The Economic Survey 2018-19 paints a dismal picture of the national economy. Official figures show that the economy grew at an average rate of 3.29 pc in fiscal year 2018-19 against an ambitious target of 6.2pc set in last year’s budget.
The sector-wise growth rates are: agriculture: 0.85 per cent (against target of 3.8pc), industry: 1.4pc (against target of 7.6pc) and services: 4.7pc (against target of 6.5pc). Total revenue at Rs3,583.7b (9.3pc of GDP) showed almost zero pc growth in July-March 2019, while growth in total expenditures was 8.7pc. The fiscal deficit was recorded at 5pc of the GDP, compared to 4.3pc in the corresponding period last fiscal. In the words of the survey, “Decelerated performance of total revenues primarily was due to marginal growth of 1.8pc in tax revenues and negative growth of 16.7pc in non-tax revenues.”
Revenue collection efforts proved equally futile. The Federal Board of Revenue’s tax receipts from July-April 2019 remained at Rs2,976b against Rs2,922.5b in the corresponding period last year, registered growth of 1.8pc. Actual tax collection during the first 10 months of the year remained at 67.7pc of a revised target of Rs 4,398b. But on the other hand, provincial revenue collection rose by 1.5pc from July-March 2019. On the expenditure side, the government’s total expenditure increased by 8.7pc from July-March 2019 to Rs5,506.2b (14.3pc of GDP) against last year’s spending of Rs5,063.3b (14.6pc of GDP). Current expenditure posted growth of 17.7pc to Rs4,798.4b (12.4pc of GDP). The federal and provincial governments’ current expenditures grew by 19.9pc and 13.7pc respectively during the period under review.
Discouragingly, development expenditure took a hit and decreased to Rs655.9b this fiscal year as compared to last year’s expenditure of Rs993.3b, exhibiting 34pc negative growth against 23.6pc positive growth recorded last year. The Public Sector Development Programme (PSDP) share in total development expenditure stood at 88pc or Rs578.5b in the first nine months of the fiscal year. The same period last year saw Rs931.4b expenditure. This year’s PSDP expenditure saw a 37.9pc decline, while the last year witnessed 24.7pc growth in PSDP spending.
According to the Economic Survey, exports fell by 1.9pc despite exchange rate depreciation, while imports declined by 4.9pc. This helped in reducing the trade deficit by 7.3pc during July-April FY18-19, while it had shown an expansion of 24.3pc during the corresponding period last year. The current account deficit contracted by 27pc from July-April 2019, while it had expanded by 70pc in the corresponding period last fiscal year. Workers’ remittances played a major role in containing the current account deficit to 4.03pc of GDP.
Inflation witnessed a rising trend in fiscal year 2018-19. It increased to 5.8pc in July 2018 after remaining sticky at 5pc for two months, and rose to 6.8pc in October 2018 “due to an increase in gas prices”, the PES noted. From July-April 2019, headline inflation measured by the CPI averaged 7pc against the 3.77pc measured in the corresponding period last year “on the back of the prevalence of some underlying demand in the economy, as well as continued pass-through of exchange rate depreciation and higher fuel prices. The rising input costs on the back of high utility prices and the lagged impact of exchange rate depreciation is likely to maintain upward pressure on inflation during the remaining period of the current fiscal year.
Remittances saw an 8.45pc increase in July-April 2019, compared to 5.36pc last year, reaching $17.88b in the first 10 months of the fiscal year against $16.48b last year. Foreign investment dropped by 51.7pc in July-April 2019 to $1.377b compared to $2.85b in the same period last year. Foreign direct investment from China comprised 31.2pc of overall inflows compared to 60.5pc in the preceding year. However, China continued to dominate direct investment, followed by the UK and Hong Kong. A considerable decline in investment from Malaysia has been observed in this period. Overall, it is a depressing state of affairs, which requires renewed efforts to set things right and stimulate economic growth.