Short-term fiscal measures to please the business community and the electorate are likely to crowd out the long-term objective of poverty reduction through employment generation in the budget proposal for the next fiscal year, said sources involved with the budget making process.

The finance and planning minister, M Saifur Rahman, looks set to propose tomorrow expansion — in terms of both the number of beneficiaries and individual allocation — of social safety programmes such as allowance for elderly people, widowed, deserted and destitute women, and honorarium for insolvent freedom fighters, said finance ministry officials.

Budgetary measures for poverty alleviation will thus be confined to nominal increase in allowance by Tk 10-15 for every individual, the sources said.

Saifur is also likely to announce the extension of tax holiday for 16 specific sectors by two more years, added the source. The extension of the facility, which was scheduled to be withdrawn on June 30, will placate the business community but is unlikely to boost investment growth, believe critics of the plan.

Two years of tax holiday is hardly an incentive to attract fresh investment, said a leading businessman. ‘The extension of the facility by two years only indicates that the government is not in a position to displease the business community ahead of the next general elections. Had investment growth been the rationale, the government would have gone for a five-year extension.'

The government is also unlikely to lower the highest import duty slab, now fixed at 25 per cent, taking into account the demand of the industrialists who fear that such reduction will flood the market with imported finished products and put local industries in peril.

The duty structure was revised in the current fiscal year at the insistence of the World Bank, the International Monetary Fund and also the World Trade Organisation.

 ‘There is nothing wrong in retaining the highest duty slab, even if to placate the business community, as it will eventually help strengthen the industrial base,' an industrialist told New Age. He refused to term such a move poll-centric and described it as a pro-industry fiscal measure.

The finance minister is also expected to propose an allocation of Tk 80 crore for gram sarkar (village government), twice as much as the amount for the current fiscal year.

Meanwhile, the government has already finalised a Tk 24,500-crore annual development programme for the next fiscal year despite being forced to revise downward the ADP for the current financial year.

One thousand four hundred and forty development projects, including 516 new and unapproved schemes, are marked for implementation in the next fiscal year — 1,372 under development and 68 under revenue budget. The number of project under the current ADP is 929.