Budget does not light up recovery path: CPD

The proposed budget is far from being a pandemic budget that should help revive the economy beset with Covid-19, the Centre for Policy Dialogue said. 

"It is not a budget only for the next fiscal year. It should have shown clear directions as to how health, education and social sectors will recover in the next few years and how the government spending will be in other sectors," said CPD Executive Director Fahmida Khatun in an immediate response to the budget in a virtual press briefing. 

The budget for fiscal year 2021-22 should have been formulated, keeping in mind the targets set in other plans, such as 8th Five-Year Plan. 

The government is looking to achieve 7.2% GDP growth in the next fiscal year, as said in the budget. "The overall structure of the economy projected in the budget and targets set for indicators, such as revenue collection, expenditure and investment, seem to be unrealistic to the CPD." 

No major changes have been introduced in the revenue structure. There are discrepancies between the proposed budget and the revised budget of this fiscal year drawn up against low implementation in 10 months until April. 

The 30% increase in the revenue target in the proposed budget seems to be too high, Fahmida said. 

The CPD, however, appreciated foreign financing shown in the budget. 

It said foreign loans might increase the government's dependency on them. 

The thinktank sounded a note of caution that Bangladesh should keep foreign loans within a comfortable limit.   

The tax benefits given to industries are realistic and will help them bounce back in business, the CPD said. It also endorsed proposed measures to provide loans to small and medium enterprises at low interest rates. 

Individual tax rates remain unchanged. The CPD said it was unfair that the taxable income at the lowest tier did not change while the tax rates for those who fell into the upper tax slabs did not increase.  

Against the backdrop of the pandemic, a few sectors, including health, should have gotten higher allocations.  

The health risk should be mitigated through vaccination. The coverage of social safety net should be expanded to provide food security, and more public expenditure and investments are required to generate employment. 

"Around this time, we are insisting on increasing development expenditure and bringing down the operational costs as much as possible," Fahmida said. 

The economy will rebound at a faster pace if the pandemic wanes, and vaccination is imperative for that. The Tk10,000 crore allocation for handling any emergency situation out of the pandemic is not adequate, the CPD said. 

Even if the health allocation is raised, the sector does not have the capacity to spend it..

"Over the last one year, no measure has been taken to reform the sector, which is unfortunate," the CPD said.