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বাংলা
Dhaka Tribune

BUDGET FY23

Where are the initiatives to reduce unnecessary subsidies and control inflation?

Traditionally, our national budget means a glamorous presentation of some unrealistic numbers

Update : 05 Jul 2022, 09:01 PM

The amount of enthusiasm and excitement among people before the announcement of the national budget in Bangladesh pales in comparison to overwhelming fear and apprehension.

All eyes will be on whether income will match with expenditure in the fiscal year 2022-23.

It will also determine how soon the colours of life will begin to fade, amid how fast the wheels of the world will be moving.

Traditionally, our national budget means a glamorous presentation of some unrealistic numbers.

The actual revenue and expenditure account of the government does not match with the original budget, supplementary budget, or the revised budgets at the end of the year.

Budget is not economics, mathematics and accounting; it is rather an awkward exaggeration to present some of the estimated numbers.

Although the revenue sources in the budget are limited, the government's operating expenses, deficit budget, savings certificate loans, commercial bank loans, and even foreign loans are increasing rapidly.

The jump in the estimated number of deficits and expenditures is absolutely conjectural and conventional.

Both the world and Bangladesh are going through two critical phases - Covid-19 and the Russia-Ukraine war.

Before the pandemic, a kind of stagnation was going on in the economy of Bangladesh from September-October 2019.

Since then, inflation in Bangladesh has also increased, South Asian Network on Economic Modeling (Sanem) showed that inflation was almost double that of the government at that time.

Naturally, the 51st budget of Bangladesh was expected to provide clear direction to address local and international challenges.

In his budget speech, Finance Minister AHM Mustafa Kamal sought to curb inflation, increase domestic investment, increase foreign aid, implement priority projects, implement health and education sector development projects in a timely manner, increase the amount of value added tax and increase the number of individual taxpayers, as well as foreign exchange.

He mentioned six challenges, such as increasing reserves and stabilizing the value of money against the dollar.

But there is no viable strategy to meet the budget challenge without increasing the budget expenditure, reducing corporate tax, tax on all other export sectors except readymade garments.

Rather there are new connotations of trafficking and creating discrimination on a budget.

On one hand, TCB's price of Tk10 has been made Tk15, while on the other hand, there is an incentive to legalize laundered money.

During the transition period, there was a need to curb government spending, curb extravagance such as capacity charges in the power sector, and cancel contracts for unnecessary rental and quick rental power plants.

Budget takeaways

The government has so far given a subsidy of Tk55,000 crore for power generation after the 2014-15 half-year, only Tk12,000 crore in the fiscal year 2021-22, and the five non-renewable power plants have been idle for almost a year.

Initially, a power plant has been allowed to run for 17 years under a license issued for 3 years.

There was a need for strategic initiatives to save these funds and spend them on public welfare.

During the Russian invasion of Ukraine and the Covid-19 outbreak period, it was necessary to learn from the supply system and reduce unnecessary expenditures, thereby moving towards massive tariffs and tax exemptions on food production and domestic production.

Besides, there is no strategy in the budget on how to curb corruption and extravagance by bringing efficiency in project implementation.

It is important to create a database of the number of poor, small business owners, SME entrepreneurs and the unemployed for allocating allowances, incentives and systematic loans.

In the face of local and international challenges, the budget has been austerity-oriented, with no attempt to convert spending into public welfare tariffs and necessary subsidies.

However, as promised, if the employment database is compiled, it will be a commendable thing.

If the government does not conduct a new household survey, then how can the correct poverty line and baseline be fixed?

Do we have new and old poverty update databases after the Covid-19 pandemic?

Is there an updated list of small and medium entrepreneurs? If not, how will the allocation of bank loans and social security be systematic?

Distribution in the social security sector will not stop the corruption, only the budget allocation and the strategy of increasing the number of allowance recipients will not achieve real success.

Inflation blues

People who are in a state of income contraction and unemployment after overcrowding are repeatedly hit by high inflation.

The prices of almost all types of products including fuel oil and gas have gone up by at least 20-100% depending on the product.

The effects of rising prices have two different connotations, local and global.

Although the finance minister acknowledged the pressure of inflation in the new budget, he did not show any way to relieve it.

On the contrary, the mega budget that has come with emphasis on controlling inflation, the number of inflation is veiled.

The current double-digit inflation is shown to be only 5.6%, the target is 6.3%, this is a big problem.

The government should determine the budget number by determining the correct inflation.

Besides, there is no roadmap on how to increase it from 5.6% to 6.3%.

There is no clear research on how much tax exemptions in the nonprofit sector, project expenditure, underdevelopment costs, drawn remittances and export incentives contribute to inflation.

There are striking statistical deviations between the base year for measuring inflation and the base year for determining GDP.

Bangladesh Bureau of Statistics (BBS)'s consumer price index (CPI) method of determining inflation is also flawed.

In addition, during the crisis-ridden period of inflation, it was necessary to create new baskets of essential commodities for the subsistence of the common man and to adopt strategies to cope with inflationary pressures by reducing production VAT and import duties.

If the inflation figure is full of fraud, then making a budget based on the wrong number will make the life of ordinary people easier at all?

 

The author is a physician, author, activist and youth leader 

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