Budget 2008-09: A re-statement of what is given
Syed Fattahul Alim | Friday, 13 June 2008
Preparing the budget and placing it before the nation is a regular annual exercise by any government in office.
Despite the fact that the incumbent government is not an elected one, it has still to prepare one to let the nation know what are the expected sources of the nation's earning in the next fiscal year and how it is going to spend it in a very judicious way keeping in view the prospect of the overall growth of the economy and the interest of the people at large.
The different stakeholders in the economy and the research groups have already expressed their reaction and with a mix of criticism and support for the budget proposed by the finance adviser. The reaction of the business bodies in particular was concentrated on the taxes imposed on or withdrawn from their incomes and the prospects thereof, or the impact of the duties imposed or withdrawn on various items of import for the different sectors of the business and the industries. The research groups on the other hand were more concerned with how the budget helps the overall growth of the economy through addressing the interests of the various interest groups and the poor and vulnerable section of society.
However, the common criticism that both the business bodies and research bodies have levelled against the budget for the fiscal 2008-09 is about its deficit financing especially through internal borrowing. The general argument is that borrowing from the banks will affect the latter's prospect for increasing its lending to the private sector entrepreneurs. The borrowing from the banks to finance deficits also implies that the government will have to pay interests on the loans. This will only go to increase the country's debt burden further, some research groups argued. And the situation would only jack up the inflationary trend further. The finance adviser, however, did not agree with this suggestion saying that keeping the inflation at 9 per cent, which was around 11.6 per cent on a point to point basis in December last year, was unavoidable keeping the global rise in the prices of food grains and other commodities of consumption into consideration. In fact, as one has to exist in a global environment, there is no way to avoid the impact of the developments in the rest part of the world.
The huge size of the budget at about one trillion in Bangladeshi Taka is undoubtedly an impressive one at least on the face of it. And it is also the highest ever budget declared since the independence of the country. But one has, at the same time, also to look at the fact that the value of Taka has been constantly depreciating over the years. So, calculated, for example, in US dollars, it is still not a very big budget considering the huge size of the nation's population. But one can hardly blame a budget for that if the economy has not grown at pace with the size of the population. And in that case, we will have to wait until that time when the nation's industries have developed to an enviable level.
But in an economy where poverty is the most nagging issue the budget needs to reflect how the government is planning to address some of the problems through generating employment. The budget for the 2008-09 proposed an employment generation scheme for the rural poor, strengthened the current safety-net programmes and increased allocations for the underprivileged groups in society.
Allocating a huge sum of money for the poor and the underprivileged is undoubtedly a very well-intentioned move by the government, a move that has been termed by the research bodies as populist. Though populism best suits a political government, especially an elected one, in Bangladesh context one cannot really say that the issue of addressing the marginal poor and the handicapped is a populist one. In fact, no budget will be worth its salt unless any government in power addresses the issue properly. But a big question still remains unanswered about the whole subject of addressing the poor and the distressed groups in society. The incumbent government has proposed around 170 billion taka for what it says for the social safety net programme. Now the big question is how the government is going to spend the money to address the needs of the deserving ones. For it is always the mechanism of the implementation, more than the ideology or the altruistic intention behind the move, that comes in the way and spoils the broth. If truth be told, the allocation, which is about one-sixth of the budgeted amount, bears no significance until the money finally reaches the people intended. As it is the bureaucratic arm of the government that will have to perform the job, one cannot expect anything revolutionary even under this caretaker government. The problem with the bureaucracy here is not just its tardiness or propensity for corruption. The problem is it is far removed from the people, especially those lying at the lowest rung of society. The vulnerable groups, on the other hand, have no access to those in charge of delivering the goods in question. As a consequence, the traditional vehicles of reaching the benefits to the poor and the vulnerable targeted by the government schemes created for the purpose has an elitist bias and cannot bridge the existing gap between the government machinery and those at the receiving end. As the finance adviser in his budget speech has not made mention of any new kind of vehicle that is less elitist and more pro-people to reach the intended benefits to the section of the population in question, one, arguably, sees no radical departure from the past experience regarding the issue in question.
And what is more, the entire issue of social safety net and the welfare should be deeply interwoven with the government's overall strategy for poverty alleviation. As we are talking here about as important an issue as the national budget and the government's overall plan to allocate the resources it has at its disposal to various sectors of society and the economy, a very judicious and effective utilisation of the funds would be the desire of all concerned. So, to avoid the possibility of its being called populist, the more pragmatic approach of the social safety net programme would be to keep in line with the overall poverty alleviation strategy of the government.
The common people, especially those living within the limited and low-income bracket, and who have no interest in the technicalities of the budget, want only to know how the budget is going to affect their day to life in the next year. Is there any provision in the budget to arrest the galloping price of essentials? No, the budget for the upcoming fiscal has not given them such hope. The power sector, too, remains in limbo. The budget in question therefore remains a re-statement of the facts of life projected for yet another fiscal year.
Despite the fact that the incumbent government is not an elected one, it has still to prepare one to let the nation know what are the expected sources of the nation's earning in the next fiscal year and how it is going to spend it in a very judicious way keeping in view the prospect of the overall growth of the economy and the interest of the people at large.
The different stakeholders in the economy and the research groups have already expressed their reaction and with a mix of criticism and support for the budget proposed by the finance adviser. The reaction of the business bodies in particular was concentrated on the taxes imposed on or withdrawn from their incomes and the prospects thereof, or the impact of the duties imposed or withdrawn on various items of import for the different sectors of the business and the industries. The research groups on the other hand were more concerned with how the budget helps the overall growth of the economy through addressing the interests of the various interest groups and the poor and vulnerable section of society.
However, the common criticism that both the business bodies and research bodies have levelled against the budget for the fiscal 2008-09 is about its deficit financing especially through internal borrowing. The general argument is that borrowing from the banks will affect the latter's prospect for increasing its lending to the private sector entrepreneurs. The borrowing from the banks to finance deficits also implies that the government will have to pay interests on the loans. This will only go to increase the country's debt burden further, some research groups argued. And the situation would only jack up the inflationary trend further. The finance adviser, however, did not agree with this suggestion saying that keeping the inflation at 9 per cent, which was around 11.6 per cent on a point to point basis in December last year, was unavoidable keeping the global rise in the prices of food grains and other commodities of consumption into consideration. In fact, as one has to exist in a global environment, there is no way to avoid the impact of the developments in the rest part of the world.
The huge size of the budget at about one trillion in Bangladeshi Taka is undoubtedly an impressive one at least on the face of it. And it is also the highest ever budget declared since the independence of the country. But one has, at the same time, also to look at the fact that the value of Taka has been constantly depreciating over the years. So, calculated, for example, in US dollars, it is still not a very big budget considering the huge size of the nation's population. But one can hardly blame a budget for that if the economy has not grown at pace with the size of the population. And in that case, we will have to wait until that time when the nation's industries have developed to an enviable level.
But in an economy where poverty is the most nagging issue the budget needs to reflect how the government is planning to address some of the problems through generating employment. The budget for the 2008-09 proposed an employment generation scheme for the rural poor, strengthened the current safety-net programmes and increased allocations for the underprivileged groups in society.
Allocating a huge sum of money for the poor and the underprivileged is undoubtedly a very well-intentioned move by the government, a move that has been termed by the research bodies as populist. Though populism best suits a political government, especially an elected one, in Bangladesh context one cannot really say that the issue of addressing the marginal poor and the handicapped is a populist one. In fact, no budget will be worth its salt unless any government in power addresses the issue properly. But a big question still remains unanswered about the whole subject of addressing the poor and the distressed groups in society. The incumbent government has proposed around 170 billion taka for what it says for the social safety net programme. Now the big question is how the government is going to spend the money to address the needs of the deserving ones. For it is always the mechanism of the implementation, more than the ideology or the altruistic intention behind the move, that comes in the way and spoils the broth. If truth be told, the allocation, which is about one-sixth of the budgeted amount, bears no significance until the money finally reaches the people intended. As it is the bureaucratic arm of the government that will have to perform the job, one cannot expect anything revolutionary even under this caretaker government. The problem with the bureaucracy here is not just its tardiness or propensity for corruption. The problem is it is far removed from the people, especially those lying at the lowest rung of society. The vulnerable groups, on the other hand, have no access to those in charge of delivering the goods in question. As a consequence, the traditional vehicles of reaching the benefits to the poor and the vulnerable targeted by the government schemes created for the purpose has an elitist bias and cannot bridge the existing gap between the government machinery and those at the receiving end. As the finance adviser in his budget speech has not made mention of any new kind of vehicle that is less elitist and more pro-people to reach the intended benefits to the section of the population in question, one, arguably, sees no radical departure from the past experience regarding the issue in question.
And what is more, the entire issue of social safety net and the welfare should be deeply interwoven with the government's overall strategy for poverty alleviation. As we are talking here about as important an issue as the national budget and the government's overall plan to allocate the resources it has at its disposal to various sectors of society and the economy, a very judicious and effective utilisation of the funds would be the desire of all concerned. So, to avoid the possibility of its being called populist, the more pragmatic approach of the social safety net programme would be to keep in line with the overall poverty alleviation strategy of the government.
The common people, especially those living within the limited and low-income bracket, and who have no interest in the technicalities of the budget, want only to know how the budget is going to affect their day to life in the next year. Is there any provision in the budget to arrest the galloping price of essentials? No, the budget for the upcoming fiscal has not given them such hope. The power sector, too, remains in limbo. The budget in question therefore remains a re-statement of the facts of life projected for yet another fiscal year.