The flesh and blood of the big budget

The upcoming proposed national budget's size, commitment, expectations, action-driven implementation, and many other matters are still in the speculation stage. This budget will be Finance Minister AHM Mustafa Kamal's fourth budget in a row. In this article, we will be digging out the pros and cons of the budget. The issues like 'confronting corona', 're-vitalizing the economy traumatized by Covid-19', 'encountering the challenges posed by Kyiv-Kremlin war' along with the slogan of 'life and livelihood’, particularly at the outset of making national budget before an election year, taking all these into account, national budgets are yet to be fine-tuned meticulously.

But the fact is, no succeeding governments managed to unearth a way to formulate the budget in an unconventional format within the budget framework. There is no elbow room for any finance ministry to bring a dramatic change to demonstrate an out-of-the-box budget. Even experts, who screen out the budget, will not come out with an unconventional style budget. Nevertheless, budgets' positive or negative sides reflect more or less in life. As such, having the temperament to accept the flurry of criticism of the budget, only stand as defending mode against the opposite stance, fiercely attacking them to overlook the burning issues are detrimental for all. It is conventional to shed light only on positivity or negativity or budget constraints. Keeping up with the spirit of desire and devotion, attempts were taken for reconciliation and set out a way of vintage problems in the current state of the economy; accordingly taking steps and action to confront challenges must be visible in the budget.

On the contrary, it can't be ignored that the presence of 'suvankar's dodge' (a Bangla satire/metaphor) to veil the fish by vegetable or the way of 'coteries interest' (a Bangla metaphor) are often seen present in the budget. Terming good is good and bad is bad alongside giving constructive advocacy on tackling unprecedented crises needs ensuring accountability to all. Instead of scrutinizing the budget as a subject matter or a political issue, the stakeholders should have a transparent vision and take robust steps to play an active role in sharpening and shaping the path of national development. The national economy is not for a specific community; it's for all. Perception should be uniform and integrated, not unplugged and unplanned.

Since 2014, national budgets have been touted as the most significant budget in history. Hence, the budget size increases on an increment basis (annually 15-17 growth rates), naturally, each budget is getting bigger than the preceding year. In addition to that, the doldrums of budget execution triggered the actual size of the budget to become enormous. Generally, compared to the size of GDP this is not taking the place of a big budget; sadly tax to GDP ratio is still 8-9 per cent in Bangladesh, whereas in India, it's above 20 per cent. Plainly speaking, tax is not paid properly so that squeezes the scope of expenditure. It is hard to execute the budget without reinforcing tax collection drives. Allocated expenditure in numerous areas will be undone if hard- term borrowings are not there. For long (from 2009-10) banking sector and money market industry have been gradually shattered to an unimaginable state. Installation of banking commission and overhauling plans are at times pronounced but are not embedded in the budget. The banking industry ignites the economic locomotive and is a source of remittance inflow. No fundamental strategy was taken to transform the downbeat economy into an upbeat one, only adopting a wait and see approach, in the name of safeguarding lives and livelihoods and registering revenue is inevitable without the bedrock of the economy. 'Egg or chicken first' fallacy puts the economy in this condition, which has never been a panacea for overcoming hardship.

As usual, the experts believe there have to be some propositions for tackling the challenges of divergence of economics and income. But there is still scepticism regarding endorsing the disparity by giving regular opportunities for laundering the untaxed black money and refraining from taking zero-tolerance action against the bottlenecks of whitening. History is witness that whitening the black money bears harsh experience. Earlier, black money holders got the same opportunity, even the upcoming budget moves with this controversial issue, but silent feedback is disconcerting. Why? Behind the curtain, it's explicit that this particular vested quarter won't face any hurdles. The government could not cast a shadow on them.

Combining all these reasons prompts them to be reluctant to whiten money even by paying lowered point tax only, no fine, no question about the source of 'getting' ( not earning) the money. There would be no radical changes in the situation unless hammering them to forfeit their untaxed money.

Gini Index, a yardstick of disparity is about 5 in Bangladesh, displays that the magnitude of disparity is severe. The great Liberation War's motto (freedom from oppression and non-discriminatory economy) was meant to scale back this disparity. The authorities concerned sadly remained heedless to embrace this message wholeheartedly. A healthy proposal has yet to be placed to wipe out the badly infected banking sectors and restore the erosion of confidence is apparently out of the purview.

Priorities are given to social safety nets with earmarks of considerable funds. A new signal denotes tying up more beneficiaries under this scheme. For poverty-stricken people on the back of disparity and those who live at the bottom of the poverty, this scheme will lighten their agony if it is prudently provided irrespective of party affiliation. The core message of life and livelihood cannot be sealed by beefing up the numerical figures and allowances to the recipient of distressed senior citizens and underprivileged people. Allocated funds are often marginally high in the educational and health sectors. The likelihood of project completion is disappointing, and hurdles emerge in getting benefits, and fragile steps are seen to thwart these problematic issues. Underscoring the allocation and pace of implementation in the education and health sector are the barest requirements to escalate human capital development.

Close attention is required to boost the incentive package for micro-entrepreneurs. With these credit facilities, smoothly operating their business could transform this into a thrust sector, which can add a feather to the government's success story. Subcontracts sometimes bring down the disparity. In Japan, big companies hire small companies to execute the small works through subcontracts. Ironically in Bangladesh, big companies are frying puffed rice side by side with small companies doing the same, the consequence is small becomes smaller. The government may increase the attractions in this sector by giving rebates and incentives to stimulate their businesses.

Fertilizer is to be given as a medium of subsidy in agriculture, which is pertinent both for poor and rich farmers. Nevertheless, poor farmers who cultivate paddy in 2 bigha/3 bigha land, are on the edge of their life trying to remain afloat. Hardly have they arrived at a breakeven point to equalize the selling price and production cost, which is a matter of grave concern. There should be a distinction of farmers, who cultivates 2 bighas, maintain small livestock, aquaculture, marketing food items, and are entitled to receive cash incentives.

2012's VAT law is yet to be fully implemented officially. The proper step is long overdue in this matter. Freezing the limit of individual tax rates while simultaneously trimming the corporate tax rate and without adopting online automation, a proposal was placed to widen the scope of VAT. This further brings more products under the purview of VAT that result in product prices surging. Enacting a VAT law to broaden the turnover tax limit poses a positive sign that gives a comfort zone to the small and medium enterprises. The bottlenecks are that most companies are not duly compliant to register under VAT despite having the capacity to pay VAT. So, the point is how to collect funds from these companies. Apart from this, many companies with VAT registration separately maintain accounts and deliberately skip VAT receipt to the customer to dodge the VAT. NBR is striving hard to bring them under the purview of VAT. Scaling up the capacity of NBR, restoring the trust of taxpayers by cementing the national security and scanning the system loss to collect the unpaid tax and VAT, these issues claim close attention alongside deadly corona and Kyiv-Kremlin War, if not battling the bad experiences of some South Asian economies.

What brought us here will hold us to the same point. An innovative and inclusive strategic roadmap could turn the pace from lacklustre performance to a progressive journey.

The writer is a retired Secretary to the Government and a former Chairman of NBR. He can be contacted at [email protected]