To put the record straight for the information of the writer, it is suggested that the recent Kissan Package is a welcome development, which has been appreciated by all quarters. It will not only on one hand save our farmers from vagaries of environmental/ climatic behaviour change but on the other hand will contribute in the development of real sector of the economy. As far as writer's concern that this package will impact budget and there is cut on PSDP is not true as the package is a part of the budget. The writer should acknowledge that since the present government came into power, fiscal consolidation has been attained without compromising development expenditures as is evident that PSDP expenditure increased from Rs 300 billion in 2013 to Rs 700 billion in 2015, whereas the fiscal deficit contained from 8.2 percent in 2013 to 5.37 percent in 2015 and during first five month of current fiscal year 2015-16 it has been contained at 1.6 percent against 1.7 percent of the corresponding period of last year which augur well targeted fiscal deficit of current year.
Although during first quarter revenue shortfall occurred due to steep fall in oil prices which has been bridged through additional tax measures, now better results have been achieved during second quarter which the writer did not liked to mention.
The tax collection during Jul-December 2015-16 stood at Rs 1,385 billion showing an increase of 19 percent from the corresponding period of the previous year. The target for the current quarter has, therefore, been surpassed by around Rs 35 billion.
With regard to her criticism that Dr Hafeez Sheikh, former Finance Minister an economist, manipulated data changing the contribution of components of a macroeconomic indicator say by lowering the food component of inflation from nearly 40 percent to 34 percent is meaningless.
She is advised to go through the methodology of National Accounts before making any criticism. The change of indices is not on the wishes of any individual. The base year of price indices is changed after a decade or so in order to capture the changes in expenditure/consumption pattern. As the current CPI series with base 2000-01 may not be fully reflecting the recent composition of household expenditure (weights), it was desirable to update/change the base, improve methodology and capture the latest pattern of consumption of people. Previously, base year of CPI was being changed after 10 years but the Technical Committee for Change of Base of Price Indices and IMF suggested that it may be changed after 5 years to capture rapid changes in consumption patter of the inhabitants of country. Accordingly, new base year of CPI was selected as 2007-08.
The improvement in procedure and methodology of CPI is a continuous process and, as such, has been discussed and reviewed from time to time in seminars and workshops attended by subject experts, journalists and users from public and private sectors. The foreign experts and international agencies have also reviewed the work of CPI in detail. Their suggestions and recommendations were duly considered from time to time for adoption while revising the base of CPI. Classification of Individual Consumption according to Purpose (COICOP), has been used which are in line with international standards. According to which food, beverages and tobacco group weights changed from 40.34 percent to 34.83 and likewise other group weights also changed.
(The writer is Economic Advisor, Ministry of Finance)