In line with his previous efforts, Finance Minister AMA Muhith has outlined another national budget. As such the prime objective of the proposed budget for the upcoming fiscal year 2016-17 (FY17) remains to be 'marching towards growth'. It, however, explicitly declares 'development and equitable society' as two other objectives besides growth. But, careful analysis of the finance minister's budgetary initiatives makes it clear that little effort is there to contain the incremental socio-economic disparity in the country.
'Obsession with growth' appears to be the main driving force that makes the finance minister too ambitious. In his budget speech, he repeated 'growth' for at least 72 time while 'disparity' for only four times. The finance minister and his colleagues in the government are apparently more interested on quantity of growth, not the quality. The '7-plus' growth rate is now the 'mantra of development' in Bangladesh. That's why, mega infrastructure projects are getting priority while necessary measures to reduce the plight of ordinary people are sidelined.
Due to special focus on 10 mega projects including the Padma Bridge, 20 per cent of the total development expenditure is allocated there. Some other ongoing physical infrastructures like flyovers in the capital city are also in the priority list. The logic behind pushing these projects is to generate more growth. Policymakers believe that higher growth will ultimately trickle down. So, the deprived, vulnerable and poor section of society will also get some pieces of growth cake by default.
Though these projects are now dubbed as 'new dimension in growth acceleration,' there are already logical questions on inflated expenditures and long-term effectiveness of some projects. The policymakers have rejected the possible negative impacts on natural environment due to implementation of some of these projects. But, cost of such environmental damage may be very high and beyond compensation.
Nevertheless, this is a part of the neo-liberal agenda adopted by the government as a means to achieve higher growth. It is to be noted that philosophy of neo-liberalism asserted the supremacy of private entrepreneurship, private property rights, free market and freeing of trade. Moreover, neo-liberalism bumps up market exchange over and above other sets of connections between the people. Under the framework, 'market is the source of value and virtue.'
There is nothing wrong on encouraging private entrepreneurship but crony capitalism under no circumstances, as the country's economic activities are mostly dependent on private investment. But, condonation, if not encouragement, of irregularities and bad governance along with misappropriation of public money in the name of growth generation can't ensure long-term sustainable development. That's why, strict monitoring and auditing of public fund is important. The proposed budget doesn't provide anything in this direction.
Financing big budgetary outlay is always challenging, especially when the outlay is designed to promote more on neo-liberal agenda. So, more taxation is a must to mobilise resources. In line with this proposition, the government has finalised the new Value Added Tax (VAT) law which sets 15 per cent uniform vat rate across the board.
The finance minister, however, has backtracked on full implementation of the new Value Added Tax (VAT) law from the first day of the new fiscal year. Now, it will be effective from FY18. The decision has been taken due to strong objection from the business community, especially small and medium-sized enterprises (SMEs). But, he widens indirect tax net aggressively. It will partially offset the revenue shortfall due to delay in implementation of the VAT law which was prescribed by the International Monetary Fund (IMF).
Over the years, lower tax-GDP ratio has also become a matter of concern in the country. So, the finance minister again pushes for higher tax revenue through this budget. In his budget speech, he repeated `tax' for at least 140 times which reflects his reliance on tax revenue. While there is a lot of scope to enhance direct tax, it will be difficult to achieve without adequate reform in tax administration.
Against the backdrop, it is critical to understand the trail of tax money. How efficiently and effectively will the money be utilised? Recent trend makes it clear that efficiency on resource utilisation has been compromised significantly on the plea to cost escalation in many infrastructure projects. Some Tk 668.78 billion has been allocated for construction and work which is one-fifth of the total budget.
As public money is mostly tax money, misuse and misappropriation of this money in favour of private or corporate firms not only deprive the tax payers, but also fuel income disparity.
The finance minister's optimism about achieving high (34.5 per cent) revenue target in the next fiscal year is based on his aggressive steps to taxing people even in areas earlier considered not realistic. For example, he brings the meditation service under the VAT net. In a stressful society, knowledge and practice of meditation to keep body and mind calm and relaxed is now a growing phenomenon. A few organistions are providing the service and a lot of people are going there. Probably this drives the tax authority to bring the meditation under tax net.
The proposed budget ignores some important areas of ordinary people. One of these is efficient public transport. This is the sector fully criminalised, and people of the country are hostage to the private transport owners who have strong nexus with politicians and the police. Though the budgetary allocation for transport and communications is the second highest amounting to Tk 372.89 billion or 11 per cent of total budget, there is no guideline for developing an efficient public transport system in the capital city as well as across the country.
No doubt, the finance minister has to work a lot for balancing different stakeholders' demands and requirements. But the reality is that everything can not be accommodated. Thus, the proposed budget is also not a balanced one. It is heavily tilted to resource accumulation and has ignored resource redistribution.
[email protected]
- Friday, 19 April 2024 |
- Today's FE |
- e-Paper |
- Beta Website
