Setting priorities in the budget
Saturday, 15 May 2010
The national budget for the fiscal year (FY), 2010-11, will be announced early next month. It would be placed in the Jatiya Sangshad to be scrutinized, debated and finally adopted. The budget makers, as in other years, are now holding a series of meetings with different stakeholders to get their proposals for consideration and incorporation in the next budget. In this process, a meeting was organised last Tuesday by the National Board of Revenue (NBR) and the Federation of the Bangladesh Chambers of Commerce and Industry (FBCCI), the country's apex trade promotion body.
The speakers in this meeting from the business side urged the government to provide extraordinary allocations through the coming budget for the development of the energy sector as a whole. This means much greater than normal allocations to be made in the gas and power sub-sectors for substantial increase in the generation of electricity and exploitation of current gas reserves as well as exploration activities. One such specific proposal was for allocation of some Taka 100 billion of the budgetary resources for the energy sector in the next budget. It is notable that the representatives of the country's leading export-oriented sector also underlined the great importance of giving the highest priority to development of the energy sector in the coming national budget.
Indeed, the views seemingly without any exception from the business quarters of the country is for the greatest spending on energy sector development. The reasons for the same are obvious. Export earnings in the last seven months were noted to be falling; many indices of industrial production are showing some disconcerting signals. The import of capital machinery and industrial raw materials has not picked up to the expected level. This would otherwise point to the under-utilised capacity in different industries and faltering new investment initiatives. The government is hopeful about achieving at least a 6.0 per cent economic growth rate in the on-going fiscal year. If it actually achieves this even under the given constraints relating to supplies of key infrastructural facilities like power and energy, this will indeed be a luckier situation. This is because not only the industrial sectors, the services sectors have also been underperforming from the energy crunch. The growth prospects of the economy would have certainly been brighter had not the constraints been so binding on growth.
In this backdrop, the government would be expected to take appropriate steps for addressing the concerns that were expressed by the businesses. It should, thus, use its budgetary resources and tools to the maximum to attain rapid progress in augmenting energy supplies in the next fiscal year. Bangladesh, as experts have suggested, has to increase power production by at least 9.0 per cent from the present level if it wants to achieve 6.0 per cent GDP growth.
There are also other important considerations that ought to concern the budget makers. The budgeted resources in the current fiscal year were wasted in unwarranted delays in starting the much-vaunted infrastructure building under the public-private partnership (PPP) scheme. It needs ensuring that PPP projects can take off under proper guidelines and necessary policy and other related supports assuredly in the next fiscal year. Businesses have made several proposals in their pre-budget dialogue with the government. These relate to the areas of income tax and corporate tax, a three-tier duty structure with lowering of import duties at every tier, a reduction in value added tax (VAT), similar reduction in power tariffs and retention of tax holiday and opportunities for whitening undisclosed income only for investments in few selected sectors. Each of such proposals should be carefully considered and pluses and minuses thereof merit a critical scrutiny for accelerating the growth momentum of the economy. If found appropriate, the same should be reflected in the budgetary measures.
The speakers in this meeting from the business side urged the government to provide extraordinary allocations through the coming budget for the development of the energy sector as a whole. This means much greater than normal allocations to be made in the gas and power sub-sectors for substantial increase in the generation of electricity and exploitation of current gas reserves as well as exploration activities. One such specific proposal was for allocation of some Taka 100 billion of the budgetary resources for the energy sector in the next budget. It is notable that the representatives of the country's leading export-oriented sector also underlined the great importance of giving the highest priority to development of the energy sector in the coming national budget.
Indeed, the views seemingly without any exception from the business quarters of the country is for the greatest spending on energy sector development. The reasons for the same are obvious. Export earnings in the last seven months were noted to be falling; many indices of industrial production are showing some disconcerting signals. The import of capital machinery and industrial raw materials has not picked up to the expected level. This would otherwise point to the under-utilised capacity in different industries and faltering new investment initiatives. The government is hopeful about achieving at least a 6.0 per cent economic growth rate in the on-going fiscal year. If it actually achieves this even under the given constraints relating to supplies of key infrastructural facilities like power and energy, this will indeed be a luckier situation. This is because not only the industrial sectors, the services sectors have also been underperforming from the energy crunch. The growth prospects of the economy would have certainly been brighter had not the constraints been so binding on growth.
In this backdrop, the government would be expected to take appropriate steps for addressing the concerns that were expressed by the businesses. It should, thus, use its budgetary resources and tools to the maximum to attain rapid progress in augmenting energy supplies in the next fiscal year. Bangladesh, as experts have suggested, has to increase power production by at least 9.0 per cent from the present level if it wants to achieve 6.0 per cent GDP growth.
There are also other important considerations that ought to concern the budget makers. The budgeted resources in the current fiscal year were wasted in unwarranted delays in starting the much-vaunted infrastructure building under the public-private partnership (PPP) scheme. It needs ensuring that PPP projects can take off under proper guidelines and necessary policy and other related supports assuredly in the next fiscal year. Businesses have made several proposals in their pre-budget dialogue with the government. These relate to the areas of income tax and corporate tax, a three-tier duty structure with lowering of import duties at every tier, a reduction in value added tax (VAT), similar reduction in power tariffs and retention of tax holiday and opportunities for whitening undisclosed income only for investments in few selected sectors. Each of such proposals should be carefully considered and pluses and minuses thereof merit a critical scrutiny for accelerating the growth momentum of the economy. If found appropriate, the same should be reflected in the budgetary measures.