THE proposed budget for 2020-21 is a huge expenditure programme at a cost of Tk 5.65 trillion with a deficit of Tk 1,90,000 crore which is over 6 percent of the GDP and invariably signals the redline in fiscal discipline. Budgetary deficit is usually tolerable at 5 percent level.
The Finance Minister said the proposed budget will help recovery of the economy severely impacted by corona pandemic and find the pathway to progress. But financial analysts said it is a traditional budget in all sense in a business as usual year and not the one having the innovative ideas and technique to bring this change.
Agriculture and employment generation for the poor and bail out of small and medium enterprises (SMEs) sector remains largely unattended. A strong response to Coronavirus fighting is missing belying expectations of the nation.
The government revenue target at Tk 3,78,000 crore appears to be quite challenging and may largely remain unattainable when the country’s businesses and economy are struggling to survive from the impact of corona pandemic. The huge deficit financing in the budget is mainly loan based from banking sector along with heavy dependence on foreign loans and grants.
The government plan to borrow Tk 190,000 crore from domestic sector of which include Tk 80,017 crore from banking sector– almost double from last year. The government has shelved borrowing from sales of savings certificates to Tk 20,000 crore. Government borrowing plan from banking sector is not corroborative as well to its high target of over 16 percent credit flow to the private sector.
It can’t be forgotten that the government has also set a target of Tk 1.03 trillin stimulus package based on bank loan financing for ailing businesses as part of a recovery programme out of the budgetary process.
But how the banking sector will be able to generate so much money like a parallel NBR window for budgetary funding is creating new problems for banks now triggering with crisis from default loans. Banks are failing to muster enough deposits at 6 percent interest and too much dependence on bank financing may cause a big mismatch at the end.
The financing of Tk 80,017 crore from external sources also looks unrealistic. The Center for Policy Dialogue (CPD) said the government GDP growth target for 8.2 percent in the upcoming fiscal, which basically aimed at putting a big face amid economic crisis may put wrong signals to global development partners. It may impact on getting enough fund for Coronavirus related projects.
The government has earmarking a Tk 10.000 crore as lumsum allocation to fight coronavirus pandemic. Experts have laid emphasis on making on at least 20 percent higher allocation on health sector for quick restructuring of the health sector to achieve the capacity to tackle the surge in Corona patients and hire more doctors and health workers. But nothing as such is visible.
Emphasis on bigger allocation to agriculture also remains partly unattended at a time the number of the poor has almost double in the countryside from shutdown of economic activities in last three months. Similarly allocation for strengthening social safety is not enough.
The budget has proposed tax cuts at various levels aimed at giving favors to big businesses while the call to impose higher rate on mobile phone call rate and data in the ICT sector is likely to bring more financial load on the common people.
