A budget with a difference
THE first budget of the grand-alliance government was presented in the parliament last Thursday by Finance Minister Mr. A.M.A. Muhith. After remaining "captive" to an unelecected caretaker government for two fiscal years, the budget is back to the beholder (parliament). This is, to me, the first good news to note.
A budget is not merely an account of the income and expenditure of a particular year; it is also a political document of the party in power to project its vision of making a prosperous Bangladesh through policies as mandated by the people. However, I personally find that the budget for 2009/10 stands distinctly different from the earlier ones on the following grounds:
First, the budget speech of the FM was not only euphony of economic jargon but also espousal of the philosophy of the government. The 20/21 vision envisaged in the election pledges begins to work from now and, in this sense, the budget is the beginning of the "ends" for which the party was elected to power. The budget speech shows when and how to reach the goal: vision 20/21. Not many budget speeches I have heard had horizons stretched so widely and on so many fronts.
Second, compared to earlier years, preparation of this year's budget was relatively more plagued with problems; arresting the impacts of the slides from recession and promoting economic activities to raise economic growth and generate employment. This possibly made the budget look allegedly "large" and "ambitious." Bangladesh's budget has to be larger each year as demands are increasing. To be ambitious is also a positive sign.
Third, economists have long considered growth and equity as mutually exclusive events, but our government seems to have rejected that notion: equity could be a sine qua non for economic growth. Thus, it is no wonder that huge expansion of social safety nets, hefty farm subsidy, major environmental initiatives etc. give the budget a "human face."
Fourth, the concept of the public-private partnership (PPP) is an innovative idea in the context of Bangladesh. Pending the modus operandi issue for the momen -- tand which hopefully will be worked out later -- it will suffice to say that the concept will serve two purposes; generate private resources for public works -- hitherto unheard of due to the risksand thus ease resource constraint; second, meshing private profit-maximising with public sector initiative. This might help the public sector to become profit oriented and the private sector social oriented.
Having heralded all hopes, some cautionary remarks should be on board also. It is true that domestic industries should be encouraged through protection, but a rise in the tariff and para-tariff rates might distort prices to encourage smuggling of goods and inefficiency of industries.
Second, the finance minister is right in saying that, to make a free market work properly, timely intervention from government is necessary. But what cannot be lost sight of is the bitter experience that too much intervention might cause both market and state to fail.
Third, falling growth rate could constrict savings and hence the funds for investible resources. Bank borrowing could become inflationary and impose a "crowding out" effect. It remains to be seen how much foreign aid will come on the heels of the economic recession. And finally, given the current efficiency levels of the bureaucracy and tax administration, the implementation of ADP and domestic resource mobilisation might be difficult.
The efficiency with which agricultural and food issues have been faced in recent months, of course, tells us that there is light at the end of the tunnel. The rate of inflation has come down and the budgetary deficit hovers around 5 percent of GDP. We hope that the government will leave no stone unturned to materialise budgetary commitments. The dawn of the dream of Digital Bangladesh should not be far away. But there are many miles to go before we can sleep. A different Bangladesh will need a different budget -- large, challenging and ambitious too.
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