Saleh Akram :
The Finance Minister presented a wide-bodied budget of Taka 2.5 lakh crore for 2014-15 financial year – so far the biggest budget in our history. It appears, the Finance Minister who has had the distinction of presenting annual budget for the eighth time, refuses to be ruffled by the volume of the budget and impending doubts over the practicability of its implementation. With a characteristic smile on his face, he would always plead, the budget may be ambitious, but if we don’t aspire, how would we achieve.
The budget envisages a revenue income target of Taka 1.83 lakh crore. The target last year was Taka 1.36 lakh crore, which was later reduced to Taka 1.25 lakh crore in the revised budget. Questions are pertinently being raised whether the target is achievable, or whether, this will also be reduced in the revised budget. Therefore setting a revenue income target 25% higher than that of last year, can not, to say the least, be termed as realistic.
Same thing can also be said about growth rate. The Finance Minister had been claiming to have achieved more than 7% growth over the last three years. In reality, growth rate had always been almost stationary around 6%. In spite of such experience, fixing a growth target at 7.3% for the coming financial year, appears somewhat like building castles in the air. According to Centre for Policy Dialogue, 32-33% investment is necessary for achieving 7.3% growth. Investment from our public sector is about 7%, which necessitates 25-27% investment to be made in the private sector. At present, private sector investment in our country is about 20%. In view of the present crisis in the energy sector and administrative management, it is difficult to imagine an additional investment of 4-5%. The complicity of investment, rampant corruption and above all the service standard in public sector have reached a stage which will push inflation further up rather than boosting economic growth.
The Finance Minister had to include all these in view of declaration by the government to transform Bangladesh to a middle-income country by 2021. In fact, in order to be a middle income country, it is imperative that we achieve an annual growth rate of 7 to 8% and that is why, the Finance Minister could not think of a growth rate less than 7% regardless of ground reality. In the same manner, he had been talking about increased investment round the year, which could not be achieved. As a matter of fact, not only investment in the private sector has decreased, import of capital machinery and raw materials have also registered a sharp fall. Credit flow of private sector Banks has also slowed down. Despite all these, the blowing up the revenue collection target, as the Finance Minister has done, appears impracticable. There is a gap of Taka 67 thousand crores between the projected income and proposed expenditure and as per budget proposal, the deficit is about 5% of the GDP.
The Finance Minister has proposed that Taka 24 thousand crores out of the total deficit will be met by borrowing from external sources and Taka 43 thousand crores will come from local sources. Whereas the total foreign loans received so far during the current fiscal stands at Taka 14 thousand crores only, it would be grossly unwise to assume that foreign loans and grants will leapfrog in the coming financial year. At the same time, foreign remittance has started to decline and nonresident workers are coming back in increasing numbers. Under the circumstances, we have very little choice other than reducing expenditures and increasing borrowing from internal sources. Borrowing of Taka 31 thousand crores from local sources has been proposed in the budget. Actually, increased borrowing from local Banks by the government will mean lesser availability of Bank loans for the private sector and will ultimately discourage the local investors. The Finance Minister has emphasized on the need for political stability and has called upon all political forces to refrain from violence and be united in greater interest of the country. Since the two major political parties are at loggerheads with each other, prospect of political stability in near future appears extremely remote. Again, in absence of political stability, economic activities will be seriously constrained and fewer employment opportunities will be generated. There is also a possibility that price inflation may also increase and things may go out of control.
Subsidy in agriculture remains more or less unchanged in this year’s budget, although a realistic guideline to determine fair price for agricultural products, is missing. Announcement for collection of food grains from the farmers is still there, but the problems of agriculture and farmers have not been given duly addressed in the next year’s budget. Higher allocation proposed for defence compared to agriculture, health and education, has given rise to many questions in many quarters. Experts have questioned the validity of increased expenditure in absence of a proper defence policy. Out of proposed total expenditure of Taka 2.5 lakh crores, Taka 1.75 lakh crore has been allocated for pay & allowances and other current expenses, which can be termed as non-development expenditures. The remaining Taka 80 thousand crores has been proposed as development budget. But of late, the success or achievement of a development budget has always been questionable. As a matter of fact, we have never seen implementation of more than 60% of the development budget and the failure can be attributed to weak monitoring and inefficient administration. Unless there is a dramatic improvement in monitoring system and administrative efficiency, implementation of the next budget is also unlikely to be any different from previous years, and the possibility of curtailing the expenditure target in the revised budget is imminent.
History of major projects with our own finance speaks volumes about corruption during implementation phases. Because of their own monitoring system, corruption can not have an unrestrained passage in projects financed by World Bank and other donor agencies. Therefore, whatever is said about construction of Padma bridge with our own finance, apprehension of corruption in implementation of the project can not be ruled out altogether.
In his post-budget press conference, the Finance Minister spoke of his resolve to remove the inequalities between the rich and the poor, alongside explaining the implementation potential of the proposed budget, He has predicted, there shall be no ultra poor in the country after 2018. But no specific steps to increase the income of the poor and extend the social security net for them, has been suggested in the budget. Whereas the spirit of our great liberation war and democratic movements was peoples’ welfare, the proposed budget does not contain any well-planned proposal for increasing sectorwise investment and improve the standard of living for producers/manufacturers, and therefore the budget can not be called welfare-oriented.
People of higher classes have always been enjoying the fruits of development in the country which resulted in further widening of the gap between the rich and the poor. Calculation of growth rate, based on certain assumtions, does not reflect the ground reality. The present government in stead of making the opposition its development partner, has chosen to eliminate them. Hence there is hardly any hope for political stability in near future. This has made the job of formulation of a realistic budget very difficult, if not impossible. Question of implementing the same comes later.
(Saleh Akram a well-known TV personality and writes on economic issues)
