“Budget” is a very common word, often used in our day to day conversations. However, this expression has huge significance for any democratic nation. In macroeconomics, budget means an annual statement of the government outlining its plans for spending and earning revenue. The annual budget is a statement of fiscal policy and, thus, often receives much media attention as an indicator of both fiscal policy intentions and economic performance. In our country, the finance minister outlines this plan in the first week of June in the National Assembly, where these schemes are discussed thoroughly before being passed on June 30 by the referendum of the Members of Parliament. Eventually, these plans are implemented from the month of July onwards.
This year’s financial budget was announced on June 3 by our finance minister, Mustafa Kamal. The summation of this semi-centennial budget is 6,03,681 crore taka with a deficit of 2,14,681 crore (comprising 6.2 per cent of the total Gross Domestic Product). In comparison with our first fiscal year 1972-73, where a budget plan of 786 crore taka was passed by Tajuddin Ahmed, a massive difference can undoubtedly be detected in the total size of the budget that reflects the remarkable economic progress that our country has achieved in the last 50 years. However, our success has often been undermined by the fact that projects were not often executed in the manner they should have been.The first major challenge that can be identified is the collection of government revenue from taxes. Like the previous year, the Covid-19 pandemic situation would most likely affect the revenue collection this fiscal year too, creating a substantial shortfall in revenue collection. However, the unit of the VAT wing of the National Board of Revenue (NBR) reported a noteworthy growth in VAT collection from telecommunication, cement and tobacco sectors during the first three-quarters of the fiscal year 2020-21. The Bangladesh government should focus more on improving the efficiency of the revenue board in order to raise the revenue-GDP ratio. The administration would be required to be more innovative in collecting increased volume of resources by initiating online business tax, inheritance, wealth and property taxes to meet the revenue shortage. A major source of government income is being forfeited due to a lower proportion of people paying their income tax; only less than one per cent of the country's population declare their actual income tax and a poor tax infrastructure is making it further difficult to enforce greater compliance.
Another serious issue are the loan-defaulters who do not repay debts, including interest and principal on loans or securities. According to the World Bank's latest ‘Global Economic Prospects’ report, Bangladesh tops the list of loan default indexes in South Asia with a high loan default ratio of 11.4 per cent in 2019. Banking regulators and analysts are prescribing remedies one after another. The formation of ‘Banking Commission’ and ‘Asset Management Company’ are the recent initiatives which have been undertaken to prevent this phenomena, however, nothing seems to work as default loan problem still remains the biggest threat to the banking sector. The presence of this “so-called banking cancer” in the long run will result in a liquidity crisis within the banks of our nation causing difficulties while engaging with foreign banks.
The aspect which prevents the annual budget from gaining its ultimate triumph and fame is the delay in completion of mega projects. For instance: the Padma Bridge which was supposed to exist in reality by the end of June 2021, is not yet completed. The Chinese construction company involved with this project has already appealed to extend the deadline until June 2022. Apart from an extension of project tenure, many of the projects will get costlier because of the two-month suspension of all activities due to Covid-19 last year. However, it is undeniable that postponement of projects is a common scenario in our nation that has been present even prior to the Covid-19 pandemic. The impact of delays not only creates uncertainty among policy-makers but also generates more expenses for the government, hence the target which was set for the fiscal year beforehand does not get completed. The National Economic Council (NEC) allocated Tk 31,391 crore for the 10 mega projects, which was Tk 1,930.40 crore less than the original allocation of Tk33,321 crore. Rooppur Nuclear Power Plant, Padma Multipurpose Bridge, Dohazari-Cox's Bazar-Gundam Rail Link, Dhaka-Ashulia Elevated Expressway Project (DAEEP) and Karnaphuli Tunnel are among these ten projects where the government could not spend the allocated funds within the current fiscal year.
In my opinion, the entire budgetary session should be shifted to the end of the year instead of being held during the monsoon months of June and July. The fact that the implementation of these projects cannot actually be started from the month of July means that a significant amount of dry days, an ideal condition for construction, are wasted. In fact, in 156 democratic countries the annual budget commences in the month of January, which includes Germany, Belgium, Denmark and even Sri-Lanka. If our budget session is shifted, it can prevent loss of work for months hindered by rainy weather.
In the context of Bangladesh, more necessary than a hefty budget allocation it is essential to ensure proper implementation. Money can be injected into the economy, but it will only line the pockets of few without translating into improved living standards of the majority, unless the allocated budget is utilised to fulfil its declared goals. Therefore, in order to attain the predicted growth rate of 5.1 per cent as per the World Bank, Bangladesh needs to use resources efficiently with special emphasis on human development, especially in Health and Education to overcome Covid-19 crisis times.
Safaq Zilan, student of Greenherald