Centre for Policy Dialogue (CDP) on Saturday doubted that ensuring the desired investment to achieve the proposed GDP growth to 7.3 percent in the budget for fiscal year 2014-15 would not be possible.
“To achieve the target, private sector investment should reach at least 25 percent from 21 percent. That means, around Tk 75,000 crore additional amount of investment will be needed,” which it said is ‘an impossible target.’
The CPD, a social think-tank, termed the proposed budget a ‘luxury of target’, saying it would not be possible to achieve the GDP growth if political stability and investors confidence could not be ensured and private investment increased.
It added that the total investment should be at 83-84 percent. Of the amount, around 7-8 percent may come from the public sector.
But in the new budget it was assumed that around 21 percent investment would come from the private sector, said Dr Debapriya Bhattacharya, a distinguished fellow of CPD.
The economic value of the four percentage point investment in private sector is Tk 75,000 crore ($9.5 billion), he said.
So, he said, it is now a matter of concern that what would be the source of the additional amount of investments. The quality of investments, both public and private, is needed to be increased to achieve the target, Dr Debapriya told reporters while presenting comments and analysis on the National Budget at Brac inn centre in the capital’s Mohakhali on Saturday morning.
CPD executive director Prof Mustafizur Rahman, research director Dr Fahmida Khatun, additional research director Dr Khondaker Golam Moazzem and other research fellows were present at the briefing.
Dr Debapriya said the new budget has been set by selecting 2005-2006 fiscal as base year, while other calculations have been done on the basis of 1995-1996 fiscal. “We observe two negative trends in the economy — registration of foreign investment decreasing and a fall in remittance inflow.”
But the booklet on the budget provided by the finance ministry reads as all calculation have been done by taking 2005-2006 fiscal as base year, he said. So, there will be some confusion — which year will be the base year for the 7.3 growth rate, he added.
“We fear that the double use of statistics, in one hand 1995-1996 fiscal and on the other hand 2005-2006 fiscal, will affect our various discussions,” he said.
“So, we suggest all the budget discussion and calculation should be done immediately by taking 2005-2006 fiscal year as base year.” he added.
Commenting on the vision of the budget, he said the Sixth Five Year Plan has completely been ignored and there is no clear direction or seventh five year plan.
In addition, he said, foreign exchange reserve may come down to below $ 17 billion because of Padma Bridge payment.
The CPD, however, appreciated the government for creating a new group of taxpayers by fixing 30 percent income tax for them. But it criticized the Finance Minister for keeping continued scope for whitening of block money. “The Finance Minister deliberately kept mum about whitening of black money,” it claimed.
It also welcomed the steps for increasing the allowances of the Muktijoddha and other groups of the society, tax exemption for small industries, incentives for entrepreneurs to set up industries outside Dhaka, increasing tax for land procurement, and also separate budget for eight districts.
The CDP observed that the allocation for education, agriculture and health sectors had been shown decreased in the proposed budget. It said the defense budget is static, but while revised budget is prepared, it increases every year.
About black money, the CPD criticised the finance minister for sustaining the provision of whitening of black money through his silence on the issue in the budget proposal for next fiscal.
“It is very regretful for us as the finance minister, despite his assurance of giving no scope of whitening black money in the budget, did not make it clear in his budget speech,” alleged CPD distinguished fellow Dr Debapriya Bhattacharya.
“We understand that the finance minister like the previous fiscals approved the provision of whitening black money with his silence and it should not be,” he said.
He said the budget has no commitment for overcoming the political crisis through holding dialogue and election.
Since the quality of implementation of projects has deteriorated over the last few years, it would not be possible for NBR to increase the revenue by Tk 26,283 crore, he said.
In the analysis, the CPD identified that the budgetary measures have objectives to attain fiscal consolidation backed up by high growth revenue; to revitalise economic growth momentum; to revert the downturn of investment and to further control inflation.
However, the budget has not provided for necessary institutional reforms towards improved fiscal-budgetary management as well as supportive policy environment.
In order to achieve a comprehensive economic goal, the CPD proposed establishing an Agricultural Price Commission to ensure fair prices of agricultural commodities, to ensure incentive price for the producers while maintaining market stability.
It also suggested establishing of an Independent Statistical Commission to validate the Macroeconomic correlates; a Local Government Financing Commission and a Public Expenditure Review Commission.
