Published in The Daily Sun on Thursday, 3 June 2016
Budget a mixed bag: Economists
Ahammad Parvej Khan and Hasibul Aman
Economic analysts and business leaders have said the new budget, announced in parliament on Thursday for the 2016-17 fiscal, is a mixed bag of opportunities and challenges, posing execution capacity a big question.
Referring to the implementation of the fiscal plan, they said it is a big budget but the administrative capacity of executing the budget remains a challenge.
The gap between targets in the budget and the implementation capacity has widened this year like previous years, said Mirza AB Azizul Islam, noted economist and former adviser to a caretaker administration.
He said the revenue target is much higher and unachievable as it is 35 per cent more than that of the target set in the last year’s revised budget.“Similar is the case for ADP this year—Tk 1,10,000 crore target is too high. I don’t think that it will be implemented. Besides, the target for tax revenue is also beyond reality,” he added.
Federation of Bangladesh Chambers of Commerce and Industries President Abdul Matlub Ahmad termed the budget pro-people and industry-friendly.
Duty on many raw materials has been reduced—a move which will help the local industry grow, he said.
“Keeping the package VAT unchanged is a big achievement for SME sector. Although the package VAT doubles, we’ll sit with NBR over this issue and request them to keep it as it was earlier,” Matlub added.
As per the budgetary measures, he hoped, there would be new jobs and employment opportunities.
Economic analyst and former deputy governor of Bangladesh Bank Khandaker Ibrahim Khaled said, “No doubt it’s a big budget. If it’s implemented properly, economic growth will take place in the country.”
He said collection of Tk 2,42,752 crore revenue is a big target, but it is to be considered whether NBR has the capacity to do so.
“Even if funds are there, it’s a big question as to utilising the money. I think administrative weaknesses will hamper full implementation of the budget.”
There should be budgetary measure to build capacity of those who will implement the budget, Khaled observed.
Bangladesh Garment Manufacturers and Exporters Association President Siddiqur Rahman said normally a budget should be designed in such a way that would ensure well-being of the public.
“To make the country a middle-income one, I think, investment and employment generation must be given top priority. To this end, corporate tax should be cut by 10 per cent and source tax has to be taken at .30 per cent…”
He, however, said some measures have been taken in the budget for overall well-being for the public.
Dhaka Chamber of Commerce and Industries President Hossain Khaled said there is nothing new in facilitating industrialisation in the budget.
“We thought this year’s budget will be more industry-friendly than that of last year’s, but there’s no such a sign in the budget,” he told daily sun.
“There is no question about the size of the budget, although it has been increased to 17 per cent of GDP. But the question still remains in the government’s implementation strategy and capacity,” Prof Mustafizur Rahman, executive director of Centre for Policy Dialogue told the Daily Sun.
Development analyst Dr Zaid Bakht said the budget was “big” in continuation of the government’s expansionary fiscal stance that has been followed for the last few years, given the stagnant private investment.
Prof Mustafiz said achieving both targeted revenue earnings and expenditure, and expected private investment growth would be an uphill task for the government for its capacity shortfall.
He hailed increased allocations for education, social safety net and railway, but he repented for a decreased allocation for agriculture sector.
However, he expressed frustration over Tk 2,000 allocation for recapitalising state banks that are plagued by increasing non-performing loans, what he said won’t be healthy for the overall financial sector.
Dr Zaid said drawing private investments will largely hinge on quality ADP implementation.
Successful implementation of mega projects like Padma Bridge and those for setting up economic zones will certainly attract private investment in future.
The budget lacked any specific target of creating skilled manpower, which is now very crucial for the country, he mentioned.
Meanwhile, Business Initiative Leading Development (BUILD) in its reaction highlighted some major features of the budget terming it a ‘usual increment’.
The budget kept unchanged the slabs for customs duty which is six, but slab 3 was increased to 5 per cent from 2 per cent, slab 4 to 10 per cent from 5 per cent and slab 5 to 15 per cent from 10 per cent, it said.