An oversized budget

THESE are our preliminary reactions to the new budget, reserving more detailed analysis and comments for future. It stands at slightly over Tk2,500 crore and represents an estimated 16 percent rise above last year's budget. The finance minister is confident that it will provide both dynamism and the mechanisms necessary to foster investment and help reduce poor-rich divide. Sceptics are not so sure. And though the government has prioritised growth, poverty-reduction and investment, concerns remain as to how investments will climb as both domestic and foreign investor confidence remains low even five months after the last general elections.
Special emphasis has been placed on developing dilapidated infrastructure. But mere allocation of more resources will not get the job done; the bigger question remains whether the government will be in a position to fast track crucial projects in terms of implementation. A look at the progress of some major infrastructure projects, for instance the Dhaka-Chittagong highway expansion undertaking, only highlights how difficult it is achieve the physical targets. The other major problem is employment generation. To create sufficient jobs, the finance minister must boost investment from current 28.7 percent of GDP to about 33 percent.
Revenue collection is bound to be more challenging this time around. Though the National Board of Revenue has been tasked to collect aproximatelyTk1,800crore, it is not entirely clear how the reshuffling of the tax slabs for personal income, corporate tax and various surcharges on imported goods and material will aid revenue collection for the government. An increase in the tax regime will inevitably lead to a new round of inflation which in turn, will hurt the poorer sections of society. The government needs to get its act together in terms of implementation; otherwise bulk of allocations will remain confined to paper.