Centre for Policy Dialogue, a social think-tank, on Friday termed the proposed budget for next fiscal 2014-15 a ‘luxury of target’, saying it will be impossible to archive 7.3 percent GDP growth if political stability is not ensured and private investment is not increased to 25 percent of the GDP.
It mentioned that at present, private investment is 4-5 percent of the GDP. If it is increased to 25 percent, about $9.5 billion will need to be put in place.
“The luxury is sometimes OK, but it is not matchable with our capacity in the current perspective,” said CPD’s distinguished fellow Dr Debapriya Bhattacharya while briefing reporters at BRAC Inn auditorium in the city.
The research organisation observed that meeting the budget deficit through foreign funds will be its major challenge. “Foreign resource mobilization was targeted to be US$4 billion, which never happened in the past,” it said.
CPD executive director Prof Mustafizur Rahman, research director Dr Fahmida Khatun, additional research director Dr Khondaker Golam Moazzem and other research fellows were present at the briefing.
Dr Debapriya Bhattacharya said the new budget is not prepared in codonation with the Sixth Five-Year Plan. It has even no reference to the 5-year plan. “We observe two negative trends in the economy — registration of foreign investment decreasing and a fall in remittance inflow.”
In addition, he said, foreign exchange reserve may come down to below $ 17 billion because of Padma Bridge payment.
The CPD, however, appreciated the government for creating a new group of taxpayers by fixing 30 percent income tax for them. But it criticized the Finance Minister for keeping continued scope for whitening of block money. “The Finance Minister deliberately kept mum about whitening of black money,” it said.
The CPD also welcomed the steps for increasing the allowances of the Muktijoddha and other groups of the society, tax exemption for small industries, incentives for entrepreneurs to set up industry outside Dhaka, increasing tax for land procurement, and also separate budget for eight districts.
But it observed with a negative view that the allocation for education, agriculture and health sector is decreasing in the new budget. It said the defense budget is static, but while revised budget is prepared, it increases every year.
The CPD termed ‘discriminatory’ the decrease of tax at source for the garment sector, saying it should be applicable for other industries in general and the jute industry in particular.
Dr Debapriya raised question about the base year of the GDP growth, saying that the Finance Minister himself has reservation about the base year.
He said the budget has no commitment for overcoming the political crisis through holding dialogue and election.
The quality of implementation of projects has deteriorated over the last few years, he said, adding that it would not be possible for NBR to increase the revenue by Tk 26283 crore.
Expressing concern over the increasing trend of interest payment, the CPD distinguished fellow said: “Payment of interest is eating up most of the government expenditure as one-third of revenue earning will go to meet the interest payment.”
He also observed that the subsidy in the new budget has been decreased to 2 percent of the GDP and “it was possibly done to comply with the IMF conditions.”
Dr Debapriya said anarchy is observed in the annual development programmes (ADP) as it has 688 projects without any approval. Similarly, there are more than 10 big projects including some power projects whose implementation is being delayed.
The delay of power plants implementation will increase dependence on the rental and quick rental power plants, he said.
-UNB.
