Economy

Federal Budget’s Rs79 Billion IT Allocation Sparks Alarm: Experts Warn of Brain Drain and Sector Setbacks

The recent federal budget for 2024-2025 has sparked significant concern among IT professionals and industry experts in Pakistan. They warn that the poorly crafted budget could hinder digital prosperity and exacerbate the brain drain of highly-skilled IT professionals, potentially derailing the IT sector’s momentum gained post-COVID-19.

Despite the government allocating Rs79 billion for the IT sector, industry insiders have raised grave concerns. Professor Tahir Mehmood Chaudhry, Chairman of the Computer Society of Pakistan (CSP), criticized the establishment of IT parks, calling them ineffective and beneficial only to landlords. With 13 existing software technology parks failing to provide the necessary infrastructure or cost-effective facilities, many IT companies and freelancers have relocated to more suitable areas.

Chaudhry pointed out that the budget neglects the IT industry’s needs, especially in tax policies. While the government has increased the budget for the Benazir Income Support Programme (BISP) by 27% to Rs593 billion, he argues that half of these funds should be redirected to revive ailing industrial units, which would employ thousands and boost the economy.

The export figures also tell a worrying story. Despite reaching $32 billion, overall exports have plummeted to $18 billion, with the IT industry contributing $3.2 billion. The IT sector had aimed to reach $5 billion by year-end, and potentially $10 billion in the next five years. Achieving this target could address concerns raised by the International Monetary Fund (IMF) and the World Bank (WB).

Khawaja Fahad Shakeel, an eminent AI consultant and IT analyst, expressed concerns about the budget's effectiveness. He highlighted that out of the Rs79 billion allocated, Rs48 billion is earmarked for government projects like the digitization of the Federal Board of Revenue (FBR) and the establishment of IT parks in Karachi and Islamabad. Shakeel criticized the practice of diverting IT funds to other departments, calling it an injustice.

There are also concerns about the potential misuse of funds allocated for IT parks, fearing that a significant portion could be taken over by ministries and used for non-IT purposes, thus limiting access for IT learners and professionals. Shakeel emphasized the need for better policies, such as training in cutting-edge computer technologies, facilitating firms, providing subsidized internet services, and streamlining registration processes.

Despite these critical issues, the new budget fails to address essential aspects such as easing business operations for IT firms, tax relaxation, and other necessary considerations. The government’s budgeting process appears to overlook the IT sector's growth potential. Moreover, new taxes on the salaried class could exacerbate the brain drain, as IT professionals might prefer freelancing over traditional employment.

The federal budget for 2024-2025 poses significant risks to the burgeoning IT sector of Pakistan. Policy missteps and a lack of focus on essential infrastructure and support may stifle growth and lead to a loss of valuable talent, exacerbating fears of a brain drain among IT professionals. The government must reconsider its approach and align its policies to support and nurture the IT industry effectively to prevent further talent exodus and ensure the sector's continued growth and prosperity.

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