A populist budget

It is Saifur Rahman's brain child alright, but a part of the responsibility for implementing the budget befalls the caretaker government from October up until the formation a new government which thereafter takes up the budgetary reins for the remainder of the fiscal year. So, the present government spends money for the next four months of its incumbency without being answerable for the expenditure so incurred. The caretaker government's mandate is election and which party forms the next government is in the womb of the future, so that the implementation of the budget is not only on uncertain grounds, the answerability for it will also be missing.

In all probability, a spoils system will be at work during the coming four months, in the run-up to the general election. All the ingredients for it have been kept handy. For instance, the massive lump allocation of 12 percent of the total budgetary allocation is there for the grab. The money is likely to go into activities like road and market building, other construction works like bridges, culverts etc all of which can be used for election purposes. Moreover, the new annual development programme (ADP) actually contains 428 unapproved projects being ostensibly taken up with an eye on the election.

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Incidentally, money seems set to be spent on all these projects in the monsoons so that the possibility for wastage and corruption is huge. Who is going to monitor the government spending in an election year?

In its fiscal measures, the government is relying more on direct tax like income tax and VAT thereby tasking the tax administration to go the extra mile in collecting revenues. To cover up for the huge deficit in an oversized budget of nearly 70 thousand crore taka, the government will have to take recourse to heavier bank borrowing, hopefully not the supplier's credit the burden of all of which will fall on the two successor governments. Foreign aid will be in short supply, as it is.

Saifur Rahman likes to dub it as a pro-poor budget claiming that nearly 50 percent of the budget is dedicated to the uplift of the poor. One has great difficulty finding where such a largesse to the poor lies. Let's not forget that while the upper 5 percent of the superrich were 46 times richer than the bottom poor only a few years back, the former are now 84 times richer than the latter. This brings to a bold relief the fact that with the higher rates of GDP growth we so much pride ourselves in, the income gap between the rich and poor has actually yawned rather than reducing.

The whole concept of PRSP rests on creation of employment opportunities for the poor; yet, the budget proposals are devoid of any push being given to employment generation as such.

Subsidies to agriculture have been increased to Taka 1200 crore, but reaching the support to the farmers directly proved problematic last year. The middlemen's class siphoned these benefits off through cuts. So, the farmers did not receive any relief in terms of cost of production. Just how ingenious and spirited our farmers are was underscored by the fact that despite scarcity of diesel and its high price, they reaped a bumper Irri harvest belying all the pundits. That's where our strength is.

On the price of essentials a string of import duty cutbacks has been announced which is on the positive side of the populist budget. We quite agree with the finance minister, however, that mere tax rebate or waiver cannot bring the prices down. Curbing of corruption and extortion can help in a big way. The import duty reduction on raw materials and intermediate goods will help step up local industrialisation.

The big hikes in kerosene, diesel, petrol and octane prices are likely to both raise the costs of production and those of transportation thereby increasing the pressures on prices. It is a necessary evil, but the high margin of increase is questionable, the impact of which on the macro-economy will doubtless have to be closely monitored.

The black money whitening opportunity has been withdrawn but only partially. It is not understandable why the concession is being allowed for buying cars, houses, apartment and landed property. This is an area where sources of income need to be ascertained for establishing accountability.

The increased allocation for agriculture research is welcome. But we need to have adequate institutional preparations for aborting the allocations on useful purposes.

We wish the allocation for the gas and energy sector were higher. We regret the fact that nothing was done to reduce tax on newsprint, which would help reduce publication cost of educational materials, books, magazines and newspapers. Government grants the highest for education, but does nothing to make reading materials cheaper. What a contradictory policy!