Budget for FY 2015-16: Getting out of the circle

To have high hopes is not a fault, when it comes to a national budget. We need to improve our capacity to cope with the hopes running high. Then come the questions: Are we capable of implementing such a big budget of Tk 2.951 trillion (295,100 crore) for the FY 2015-16, when the size is up by 18 per cent from the budget outlay of over Tk 2.50 trillion fixed for the outgoing fiscal year 2014-15. Will it not depend on our past records of budget implementation? The hopes that hinge on the new budget may be realistic, if there is a proof that the earlier budget was implemented properly or there was a clear strategy on widening the tax net and spending funds from allocations for both development and non-development work. Experts term it luxurious as they do not see a strong base for revenue collection and a strategy for spending funds to ensure efficiency in priority sectors. This scribe affirmed clearly in his many articles the necessity of a budget implementation strategy. If the budget could be structured focusing on a strategy of revenue collection and efficiency in fund spending in line with a prioritised reform plan, such a debate could be minimised. Every year its size is becoming bigger. The critics also come down heavily on it. But at the end of the year the performance registered is not dissatisfactory. So, it should not be brushed aside simply terming it luxurious or not realistic. The following table shows the budget structure for the FY 2015-16 and budget implementation for the FYs 2013-14 and 2014-15 (March-15) including revenue collection:
The outlay of our first budget was Tk 7.60 billion (760 crore) in 1972-73. The outlay kept growing every year and now it stands at Tk 2.951 trillion for the FY 2015-16. The budget is not that big in size compared to that of the outgoing fiscal year. But, of course, it is bigger than what has actually been achieved in the FY 2014-15. Up to March, 2015, the achievement stood at over Tk 1.18 trillion. We may achieve budget implantation to the tune of approximately Tk 2.08 trillion (87 per cent of the revised budget of Tk 2.39 trillion for the FY 2014-15) by June 30 next. So, it is a big jump in the outlay from this scribe’s estimated actual budget implementation of Tk 2.08 trillion for FY 2014-15 to Tk 2.95 trillion in FY 2015-16. It is up by about 42 per cent. The chart shows the worst performance in development expenditures because of failure to start implementation of the projects under Annual Development Programme (ADP) in time. When the performance in collection of revenue and development fund expenditure is under question, how can we bear an additional load? In such a case, the budget should draw up a clear strategic plan on revenue collection and fund expenditure to make the general people understand its realistic framework.
Revenue collection and implementation: From the above table we see, about 82 per cent revenue was collected in terms of the original budget and it was 90 per cent in terms of the revised budget. Considering the 90 per cent revenue collection in terms of the revised budget, we may estimate the total collection in the FY 2014-15 at Tk 1.47 trillion (on Tk 1.63 trillion).  If we look at the following diagram on collection of NBR’s tax revenue, non-NBR tax revenue and non-tax revenue for last six years up to 2015, we find a gradual growth in each component.
The revenue target in 2016 under three components—NBR tax revenue, non-NBR tax revenue and non-tax revenue—indicates the proposed budget and it is apparent from the above graph that the budget of revenue for each component for FY 2015-16 shows a increase by a big chunk from the actual collection in FY 2014 and the estimated collection in FY 2015. The revenue budget in FY 2015-16 is Tk 2.08 trillion, up by 28 per cent from that in the revised budget and 42 per cent from the estimated collection of Tk 1.47 trillion for FY 2014-15. The scope of revenue collection could be even higher than budgeted. We saw many meetings and conferences that suggested widening the tax net and reducing the tax rate to enhance the collection. In the budget we see some proposals on reducing the tax rate and providing tax incentives to create investment-friendly environment for the businesses, which may lead to more investments resulting in more income and tax. But we do not see adequate steps for widening the tax net except a declaration to raise the number of taxpayers to 3.0 million (30 lakh) from 1.1 million (11 lakh). In order to widen the tax net, the number of taxpayers needs to be increased through surveys. Gift tax and surcharge on properties need to be strengthened. Gift tax is very rare in use and the rate of surcharge on properties is irrational. It should be made time-befitting in the form of property tax instead of surcharge. The number of property surcharge payers having total assets exceeding Tk 20 million (Tk 2.0 crore) must not be only 5,000 in Bangladesh. We can find out the owners of properties exceeding Tk 20 million in a lot of ways. We do not know why we are not trying to find out them. There are some problems with bringing all incomes under the tax net. They are irrational tax policy, inefficient and corrupt tax administration, misleading accounting, auditing and tax audit, inequitable laws and abuse of laws, improper tax survey, unprofessional and incapable manpower etc. The problems should be addressed under a budgetary strategy to achieve the sizable target of revenue collection. The revenue target is not unachievable, but the directions and the strategy of achieving the target are missing. However, the government can find out the way even after passage of the budget. The traditional way of collection will never help achieve the targeted achievement. A special and proactive strategy could ensure better efficiency in revenue collection.  
Expenditure budgeting—priority, strategy and efficiency:
Budgetary reforms are a much talked-about issue, especially reforms in expenditure based on prioritised allocation. Under a priority analysis, agriculture, readymade garments, manpower and other export-oriented sectors like jute, leather etc. should be addressed to promote the sectors and attain their competitive advantage internationally. As a nation we have to enhance democratic practices and the scopes of education, good governance and infrastructure development. The budget could be reformed based on the priority issues.
The nation should have a democratic space that can ensure their accountability, responsibility and acceptability at all levels. The power should be decentralised institutionally to help democracy flourish. A democratic nation is transparent, efficient and enlightened. To ensure democratic institutions at all levels a big reformed expenditure plan will be needed. Allocation for the education sector is traditional always. Education systems need to be reformed substantially. In Bangladesh expenditure on education is 10 per cent of the budget (Tk 298.88 billion out of the total budget of Tk 2.95 trillion) and in percentage of gross domestic product (GDP) it is 1.8 per cent. In Pakistan, Indonesia, India and Vietnam the figures are 2.2 per cent, 3.6 per cent, 3.8 per cent and 6.3 per cent respectively. According to the UNESCO, the education budget of a nation should be 20 per cent of the budget and 6.0 per cent of GDP. The budget allocation is far below than the UNESCO threshold.  Bangladesh’s existing education system needs reforms for good schooling at all levels with well-trained teachers, digital equipment, high-tech modern libraries and online access to good write-ups, resources, universities and educational institutions. Lack of good governance eats up about 2.0-3.0 per cent GDP each year, as estimated by the World Bank. We need good governance at all levels of the state. Infrastructure has got its priority in the budget for FY 2015-16. The allocation for transport and communication increased by 44.5 per cent compared to that in the revised budget for FY 2014-15 because of the Padma Bridge,
underground railway, expressway, flyovers, widening the Chittagong-Dhaka highway etc. The fuel and energy sector has got the most importance in terms of growth due to plan for setting up power plants for enhancing power generation in the long run. The following chart gives a view of sector-wise increase in budgetary allocation compared to the revised and the original budget of FY
The increase in sector-wise expenditures is not that significant excepting those for fuel and energy, interest, housing, transport and communication, public services and social security and welfare. The allocations under those sectors increased significantly because of development expenditures. We know about our poor performance in development fund expenditures as stated initially. Throughout most of the year the expenditures in the development sector are approximately 50 per cent, because the projects under Annual Development Programme (ADP) cannot be started and completed in time. In view of this pace of development expenditure that sees 50 per cent unimplemented, we can say the expenditure allocation, as it is made for each sector, is a traditional and routine job which is continuation of a previous year’s framework. We want to come out of this tradition and want substantial implementation of the development budget.
The budget for FY 2015-16 may be considered big in size compared to all earlier budgets. We have resources to make it realistic. What we do not have is a realistic strategy to address the SWOT (Strength, Weakness, Opportunities and Threats). What is eating up our capacity is bad governance and corruption that should not be to the extent we have. A strategic and realistic drive against corruption can provide us with better output.
The writer is an Associate Member of ICAB.
 roy_dipok@yahoo.com