Dr. Ananya Raihan
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The text does not represent position of any institution. Only the author is responsible for the opinion. Although Saifur Rahman mentioned that the budget has been prepared on the basis of the PRSP targets at the beginning of the speech, it is not clear how it is different in terms of structure from the previous budget. This traditional structure allows to challenge the claim that 56.3% of the allocation in this budget is for poverty alleviation. The budget structure remains obscure for the common citizens. The major concern of the citizens at this moment is how to meet the living expenditure with limited budget. Because, the price spiral went beyond any imagination. The budget proposes reduction of tariff on some essential items to 5 per cent. That is a positive sign; however, lack of control over the market does not ensure reduction of prices on those items. The imposition of fixed tariff on sugar is also a good proposal. I think government can implement this reduction through statutory order without waiting for budget approval. For improvement of revenue earning the government went to the easy path – broadening the coverage of VAT. The rise of VAT definitely will play a role in price of essential goods and services. Another way was to improve the tax collection mechanism and stop tax evasion. However, it difficult in prevalence of pervasive corruption and mal-governance. Saifur Rahman asks the lawmakers for immediate reform of laws and legal system. Interestingly, the government took a few weeks for enacting and changing some laws, but why it was not possible for such an important matter, it is not clear. The income tax provisions went against the low income group whereas it favoured upper middle class by offering rebate of 10%, who paid tax above 25% of income. Due to price hike it would wise to reduce the tax burden for those, whose income fall in the first tier of tax structure. This would relieve the pain of the poor and low income families to save money for spending on essentials, rather than paying tax. It is not also understandable why tax evaders’ burden has been reduce by reducing fine for tax evasion. If citizens could pay tax without hassle and bribe, the tax income could cover both revenue and development budget, we would be free from the curse fro seeking money from the IFIs in exchange of giving up policy space. Because, policy package imposed by them seldom goes in favour of country’s economic stability. SMEs would be benefited from steps of withdrawing tariff on raw materials and machineries and imposing tariff on competing finished products of electronics, plastic and melamine industry, textile, readymade garments, hosiery, label, terry towel, dairy and poultry industry. This step would also positively affect the produce of these industries which are mostly consumed by common people. The trend of cosmetic treatment continues for the vulnerable groups with marginal increase of the benefits and coverage of beneficiaries. There is no attempt of allocation in each of sector’s budget so that the lives of millions of vulnerable people can be improves meaningfully. The budget speech starts with human resource development; the allocation has increased in this by only 1 per cent, from 22 % to 23%. It is not clear how this 23% will be spent both for quantity and quality, which was emphasized in the budget speech. The government could not dare raising price of fuel, which could be benefiting the whole economy in the long run. Now it would not be possible until next government comes. The time would be enough to jeopardise the whole economy. The budget also could not offer any special measure for the power sector; it is not clear whether it is due to lack of faith in returning to power. It was more than urgent to take emergency measure to improve the power situation without wasting a single day. Unfortunately the government keeps the onus on the next government. The budget allocation is in the same line of the previous year. The military approach would be better for this sector rather than for the struggling garments sector to overcome the crisis of labour unrest. Because, labour unrest can not be resolved by appointing military discipline. The government is continuing to ignore the information and communication technology sector and relishing with the steps taken earlier, which in no measure are adequate to unleash the huge potential of this sector both for poverty alleviation, employment generation and catching the huge international market of global knowledge economy. There is no budget to build up national-wide information infrastructure, which could be used by the local governments, local SMEs and farmers and other vulnerable groups, for getting essential livelihood information, market information, employment opportunities, improving transparency in operation of local governments related to the vulnerable groups. Until a participatory process is ensured in budget formulation, the “transplanted economists”, who have little understanding of ground realities and ready to apply “western text book solutions” and bureaucrats of IFIs will continue to destroy the scope of flourishing of the economy and society by dictating budget’s terms and conditions. It is time to rethink about sovereignty of decision making of a sovereign government. June 08, 2006. |