Budget sees new shift in economy, says Unnayan Shamunnay

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FE Report
The budget for the upcoming fiscal year may not contain any fresh feature but it steers the country towards a more egalitarian welfare state, private think tank Unnayan Shamunnay said Saturday.
Finance Minister AMA Muhith unveiled a 1.32 trillion taka budget for the 2010-11 financial year Thursday, projecting a record 6.7 per cent economic growth target and a 20 per cent increase in annual spending.
Leading economic research outfit Shamunnay said the budget treads a "traditional course" but its implementation would be the biggest challenge for the government.
"The new budget sees the country shifts to a sort of welfare nation from a capitalist economy," said leading banker Khondaker Ibrahim Khaled, as he spoke during Shamunnay's press briefing on the budget.
Khaled, chairman of Bangladesh Krishi Bank and emeritus fellow of the think tank, said the proposed budget size is still small compared to the country's GDP.
"It's just 17 per cent of our GDP. The government could have gone for a bigger budget as the demand for the country's around 150 million people is quite high," he said.
"Size is the not the issue as far as Bangladesh's budget is concerned. Implementation of the budget has been our main weak point for years and it will be so for the Tk 1.32 trillion budget," he said.
Shamunnay study team leader Dr A K Enamul Haque presented the keynote paper, while its research director Dr Taiabur Rahman spoke during the briefing in a city hotel.
Khaled said for decades the country had been witnessing economic boom in the urban areas whereas the rural areas were out of sight.
"But the government has taken a raft of steps and projects, which will pump Tk 200 billion into the rural economy," he said.
"The farmers have already shifted to high-value crops and the number of poor farmers has decreased."
"If this trend continues for a few more years then we will be able to shift to a welfare state like any Scandinavian nation from a capitalist one," Mr Khaled said.
He said the government has increased subsidy for the agriculture although the sector was beset with a number of disasters.
Khaled said the government can allow whitening of undisclosed money - earned legally - with a minor punishment.
The former Bangladesh Bank deputy governor added that undisclosed money might account for one-third of the country's GDP.
Khaled judged the opposition's alternative budget as the good omen for the country's democracy.
"It would have been better if the opposition had placed their budget in the parliament. Lack of proposals on income has also made the opposition's budget an incomplete one."
"If they (the opposition) come up with a complete budget next year it will help the government," he said.
He also urged the government to simplify the tender approval process - which is blamed for snail-paced implementation of public projects.
He said the state-run Bangladesh Petroleum Exploration & Production Commpany Limited (BAPEX) should be strengthened and funded to explore gas.
Taiabur Rahman called for increased role of parliamentarians to vet the budgetary spendings.
"In Bangladesh, the scope for the parliamentarians to play role in preparing budget is very limited. So at the end of the day it turns out to be a bureaucratic budget."
Mr Rahman said there should be scopes for the parliament's standing committees to discuss the nitty-gritty of the budget.
"This practice could allow the MPs to give better inputs," he said.
He urged the government to set up tax offices at the union levels as there are many people in the grassroots level who can pay tax.