Noted economists and business leaders have given mixed reaction on the proposed budget announced by finance adviser Dr. Mirza Azizul Islam on Monday. They said a thrust on poverty alleviation, social safety net and pro-private sector growth in the budget is encouraging. They, however, said the main challenge will remain in implementation.
M Syeduzzaman,
former finance minister
Former Finance Minister M Syeduzzaman termed the proposed budget as a departure from the traditional one as it shows nearly 75 per cent recurrent expenditure and only 25 per cent investment.
The size of ADP, he said, is even less than the total deficit of the budget. Foreign aid disbursement must be ensured as about 57 per cent of the ADP will be financed from foreign aid. The government, he said, should look for ways to increase project aid disbursement, which in the recent days is showing a declining trend.
The government should keep think whether the projection of revenue growth is realistic as in the current fiscal year a major chunk of revenue came as payment from a number of individuals because of emergency rules.
Giving instant reaction to the FE he said the priorities on food security, agriculture and some other areas along with broad safety net measures are all welcome measures. "But we have to see whether investments are made in proper areas," said Syeduzzaman. These are all rightly planned, but everything will depend on the efficiency of implementing agencies, he added.
He said about 17 months of the incumbent government have already passed, the situation in the power and energy sector remained highly pittiable. In such a situation the measures proposed for the power and energy sector is a right move. "Mere allocation is not important, people want to see real improvement here," he asserted.
Regarding high allocation in social sectors such as education and health, the former finance minister said quality of service delivery is a major challenge to proper utilisation of the resources.
Syeduzzaman felt that the 20 per cent DA for the government employees will pave the way for sympathetic rise of wages in the private sector. Already the business community has a fear of inflation which is already at a high level.
The proposed duty cuts on many items will encourage the private sector to go for large scale import. The question is whether the export will grow at the same pace, he said. If the export does not grow at the same rate, the former finance minister apprehended the balance of payment would be under pressure.
Dr. Q K Ahmad
President, Bangladesh Economic Association
Dr. Qazi Kholiquzzaman Ahmad, President of Bangladesh Economic Association, said the finance adviser presented his budget at a time when the global scenario is not encouraging because of food and fuel price hike. Besides, the budget came as the country was still reeling under some worst natural calamities such as cyclone sidr and two major floods.
The budget, he said, as usual lack public involvement. He said the finance adviser deserves thanks for increased spendingon food security, agriculture, employment generation and protection of environment. The huge deficit of over Tk. 300 billion is a matter of concern, he added.
Dr. Ahmad said the social safety net measures will be affected if the revenue growth is hampered for any reason. He said the finance adviser's various measures proposed in the budget for production increase, poverty alleviation, reduction of import duty will yield result if the implementing agencies function in a coordinated manner.
The president of economic association said despite all measures people do not feel that the prices of essentials will come down to give their comfort.
Anisul Huq
President, FBBCI
President of the Federation of Bangladesh Chambers of Commerce and Investment (FBCCI) Anisul Huq said the finance adviser gave his best effort to present a business friendly budget that he promised earlier.
"I saw an effort to make it business-friendly although there are some differences when it comes to our expectations," he told FE in an instant reaction.
He, however, pointed out that the customs duty on import of basic raw materials should have been reduced to 5 percent to promote domestic industrialisation. The budget proposed to reduce the duty from 10 percent to 7 percent.
He felt that the slabs of customs duties should have been reduced to 5 percent, 12.5 percent and 25 percent to promote overall industrialisation in the country, considering the real effective rate of duties and the rising trend of prices of essentials.
Annisul Huq welcomed the tax holiday measure in slabs for the next five years until 2011, but stressed the need for complete exemption of tax and extending the tenure until 2014.
He also appreciated the budget proposal for 20 percent dearness allowance for the government employees, but said the common people should have been compensated through raising the tax exemption limit.
He added that the country's senior citizens (70 plus) should have been exempted from the income tax.
The FBCCI president said he noticed a positive effort in VAT measures too, but the measures would not be clear until they get the finance bill.
He appreciated the duty reduction on capital machinery from 5 percent to 3 percent, and measures to promote domestic and export-oriented industries, agriculture, poverty-reduction, social safety-net programmes and human resources development.
Dhaka Stock Exchange
In a reaction the Dhaka Stock Exchange (DSE) lauded the budget proposed for the year 2008-09. In a written statement DSE Chief Executive Salahuddin Ahmed Khan welcomed the move for offloading government shares in the power and energy, industrial, and telecommunication sectors. DSE said the budget will encourage the private sector to perform better.
Our Khulna Correspondent reports: The proposed national budget for 2008-09 financial year placed by Finance Adviser AB Mirza Azizul Islam today elicited mixed reactions from politicians, businessmen and professionals in Khulna.
President of Khulna Chamber of Commerce and Industries Shaharuzzaman Mortaza in a statement said the budget would help continue development in agriculture, education, health, communications and power sectors. The statement said the budget would help create employment opportunities for farmers with indication for poverty alleviation. He also welcomed the reduction of trade licence fees.
Khulna City Corporation Mayor (Acting), Moniruzzaman Moni welcomed the budget, terming it pro-people. He said the budget stressed poverty alleviation with subsidy in agriculture sector and more allocation for the annual development programme.
Khulna University Vice-Chancellor Md. Saifuddin Shah welcomed the budget, saying it has the highest allocation for agriculture, education and health. He also said the budget would be a milestone in the development of Bangladesh.
Secretary General of Greater Khulna Development Coordination Committee Sk. Ashrafuzzaman rejected the budget. He said the government has not made much allocation for development of Khulna and Mongla port. He criticised the finance adviser for providing opportunity to make black money white with 7.0 per cent tax
City BNP Secretary Nazrul Islam Monju said the budget would bring about no change in the economy. There are no measures to check price spiral of essential commodities and to safeguard the interest of farmers.
Mizanur Rahman Mizan, city unit Secretary of Awami League, said the budget would do nothing good for the common people. Miseries of low-income group will increase further, he added.
District Awami League president Harunar Rashid said it is a showing budget, which would not bring any good for the people.
Khulna city Jamaat-e-Islami Amir Mia Golam Parwer said the budget gave more subsidies in agro-based sectors.
President of Nagorik Forum Kayum Choudhury said the hopes of the people have been reflected in the budget.
