The Chinese President Mr. Xi Jinping once told a story that a cat is white or black that is not important, whether it kills the rat or not that is to be judged. Budget proposals of any financial year find a common that they do not go down well to all. Or levying of value added tax on edible oils and hike in specific duty on sugar make it enemy to people is not the analytical philosophy of a budget. Since no budget is framed against the surfeit portion of people or could bring smiles to them. In economic literature, budget is defined as not only the reckoning of variant allocations, economic philosophy and priorities of a political authority is also reflected in it. We are divided here due to our divided anchorage to divided camps and remaining shy off giving the real economic articulation. This is a sorry state of mental make- up of our political culture that deters to call a spade a spade. But the real challenges lie in operational aspects and in the understanding of hard core message of budget. That is to be judged the extent of success and failure of a budget in its final analysis. Mr. Xi Jinping wants to say this. Yes the proof of coffee is in eating.
Budget 2019-20 gave a clear message in a splendid form. That is number one, the size of the cake is to be enlarged. Without distributing poverty equally, finance minister intends to distribute cake. That means, beefed up productivity is the first priority to be achieved with constraint resources. With the same aim businesses and external sector get the equal weigh in. Revamping productivity by giving fiscal coverage, subsidy, cash incentive and other policy support will generate employment opportunity. Without going to too much of munching of data, the very proposal seems to appear quite accommodative as far as the interests of the small and medium enterprises and traders are concerned. The proposal to exempt the small marginal traders having an annual turnover of TK 5.0 million or less from payment of VAT is one example. The turnover limit has also been raised by TK. 1.4 million for SME with regard to income tax payment and space for whitening black is given if it comes in manufacturing. Yes, the question of whitening black money might get holding up until holes through which black money is fountained is not plugged. Until sources of earning are not stopped, we cannot tell it brushing away from spending for so called fragile moral ethos. Rather finance minister proved his maturity by creating scope for black money to get into productive sector without going it being distorted in consumption expenditure or syphoning off abroad.
Number two, side by side he did not forget giving due weight to social safety nets. Nearly 16 lakh more disadvantaged including all registered differently abled people and more marginalized and vulnerable ones are added to the government’s core social safety net programmes in fiscal year 2019-20 taking the total to TK. 1.13 crore. Now 97.13 lakh people receive allowances under 17 social protection and several other social safety net programmes of the government. Last year we saw 7 lakh beneficiaries were included.
Could we brand 2019-20 budget with having something special? It is as usual with having no break -through and as a middle term measure how much an annual budget could accommodate breakthrough? Then how it will be measured, evaluated and judged with what yardstick and with what? Yes, it is to be seen in the light of its continuity and connecting responsiveness to our passing seven five year plan ( 8th FYP is in the offing) and extent of its being accommodative to the political commitment of those in power. But on the question of its desirable implementation or achievement, priorities, extent of allocation and effectiveness of related implementing agencies (here related 24 ministries) and last but not the least its challenges and uncertainties are always facing differences.
2019-20 budget is of no exception unless differences are framed and aimed at political rather than macroeconomic perception. Many variables to be certain and uncertain might come up for analysis with their past trail of records. But whom be named to come first? Yes the bureaucracy that are ending up implementation of budget. Running debates on rationale of the size of budget, TK 3,77,810 crore revenue earning, within this TK.3,25,600 NBR earnings( VAT 37.8% + income tax 35%+27.2% import duty and others), TK. 52,210 crore non- NBR earnings, TK. 2,02,721 crore development budget or ADP, TK.3,10,262 crore non-development budget and TK. 1,45,380 crore deficit etc. etc. all will have no ground unless existing bureaucracy and institutions are structured making capable of implementing budget and ADP. Budget implementation is ours “Achilles heel”. Existing bureaucracy entrusted mainly with the task of implementing budget are not apt for this. As a result at the end of the year we see a lofty portion of budget proposals remain unimplemented. Volume of revised budget are routinely getting enlarged every year and misses the targets. So to us reforms of the bureaucracy and institution must come first that was badly missed out by finance minister.
We see sounding off much on our routinely failure of targeted resource mobilization and that is made the most risk factor for budget implementation. It is not denying. A look at the revised budget for the outgoing financial year and its state of implementation up to the month of March reconfirm the main weakness of our financial management , namely, the persistently the low resource mobilization that repeatedly misses the target. In this light, TK. 3,77,810 crore as total revenue seems to be impossible. This is much sounding off. But we differ. In our transitional phase, NBR is to be made prepared and structured for TK.3,25,600 crore to take challenge of collecting tax from one crore people. Now only 15 to 20 lakh pay tax out of nearly 17 crore people. Is it not a national crime? Lofty amount drives home to NBR to be prepared for bigger task. But that does not mean NBR would slaughter one cock for two times.
Rural economy has been invigorated many folds with the expanding of informal sectors largely. So NBR must leave air conditioning in cities and go for roots. But they must obey the canons of taxation without disturbing fixed income earners in cities repeatedly.
For financial sector reforms, our proposal is clear. Finance ministry must stop the functioning of banking and financial institution division. Since it is the apple of discord for amassing of default culture and piling up of non- performing loan. Must stop the sanctioning of loans by direction of power politics. Bangladesh bank be made autonomous and only guide in financial management in the true sense of the term. But budget proposals remain silent regarding this.
But higher bank borrowing say TK.47,364 crore definitely hit private investment. It would be troublesome.
Government is farmers’ friendly. It proves in allocation in agriculture, in giving subsidy in various forms to farmers those lead them to find a splendid way of having lower cost of production. But it fails to protect them in market competition and make them prey to visible and invisible play of middlemen in various stages with the result of making them far away off end consumers. So without delay investment must directed both from public and private towards building modern store houses to empower farmers face competitive edge in agriculture marketing. Finance minister was mum about this, particularly the ongoing mishaps in boro pricing fails to disturb his sleeping.
But our economy is looming in low investment and low savings trap. Private investment for long is stuck to 23.4 percent of GDP which is below the target of 7FYP for 2019. Gross national savings is 28.41 percent of GDP, below the target of 7FYP for 2019. Private investment is meant for the main driver of our economic booming. We expected from him regarding this. But failed. Here is our vintage point of reservation.
The unique beauty of 2019-20 budget are the proposals of start -up programme of TK.100 crore for creating youth entrepreneurs. It is a message that future generation must come out of the orbit of stagnant thinking of traditional job seeking. Their prosperity lies in being entrepreneurs and not in job seekers. So prepare to go on. Proposal for universal pensioning. Proposal for 2% cash incentive on remittance that will check illegal “Hundi”. Lastly we have social security strategy and following this will not suffer from the dearth of guide lines.
Silent rising of health care cost that compels some four to five million people to move into poverty every year and dearth of quality education definitely occupy the thought world of finance minister.
We are not suffering negativity to our progress and accustomed to say half full glass of milk without being oblivion to our challenges.
Writer is a retired Professor and now a freelance contributor