Relief Package

Although difficult it was to prioritize between supporting industry or the poor directly, the government seems to have done well. But more details would be required to gauge the impact of the relief package. Given the halted construction activities because of lockdown, package for construction sector will be announced later. Expediting sales tax refunds and deferred debt payments are devised to support industry but targeting is the key here. In private sector, only those with access to bank credit will benefit from deferred debt payments. Yet criteria for distributing Rs 100bn of sales tax refunds among small and medium-enterprises and agriculture is to be decided. Besides, Rs 400bn seem to be allocated for direct assistance to the poor, seemingly half of this amount is to save jobs. Again mechanism is vital. Routing money through industrialists to the poor will create room for abuse. Given the novelty of challenge, the government should prefer direct assistance to the poor. There is enough time to boost targeting capacity while existing technologies like National Socioeconomic Registry of the Benazir Income Support Program can be utilized too. With time, the funds might look insufficient and complaints will come up especially from industry

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Detailed Post can be found at Incentive Package

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