CPD organised a dialogue on the Analysis of the National Budget for FY2012-13 at the Lake Shore Hotel on 16 June 2012. Planning Minister Air Vice Marshal (Retd.) A K Khandkar, MP was Chief Guest at the dialogue where the discussion was moderated by former Finance Minister and CPD Board of Trustees Mr M Syeduzzaman. While presenting the analysis, CPD Executive Director Professor Mustafizur Rahman said achieving this target would be a real challenge and would demand a significant improvement in many key macroeconomic indicators. He also expressed doubt over realisation of many of the other targets such as investment (both public and private), ADP, inflation and non-tax revenue targets in the budget. Professor Rahman presented many facts to explain CPD’s apprehension as regards these targets. Citing one such fact he noted that if share of investment in GDP has to rise by 4.6 per cent more than last year (as projected in the budget), growth in investment will have to be 32.4 per cent which is a formidable jump considering last year’s performances. He, however, appreciated the high performance of NBR, steady growth in agriculture and stable flow of remittances of the outgoing year.
Taking cue from the keynote speaker former Finance Advisor to the Caretaker Government, Dr Mirza Azizul Islam added that obtaining a GDP growth target of that magnitude would be ‘mission impossible’ as higher borrowing rates will worsen the already declining private sector investment this fiscal year. Planning Minister A K Khandkar, however, believed it was an achievable target as the government was determined to implement 90 per cent of the ADP projects in FY2013.
Several speakers including Mr Fazlul Azim, MP expressed their unhappiness about the proposal to increase uniform tax rate from 0.6 per cent to 1.2 per cent on earnings from exports. The general consensus was that such taxes will have a negative impact on export revenue in FY2013. CPD, however, suggested to reduce it to 1 per cent in view of the depressing global market situation.
Speakers also expressed grave concern about the ongoing crisis in the energy and power sectors. BNP leader and former Commerce Minister Mr Amir Khosru Mahmud Chowdhury called the government’s dependence on quick rental power plants a ‘scam’ citing them as the cause for energy subsidies to shoot up to such a high level. Former Special Assistant to the Chief Adviser of the immediate past Caretaker Government, Dr M Tamim mentioned that quick rental power plants were only a short-term solution for which the government should have had an exit plan. He urged the government to focus on primary energy for a long-term solution to the crisis. On this issue Mr M Syeduzzaman insisted upon the development of the Coal Policy and take advantage of the untapped store of coal in Jaipurhat.
Gano Forum President Dr Kamal Hossain expressed dissatisfaction over the delays in taking action against stock market manipulators. He also questioned the reasons for the delay in placing the Financial Reporting Act bill in the parliament for passage and called for complete transparency in this regard.
Participants at the dialogue felt that the main objective of this year’s budget should have been to provide essential food items at a controlled price targeted towards the poorer section of the population and containing high inflation. Dr Mirza Azizul Islam doubted that the government would be able to contain inflation (within 7.5 per cent) because of its dependence on bank borrowing and foreign aid.
Member of the Parliamentary Standing Committee on Ministry of Finance Mr A K M Mayeedul Islam, MP remarked that the National Budget for FY2013 was a Dhaka-centric budget and believed that the government should create incentives (built in the budget) for people to move outside Dhaka to more rural areas by providing good infrastructure there such as health facilities, schools and colleges.