Bangladesh needs priority-driven budget

In addition to traditional administrative responsibilities, the government of a country has numerous plans and policies to meet the objectives of social development and economic growth. For implementing the policies, the government has to spend huge funds on administration, defence, education and human capital development, healthcare, energy and power development, poverty alleviation, industrial and agricultural development and so on. To put into action the various plans, the government has to find out all the possible sources of finance and revenues to be generated to meet the need for large amount of revenue for capital expenditure. The process of determining revenue and expenditure is called a 'budget' in economic and financial terms. The term 'budget' is obtained from the French word 'Budgette' which means a 'leather box' or 'wallet'. It is a statement of the financial plan of the government of a country delineating the sources of revenue collection and planned expenditure for a particular year. The budget's financial or fiscal year (FY) varies from country to country. In Bangladesh, the budget FY is from July 01 to June 30.
The budget is a pre-eminent document of the government like the annual report of a large public limited company, showing utilisation of revenues and expenditure of previous FY and a forecast of revenue and expenditure for the next FY. Commoners, economists, accountants, analysts, industrialists, bankers, business persons, politicians and political leaders are keen to know the budget with a view to have an overview of financial programmes and planning of the government for the upcoming FY, financial performance of the last FY, any tax upsurge or slash, any oscillations in VAT, tariffs and many more.  
The national budget should not be an enigma to commoners. In developing countries like Bangladesh, the annual national budget is always seen as an enigma to the commoners. Instead of getting inspired, people get peeved with a new budget. The new budget always comes with additional tax burdens, rise in VAT rates, increase of duty on imported items, expansion of VAT net, and imposition of new penalty for tax avoidance and so on. People don't get any benefits out of the new budget.
No change or improvement in the standards of living generally happens although costs of living increase upon declaration of the national budget. Most of the budgets are politically motivated and are not people's welfare-oriented. With the introduction of VAT on many items including essentials of life, most of the people - rich, middle class, poor and ultra-poor - pay taxes to the exchequer of the government. But what are they getting from the government?
Whenever an annual budget is declared, the cost of consumers' items, including essentials, go up. That's why the commoners never welcome the new budget and it is a conundrum to them.
ANATOMY OF A PRIORITY-DRIVEN BUDGET PROCESS: Conventionally while preparing a national budget the budget authorities always take the previous year's budget as a base and do some changes/amendments of the same and prepare the current year's budget. This is known as incremental budget and the incremental budget does not reflect the priorities the nation needs. Priority budget is a philosophy of how to budget limited resources to meet the priorities of the country along with the step-by-step process of doing so.
Priority budgeting represents a fundamental change in the way of resource allocation. The philosophy of priority-driven budgeting is that resources should be allocated according to how effectively a programme or service achieves the goals and objectives that are of the greatest value to the citizens of the country. In a priority-driven approach, a government identifies its most important strategic priorities, and then, through a collaborative, evidence-based process, ranks programmes or services according to how well they align with the priorities.
The government then allocates funds in accordance with the ranking. The principles associated with the doctrine of priority budgeting are: (a) identifying the goods and services of highest values (b) defining and prioritizing the goods and services (c) identifying the available resources (d) allocating resources and (e) creating accountability for results, innovation and efficiency.
Why should Bangladesh go for priority-driven budget? Bangladesh is a small country of 161 million people and has very limited natural resources. The country has been growing with economic and social problems which need to be addressed. Every year the annual national budget is prepared by the government of Bangladesh and gets approved by the parliament.
The budget is prepared in the traditional way giving emphasis on many areas. As a result, the budget does not bring any changes in the most crucial arenas. The abysmal problems of Bangladesh can't be solved at a time or within a short span of time because of scarce resources and financial restraints. Some specific economic sectors in the country need revolutionary changes for sustainable economic development and growth. But the orthodox budget fails to take care of those sectors. For development, peace, progress and social stability, three sectors get priority in the national budget. These are (1) education and human capital development (2) energy and power and (3) infrastructure development. These sectors need to be brought under the purview of annual budget of Bangladesh and move forward with strategic and targeted action plans to keep pace with the ever-speeded-up world.
Education sector deserves topmost priority in the national budget. In terms of education, the country is still lagging behind. The literacy rate of Bangladesh is male 61.3 per cent and female 52.2 per cent and the average rate of literacy is 56.8 per cent.  It means that 43.2 per cent of its population - that is, 69.12 million people of Bangladesh - is illiterate according to the Bureau of Statistics of Bangladesh. It's really sad news that 43.2 per cent people of an independent country cannot read and write in their mother language in the 21st century when majority of the countries of developed world maintain 100 per cent literacy rate. The literacy rate of Bangladesh is increasing at a snail's pace and the average increase is 1.5 per cent per year. If everything goes well and other things remain the same and Bangladesh can achieve the present rate of 1.5 per cent increase, it will take 30 years to achieve 99 per cent literacy rate.
A country can never achieve economic progress and economic emancipation keeping its 43.2 per cent population in the vicious circle of illiteracy. The top most priority is needed for education sector of Bangladesh with a view to 'eradicating illiteracy' from the country within a specified time. Allocating the highest allocation in the revenue and the Annual Development Programme (ADP) and spending the money in an unplanned traditional way are not enough to eradicate illiteracy. Specific long-term planning is required. Compulsory education has been adopted in most of the present developed countries in the world since the 17th century, and this had successfully eradicated illiteracy from those countries.
The education budget of FY 2012-13 was the lowest among other South Asian countries.   According to the Director General of the National Academy for Educational Management, the budgetary allocation for education is the lowest in Bangladesh among 10 other Asian countries. Educationalists have expressed disappointment over the budget for the education sector, stating that it was inadequate and would make it difficult to implement the education policy.
As the number of students is increasing, the education sector would face problems if adequate budget provision is not made in the upcoming budget. In the FY 2012-13, an allocation of Tk 214.08 billion was made for the education sector, which was 11.5 per cent of the total budget. In the FY 2013-14, an allocation of Tk 260.31 billion was made in the budget. Education sector got the 3rd position in the budget allocation in FY 2013-14. The share of education sector budget (FY 2012-13 and 201-14) both as a percentage of the GDP and the total budget is decreasing.
The ratio of education budget to GDP remains static at around 2.0 per cent over the years. This means, education sector investment is declining proportional to overall national growth. Educationists and social scientists insist that at least 20 per cent of the total budget should be allocated to education sector. The UNESCO declaration states that the allocation for education should be at least 20 per cent of the national budget or 6 per cent of the gross domestic product.
After education, the next priority sector is energy and power. Power and energy are increasingly important for development of the economy. The power sector is one of the most critical growth drivers for the country. In order to provide adequate support to the country's growth aspirations, it is crucial that the sector scales its power generation capacity up and push reforms in areas such as power and distribution losses. The main objective of any national budget is the welfare of the people on one hand and development and progress of the nation, on the other. Power and energy sector deserves to be on the priority list in the national budget but surprisingly it got an allocation of Tk 111.24 billion (5 per cent of the total budget) in FY 2012-13 and Tk 113.51 billion (5.1 per cent of the total budget) in FY 2013-14 that will have very imperceptible effect on the supply of power and energy.  According to the latest data, 50 per cent of the population of Bangladesh don't have electricity connection. Without electricity connection, the 'digitisation of Bangladesh' programme of the government will be a futile attempt.
It is well known that all energies on the earth come from the sun. Total solar energy reaching the earth surface within one year is converted into 1.39×1015 billion ton standard coal - this is 10,000 times the proved fossil energy reserves across the world now. Therefore, vigorous development of power generation technology of solar and renewable energy resources is the inevitable path for human beings to solve the key issues such as resource shortages, energy crisis and environmental pollution, etc.
Chinese leaders recognise the importance of reliable, low-cost electricity and are encouraging a massive build-up of their power grid. They are enabling a greater resilience in their economy. In Latin America, Costa Rica has branded itself as the green economy of the future: 93 per cent of its electricity is from renewable sources. Hydro-power, geothermal and solar energy have made its energy generation 100 per cent green (Bloomberg, June 13, 2013).
The annual budget for the upcoming year should make provisions for solar and renewable environment-friendly energy as an alternative to the traditional way of getting power by using coal, natural gas and oil. Generating energy by using coal is not environment-friendly. It severely pollutes the air and the environment especially that of a small and overpopulated country like Bangladesh. Shortage and interrupted supply of electricity severely hamper productivity, employment, investment, development and progress of the country.
The power projects under the public-private partnership (PPP) appear to have become dysfunctional and failed ones. The government should undertake mega projects for generating electricity. The government should first solve and ensure uninterrupted power and energy supply and then go for other mega projects in the future. The projects should be under the direct supervision of the governmental organisations like the Bangladesh Power Development Board (PDB). Even in neighbouring India, 87 per cent electricity is generated from government projects.
The third priority after education, energy and power is infrastructure development of the country. Infrastructure stands for those types of capital goods that serve the activities of many industries including smooth roads, railroads, seaports, communication networks, financial systems, and energy supplies. All of these support production and marketing of industries within the country.  Besides these, the quality of an infrastructure directly affects a country's economic growth potential and the ability of an enterprise to function efficiently. Infrastructure is important for the services it provides. It provides services that support economic growth by increasing the productivity of labour and capital thereby reducing the costs of production and raising profitability, production, income and employment.
Strategic and targeted budget for the prioritised sectors of the economy like education and human capital development, adequate power and energy supply and infrastructure development is sine qua non for economic growth and development of Bangladesh. If the government of the country can improve the literacy rate and upgrade human capital, ensure adequate power and energy supplies to industries and households and build strong infrastructure for establishing industries and businesses, the country would move forward in all respects. If the three basic sectors which are called the foundation of economic development are taken care of by the budget, the country would move forward in terms of industrial, commercial and social development. Many completed industries remain idle for many years and can't go for production due to lack of energy and power.
Many local and international investors invested huge amount of money but failed to start production for short of power and energy. Lack of skilled workers and inadequate supply of power and energy and weak infrastructures work as a deterrent to Foreign Direct Investment (FDI) and local investments and many FDIs are diverted to other destinations in Asia and Africa. Many completed houses and apartments in big cities could not be used for lack of electricity and gas supplies.
If the state policy makers and the people of Bangladesh really want to build the economy on a stronger, more stable foundation, then they ought to prioritise education and human development, energy and power and infrastructure in the national budget and move forward by "Fix-It-First" programmes without further loss of time.
The writer is the Group Financial Controller of a private group of industries.
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