he Case:
Pakistan’s finance minister Dr. Abdul Hafiz Sheikh presented federal budget 2012-13 on June 01, 2012. The total outlay of budget 2012-13 is Rs. 3,203 billion which is 15.8% higher than the size of previous budget 2011-12. Comparison of two budgets reveals that the total government expenditures have increased by 15.20% from Rs. 2,835,373 million to Rs. 3,266,307 million out of which development expenditures have increased by 25.83% from Rs. 354,872 million to Rs. 446,539 million. According to Economic theory, if government expenditures increase, generally economy flourishes butPakistan is an exception to the rule. In every budget, government expenditures increase but our economy is not showing any positive response. This budget has also been presented in a situation when the condition of our economy is not at a satisfactory level. Despite increase in government expenditures, Pakistan economy has been facing unemployment, acute energy crisis, inflation, poverty and trade deficit for many years.
Requirement:
Think as an economist and discuss the reasons why is Pakistan economy not showing any positive change despite the increase in government expenditures?
