Budget: Paradox or Promise?




It was around a week ago when the Finance Minister AMA Muhith declared the budget for the 2015-2016 fiscal year, The mammoth size of the budget is focused on the growth of certain sectors such as the public service, housing and fuel and energy being the major department of expenditure for the fiscal year 2015-2016. The total declared budget is around 295,100 crore with the aim to ensure development in certain sectors and along with that increase the number of taxpayers.

Considering the entire good, bad and ugly of the budget of fiscal year 2015-2016 it can be concluded as that there are actual possibilities to develop certain sectors through this budget, the measures that has been set to meet the deficit may work according to plan and enhance the economic capability of Bangladesh and thus escalate the economy gradually in the long run. As for now, we hope and wait looking at the beaconing light of economic prosperity as the budget makes its way to proper and efficient implication.

Breaking the "6%" Chain

The finance minister claimed that the announced budget has all the necessities that are required to break the age old clinginess of 6% GDP Bangladesh. According to the estimation, the GDP is to be grow by 7% after the fiscal year of 201-2016. The government aims to take up corrective actions to reconcile the factors causing the GDP to stay around same rate for nearly couple of decades. The lethargic global economy, inconsistency in private sector investment and consistency in political turmoil has kept the nation in the edge of the 6% GDP rate. Even though the minister acknowledges the significant of less investment in private sector as a drive for less growth in GDP, the actions such as increasing the amount of tax and taxpayers will by default reduce the investment in private sector.  The domino effect of focusing on getting more tax will affect the long term economic history.

Peter and Paul still got it

The game of robbing Peter to pay Paul has always been inspiring to the legislator over the world. The reflection of that can be seen in the 44th budget of this sovereign nation. This high ambitious, skyrocketing budget is not only mere plans for development, revenue and expenditure rather it is a way to backup the sources of managing the cheque that the mouth of the legislators have already cashed. The 100% pay rise  of the civil servants will be put into practice from July, however the government will need additional Tk 16,000 crore to make the whimsy to turn into reality.  And what is the best way than taking the paid tax of the citizen of this sovereign nation?  So that the government can live up to their high ambitions. The budget has focused on increasing the number of taxpayers and along with that collection of tax will be done through reforming measures. To back up the expenditure in the budget the government estimates around Tk 2.08tn of tax revenue which includes NBR tax revenue of Tk1.6tn.

The paradox

Among the various aims of the budget, to increase the GDP to 7% is one of the foremost. From the acknowledgement of the Finance minister it is eminent that one of the reasons of the slack development is the lack of investment in the private sector. However, this budget emphasizes on the aspect of collecting tax through numerous measures and increasing the number of taxpayers. The increase in the tax will aid in the fulfillment of the 100% pay rise oath of the government and the legislator looks the pay rise as a drive of increasing GDP through increasing the amount of consumption. Even though the assumption is correct as per the theory of Engel's law which dictates that the increase in income will increase the consumption and thus GDP, however, for a developing country like Bangladesh the investment in private sector will facilitate growth in GDP rather than individual  consumption,. But the fact is the budget has set higher tax as a result the investment will not grow by default, thus the goal and the action of the budgetary decision has become a paradox.

 

Considering the entire good, bad and ugly of the budget of fiscal year 2015-2016 it can be concluded as that there are actual possibilities to develop certain sectors through this budget, the measures that has been set to meet the deficit may work according to plan and enhance the economic capability of Bangladesh and thus escalate the economy gradually in the long run. As for now, we hope and wait looking at the beaconing light of economic prosperity as the budget makes its way to proper and efficient implication.

 

Nafees এর ছবি

About the Author

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Nafees is a business student, a freelance writer and a top-notch public speaker at dhaka toastmasters club. 

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isra এর ছবি

nice write up :)