It is a good sign that public interest on the preparation and implementation of the national budget is growing. Both the print and electronic media, as well as think tanks and the civil society activists are getting increasingly involved, while the nonparticipation of the ruling and opposition parties is also quite noticeable.
The procedural aspect of budget-making is a top-down activity rather than one initiated from the bottom. In this method, implementation of the budget at the bottom level becomes difficult. Challenges are faced and frequent revisions to the estimates become crucial, thus weakening the macroeconomic management.
This year, a 30 per cent growth in the size of the national budget has been proposed over the previous year, and accordingly, the estimate of revenue income has shot up more than 33 per cent. If everything is not done in accordance with planned demand or supply, with proper consideration of ground realities based on proper assumptions, revenue realisation as well as development expenditure estimates would remain unreachable, and revisions at the end would become unavoidable.
Critics are wondering why the budget is so bulky, highly 'ambitious'. Yes, the size of the budget is becoming bigger though the pace of implementation is declining. Like many developing economies, our budget estimates are prepared incrementally. Nominal size of the budget increases every year. The pace of growth of the incremental budget is supposed to be based on the summation of gross domestic product (GDP) growth and CPI (Consumer Price Index). If it is not so, the budget will not reflect any growth in real terms. Moreover, increasing the size of the budget is also to explain the level of the rise of purchasing power vis-à-vis consumer satisfaction and the level of development. It happens in both market-dominated and welfare-oriented economy.
Taka 2, 951 trillion was the total outlay last year which was revised down to Taka 2,65,5 trillion. Outlay of the proposed budget is Taka 3,406 trillion, a rise by around 28 per cent. Though in real terms the increase is not much, its implementation will remain a big concern, because a lot of innovation and procedural improvements will be required to materialise it.
Consideration of another factor should be kept in view. Increase in the size of the budget is imperative, as we are aspiring to reach the middle-income country status. To maintain economic dynamism, our development expenditure should increase. If not, desired 7-8 per cent GDP growth will remain a far cry.
A budget is often termed 'ambitious' if it is found that the pace and capacity of its implementation is low. Critics put strong focus on the implementation of the budget. Efficiency and transparency in the implementation of the budget is a major cause for worry. For example, announcement of a large Annual Development Programme (ADP) and subsequent revision by cutting its size to a large extent may create a very frustrating scenario both for development and revenue realisation. If you can not implement a project on time, the adverse impact falls on the macro-economic management. Delay or inability to use foreign aid from aid agencies or FDI (foreign direct investment) from foreign companies is your failure in many respects. Paying higher attention to these interlinked issues should be the foremost responsibility. There is no alternative to increasing the efficiency of the workforce responsible for the implementation, be it development of infrastructure or revenue realisation.
Policy or procedural changes in any fiscal measure in the budget (through Finance Bill) should not happen abruptly, it should start when the stakeholders have fully comprehended the implications and are ready for possible changes. Any change while imposing a new tax or duty must be based on pre-review by stakeholders. This year, introduction of the new VAT and Supplementary Duty Law sparked protests from the business community. It seems that differences on some issues are yet to be resolved. Introducing any new tariff or tax law should depend on the preparedness for its implementation. Fitting mindset should be developed at both ends (tax payers and collectors). Creation of an enabling environment is a sine qua non for realising revenue in the desired large quantum.
A very small portion of the budget (annual 1.0 per cent) may be kept aside for the development of trade and financial database, automation, research on valuation and even ad valorem. Policy makers must review the relevant data, find out options commensurate with the impact study. Various trade, commerce and industry associations, think tanks and research institutions can build economic and financial databases. If enough data for policy makers are not available, in order to make the policies precise and accurate, it would be difficult for them to review even the impact of their decisions.
For both the proposed revenue and expenditure budget of the upcoming fiscal, the challenges of macroeconomic surveillance, including alert management guidance, would be necessary, particularly in the following two areas: (1) minimising the backlash from the last fiscal year due to previous political situation, and (ii) sticking to the right path, and advancing along the path of development and progress to the point where growth would take us to the middle-income status.
It is widely held that the twenty-first century will be marked by economic development of the Asian developing nations, and the competition for superiority among them for regional leadership will be very crucial whirling and controlling factors for small economies like Bangladesh. Substantial economic growth will be crucial for existence and development.
Progress in the emerging economies of South Asia and the targets set during the budget estimate should ensure that standard of living, economic self-reliance as well as values of all other aspects of moral and democratic norms are pursued in right earnest. The spread of free market economy and further liberalisation measures in the global trading practices call for transparency and good governance to create an atmosphere favourable to the empowerment of the impoverished masses.
Dr Muhammad Abdul Mazid, former Secretary to the government of Bangladesh and former chairman
of NBR, is chairman of the Chittagong Stock Exchange. [email protected]
- Friday, 22 November 2024 |
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