Muhith rolls out budget to make all happy, rides high on spending, low on revenue; leaves stiff challenge for next govt
The grander your plan is, the more targeted and specific your actions have to be.
Finance Minister AMA Muhith in his last budget showed the grandeur of his wishes against all odds — a high growth of 7.2 percent, a big revenue growth of 20 percent, a bridled inflation of 7 percent and so on.
But he probably forgot to mention what specific actions he proposes to make them come true.
An election year budget it truly is as he has only shown how significantly he is going to cut down on duties, but he has not hinted where the pains will come from.
He has offered his last caring hand for industries of a wider range — from ceramics to ship-building, from poultry to steel re-rolling. The finance minister has also offered a Tk 2,592 crore export incentive too. But how that money will be spent is unclear.
Muhith has also tried to curl his arms around the farmers and socially disadvantaged groups.
Despite that, one would tend to be sceptic.
Is duty relief the only way to foster industry, as he wishes to push its share in GDP from 30 percent to 40? Will that ease the cost of doing business if governance is left unattended? How will credit interest rates come down? And the often asked question — are the safety network programmes effective?
These are some of the unanswered questions.
The finance minister’s opening remarks that he had placed his first budget with a vision of “high performance growth” and stabilisation of commodity prices also looks unfulfilled four years down the line.
Growth has dipped for the second consecutive year and his new budget has infused little vision of how that magic growth will come.
And the economic survey accompanying the budget documents shows private investment has gone down significantly this year to 18.99 percent of GDP from last year’s 20.04 percent. The budget has not come up with any innovative investment plan.
His only explanation for growth that there would be a global turnaround to yank the economy up is a matter of high risks. Muhith also banked on agriculture, to which he has also slopped chunks of money. But incremental growth from the slowing down sector needs incremental investment in research, which the proposed budget has not promised much.
Muhith’s high expenditure budget should have explained high revenue collection drive too. He has made mention of “comprehensive reform initiatives”. But when one turns to his “future plans’, only two short paragraphs look up, mention of things like “utmost sincerity and integrity”, commitment to “build a happy and prosperous Bangladesh”, “remarkable success” and so on. Only a lot remains unanswered.
Such vagueness poses remarkable threats to macro-economic stability since there should have been clearly outlined contingency plans in case of revenue failure because of future threats of political unrest.
To finance his big budget, the finance boss has thought up a big $3 billion foreign financing, which might be too ambitious. This is because even this year, when project aid performance was good, foreign financing did not reach that amount. And in an election year, how much foreign funds can be mobilised is an open question. There is no clear statement on improved ways of aid mobilisation.
There are also no new thoughts on improving ADP implementation, though the size of the development budget is huge.
Muhith’s boost for industry deserves a pat in the back. Cleverly designed, it protects the domestic industry on a wide scale and at the same time plays to the IMF’s demand for liberalisation.
Source: The Daily Star