Unusual time needs unusual approach

The government should pursue an expansionary fiscal policy and push up the deficit by two to three percentage points in the budget for the next financial year (FY), said Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), in an interview with the FE recently.

The policy changes, according to him, are needed most given the ongoing pandemic. The prospect of higher revenue growth is no that bright in the next FY even though the government will be required to spend more to attain the expected GDP growth, he said.

Dr Mansur dwelt on a variety of economic issues, pointed out a few lapses in the budgetary policies and suggested some remedial measures.

He felt that Bangladesh as elsewhere in the world would continue to experience economic disruptions due to the Covid-19 pandemic even in the next year. But for ensuring economic recovery, he said, the pace of vaccination needs to be expanded.

Dr Mansur found the targets set for mobilising tax revenues in the budgets unrealistic and said the target in the budget for the next FY should not be more than 10 per cent over that of the current FY.

He predicted a lower revenue mobilisation in the next FY and suggested keeping the budget deficit at a level higher than the traditional one. Usually, the budget deficit is projected at 5.0 per cent.

The PRI executive director found the policies set in the budget for the current FY faulty. In this context, he referred to the failure of the Ministry of Health and Family Planning in implementing some very important projects to deal with the ongoing medical emergencies despite having sufficient allocations in the budget.

He regretted the government's failure to make available cash or food to the poor during the previous lockdown for a lack of a reliable 'database'. So, he suggested preparing one without any further delay.

Until a database is prepared, he said, the government should depend on self-identification by the target population for distribution of such assistance.

Asked how could the government generate more revenues from the major corporate taxpayers, he said the policy the government has been adopting to realise taxes from the sectors like telecom, tobacco, cement etc., is not right.

"We often exercise arbitrary power to collect taxes from big businesses. We need to develop a system that would be able to generate more taxes from them", he said.

"The simple way is to develop a database of the big tax-paying sectors. We need to understand the chain effect of tax imposition on such big tax sectors on other sectors. A detailed database of the big sectors can generate a system and help get more revenues".

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