“In order to maintain both macroeconomic stability and recently generated moderately high growth momentum the upcoming budget must ensure raising allocative efficiency, enhancing implementation capacity and strengthening monitoring and outcome assessment.” These remarks were made by CPD while presenting A Set of Proposals for the National Budget FY2011-12 in a media briefing on 26 April 2011, at the CPD office. Dr Fahmida Khatun, Head of Research, presented the proposals while senior CPD researchers were also present and responded to various queries from the media.
While briefing the media, Dr Khatun said that the economy is currently facing a number of challenges including inflationary pressure, deteriorating balance of payment and growing subsidy requirements. She explained that the economy is experiencing mainly food inflation driven by soaring global prices of food and fuel, and the balance of payments situation has been put under some pressure because of higher trade deficit and stagnated remittance inflow. Keeping all these in mind, CPD prepared its proposal for the next budget which included issues of raising income tax exemption limit to Tk. 200,000 for individuals, introduction of capital gain tax on stock market transactions, mandatory tax identification number for beneficiary owners’ accounts and creation of a special contingency fund for migrant workers. About containing inflation, CPD proposed to concentrate on facilitating employment creation through investment; continuation of zero tariff on import of rice, wheat and lentils, provide adequate budgetary allocation to import essential commodities periodically from the global market. CPD expressed concern regarding transparency in utilisation of subsidy funds and suggested that there is a need to explore rationalisation of subsidy including raising tariff on energy.
On energy, infrastructure and communication, CPD suggested the government to put high importance on medium and large power plants in place of smaller rental and quick rental plants keeping in mind the long-term solution of power crisis in Bangladesh. CPD recommendations also included giving highest priority to railway services to ease the pressure on the highways as well as additional allocations for strengthening the facilities at the Chittagong and Mongla ports in view of the proposed enhanced connectivity with neighbouring countries.
About Public Private Partnership (PPP), CPD suggested that in order to attract large funds government should consider offering medium to long-term concessional contracts, depending on the size of the project. CPD appreciated the government’s initiatives to introduce Value Added Tax Act 2011 and Direct Tax Law 2012. In this context, Dr Khatun mentioned that a 26.7 per cent growth of NBR tax mobilisation may not be overambitious if the recent performance of the NBR continues and these new tax laws are brought into action. CPD’s recommendations also included establishment of a ‘Technology Upgradation Fund’ for major export-oriented industries such as RMG, textile, leather and jute.