Hiren Pandit: A budget is not just an account of the income and expenditure of the government. It is a macroeconomic achievement document of the year. On the one hand, due to the political unrest in the world and the problems caused by it, the pressure of creating a somewhat contractionary budget, on the other hand, the issue of allocation to appease the people in front of the national elections was also in the minds of those concerned. However, the budget appears to have given importance to long-term sustainable economic planning.
If the goal of increasing the government’s income is achieved in the budget, there will not be much problem with the supply of money for the implementation of this budget. In addition to the loans and cooperation received from international development partners, a tax collection target of Tk 430,000 crore has been set for the revenue board in the coming financial year.
Despite pressure from development partners to reduce subsidies, a subsidy allocation of Tk 84,000 crore has been made for this fiscal year. However, to build a smart Bangladesh, there is no alternative to developing sectors like education and health.
The prices of daily commodities are increasing in the market. Not only daily commodities, electricity prices, natural gas and LP gas prices have also increased. Various initiatives of the government seem to be of no use. The finance minister expressed hope that inflation will be under control due to four factors including the effect of government initiatives to reduce the prices of daily necessities. In the next financial year, the price inflation will be controlled due to the decrease in the price of fuel, food products and fertilizers in the world market, adjustment of fuel oil prices in the country and government initiatives to keep the food supply situation normal. Besides, the Finance Minister claimed that the annual average inflation will be close to 6 percent. Can we be optimistic in such a statement? It remains to be seen how much of it can be implemented. It is to be noted that the finance minister announced the goal of tying one of the main indicators of the economy to 5.6 percent in the outgoing 2022-23 fiscal year. Later it was revised to 6 percent. However, due to the Russia-Ukraine war, the dollar crisis and rising prices of imported goods, even that target could not be met. According to Bangladesh Bureau of Statistics data, the 10-month average inflation in the period up to April of the current fiscal year stood at 8.84 percent, the highest in several years. Inflation is basically a measure of the rate of increase in the price of a product or commodity. The BBS calculates the fiscal year based on 422 commodities for the base year. Due to the impact of Corona, the people who are jobless, unemployed and have reduced income are struggling to collect money for daily expenses, and many families are suffering greatly due to the pressure of inflation. In this situation, if inflation cannot be controlled in any way, it will have a negative impact on the currency exchange rate, import and export sector- it is natural.
The Ministry of Commerce has formed a high-level task force to control commodity prices. The Commerce Minister is serving as an advisor to the committee. This committee of 17 members is working under the leadership of the Senior Secretary of the Ministry of Commerce. All these are positive initiatives. But the sad thing is, its impact is very little seen in the market. It should be ensured that the plans taken for market control through the Trading Corporation of Bangladesh (TCB) for marketing products in the open market, market monitoring etc. are properly implemented. In order to keep the transportation of goods smooth, especially in the supply of agricultural products, the concerned parties should take care to ensure that there is no hindrance. By way of consumer protection authority and administration, the market situation should continue to be monitored through mobile courts. Management from the center to the local production areas should also be brought under surveillance. At the same time, the provision of uninterrupted supply of these two types of daily necessities, imported and domestically produced, must also be ensured. If the relevant authorities pay attention to these issues, there will be some impact on the market.
The impact of the Ukraine war on the global economy has been extremely damaging. The war in Russia and Ukraine disrupted the entire global supply chain. Russia and Ukraine together supply 30 percent of food to the international market. Russia supplies one-tenth of the fuel oil to the international market. As a result, there is a severe shortage of fuel oil worldwide. High inflation is now the biggest challenge for the world economy. The high inflation caused in the United States and European Union countries has also affected developing countries like Bangladesh. High inflation is currently the biggest challenge in the economy of Bangladesh. High inflation is prevailing not only in Bangladesh but also in the entire world economy including the United States, and Britain. However, developed countries have brought inflation under control by applying their own strategies.
We have to increase the import of raw materials, capital machinery and intermediate goods used in our industries so that industrial production is not disrupted in any way. Imports of industrial raw materials, capital machinery and intermediate goods decreased compared to the corresponding period of the previous year. Imports of capital components fell by 56 percent and imports of intermediate goods by 31 percent. Poverty alleviation programs will suffer if new employment opportunities are not created. So, we have to maintain industrial production at any cost. A favorable environment should be created for the establishment of new industries in the country. Rapid and balanced industrialization is also necessary to continue the economic development the present government is doing.
The money earned by expatriate Bangladeshis should be properly channeled into the country through legitimate channels. The government is giving various cash financial incentives to expatriate Bangladeshis. Effective measures should be taken to ensure that expatriate Bangladeshis take the initiative to remit their earned money to the country through legal channels. Initiatives have been taken to increase the social safety net in the budget for the next financial year. For this reason, allocating Tk 1 lakh 26 thousand 272 crores in the social safety net sector has been proposed. The number of beneficiaries has also increased along with the increase in allowances at various levels of social security.
The finance minister is thinking of collecting about 5 lakh crore from the revenue, but to do that, taxes will have to be collected at a huge rate. For this, the budget has to pay special attention to personal tax, VAT, and duties. Many reform measures have been announced, including the need to find new taxpayers, and the participation of private companies in VAT collection. Apart from this, even if there is no income, the taxpayer with TIN has been made to pay a minimum tax of 2 thousand rupees. In essence, the budget has made the National Board of Revenue (NBR) tougher than ever in tax collection.
This year’s budget is a debt-driven deficit budget. In order to continue spending on all the proposed development and underdevelopment sectors, money will have to be taken from foreign sources and banks along with massive tax collection. In the midst of economic stagnation, pressure on tax collection will put additional pressure on people. Traders will increase the price of goods again. On the other hand, borrowing at interest from banks and savings bonds will increase government spending, while credit flows to the private sector will decrease. If the private sector does not get adequate credit, there will be no investment at the desired rate. As a result, employment opportunities will decrease. Again, if the government tries to meet the expenses by printing money from Bangladesh Bank, then the money flow in the market will increase and inflation will occur. It can also cause damage to the economy. So many things have to be taken into consideration.
Many people feel that there should have been relief measures for the people in this crisis in the budget. Instead of doing that, a big budget has been given according to the custom. There is apprehension about the implementation of this. However, the government has claimed that the entire budget is a gift for the poor people. There are many middle-income people in the country, but they do not pay income tax. The time has come, they have to pay income tax. Those who earn income, have the ability to pay tax – must pay tax. When the government came to power in 2009, the revenue collection was taka 69,000 crore. Now our revenue has increased to 2 lakh 95 thousand crores. If we can reach from 69 thousand crores to 3 lakh crores – then we will be able to achieve what is being said to be extra now.
Our employment is increasing and the scope of employment has also increased. The government has taken various steps to create employment. The government is trying to popularize Made in Bangladesh culture. The things that will be made in this country will meet our needs. Through this, employment will be created.
Government always gives budget thinking about poor people. This time was no exception. To alleviate poverty, the government has also allocated 1 lakh 26 thousand crore taka to the social security sector in this year’s budget. This year too, 1 crore families are being given rice at the rate of 15 taka to alleviate poverty. Not only that, products are being given to 1 crore families at subsidized prices through TCB. Besides, the allocation will be increased in case of any kind of natural calamity.
Hiren Pandit is a columnist and a researcher. He can be contacted at firstname.lastname@example.org