Budget has no reflection of people’s sufferings
The finance minister on Thursday presented the country's 52nd budget of Tk 761,785 crore, which is 12.34 percent more than the previous budget of Tk 678,064 crore. It has been portrayed as expansionary and future-oriented. But unfortunately, there is barely any reflection in the proposed budget of the current reality being experienced by the majority of people in the country. Two positives that can be taken away from the budget is the environmental tax – influenced by the World Bank's loan conditionalities – imposed on owners of more than one car, and the allocation for startups that the government hopes can transform the country from "Digital Bangladesh" into "Smart Bangladesh." But when prices of food and non-food items have shot through the roof, these catchphrases are of no use to the people who are being overwhelmed by their daily struggles.
In the budget, the government has proposed increasing the tax-free income threshold, but only slightly, from Tk 3 lakh to Tk 3.5 lakh. Yet simultaneously, it increased the surcharge-free limit of wealth from Tk 3 crore to Tk 4 crore – a gift to the rich. It also proposed increasing the monthly allowance for the elderly by Tk 100 to Tk 600, and for widowed, deserted and destitute women by Tk 50 to Tk 550, which are still extremely trivial amounts given the present conditions. Even more ludicrously, it proposed the imposition of a minimum tax of Tk 2,000 for individuals who are required to submit income tax returns to avail themselves of various government services, even if they do not have taxable incomes. Meanwhile, in its desperate bid to increase revenue, the government has decided to rely more on indirect taxes, which will increase the financial burden on the middle-class in particular.
In typical fashion, the government has also come up with a wishful inflation control target of 6 percent; however, most of the budgetary measures give very little hope of achieving it. The budget has also set a highly ambitious revenue collection target of Tk 500,000 crore, with the vast majority of it to be collected by the National Board of Revenue (NBR). However, given that the NBR has failed to meet its tax collection target in the past 11 consecutive years, and that the newly proposed target will be its greatest challenge till date, we see no reason yet to believe that this time will be different. And despite the mention of bringing some reforms to the tax system, the government has failed to provide specifics of said reforms – which is concerning because we have previously seen such promises turn out to be completely hollow.
Besides that, government expenditure will be financed by significant borrowing from the banking sector which may lead to a "crowding-out effect" – thereby increasing the struggles of small and medium enterprises to access loans – not to mention increase the government's debt burden. Or it will be financed by borrowing from Bangladesh Bank, meaning more money printing, which will increase inflation. The government also plans to finance the deficit via foreign borrowing. But it is difficult to see how the government can mobilise the targeted funds, given its past collection history.
It is evident that the IMF has had quite a bit of influence in the budgetary preparations and allocations. But that has not been echoed in the allocation for the healthcare and education sectors, with both sectors receiving lower percentages of the total budget as compared to last year. Because the IMF was also opposed to government subsidies, the subsidies for the energy sector have to be more effectively utilised as people cannot afford even higher energy prices right now. Yet it is unclear what the government plans to do about its energy subsidies – whether most of it will again go down the drain in the form of paying capacity charges to private and politically connected individuals and businesses, or it will be actually used to give relief to the public. For once, the issue of paying enormous capacity charges was mentioned during the budget session. But disappointingly, no bold decisions were taken.
This overall lack of initiative and courage pretty much sums up the proposed budget, which was neither pro-poor, even though it needed to be, nor cognisant of the rapidly growing inequality gap, which has already reached a worrying level. While setting unrealistic targets, the government has failed to consider the very real sufferings of the people by presenting a budget that barely looks to address any of their most burning concerns.