Now that the national budget is doing the rounds into thinking quarters, the fact remains that understanding the implications is not always free from speculations. This is because the budget proposals are too reliant on ifs and possibilities that often do not translate into viable realities.
Curiously, every year, soon after the budget announcement, analysts tend to ponder on a few of their pet issues to write on and talk about in seminars and the garrulous television talk shows. Unfortunately, for most people, budget brings no cheer. What, however, keeps them looking for is status quo -- continuation of their existing state of living, and no more hassles. Commoners are not interested in the economic implications of the budget in macro-economic context. All they are concerned about is whether they are worse off or not than they were in the past year. They remain concerned over chances of price-hike of daily necessities, while businesses - big and small alike -- worry over the new taxes coming their way. This, more or less, defines the pre-and-post-budget narrative in the country.
Maintaining the status-quo is not at all a well-meaning term for an economist, or even for a conscious citizen, as both want to see proactive plans in the budget that besides addressing some of the critical areas affecting the country and lives of the citizens, would be able to present a realistic roadmap for some of the priority sectors.
For a country like ours, sifting out the priorities is no easy task as there are scores of issues demanding more or less equal attention, simultaneously. Or, because of the overlapping nature of the issues, identifying a few for mighty thrust may prove challenging, requiring clear and comprehensive planning. This is how, the budgets barely ever brave beyond the so-called status quo syndrome. However, there is a great difference in common people's perception of status quo and that of the government. While it is an escape route for the government in not taking the problems head on and skirting them past, for the bulk majority of the common people, it is a way of holding onto a 'neither good nor bad situation'.
The mega size of the budget -- 4.64 trillion in taka terms -- has mostly been designed not to hurt any section of the citizenry much, though it now appears that there are sections which would be ill at ease to keep up with some tax and value-added tax (VAT) levies.
This is the election year, so 'harm less and be benign' is the principle that the government seems to consider wise to secure its comfort zone. But such wisdom has its precarious limitations when judged by its apparent merits disregarding the foibles. The key question: which are sections of society the budget targeted to treat benignly, albeit too graciously -- that too at the expense of public money? Surely, not the commoners, not the middle-income groups. There are some sops in the form of expanding the not-so-visible social safety net, continuation of subsidy on farm subsidies, especially on fertiliser and so on. But these and few more do not explain the benign character of the proposed budget. By trying to be benign, the Finance Minister in his budget speech has very generously bestowed his benevolence on two of the most degraded sectors of the economy -- the banking and the capital market. It is, as though, sparing these two from the clutches of punitive measures, augurs well with the benign treatment to other sectors.
Although the Finance Minster is known to be highly critical about gross irregularities in the banking sector for years now -- over the incredibly high proportion of default loans in the state-owned banks, and the nasty manipulation schemes in the stock market -- his budget statement is unreservedly mute on some of the actions he had earlier suggested. Forming Banking Commission was one such.
The strongest criticism of the proposed budget is the reduction in corporate tax for banks mired in scandalous financial irregularities, money laundering and default loans. How does being benign to the banks -- scandal-prone sick banks -- help the government is not too riddling to discern. In a word, politicisation. The government, on one hand, is making provisions for bailing out these banks and loan defaulters by injecting taxpayers' money, and on the other, by reducing corporate tax, indirectly creating opportunities for scams. Certainly, reducing corporate tax will in no way help reduce lending rates nor heal the liquidity crunch of banks. So, is it just the bank directors who are to solely benefit from the generosity? Trying to find an answer would explain the political economy of the budget.
This apart, a budget-illiterate like this scribe would have loved to hear the Finance Minster speak a bit elaborately on the soaring social inequality and give a framework of measures in a practicable manner. True, hardcore poverty has decreased considerably over the years which at times gets him too blissfully carried away, but on the flip side, the yawning urban-rural gap, intra-urban and intra-rural gap in the country do not indicate that development activities are going to improve the lot of the poor much. The budget makes no attempt to give any direction.
