Will the government be able to handle its finances well in next fiscal?
Budget, as taught in our secondary school, is no more all about numbers.
It is also a strong philosophical tool for the government to take the country forward, drive growth, ensure equitable distribution of growth as well as national wealth, make adequate investment in education and health infrastructure, and, more importantly, ensure food and energy security and thereby social harmony with clear visibility about the future.
This has become an absolute reality in an era where the Nobel Peace Prize is given in recognition of the fight against poverty or rapid poverty assessment.
There was a humble debate among this scribe and few retired senior finance division officials- is there any way to make a drastic "quality shift" in the process used for formulating and implementing the budget?
Having studied economics for many years and after doing a dissertation on development planning in Bangladesh, I would rather expect the budget document to reflect serious background research on issues like growth-inflation relationship; impact of electricity generation or telecommunication spread on growth, and on the other hand, growth warranting electricity generation; effective land management in view of land loss to manufacturing and infrastructures; impact of private as well as public investment on growth; size and impact of informal economy on growth and possibility of mainstreaming the black or informal economy; way to ensure food security for the increasing population; effective handling of the entire subsidy economics; as well as effect of public sector economics on the entire economy; and, more importantly, on how the neighbouring or similar competing countries are responding to similar or emerging issues or challenges, in order to make growth inclusive and ensure forward-looking capacity building.
This is more needed in a country where there is an identified paucity of market or social research and the economists fail to respond when they do not have any link with the party in power or their input is very shallow, or emotion-driven.
How the Covid-19 budget should have looked like?
If one would have believed our journalist friends, they would have known how the ensuing budget would look like? Not much of a change. Few were apprehending whether finance ministry would be able to present a full budget, more importantly, the finance bill while the country was under government holiday for 66 days due to Covid-19.
Few were even pushing for an interim budget or even deferring the budget for a few months. Therefore we at least should thank NBR, finance division as well as finance ministry for doing a good job with an almost "business as a usual budget", if not an appropriate budget to fight coronavirus related health hazards, new entrants in to "below the poverty line" and supply chain disruptions both locally and globally.
Taking a clue from what is happening and particularly being cognisant of the serious "capacity disconnects" among the regulatory and implementing agencies, we have doubts whether the finance minister would be able to materialise many of the objectives he has set through the budget. We are aware of our identified resource constraints, and the global situation is not also in our favour.
No doubt, the minister will be facing a daunting task of keeping the fiscal deficit within 6 percent and subsidies within the estimate that he has made in the new budget.
Whoever says whatever on the inflation front, the challenge is likely to be more than estimated. I would not be at all surprised if we get to see the food prices dictating terms for all of us.
The government facing a "take it or leave it" situation will be forced to align all its policies in line with the international prices, thereby making management of budget deficit more importantly money supply, a continuous struggle for the government.
Therefore, the entire budget implementation architecture for the next fiscal will no doubt be a tough one, given the current state of the economy, uncertain and challenging global scenario, and meagre political might available at the disposal of the government to drive any meaningful policy reforms.
Will the government be able to handle its finances well in next fiscal? As usual, we would expect the finance minister to put the public finances in order. We would be very interested to watch how he reins in reforming the way we do things.
The obvious question would be: While the government is likely to be too busy tackling the current issues like health safety during Covid-19, food security, ensuring jobs for the "oil-producing countries" returnees and effective delivery of social safety net and revamping the large informal sector as well as some important political developments in the region, where would they get time to think about the future, do necessary homework to launch an inclusive growth plan, and thereby take the country back to a sustainable development path?
No doubt, it is going to be a tough war and may even become tougher, if policy planners, politicians, private sector, development partners, increasingly becoming thin civil society, and other important stakeholders do not get into a "fair game."
The author is an economic analyst.