Budget FY 2019 – 20: Heed critics’ feedback
Taking into consideration the fact that since a national budget is basically an estimation of revenue and expenses for a year or a given period, it affects all the people, Plebeians as well as Patricians, economy and all other aspects, hence the adage can be an apt model — a successful plan helps to plan successfully. While speaking about budget — perhaps bearing in mind the time-honoured maxim to cut one’s coat according to one’s cloth — one of the Founding Fathers of the United States and its first President, George Washington (1789–1797) succinctly forewarned, “We must consult our means rather than our wishes.” Some 1860 years ahead of President Washington, Roman philosopher Cicero (106 – 43 BC) had suggested that budget should be ‘balanced’.
While a salient point of the proposed Tk 523,190 crore budget for the fiscal year (FY) 2019 – 2020 is 8.2 per cent GDP growth target, it anticipates to generate fresh employment for 30 million people by 2030. Mulling over increasing the number of taxpayers to 10 million from the existing 2.1 – 2.2 million, it projects to contain inflation at 5.5 per cent. The 5 per cent cash incentive for the RMG sector and 2 per cent incentive for wage earners—who dispatch $15.9bn remittance as of 10 December 2018—have been proposed. Whilst pension scheme for all sounds worthy as a social safety net measure, provision for Tk 1.0 billion to rehabilitee river erosion victims is welcome.
It is a truism that “critics are friends; they show faults”— so said a sage statesman, while servile self-seeking sycophants close the eyes to faults and keep on praising. The wise heed the advice of critics, while ill-advised ones abhor them. Accordingly positive and negative reactions, i.e. bouquets and brickbats, have poured in. Independent think-tank Centre for Policy Dialogue said the national budget for the 2019-20 was not placed in light of the real situation on the ground, and that the Finance Minister tried to make it appear realistic but the reality has not been reflected specifically.
Eminent economist Prof. Wahiduddin Mahmud has observed that from the look of the revised budget for the outgoing financial year and its state of implementation up to the month of March reconfirms the main weakness of our financial management, namely, the persistently low revenue mobilisation that routinely misses its target. It appears from the budget speech that the strategy for the upcoming budget will be to substantially improve revenue collection by initiating a campaign against tax evasion and not by hurting the common people through increases in the tax rates. That is indeed a noble goal and, even if partially successful, such a campaign can begin to make a real difference in our fiscal management. Admittedly, a change in the culture of tax evasion will not be easy, but the campaign should have started much earlier”.
For some years liquidity crisis in the banking sector has been persisting due to slow growth of deposits and a sluggish recovery of loans. The rise in default loans, an erosion of public confidence in the banking sector and the latest central bank’s move to ease the loan classification rules are largely blamed for the ongoing liquidity crisis, analysts said. A total of $2.14 billion was purchased by banks between 1 July 2018 and May 2 this year.
Though only a microscopic number of real farmers can read English, yet the bank was named ‘Farmers Bank’; and as over Tk 3,500 crore was siphoned out from it, so Muhiuddin Khan Alamgir and Md Mahabubul Haque Chisty, the then board chairman and chairman of the audit committee respectively, were forced to resign. Then it was renamed as Padma Bank in January 2019. And what about the scam-hit BASIC Bank? These cogent questions beg credible answers.
In contrast, to over 16 crore active mobile phone users in the country [perhaps 90 percent people of the land] it is worrisome because their mobile bills will go up as the National Board of Revenue has already sent statutory regulatory order to all mobile phone operators soon after the proposed national budget for 2019-20 fiscal was placed.
It is pertinent to draw attention of the Finance Minister in particular and the Government in general to the disquieting fact that some 5 lakh foreigners are working in Bangladesh without any legal documents, draining at least $4.08 billion, researchers have found. In 2015, a study based on World Bank Remittance Data showed Bangladesh as the 5th largest remittance source for India and more than $4.08 billion was remitted to India from Bangladesh in 2012. The foreigners mainly come from India, Sri Lanka, China, Pakistan, South Korea, Taiwan and some European and African countries. [Vide http:/ /www.newagebd.net/ article/ 36422/foreign- nationals-working-illegally-go-unchecked, 10 Mar 2018.]
Ostensibly an atypical happenstance, the depressing news hit global headlines the day before Bangladesh budget for FY 2019-20 was announced. According to the 2019 Global Peace Index (GPI) released in London on 12 June by the Institute for Economics and Peace (IEP), Bangladesh has been ranked 101st out of 163 countries with a global score of 2.128. Last year, its position was 93 with a score of 2.084. In South Asia, Bhutan topped the index with 15th rank.
A budget is balanced when revenues ‘equal’ expenses, or where revenues ‘exceed’ expenses; but not where expenses exceed revenues. A humanitarian administrator, Herbert Hoover, the 31st US President, believed that a budget should be balanced not by more taxes, but by “reduction of follies”. Generally speaking, the FY 2019 – 2020 budget—undoubtedly an ambitious one—has a pro-prosperous bias. The upward trend of default loans stemming from financial scams and weak supervision by the central bank is eroding the confidence of customers in the banking sector. At the end of 2018, the total default loans in the banking sector stood at Tk 93,370 crore, which is 10.30 percent of the total outstanding loans. Last but not least, education and healthcare sectors deserve further attention.