Economist Salehuddin Ahmed feels fulfilling budget proposals would be the next fiscal’s biggest challenge. He foresees a bulky budget ahead of the general elections that will have to be implemented by the present and future governments.
He told bdnews24.com that the 2013-14 budget, to be announced in early June, was expected to be large as it was the present government’s last before the next parliamentary elections. One-third of this year’s budget was being earmarked for the Annual Development Programme (ADP), he added.
Ahmed, also a former governor of the central bank, said: “Efficient project directors have to be employed to implement this huge budget. It’s really a challenge to execute projects with transparency and efficiency.”
“The next budget will be implemented during the present and the next governments. That’s a hindrance. Its large size is also a problem. So the budget’s main challenge will be its implementation,” he said.
The size of the ADP would be Tk 740 billion, over 30 percent more than current fiscal allocation. The power and communications sectors would claim a larger ADP pie and so would the Padma bridge project, he said.
Salehuddin feels a hefty allocation for the Padma bridge may hinder education, health and social safety net programmes.
“The government will be under pressure to infuse dynamism in the economy, including the banking sector and capital market, to raise investments and revenue. The government may face funds deficit in executing the budget if revenue collection falls short of target,” he said.
He felt the government should choose to increase revenue collection rather than borrow from banking sources to meet any budgetary deficit.
“If money is borrowed from banking sources, credit flow to the private sector could slow down on the one hand and inflation could rise on the other.”
He suggested measures to increase direct taxes and cut indirect taxes. He also advocated corporate tax cuts to prevent evasion.
“As the rate of corporate tax is high, a few businesses under the tax structure evade tax. This evasion will be less if the tax rate is low,” he reasoned.
Salehuddin said the government needed to adopt some policy measures to boost private sector investments.
“Besides, different regulatory bodies including Bangladesh Bank, Securities and Exchange Commission and BTRC (Bangladesh Telecommunication Regulatory Agency) have to maintain the continuity of their policies,” stressed.
He said every regulator deviates from its policy now and then.
The former Bangladesh Bank governor said the government needed budgetary provisions to build infrastructure, including roads in rural areas, to facilitate easy marketing of agriculture products.
He also felt science and technology should get greater attention.
Source: Bd news24