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After the budget

  • Published at 10:11 pm June 12th, 2018
  • Last updated at 10:13 pm June 12th, 2018
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Questions regarding the private sector remain Bigstock

A few critical points on the new national budget. This is the 2nd part of a three-part op-ed

Continuing right from where I left off, I’d like to bring to light some of the other key spots that grabbed my attention. Hope it makes sense to you too. 

Evaluating the agenda of gender budget formulation

It is a matter of our special attention that Bangladesh has beaten other South Asian countries in minimizing the gender gaps and disparities simultaneously. Point 141 of the finance minister’s speech claims that this year’s budget will be a gender responsive one, as in the agenda of the Gender Budget Formulation initiative that has been put in practice will be evaluated for reform. We have to wait and watch how this evaluation takes place. 

Subsidizing agricultural development: Tweaks for corruption?

This year’s budget promises to implement programs for agricultural development including provisions for subsidies. This means that a “laissez-faire economy” where private parties are free from government interventions will not be possible through this budget. Now, whether these subsidies genuinely going to increase crop production and benefit farmers or become stealthy avenues for exercising corruption is yet to be found out. In this case, will the demand and supply of goods reach equilibrium through the “invisible-hand phenomenon?” Will consumers be better off or worse off through such a policy? 


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IT sector sustainability

To fulfill the objectives of “Vision 2021,” IT sector sustainability is very important for our country. The contradiction that 5% VAT has been allocated on all virtual businesses that use mobile apps (Uber, Pathao) whereas e-commerce stakeholders have been exempted from VAT has attracted much notice. With these scenarios, is developing a sustainable IT structure really a feasible task? What are the repercussions? 

Hussain M Elius, the CEO of Pathao has commented that the tax will negatively impact the growth of the digital service industry and the youth employed in this industry will be affected by this “new tax structure,” as he names it. Additionally, Razib Ahmed, founding President of the e-Commerce Association of Bangladesh, has stated: “The country is far behind when it comes to true digitalization.”

Special benefits for certified green factories and duty on polythene

This year’s budget is prospectively an environment-friendly one, as the minister has proposed a 5% supplementary duty on polythene products, discouraging the citizens to boycott the use of polythenes and poly-packaging. Besides, the apparel manufacturers having certified green factories will enjoy special benefits including a tax rebate of 3%. The overall agenda will surely be lauded by most of the environmentally conscious citizens. 

Why will it be so hard for SMEs to flourish?

It is of zero doubt to all of us that a good manufacturing base is the key to enhancing GDP growth rate. However, is the growth rate being driven by investment in infrastructure or strengthening the manufacturing base? Is there a possibility for a tipping point when skilled man-power will become the driver of economic growth instead? With a large expenditure on interest payments in this year’s budget, social welfare is in danger. The target is to keep inflation under 5.6%. However, with this level of labour productivity, can small-scale enterprises really flourish from government public initiatives? 

The finance minister has declared that private investment will be 25.25% of the total GDP. The former finance minister to the caretaker government, Dr AB Mirza Azizul Islam thinks that this year’s budget is an unrealistic one, as in the targeted growth rate can only be achieved if and only if the investment-to-GDP ratio is increased by an additional 4%.

Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh has stated that the unrealistic tax goals will hinder the implementation of the budget and private sector investment is going to be a very big challenge. Dr Debapriya Bhattacharya is highly sceptical about the consistency in the implementation plan, and that the banking sector is facing a financial crisis.  

Provision for Freedom Fighters: Enough? 

It has been thoroughly highlighted that this year’s budget posits a better provision for freedom fighters by giving them the right to exercise their existing tax rate and an additional victory day allowance of Tk5,000 per head. But given their contribution to our nation’s independence, are these provisions really enough? I guess, no matter what we do, we can never repay their debts to our nation. It was not, is not, and will never be enough.


Maisha Mehzabeen works at the Dhaka Tribune and is a graduate in economics.