Editorial
Budget with a human face
How the huge deficit will be met remains a question
Theoretically, the current budget shows an income-expenditure balance as most of its predecessors had done -- on paper. But when chips came down at the end of the year, the mismatch between calculations and achievements proved to be rather glaring. This truism might hold good even more with the present budget. For, apart from the mega-size of the budget of Tk100,000crore, even though partly explained by inflationary erosion of money value, what is really jarring is the sheer extent of the budgetary deficit exceeding well over Tk30,000crore. How is the money going to be garnered or the deficit met? The sources of revenue and other receipts have been elaborated alright; but the deficit can possibly only be met by the government borrowing money from the banking sector or external sources.
It is a potentially double-edged sword. The debt servicing will grow while the credit flow to the private sector would be squeezed. In recent months the private enterprise has shaken off its previous stupor originating in the anti-corruption drive and is displaying an active interest in picking up the past momentum. At a time like this, any credit squeeze will be self-defeating.
The corporate tax rates for listed and non-listed companies have been reduced, import duty rebate on capital machinery and spare parts have been brought down from five to three percent and tax holiday continues. Simultaneously, incentives package for SMEs has been enhanced, endowment fund is proposed to be doubled and tax holidays for entrepreneurs have been strung out from between two and five years. All these are reasons why equity support from the banks should have been ensured.
A very positive feature relates to subsidies given on food, oil, agricultural inputs aimed at both raising productivity and alleviating poverty. Extending social safety net to more of ultra-poor people is highly imperative but reaching out to the really needy people without the process being scavenged upon would be the challenge. The allocations for stepping up agricultural productivity, building up food security and ensuring rural development were expected. That a modicum of institutional efficiency is required to use funds is highlighted by the non-utilisation of the higher allocation for agricultural research in the outgoing year. Significantly, making incomes of those derived solely from agriculture tax-free is a step that is likely to increase investment in farming.
We cannot fail to point out that slashing of government development expenditure and public investment could have a knock-on effect impeding the growth of social development indicators thereby ultimately undercutting the goals of the expanded social safety-net programmes.
The three-year tax exemption on incomes made out of computers, software and data processing is set to boost IT sector. The tax rebate on printing paper is a welcome move.
The budget does not spell out any specific strategy for reducing inflation and keeping the prices from going further up. It is difficult to understand how the government can ensure macro-economic stability while handling such a big deficit? Good export performance, revenue collection and avoidance of government borrowing hold the answer.
Accountability and commitment are key here because the government with only six-months left to its tenure is flagging off a year-long budget.
For all latest news, follow The Daily Star's Google News channel.
Comments