The Centre for Policy Dialogue (CPD) has termed the proposed budget as realistic, but not innovative.
The think-tank made the observation at a media briefing, held to share the analysis of the National Budget FY2019-20 at the Lakeshore Hotel in Dhaka on Friday.
“The budget is realistic because all the targets in the new budget is lower than the previous budget. Finance Minister AHM Mustafa Kamal’s soft stance has been reflected in the proposed budget,” CPD Distinguished Fellow Dr Debapriya Bhattacharya said.
“However, in terms of the GDP, the size of the budget is not enough to meet the demand for taking Bangladesh into a middle income status. The size of the budget remains within 13 to 14 percent of GDP, but it must hit 16 percent to shift the country into the middle income status.”
Observing that the pressure facing the country’s macroeconomy was not recognised in the proposed budget, CPD said the government did not try to find out any innovative way to solve the problems, as the issues were not recognised.
Dr Debapriya pointed out that there is also no innovation in the monetary policy, trade policy and in subsidy allocation.
“The finance minister showed innovation in budget presentation, but we did not find any innovation in budget proposals. There is no reflection of election manifesto in the budget proposal,” he said.
There are some proposals, but no specific outline about implementation was announced. For instance, one crore new tax payers will be included, but there is no clear outline regarding how many will be included in which year, and how much income will come from there, the CDP observed.
“Some assurances were thrown in the air, but these are not realistic. The government did not recognize any need for reform in this budget,” Dr Debapriya said.
The whole development programme stands on the government spending and infrastructural development, through which growth is expected to reach the highest possible level. It is an outdated concept and it has no consistency with the government current thinking of inclusive growth.
CPD: High time to discuss subsidies, incentives
The Centre for Policy Dialogue (CPD) thinks it is high time to discuss the usage of subsidies and incentives that are being introduced every fiscal year.
Discussing the record allocation of subsidies and incentives, reaching Tk43,230 crore in the upcoming fiscal year, CPD Distinguished Fellow Dr Debapriya Bhattacharya said: “We have to discuss how much we will spend for underprivileged people and how widely we will use it.”
He was speaking at a media briefing analysing the National Budget FY2019-20 at a hotel in Dhaka on Friday.
Subsidy for the gas sector for FY 2019-2020 has more than doubled, from Tk4,500 crore in the previous fiscal year to Tk9,600 crore in the next budget.
According to government sources, gas sector subsidy was increased because of import of liquefied natural gas (LNG), which is more expensive than the domestically produced alternatives.
Per unit cost of imported LNG is Tk25.17, after adding tax and regasification charges the total cost reaches Tk39.44, said sources from Petrobangla. When the LNG is blended with local gas, the cost of production for per unit reaches Tk14.64.
Meanwhile, the average retail price of gas supplied by Petrobangla from domestic sources stands at Tk7.39 per cubic metre.
In his budget statement on Thursday, Finance Minister AHM Mustafa Kamal also recommended setting aside Tk9,500 crore as subsidy for the power sector in the next fiscal year, which was Tk9,200 crore in FY2018-19.
“In 2013, the highest portion of subsidies were allocated to agriculture sector, and Bangladesh Petroleum Corporation (BPC). But over the last seven years, the composition of subsidy has shifted towards power and gas,” Debapriya further said while analyzing the proposed subsidies.
He also stated that it is difficult to claim a certain quarter is benefitting from the allocated subsidies as some portion of it is surely reaching underprivileged farmers and common people through Bangladesh Power Development Board (PDB).
“So, we can say everyone is benefitting from the subsidy,” Debapriya said.
Criticising the agriculture sector subsidy and its policies, the CPD distinguished fellow said: “A total of Tk9,000 crore has been allotted for agriculture sector, which is the same amount as the previous fiscal year. However, the subsidy has not been spent fully in the past three fiscal years.
“Presently we have around 2 crore registered farmers. If we want them to survive, the government should allocate Tk5,000 for each farmer under the subsidy, which we proposed last year.”
Mentioning the Tk4,000 crore subsidy for Bangladesh Jute Mills Corporation (BJMC), Debapriya opined that only a subsidy is not enough, and a reform agenda is a must for this sector.
In the proposed budget, Tk3,060 crore was allocated, incentivising 2 percent benefits on money sent by expatriate Bangladeshis, aiming to bring in more foreign remittance through legal channels.
Instead of cash incentives, the CPD recommended a gradual depreciation of Taka to help incentivise export and remittances.
Budget favours beneficiaries of economic misrule: CPD
The proposed budget for the upcoming fiscal year favours the beneficiaries of economic misrule, the Centre for Policy Dialogue (CPD) said yesterday.
“The budget will benefit the upper- and upper-middle class people,” said Dr Debapriya Bhattacharya, a distinguished fellow at the independent think tank. “The budget has nothing for the terminal people.”
He was speaking at a post-budget press conference titled “National Budget for 2019-20: An analytical prospect” organised by the CPD at a city hotel.
Debapriya said the budget has created an opportunity for black money holders by giving scope to invest their ill-gotten money.
He said by increasing the limit of surcharge, the wealth of the rich people has been taken out of the wealth tax.
The budget did not mention any guideline for reforming the banking sector, he said. “In the budget, there is no mention of the crisis in the banking sector. It has very scanty information about banking.”
On the other hand, by allocating merely 5 percent of the total budget outlay for education, health, and social sector, the lower- and lower-middle class people have been deprived of opportunities and the high-income group has been provided scopes.
Debapriya said, “The government manifesto spoke about building an inclusive and balanced society, which has not been reflected in the budget.”
The budget lacks specific guidelines required for building a prosperous Bangladesh, he said. “The election manifesto [of the government] pledged elimination of disparity but the budget does not have any such guideline.”
The CPD distinguished fellow said a society in which inequality increases cannot survive.
“An uneven society will crumble today or tomorrow. With the present rate of increase in disparity the growth cannot be maintained, a prosperous Bangladesh cannot be built,” he added.