The New Nation - Internet Edition

Mostafa Kamal Majumder

A big budget presented in Parliament by Finance Minister - his third after the first two presented under former ruler HM Ershad in 1982 and 1983 - reflects on every page the pledge made by the Awami League-led alliance in the last election manifesto to build a digital Bangladesh with a view to creating a sonar Bangla as dreamt by Bangabandhu Sheikh Mujibur Rahman.

The octogenarian finance minister has taken to his hand the traditional budget brief case after a gap of 26 years, and the length of his 98-page speech bears testimony of his sincerity to keep on record everything that he wanted to tell the nation. This is possibly the longest budget speech ever given by a Bangladesh finance minister and, as a consequence, contains repetitions at many places.

He has promised a 5.5 per cent growth rate as against the current year’s revised estimate of 5.9 per cent growth because of the adverse effects of the global economic meltdown which has already started hurting the economy in the form of reduced imports and pressure on export and remittance earnings. Thus, the Finance Minister has to rely on heavy borrowing of Taka 34, 358 crore which comprise more than one-third of the largest ever Taka 1,13,819 crore budget.

As earnings from customs and excise duties show a declining trend the Finance Minister had no option but to give more emphasis on streamlining direct tax collection through both expansion of the net and strengthening measures to check tax evasion. He has also preferred to tax the rich more by increasing duties and vat on luxuries including cars, air conditioners and imported consumer items.

Increase of benefits to the poor covered by the social safety net is in line with the expectation of observers and the average people. The Finance Minister is lucky and he has acknowledged that the international market situation offers economic managers a good time now to free the economy from severe external pressures under which it used to be during the last few years. The prices of fuel oil and food items have substantially fallen internationally that they have favourably affected the domestic market while also enabling the government to make some profits as against heavy losses incurred by the immediate past government from the energy sector.

The chance renewed to whiten black money has attracted criticism of some quarters. But this was a demand from the business community and at a time of economic contraction this would possibly help increase investment to create jobs, production and income. The finance minister has reposed his trust in the private sector by also announcing the private-public partnership programme to increase investment. One word of caution however, needs to be sounded here. The public money to be committed under such partnership should be under close monitoring so that such funds do not end up like bad bank loans never to come back to the consolidated fund of the republic for recycling.

The reliance on heavy borrowing again bears the risk of making difficult the utilisation of the Taka 33,059 crore development outlay including the Taka 30,500 crore under the Annual Development Programme in case the assumptions on the basis of which the budget has been framed do not remain the same. The assumptions as mentioned in his speech are: dropping of GDP growth rate to 5.5 per cent next year but again surging back during the subsequent two years, fall of annual rate of inflation from seven per cent to 6.5 per cent, increase of actual remittance in excess of 10 billion dollars despite negative impact of world economic recession on remittance income, and finally, increase of revenue collection because of expansion of tax and non-tax revenue bases.

In short, the finance minister will continue to be on a tight rope to steer the economy towards growth acceleration. One important step for this target to be achieved is to unite the nation to work together for overcoming the present difficulties. This is indeed, a difficult time and calls for extraordinary measures for united efforts of the whole nation. Achievement of this is however, possible only if such a move is encouraged and strongly backed by none else than the Prime Minister herself and her other cabinet colleagues.