Budget- take it or leave it- can't address every wealth creation, savings mobilization, driving growth or equitable distribution issues. Ultimate growth and development require commitment from the political regime, better governance, accountable civil bureaucracy and effective local government.
If you ask me, as a transition economy poised for growth, what should be done in Bangladesh? My answer would be- continuous wealth creation and ensuring equitable distribution through better governance. In the interim we need to adjust with spiraling inflation, ensure employment and thereby help alleviation of poverty. Our annual development plan (ADP) should of course try to address those. We not only need a 'tight packed' ADP, we also want this to be focused on the right issues and right causes as well as its proper implementation with `military precision'. For the revenue budget, we of course want that to support wealth creation, creation of right business and entrepreneur class with right incentives and protection.
We want an end to the `subsidy regime' or at least subsidy to support only the `needy group', not to grease the wealthy ones. We want `safety net' only for the real disadvantaged ones, not protection of the `inefficiencies' and thereby discourage competition or real entrepreneurship from home and abroad. We don't want continuation of `tax holiday' to support inefficient or tax dodging manufacturers'. We want tax earnings to be increased through broadening of the tax net'.
The last budget included many small enterprises under tax net, but more needs to be done while only 6000 companies out of 62000 registered companies under the register of joint stock companies file tax returns. A broader tax net will bring only well to the revenue earnings of the government and should be hailed by the business community, if implemented justly. More awareness building activities for paying tax should be emphasized and budget allocated for this.
The key phase of the budgeting process somewhat overlooked-the implementation side of a realistic budget. To facilitate and ensure proper implementation, the best way would probably be to empower the local government and putting in a `sound proof' system around it.
Finance Adviser Dr Mirza Azizul Islam last Thursday said that the extent of total subsidy for fuel and other sectors would be 15-16% of the total budget. The government on Saturday approved a reduced Annual Development Plan (ADP) expenditure of BDT 256 billion marking a 3.39% decrease and is also planning to increase the revenue spending by 40%. These decisions should be encouraging to the business community, while foreign investment remains a major issue. The budget should have proper policy guidelines for encouraging right FDI in Bangladesh.
Though till now insignificant, the tax benefit has been successful in encouraging private companies to the Stock Market and the Dhaka Stock Exchange Index (DGEN) has risen to record highs in the last couple of weeks. We sincerely hope that incentives for the listed companies will continue and increase, if possible and will boost the country's stock market. We desperately need to reduce the supply side constraints in our capital market and thereby avoid overheating by attracting the large telecom companies, profitable public sector enterprises and local corporates.
Inward remittances from the wage earner's abroad have been encouraging. This has every likely hood to double within next 3 years given proper support and right incentives. Steps should be taken to train our unskilled labor force and increase their marketability with higher pay in the destination countries. New benefits and incentives should be introduced in this regard. So much have been talked about investment in agricultural research, reduction of regional disparities and creating safety net for the real disadvantaged ones, I can only reemphasize on those and once again reiterate on efficient implementation of the budgetary measures, steps and development programs, geared towards reduction of poverty, employment creation and business growth.
The writer is a banker and economic analyst.