The proposed budget for fiscal 2019-20 did not throw up any big surprises, but that itself is perhaps somewhat of a surprise. The Tk 5,23,190 crore budget—biggest in our country’s history—has maintained more or less the same allocation trends. Among the few noticeable changes is a substantial increase in budgetary distribution to the power and energy sector, which could benefit businesses in the long run, and an allocation of Tk 100 crore for startups—which we hope will be used transparently and kept free from corruption and nepotism.
The biggest concern with the budget is that it once again seems to favour monied quarters above others. And criticisms of past budgets and their lack of focus on key sectors such as education and healthcare, once again applies to this one. The budget does propose an increased social safety net allocation—from Tk 64,404 crore to Tk 74,367—but not nearly by what was hoped for. And despite talking about ensuring pension for all employed citizens in both formal and informal sectors, the budget proposal gives no clear indication how that would be achieved.
This seems to be a common feature of the budget across the board. As even the banking reforms that were mentioned during the budget speech, have remained largely esoteric in nature, with the budget itself failing to mention any concrete measures that could restore discipline in the sector. Furthermore, the overall lack of attention given to the sector, is also quite disappointing. As is the absence of much attention given to the agriculture sector, particularly after the struggles faced by farmers this harvesting season.
Middle- and lower-income groups will also be adversely affected by higher indirect taxes, which always disproportionately affects lower income groups. And if the government fails to bring the ultra-rich around to finally pay their share of taxes—which it says it plans to—revenue collection may seriously get hampered.
The budget will have a huge deficit of Tk 145,380, which the government plans to finance using both foreign and domestic credit. Increased borrowing from the banking industry, which is already in a liquidity crisis, could crowd out the private sector, creating further obstacles for private investment which too has been a major concern in the past years. Moreover, it is important to remember that the interest payment on borrowing will eventually have to be borne by the citizens. Which could prove to be a major burden on them in the long run.
This massive deficit financing also means that the government does not have much wiggle-room when it comes to achieving its revenue collection targets, which could prove difficult in the absence of substantive fiscal reforms.
Because the incumbent government has had the luxury of formulating several budgets in a row, this was a great opportunity for the ruling party to sort out many unaddressed issues from past budgets and make use of its budgetary intervention to now address some of the more burning economic concerns—such as lack of employment generation, rising non-performing loans and others—that we have. That, however, does not seem very likely from the budget proposal.