Sunday, February 25, 2024

Muhith aims at populist budget to support poll plank

Finance minister AMA Muhith is going to roll out a populist budget for the 2013-14 fiscal year, on Thursday, apparently in a bid to provide sops for the electorate, ahead of the next general elections in March next year. The Tk. 222,499 crore budget, will be almost twice as large as Muhith’s first budget (Tk. 113,819 crore), presented in the 2009-10 fiscal year. The last budget of the Grand Alliance government eyes Tk. 167,459 crore revenue, having a deficit of Tk. 55,032 crore, finance ministry sources said.
They also mentioned that to meet the huge revenue target, the finance minister envisages a revenue mobilisation plan, by expanding the tax net, instead of raising
tax rates.
The budget has the highest amount of block allocation, amounting to Tk. 11,500 crore, in recent times, and experts believe that a large chunk of this amount will be spent in projects taken up under political consideration.
The budget aims to borrow Tk. 33,964 crore, from domestic sources, for deficit financing.
About his ensuing budget, the finance minister said the budget for the upcoming FY 2013-2014 would be an ambitious one.
“Economic growth in the current fiscal year would not be less than 6.3 per cent. Rather, it can be as high as 6.7-6.8 per cent, as public sector investments and agriculture sub-sectors have, so far, performed strikingly well,” the finance minister said, despite a projection by an economic think-tank that said GDP would stand below 6 per cent, in the current fiscal year. Defending his estimate, Muhith said that public sector investment went up by 1.65 per cent in the current fiscal year, making a strong case for attaining a higher economic growth.
“If investments in the economy are higher, economic growth also goes up,” Muhith argued, adding that bumper agriculture production, this year, would also boost GDP growth.
“Potato production would be about 10 per cent higher—88 lakh, or 8.8 million, tonnes—in the current fiscal year, compared to the last fiscal year. Boro yield was also expected to be higher, and the production of maize would substantially rise to around 2.2 million tonnes,” Muhith explained.
However, talking to The Independent, leading economists of the country said that in the backdrop of the current political impasse, the budgetary targets, related to keeping the economic growth on track, may not be achieved.
Former finance adviser to the caretaker government, Dr Mirza Azizul Islam, noted that keeping the growth momentum, amid political uncertainty, will be a major challenge for the government.
He also felt that attaining over 7 per cent targeted GDP growth would be difficult, considering the slowdown in domestic investment, and fall in FDI.
In this connection, CPD executive director, Dr Mustafizur Rahman, said that unless there is any change, the ongoing political impasse and resultant adverse implications will leave an unfavourable footprint for economic performance, on the upcoming fiscal year.
He also pointed out that in view of the past record, the continuing fragility of the institutions, and the looming political uncertainties, many of the objectives and indicators are likely to remain unattained.
Despite serial failures in implementing the annual development programmes, in the last four years, the budget for the next fiscal year contains a huge ADP of Tk. 74,000 crore.
In the 2012-13 fiscal year, Tk. 55,000 crore was allotted for ADP, which was later revised downward to Tk. 52,366 crore, in the budget, and, in the first 10 months of the current fiscal year, the ADM implementation rate was only 59 per cent.
Economists felt that the government appears to be on a spending spree, considering the ensuing general election.
However, for the first time, allocations for automated institutions are being included in ADP. Automated institutions will get Tk. 8,114 crore of the Tk. 73,984 crore ADP allocation, this time.
The ADP allocations under the forthcoming budget mark a 34.5 per cent rise over the current fiscal year’s (2012-13) ADP allocations. If one keeps out the allocations for the autonomous bodies, even then the increase stands at 19.75 per cent.
However, there will not be any significant change in tax rate, considering its negative impact on the electorate.
The income tax exemption ceiling will be raised to Tk. 220,000 and the tax holidays for several sectors would continue.
The budget will also keep the provision of legalising undisclosed money by paying 10 per cent tax, like the current fiscal year, and there will be incentives for the capital market, sources said, adding that there would be significant rise on duty on cigarettes.
Muhith will start his budget speech through multi-media presentation, at 4pm, in Parliament, and, consequently, the budget text would be available on the websites www.mof.gov.bd, www.bangladesh.gov.bd, www.nbr-bd-org, www.plancomm.gov.bd, www.imed.gov.bd, www.bdpressinform.org and www.pmo.gov.bd.

-With The Independent input

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