Published in The Financial Express on Thursday, 7 May 2015.
Will there be effective district budgets?
Rahman Jahangir
The government is now finalising its proposals for the national budget for fiscal year (FY) 2015-16. Different professional groups have already submitted their recommendations to make the budget for the forthcoming fiscal friendly to higher growth. The budget as is known to all concerned, provides estimates in details about anticipated revenue and other receipts and projected expenditures of the government for a fiscal year. As almost all people live in areas falling within the jurisdiction of local government (LG) bodies, the dream of financially empowering or allowing them (the people) to ventilate their aspirations for development through budget execution still remains a far cry.
In Bangladesh, the ministry of finance enjoys the sole authority to prepare the annual budget. Even there is hardly any meaningful scope, under the given circumstances, for parliamentary standing committees to incorporate their recommendations in the budget. As a result, there is little room for providing substantive inputs reflecting people’s demands in the budget.
However, Finance Minister AMA Muhith must be credited for being the first in the country’s history to have had conceived the idea of framing a district budget as a pilot project. His aim is to involve people at the grassroots in the budget-making and its execution process at the local level.
The Finance Minister had once said in his budget speech, “We prepare the national budget in a centralised manner. Demands of people from district or rural level don’t reflect in this budget. We cannot say how much money we spend in a particular district” (Budget Speech-2009-10, page-22). At that time, he made a promise to prepare district budgets to decentralise the government’s authority by empowering the LG bodies at different tiers.
But it took another five years to fulfil the promise and the first district-based budget was prepared in 2013 for Tangail. In the budget of FY 2014-15, the budgets of another six divisional districts were announced. But did the district budgets reflect the people’s demand as was earlier hoped? In reality, it was not ‘district budget’. It can at best be called ‘district-based budget’.
Through such a budget, the government only shows how much money it will spend in a particular district in one year. It’s like an information brochure of the government’s fund allocation for a particular district, said Dr Muhammad Samad, an economist, now working in an international research group in the US.
But before preparing the district-based budget, the government didn’t take into consideration the needs and demands of the unions and upazilas. So, ultimately this district-based budget helped neither to empower the local government nor to decentralise the process of budget making.
What is surprising this time is that no think-tank or professional group spoke of district budget for FY 2015-16 although suggestions and proposals for tax-relief and other fiscal sops had come aplenty from them to the government. Such proposals and recommendations have already assumed the proportions of a mountain.
The experiences with Tangail and six other divisional districts can, however, open up the eyes of budget-makers to do’s and don’ts in continuing the ‘noble’ process. A leading think-tank of the country — the Centre for Policy Dialogue (CPD) — had organised a discussion at Tangail district headquarters to see what budget had done the district in terms of development.
Experts attending the discussion at Tangail strongly pleaded for improving the method of formulating the district budget to reflect the demands of local people and deliver the desired outcomes. “The legal framework and functional responsibilities of the district council should be reviewed to ensure adequate implementation of a district budget. The structure of local government needs to be strengthened to mobilise local funds,” said Dr Debapriya Bhattacharya, distinguished fellow of the CPD.
There is a need, as the local leaders have felt, for a local government financing commission to ensure quality of public expenditure. This can help determine the appropriate level of financial allocation, keeping in line with local demands. In fact, the district budget needs a clear outline for revenue generation from district level, and the government should ensure that tax and VAT are duly being paid locally.
Some experts said the district budget should particularly address environmental vulnerability, hard-to-reach areas, marginalised people and women and children. Tangail, where the district budget was executed, excelled in reducing poverty in comparison to the national average, but extreme poverty remained still high there.
As a district, Tangail mostly received budgetary allocation towards roads and communications while the needs of other areas were left relatively unaddressed. The district’s socio-economic development is rather mixed. This has been mainly due to the uneven development programmes across different areas within the district. Policymakers should coordinate closely with the district-level administration to drive effective development measures.
In fact, district budget is a good tool to ensure local development, but it is yet to deliver the desired impact at the local level. There must be effective development devolution and administrative decentralisation at the local level so that the real purpose of formulating a district budget can be served well. Strengthening of the district council, improvement of local roads, markets, railways and highways to better connect them with the capital, facilitation of local industries, setting up of cold storages to preserve local produces, industrialisation without harming farm lands and involving gender dimension need to be in focus while preparing district budget.
Experts in the Tangail seminar also called for facilitating healthcare, particularly for women and children at local level and remote areas, vocational training and for improving sanitation arrangements.
One expert urged the government to facilitate import of raw materials for Tangail ‘saris’. Incentives to the local handicraft producers to help them develop exportable items were also sought.
As the concept of district budget for the next fiscal has not come in official discussions so far, the government needs to clarify whether such budgets will be incorporated at all in the national budget and if so, in what manner.