Budget to unite or disunite nation?

Mostafa Kamal MajumderThe budget proposed in Parliament for 2013-13 by Finance Minister AMA Muhith has been interpreted by concerned quarters from different perspectives and termed as election-friendly, please-all, and overambitious.  The economic think thank – Centre for Policy Dialogue – has called it surreal and that its implementation might be marred by election-centric political violence.The main opposition BNP in an interesting reaction said the Taka 2,22,491 crore budget, dependent on Taka 57,000 crore domestic and foreign borrowing, is not highly ambitious as the needs are more. But the prevailing messy administration and sluggish economy are not congenial for its full implementation. Senior BNP leader MK Anwar said this on behalf of his party which skipped the budget presentation in Parliament.
The proposed development outlay of Taka 72,275 crore is slightly more than Taka 10,000 crore over the original target set for the current fiscal year that ends by the 30th of this month. Non-development expenditure of Taka 1,34,449 marks an increase by about Taka 24, 000 crore over that of the preceding year. And the Annual Development Programme of 65,870 remains dependent mostly on borrowing. Fact remains, the budget size has increased by about Taka 31,000 crore over current year’s original target of Taka 1,91,738 crore.
In his budget speech the Finance minister said, ‘This is the last budget of our government in the current tenure. We began our journey in 2009 keeping in view the goals set out in ‘Vision 2021’. Today, we are almost half way through. From the very beginning, our aim was to transform Bangladesh into a middle income country. Many critics commented that our budgets are ambitious. However, the reality turned out quite differently. All major economic indicators during our tenure show positive developments in the economy…’
Over the past four years, average real GDP growth in Bangladesh was 6.2 percent. In FY 2011-12, the economy posted real GDP growth of 6.23 percent. Bangladesh Bureau of Statistics has recently released the provisional estimate of GDP for FY 2012-13 which is 6.03 percent. This is higher than the estimates made by the multilateral development banks.
Muhith said, with the steady recovery of trade partner economies from the latter part of 2012, the external demand picked up and our export posted 10.1 percent growth. In tandem, remittance inflows grew by 16.0 percent. But private sector credit growth was 7.0 percent during this period against 13.6 percent growth over the corresponding period of the last fiscal.
According to projections, growth will accelerate in agriculture, industry and service sectors propelled by the positive momentum in the world economy in 2013 and afterwards. Steps taken by the government will, Muhith hopes, considerably mitigate the infrastructure deficit. Based on these underlying assumptions and expectations, the Finance Minister has re-fixed the real economic growth target at 7.2 percent for FY 2013-14.
Making mention of the expatriates’ remittance that grew by 12.8 percent on an average in the last four years Muhith said, it continues to sustain this momentum in the current fiscal as well, widening the Balance of Payment (BOP) surplus, especially surplus in the Current Account. In current fiscal year, up to April, remittance inflows were USD 12.3 billion, 16.0 percent higher than the corresponding period of the previous fiscal year. The Finance Minister refers to the remittance earnings of the year before his government’s take over but makes no mention of the robust growth of that time and the sound foundation of the second strongest pillar of the economy that has weakened to some extent overtime.
He said more than 21 lakh workers got employment opportunities abroad from January 2009 to March 2013. Compared to this, only 11 lakh workers went abroad during the tenure of 4-party alliance regime, which is only half of what stands as of now. In 2009, remittance by the migrant workers stood at US$ 10.72 billion. In 2012, it increased to US$ 14.17 billion which is 11 percent of GDP, six times of foreign aid and 13 times of foreign investment. However had manpower exports to traditional markets in the Middle East not slowed down the picture would have been more rosy.
About resurgence of the first main pillar of the economy, the readymade garment sector, the Finance Minister has banked his hope on the steady recovery of trade partner economies from where the external demand picked up and our export posted 10.1 percent growth. The sector is however now in tatters as many foreign buyers are looking for alternative sources following the latest Rana Plaza garment factory building collapse that killed more than 1100 garment workers shattering buyers’ confidence in the industry to protect its work force. Adverse reports on human rights situations by international rights groups are only adding fuels to the speculations.
The agriculture sector, which continues to remain the mainstay of the economy, has grown annually at an average rate of 3.9 percent during the government’s tenure. Economic think tanks of the country believe that sustained growth of the economy despite the reluctance of entrepreneurs to invest in industries can be traced back to some informal investments in the agro-processing sector that remain unaccounted for. But fertile agricultural lands continue to be occupied for other uses at the rate of one per cent a year. This might jeopardise the economy in future because Bangladesh cannot rely on the international food market which has remained volatile for the last half of a decade.
One interesting aspect of the budget is an allocation made for the much publicized Padma Bridge project that has remained in limbo for the last two years due to allegations of corruption attempts in its implementation. The World Bank has submitted its investigation report to the Finance Minister while trial of SNC Lavalin executives are on in Canada. The Finance minister said, “I presume that the World Bank or the Canadian Authority will take longer than expected to settle the allegations brought against this deal. We cannot wait for an indefinite period. We expect that ACC will be able to unravel the mystery soon through speedy investigation. In the meantime, work on Janjira
Approach Road and river training has begun. The work on establishing service areas at Mawa and Janjira has begun and the purchase proposal for Mawa Approach Road will be approved soon. The minister said, I am confident that we will be able to start the main bridge and river training-related work of the Padma Multipurpose Bridge Project, during the tenure of the present government. We will be using an Indian grant of USD 200 million for this project. Economic think tanks have expressed reservation about proper construction of the bridge on a piece meal basis without the involvement of world class contractors and the mobilisation of adequate resources for the same.
The limit of tax-free income has been increased considering the inflation, increasing living expenses for individual taxpayers from taka 2 lakh to taka 2 lakh 20 thousand. The minister also proposed to increase such threshold for women taxpayers and also senior citizens aged over 65 years from Tk. 2 lakh 25 thousand to taka 2 lakh 50 thousand and for the physically challenged taxpayers from taka 2 lakh 75 thousands to taka 3 lakh. Service holders have been given more tax exempted house rent allowance and transport allowance.
Yet The Minister expects more than 30 percent increase in tax revenue which has been termed by some quarters as a problem area. This raises a question about the implementation of the record-size budget. Added to is the mention made about political instability. Muhith concluded his budget speech with the fears, “… I would like to tell you with a heavy heart that the antiliberation fundamentalist forces are out to jeopardise all our achievements made so far and thwart the on-going trial against war criminals for which the nation waited so long. Their mindless acts of violence and vandalism have put our hard-earned democracy at peril and cast a shadow of darkness on the economy. Fortunately, we have somehow been able to stem the tide of this anarchy and our future beckons us with all its possibilities”.
“Our government believes in the collective forces and wisdom of the masses, reposes trusts on the unfathomable potentials of this nation. … In the hours of peril and crisis they looked to the secular democratic forces with all confidence. And, I hope, it will be no different this time; they shall crush the evil force as they did in the past, march forward to a prosperous future, realise the dream articulated in the ‘Vision 2021’ that will leave a bright legacy for our posterity. Our united endeavors shall win the laurels, Insha Allah.”
It’s possibly here that the economists have got a jolt and raised their eye brews about the implementation of the budget on grounds of political instability. This tranquil nation of ours – termed the happiest in the world only a few years ago – will have to crush certain forces instead of forging a broad unity on basic national issues to march ahead in the globalised competitive world. In a democracy different forces accommodate each other with a spirit of convergence not divergence. Can the finance minister help the nation feel more united and confident?

Leave a Reply