The Centre for Policy Dialogue (CPD) presented a bleak outlook for the upcoming year following the announcement of the national budget for the FY2012-13 at a press briefing held at the BRAC Centre Inn on 8 June 2012. CPD Distinguished Fellow Dr Debapriya Bhattacharya while presenting CPD’s immediate reaction to the budget said that the Finance Minister’s budget speech gave the general public the illusion of a sound economy by announcing fiscal targets for FY2013 that were too good to be true. Meanwhile, it ignored a number of critical elements such as containing inflation and fiscal consolidation, legalisation of undisclosed money, adjustment policy of administered prices and possible income from Bangladesh-India transit. He also added that “implementation of these proposals would require a revolution in the government’s development administration.”
The FY2013 Budget targeted revenue earnings amounting to Tk. 1,39,670 crore- an additional Tk. 24,785 crore will need to be mobilised than the previous year. The National Board of Revenue (NBR) is expected to contribute the largest share 29.2 per cent of which is expected to come from income tax. This is the highest in last four years. Along with a uniform 1.2 per cent tax placed on exports and 4 per cent VAT on all wholesale and retail goods, the budget also proposed a 2 per cent tax on post-paid bills and pre-paid recharges for mobile phones. This, according to the CPD, is likely to have a regressive impact as it will raise costs for all mobile users, including those who are not in the tax net. CPD suggested that if the government is keen on achieving its revenue earnings target by increasing taxes, its plans should be more carefully drawn out and aim for revenue from more resource-endowed people.
The subsidy allocation of budget has shifted in favour of the power and energy from agriculture, export and food. CPD felt that the decline in subsidy allocation would increase disparity between the urban and rural and rich and the poor. CPD also noted that budget documents did not provide detailed accounts of subsidy expenditure and contingent liabilities for FY2013.
CPD expressed concern over the implementation of projects worth of Tk. 55,000 crore in the Annual Development Programme (ADP). Out of the 1,037 projects in the ADP, 646 were expected to be completed this year. This will be a daunting task as allocation for them in the ADP is not sufficient. Slow progress in implementation of infrastructure-related sectors is hurting Bangladesh’s investment environment – an issue that the budget did not discuss, said CPD.
The Padma Bridge, one of the most high-profile projects in the ADP, was estimated to cost Tk. 20,507 crore, of which, Tk. 804 crore was to be allocated for the bridge’s construction in FY2013. CPD observed that the budget did not go into the detail about the timeframe of the bridge’s construction, leaving the fate of the Padma Bridge uncertain.
CPD also expressed its reservation as regards the proposal to legalise black money by charging regular tax plus a 10 per cent penalty, saying that so far successive governments have given amnesty 16 times, including last year, but “no one knows how much money had been taxed under such proposals.”
The credibility of the budget for FY2013, according to CPD, depends on its implementation. It is critically important for there to be a meticulous implementation plan that complements the ideal fiscal framework that the budget presents.
Channel i as the media partner of CPD telecast the event live.