Cotton production has declined by 22.95 percent as the arrival recorded at ginneries as on September 1 stood at 9,95,191 bales, showing a decrease of 22.95 percent over the corresponding period of the last year when ginneries received 12,91,550 bales.

At majority of the retail outlets of the city sugar was available at Rs 85 per kg, which is higher compared to its previous rate of Rs 75 per kg. Prices of fruits and vegetable remained all time high. Bananas were available at Rs 120 per dozen against its previous price of Rs 100; mango was available at Rs 90 per kg compared to Rs 70 last week. Similarly apple was available at Rs 120 compared to its previous price Rs 100 per kg and guava at Rs 90 per kg against its previous price of Rs 70. Price of tomato went up from Rs 60 per kg to Rs 80 during last week. Price of onion registered an increase of Rs 10 per kg and sold at Rs 50 per kg in contrast to last week's price of Rs 40 per kg. Similarly price of potato registered an increase of Rs 13 per kg and reached Rs 45 per kg in contrast to last week's total of Rs 32 per kg. People from all walks of life expressed serious concerns over the price hike in the kitchen commodities. They criticised the government for failing to provide relief to the poor masses and to keep check on price hike.

Reliable sources told The Express Tribune that the government has chalked out a two-tier plan to place a cut of up to Rs180 billion on federal and provincial budgets aimed at remaining within the IMF-agreed budget deficit target (a gap between the income and expenditure) of Rs685 billion or 4 per cent of the total size of the economy. According to officials, the federal government would save up to Rs90 billion by cutting the development programme and withdrawing subsidies. The plan is based on the assumption that the Federal Board of Revenue would achieve the Rs1.667 trillion tax collection target. But officials claimed that FBR has informed the government that it may miss the tax target by Rs50 billion. In that scenario, the federal government would have to look for other avenues to slash expenditures of equal amount in the wake of the worst flooding in the country’s history. The federal government has also asked the provinces to cut their annual development programmes in order to create fiscal space, necessary to adhere to the Rs685 billion fiscal deficit target for fiscal 2010-11. Officials said that now the provinces have been asked to create a fiscal space of up to Rs90 billion to remain within the overall fiscal framework.

Official statistics showed that the federal government transferred Rs633.4 billion to the provinces from July 2009 to June 2010 as their share in federal taxes under the Distribution of Revenue and Grant-Aid Amendment Order 2006. Though the transfers remained Rs22 billion short of allocations, these helped the provinces to finance 80 to 96 per cent of their budgets. The remaining financing was either received through provincial taxes, non-tax revenues, federal grants or borrowing from banks. However, the historical seventh National Finance Commission Award has changed the distribution mechanism and now other indicators like resource generation, poverty and disparity are also being considered. This has shrunk the Centre’s share from 55 to 46 per cent and will help provinces to get more resources but may lead to loss of provincial taxes due to the provincial governments’ inability to net the actual potential. Punjab’s total income, including federal share, stood at Rs401.6 billion and it incurred expenditures of Rs435.5 billion, recording a deficit of Rs33.8 billion. Sindh, the second most populated province, got Rs188.4 billion from the Centre, which was Rs5.7 billion less than allocation. Sindh was the worst performer in terms of resource mobilisation as it collected just Rs21.6 billion in taxes, the same as in 2008-09. Provincial taxes could only finance 8.6 per cent of expenditures and were less than 10 per cent of total revenues. It also puts a question mark on Sindh’s claim to collect sales tax on services, a cause of delay in implementation of reformed General Sales Tax.
Sindh’s budget deficit remained at Rs10.5 billion. Its total revenue amounted to Rs241 billion while expenses were Rs251.5 billion. Its 79 per cent budget was financed through receipt of federal taxes. The Khyber-Pakhtunkhwa government could only collect Rs2.4 billion in taxes, just Rs187 million more than fiscal year 2008-09. Its taxes could only finance 1.7 per cent of total expenditures and the government heavily relied on the Centre. The province got Rs80 billion from the federal divisible pool compared to its share of Rs85.4 billion. Its total revenue stood at Rs152.4 billion against spending of Rs142 billion, generating a surplus of Rs10.3 billion. The Balochistan government also could not mobilise provincial resources. It collected Rs1 billion in taxes, Rs167 million more than the year 2008-09. Provincial taxes helped to finance just 1.4 per cent of expenditures. Taking into account all income sources, including non-tax revenue, the provincial government could finance just 4 per cent of expenditures, depending on the federal pool for the remaining 96 per cent.

Sugar production in fiscal year 2009-10 amounted to 3.1 million tons and carryover stocks from 2009 were 500,000 tons. However, this year Pakistan does not have any carryover stocks. Average sugar production in one year has been around 3.7 million tons.

“We need to respond strongly to the crisis at hand, but we need to do it without losing sight of important economic reforms,” said Mr Zoellick while emphasising the need to continue the reforms Pakistan negotiated with the World Bank Group two years ago. Mr Strauss-Kahn went a step ahead and indicated that Pakistan had already pledged to continue those reforms. “Our dialogue with Pakistan on the current Standby Arrangement is progressing and the authorities have expressed their intention to implement measures for the completion of the fifth review of the programme later this year,” he said. "We will stay in close contact as these efforts proceed. Completion of the fifth review will allow the Fund to disburse an additional $1.7 billion, bringing total IMF disbursements (including emergency assistance) to $2.2 billion in the second half of 2010,” Mr Strauss-Kahn said. Pakistan pledged to implement tax and energy sector reforms, reduce inflation, curb budget deficit and give full autonomy to the State Bank.

Surely, the answer should be to begin to plug the loopholes in the tax system that allow people to evade taxes. Why must the already taxed be burdened some more when so many enjoy comfortable lives outside the tax net? If a 10 per cent flood surcharge on income already taxed can yield Rs100bn as estimated, then simply going after those evading the existing income taxes could yield several times that amount.

During the last fiscal year, the government made record borrowing from commercial banks as it was bound to remain within the limit while borrowing from the State Bank under an agreement with the IMF. Official data issued on Aug 31 showed that last year’s fiscal deficit was 6.3 per cent (or Rs929 billion) of Gross Domestic Product (GDP). It was much higher than 5.2 per cent (or Rs680 billion) deficit of the preceding year. One of the major reasons of massive borrowing is poor performance of economy. The government still claims that rate of growth could be around two per cent while many economists, including some government advisors, believe that the rate of economic growth would be zero per cent. Experts said inflation could be as high as 25 per cent due to disaster caused by floods. So far, the government has not borrowed from commercial banks, instead it made net retirement of Rs44.7 billion compared to Rs54.6 billion borrowed last year during the same period.