Budget 2016-17: Dreaming a stride and reality is not far off

Haradhan Ganguly
Thursday, June 16th, 2016


 

We want Padma bridge, we need four lane road connectivity with Chittagong for reigning in cost of doing business,  we believe, if implemented Padma rail link project would boost the country’s economic growth by 1.5- 1.75 percentage points, projects of Sonadia and Payra deep sea ports, Dhaka Metro rail, Ruppur atomic electricity plant, Matarbary electricity plant, Rampal electricity project and construction of LNG terminal and proposed construction of a single line dual gauge track from Dohazari-Ramu-Cox’s Bazar and Ramu to Ghundum near Myanmar border etc – yes all are very necessary for rapid growth. Yes government is on the very right track. But we will not give tax. It’s a very irritating phenomenon. We are reluctant to income tax. Proposal of enhancing source tax should be revisited. Corporate tax will lessen our competitive edge. Supplementary tax must be withdrawn. But how government will and from where government will finance these projects. How annual development programmes (ADP) would get implemented. Where does money come from? Bangalee middle class are accustomed to be anti –tax tradition. But their art of demand includes everything. In Bangladesh we are 1.5 to 2 crore middle class with taxable capacity. But only 12 to 13 lakhs of people are giving taxes. So it proves the law.

 

So when we doubt the proper execution of the next budget of TK 3.4 trillion outlay with a TK. 2 lakh 42 thousand 752 crore tax revenue generation and7.2 percent growth target to be ambitious, albeit it is ambitious not only to finance minister, to us also. It is a positive ambition springing from given paradigm. Our economy is getting wider and we set out our stride towards turning the country into a middle income status. Vast areas are remaining untapped for revenue generation particularly from the purview of NBR. Do we think, NBR”s high-ups would sit motionless in air condition and people in flocks would throng at NBR door steps to pay taxes at their sweet will. Sorry to say, NBR has done it in the past and even as of this financial year. Ongoing financial year saw NBR’s fall short of nearly 36 thousand crore taka. For next financial year, out of TK. 2 lakh 42 thousand 752 crore, the target set for NBR is TK.2 lakh 3 thousand 152 crore. We feel from finance minister’s speech in parliament that government is serious to embark upon vigorous efforts for breaking NBR’s inertia. We believe here lies real challenges not to collect funds, but how to invigorate NBR. More emphasis would be given on value added tax or VAT in revenue generation. In revenue earning regime, NBR occupies only 10.4 percent of GDP. TK 7 thousand 250 crore would be earned from non-NBR sources which is 0.4 percent of GDP and TK. 32 thousand 350 crore or 1.6 percent of GDP would come from non- tax sources. Through full automation, expanding of tax areas, reducing the extent of tax holidays and harnessing of administrative structures NBR would to be made possible to stand on solid ground. Government is thinking so and we believe finance minister would do so.

 

But in the true sense of the term, what challenges are really posing constraints to budget or so to say to our efforts for development. It is the question of acute delay or snail- like speed of project implementation. It is true, we have been unsuccessful in galvanizing our bureaucracy that has been politicized heavily. This scenario is nothing new of today. We have been inheriting this from long past. One may be well trained in one sector but if he is entrusted to look after a big for which he has no expertise, otherwise how can we explain the abnormal delay of project implementation or the pathetic 50 percent implementation of ADP in 10 months? In the following two months, a big chunk of the ADP will be pumped out leaving out the question of quality. In the end, everybody would look at the figures, the real roads and markets will turn into projects and the projects into figures of 90 percent or so. Public investment in mega projects is growing fast. But each and every vital mega project is taking more than their estimated time to complete and with time, their costs are rising. This spells serious repercussion on their economic rate of return and our fiscal management. We are getting the same road but at a much higher cost, the same flyover at an exorbitant price. We could build almost two Padma bridges with the cost of one. So these are our true challenges –acute delay of implementation. Next fiscal will have TK.1 lakh10 thousand 700 crore ADP. The on going fiscal is implementing TK. 91000 crore. The original ADP allocation for this year was TK. 97000 crore, but it was revised down for the lack of ability to implement. Inefficiency of bureaucracy is our curse for utter dismay in ADP implementation and we believe government will not disagree. For that both finance and planning ministries will get down to monitoring development budget from the first month of fiscal 2016-17. Since implementation scenario of the ongoing ADP has been the lowest in the five years. Between July last year and April this year, TK. 45,163 crore was utilized, which is about 50 percent of the revised allocation of TK. 91000 crore for the fiscal 1015-16, according to the Implementation Monitoring and evaluation Division (IMED). So, thanks to concerned ministries for realising the basic problems of ADP.

 

But the main focus is to be directed towards unemployment which is nagging constantly. Every year, about 300000 jobs are being created as against 20 lakh new entrants in the job market. Jobless educated youths pose political and security risks to any country. Unemployment has its roots in the lack of investment and the nature of investment. But surprisingly private investment has dipped as public investment has gone up. Sluggish private investment is also agreed upon by finance minister in his   budget speech. Private investment is 21-22 percent out of total investment of 29.4 percent of GDP which needs to reach 27 percent for taking the country to a middle income status. Lack in private investment has become the main issue of debate in total budget discussion. Cost of doing business is high and dearth of fuel particularly gas availability are the stumbling block of private investment. We need higher growth. But that growth must be employment based. Inclusive growth is attainable only through enhanced employment. Drought in private investment should be the night mare of policy makers of Bangladesh economy. An interesting feature of this year’s  growth shows a major part of it would come from the service sector. As we know service sector does not generate as many jobs per dollar as manufacturing sectors do. We do understand one thing without dynamic private investment, the economy will not bonanza. So vigorously national efforts, much hoopla is to be honed in decision making bodies regarding private investment.

 

At the end of the day, could we say again that our next budget is big.  Do you know it occupies only 17.4 percent of GDP. In India it is 24 percent and in Singapore it is nearly 34 percent. Whereas our total economy stands to nearly TK.20 lakh crore. So don’t be prejudiced in making the cake big.

 

The writer is Secretary, United Nations Association of Bangladesh-UNAB

Leave a Reply

  • National
  • International