: Intensifying Class Oppression

We are publishing a speech made by Marxist MP Zulfiqar Gondal on the recent budget handed down in Pakistan. It analyses the real state of the Pakistani economy, the nature of the budget, and points out that the only way forward for the workers and poor of Pakistan is not Keynesianism or Thatcherism, but socialism.

The budget presented for the fiscal year 2004-05 by the Finance Minister is in reality a crude and desperate attempt to conceal the aggravating economic crisis and a deception for the teaming millions suffering in agonising poverty and misery. The fundamental economic theory adopted in formulation of this budget is “ trickle down economics”. It is also infamously known as Friedmanism, Reaganomics and Thatcherism in economic terms.

This budget is pro capitalist and is hostile to the interests of the oppressed classes and already impoverished. This budget stinks of the recepies being imposed by the IMF, World Bank and other imperialist institutions. It is a total surrender and subservient to vulture global capitalism and multinational corporations. The essence of this budget is to give total concessions and privileges to the national and international capitalist class.

From lowering the tariff barriers to the extravagant tax exemptions it is destined to serve the ruling classes. The massive concessions to the corporate sector and the greater independence from state control have delighted the ruling class and imperialism.

Even in the field of social infrastructure and the vital sector of education and skill developments the state has confessed failure and handed then overtly and covertly to the private sector. Sectors such as vocational training and polytechnic institutions have been put to sacrifice on the altar of private capital. This means that education and health, that are and should be the fundamental right of every citizen have been turned in to privileges for the moneyed classes. Instead of knowledge and treatment being the universal rights of any civilised society, they have been subjugated to fulfil the lust of monetary profit.

The total expenditure on revenue account will be mainly used to strengthen the repressive state apparatus to curb any hindrance in the form of workers strikes and protests that can impede the savage pursuance of market reforms and the hefty rates of profit for the bosses. Defence expenditure has been enormously enhanced when there is supposed to be peace in the offing with India. Massive inflows of capital are being directed for the procurement of weapons of mass and not so massive destruction while the vast majority of the population of this country is deprived of clean drinking water, sanitation, proper electricity supply, housing, schools, hospitals, countryside roads, a decent railways system, nourishment and a host of basic needs absolutely necessary for a minimal human existence.

The so-called developmental expenditure on revenue account incorporates all the infrastructure facilities from the repairing of the extremely fragile and an aging electricity supply network to the lining of the canal beds to prevent seepage. Not only that the amount fixed for this sector is highly insufficient but also it will cut deep into the state expenditure on health education and other sectors of human development. Hence neither will the infrastructure improve nor the destitution of the masses lessen to any extent. If we take a glance at the revenues and state income figures the axe again falls on the deprived and the impoverished. The direct taxation on incomes of the ruling elite has been very cautious and subdued. While indirect taxation, the burden of which falls predominantly on the poor, has been lavish and unabated.

The figures speak for themselves. The increase in direct taxation has been estimated at Rs1819 million in the budgetary year 2004-05. On the other hand the indirect taxation has been estimated to Rs3981 million. So much for the cause of the poor that Mr. Aziz so vehemently proclaimed in his deceptive speech.

If we look at the increase in the “dearness allowance” and the decrease in electricity charges for the masses in general it is pathetic, if not cynical. Even the decrease in power charges the class prejudice of the budget is blatantly evident. For household consumers the reduction is ten paisa per unit. While for the capitalists it is 50 paisa per unit. Taxation on items such as benola will rapidly enhance prices of basic commodities. Even the proposals for the agrarian sector clearly favour the big feudal lords and are detrimental to the interests of small farmers and the poor peasants.

In the name of creating a better and conducive atmosphere for foreign investments the most vicious attacks have been launched against the workers. The policies of downsizing, privatisation, restructuring, liberalisation and others are directly devastating the lives of millions. The claim of one million jobs in the year 2004-05 is a farce. It is a deceit and falsehood from beginning to the end. These policies directed by the imperialist institutions have only destroyed jobs, wrecked industry and slashed the already low living standards of the masses. The whole concept of developing the economy and poverty alleviation has been proved wrong and has had an opposite affect wherever it has been applied. It has only increased the burden on the masses and forced millions below the poverty line.

The important example is India. Like Mr Shukat Aziz the NDA government in Delhi had created a huge fuss on the basis of high growth rates, increased foreign reserves and other macroeconomic indicators. “India shining” and the “ feel good factor” propaganda of the rightwing BJP government was smothered and crushed by the Indian masses in the recent general elections. In Pakistan people ask what is the use of $12.5 billion in foreign reserves when a majority of the population is falling below the poverty line every day. The composition of the growth suggests that income inequality remains acute. The fact that inflation in the prices of the food and other items consumed by the poor has increased at a higher rate than the average inflation rate provides a further indication that the distribution of real income between the rich and the poor may have become more unequal. The figures of a rapid increase in large scale manufacturing also are deceptive. In this sector growth is predicated on a relatively small group of industries, namely automobiles, consumer durables and other luxury items mainly consumed by the rich. These are industries with low employment elasticities and where highly skilled workers are employed. Therefore these are hardly the industries whose growth could be expected to reduce overall poverty. To what effect does this improve the living standards of the masses the vast majority of whom can’t even afford a bicycle or buy a train or bus ticket?

In India the shine has come off. In Pakistan they are still trying to “take off”. Similarly the figure of high a growth rate is also highly deceptive. How is it and why is it that the high growth rates have failed to sustain or develop the social conditions with the same or even half the pace of the economic growth rates? On the contrary social development has fallen in contrast to economic growth. The wedge between the economic and social growth is widening and the graphs are moving in opposite directions. So much for the high growth rates! If we cut through the haze of the gimmickry of deceptive figures the reality is the regime is sitting on an ailing economy and deteriorating society.

The rampant and aggressive policies of the market reforms by the present regime are on one hand the expression of their total subjugation of imperialism and on the other hand what they see as a stagnation and lull in the workers movement. However, the latter situation is not going to last very long. The repercussions of this budget can be a provocation that could trigger a mass revolt. In India this was expressed through the ballot, here the denial of a genuine ballot can erupt into mass upheaval that can move quickly onto a revolutionary path.

The history of this country, its economy and its budgets has clearly proved that both “Keynesian” and Friedmanism (trickle down economics) have miserably failed to improve the lot of the vast majority of the population. Paradoxically it has further deteriorated and devastated the lives of the teeming millions. The conclusion is that capitalism as a socio-economic system has miserably failed in Pakistan. Now it is not a question of changing faces it is the question of transforming society. And the only scientific, effective and viable change that can salvage this society from capitalistic exploitation and catastrophe is a socio-economic transformation and overthrow of capitalism. Only the victory of socialism can ensure an end to poverty, misery, disease, crime, ignorance, primitiveness, violence, deprivation, alienation and agony of the masses.

Lets move forward!
We have nothing to lose but our chains!
And we have a world to win!