The budget and the hard-pressed people

It was the expectation of the nation that an experienced finance minister and political person would try to offer the nation an ideal pro-people budget with distinct and bold characteristics as the final work of his long and colourful career. This is expected as a person generally desires to be remembered with respect long after his departure. Naturally, it is a disappointment when it is seen that the new proposed budget is nothing but a typical incremental budget which lacks any courageous and creative initiative. In addition, one of the aims of the proposed budget seems to be to create an opportunity to buy votes for the coalition candidates in the coming general election. Considering these and some other factors, the budget in its entirety appears not at all pro-people.

The total layout of the proposed budget is Taka 69,740 crore. It is about 9% higher than the total figure of the current year's budget of Taka 64,383 crore and 13% higher than the revised budget. Almost all the items of the current budget are included in the proposed budget and a more or less similar incremental trend is maintained. The expected total revenue earning is estimated as Taka 52,542 cr. for the proposed budget as against current year's budget figure of Taka 45,722 cr. Current year's figure needed to be revised down to 44,868 due to non-fulfilment of targeted revenue earning. It may be noted that though a lower targeted amount could not be achieved in the current financial year, a new target is set at 17% higher compared to the revised figure.

A total of Taka 28,463 cr. has been earmarked for development expenditure for the financial year 2006-07 of which Taka 26,000 cr. has been kept against annual development budget. Annual development budget for the current fiscal year (2005-06) was Taka 24,500 cr. which had to be revised down to Taka 21,500 cr. due to failure of implementation capability. How could a development budget be proposed with an enhanced figure of Taka 4,500 cr. (over and above the revised amount) that too in an unstable political situation with so many changes of government within a short time, is not clear. It is more or less certain that it may not be possible to have complete implementation of the proposed budget.

As per our finance minister there cannot be anything wrong in having ambitious development programmes which might be implemented partially. But, in reality the inclusion of too many projects allows the government to choose only those for implementation which serve partisan political interests disregarding economic and social benefit for the country.

In the proposed budget a big amount has been earmarked under head 'block fund' which allows the same to be used as and when needed by the government. There is apprehension that the government in power would try to utilise most of the unspecified fund during their final days for reaping partisan benefit in the next general election. Most of the economists of the country expressed this anxiety in their post budget reactions. The renowned economist Dr. Debapriya Bhattacharya, executive director of Centre for Policy Dialogue maintained in June 10 copy of "The Daily Star" that the block allocation of Tk 6,100 crore which is around nine percent of the budget might have a questionable motive behind it.

The proposed budget is surely not pro-people, considered in it's entirety. Collection of taxes by National Board of Revenue as per the revised budget figure of the current financial year is Taka 34,456 cr. In the proposed budget the tax burden has been increased further by Taka 6,599 cr. Most of the earnings would be through indirect taxes like import or domestic duties and VAT etc. Those are paid equally by all sections of the people, rich or poor, whenever they purchase any product or service. But, traditionally this tax money benefits the rich more than the poor sections of the society.

A big chunk of this tax money is used by government itself to maintain the ever increasing expenses in the running of the administration. Other major portion is for procurement and development works. Since development and procurement works of the government do not have transparency, business is awarded mostly on manipulated tendering. This provides scope to inflate the price and degrade the quality of work. Tax money collected from people is thus plundered by a section of rich ruling party men and the general public receive low quality facilities at an exorbitant cost.

The people of Bangladesh are hard pressed because of the continuous rise in prices of essential commodities. The causes are: high rate of domestic taxes, rise of price of imported items, syndication of business community to control prices in their favour, illegal toll collection at different points by ruling party people and even law enforcing agencies. It was expected that the government would address this issue in the proposed budget. Reduced rates of tax were proposed for some essential items. But, the finance minister himself admitted during his budget speech, that due to corruption and failure to provide good governance this effort failed to produce any favourable effect on price. It appears that the traders are the only people benefited by the tax reduction, and not the public. The traders are to pay less tax during procurement but can still sell at a high rate.

The most irritating problem the people are facing now is an acute shortage of electric power supply. It was naturally wished by everybody that the budget would provide enough money to reduce this crisis. Interestingly the proposed budget has a total allocation of Taka 4,283 cr. compared to current year's allocation of Taka 4,293 cr. This shows that when there was a need to make a considerable enhancement of funding in the power sector the proposed budget has actually reduced the funding.

In respect of the power sector, the finance minister in his budget speech said, "An investment to the tune of about Tk 22,000 crore will be needed to build an appropriate power infrastructure." (Budget Speech, page 31). In the same speech he also said, "To improve power generation, transmission and distribution, an allocation of Tk 3586 crore has been earmarked for 52 projects including 2 new projects in the ADP during FY 2006-07." (page 30).

It is a well known fact that the greatest challenge for Bangladesh today is an improvement in governance and reduction of corruption. The proposed budget did not provide any direction in this respect. There is no doubt that stopping black money from being converted to white might contribute towards lessening of corruption. The finance minister himself mentioned more than once before the declaration of the budget that he would under no circumstances extend the facility to legalise black money. But, it is surprising that the finance minister in the proposed budget included provisions to whiten black money if it is invested in non-productive sectors like buying of houses, cars etc. by paying additional tax.

There is a widely accepted belief in our country that politicians say something, mean something else and do what suits them best. This has generated a lack of confidence of the people not only in politicians but also in the existing political process as a whole. Consequences have already led the people to become indifferent to political activities and to direct their choices out of usual politics and politicians. It should not be forgotten that this is the way constitutional governments go out of power and are also forced to hand it over to extra-constitutional authorities.

(Figures used above if not mentioned otherwise are taken from 'Budgeter Sangkhipthasar' meaning budget in short, published by finance department, ministry of finance, government of Bangladesh)

GM Quader is an MP