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An Analysis of the National Budget for FY2007-08

8 June 2007-07-04
 

The Centre for Policy Dialogue (CPD) said it did not find any radical changes in financing the big budget for fiscal 2007-08 announced by the caretaker government. This was observed at a press briefing organised by the centre on Friday 8 June 2007 at its dialogue room.

This is a big budget. Success and failure of it will depend on the government's ability to finance and implement its targets, the independent think tank observed. "We do not see any radical changes in financing the proposed budget as the finance adviser tried to set it on the fragile financial structure inherited from the previous political governments," CPD Executive Director Dr Debapriya Bhattacharya said. "The finance adviser wanted to break with the past but failed to make a breakthrough," he noted. As the financial sector became fragile, he (finance adviser) could not go far beyond, he added. Rapid poverty alleviation should be targeted and private sector investment should be pro-poor, otherwise, Tk 80,000 crore expenditure target in the budget cannot be achieved, he explained. The CPD suggested formation of a high-powered committee for implementing the annual development programme (ADP), a taskforce for quick release of foreign aid and forging private-public and government-NGO partnership for implementing the big budget.

Debapriya praised the finance adviser for trying to streamline the economy and taking some positive measures regarding income and expenditure of the government. He appreciated that the budget proposals reflected a number of recommendations made by the CPD for bringing reforms and expediting development efforts. Welcoming the proposed budgetary support for agriculture sector, the renowned economist underlined special focus on monitoring and curbing environmental pollution. Some important sectors like pharmaceuticals, textile, light engineering and leather did not get enough attention, he thought. Allocation of funds for power and energy sector should have some yearly break up for proper implementation of projects, he said. Emphasising efficient financing mechanism, Debapriya suggested increasing the revenue earning and speedy release of $7 billion foreign aid in the pipeline. If necessary, a taskforce can be formed for continuous efforts for foreign aid, he said.

GDP (gross domestic product) growth is on track now but seven percent growth target as proposed in the budget for fiscal 2007-08 is a challenging one. Moreovere, investment target is unrealistic, the CPD noted. Analysing the proposed duty structure, Debapriya said duty on raw materials should not be more than on finished products. Computer import should be duty-free for continued growth of information technology but logical duty can be imposed on accessories. The CPD pointed out that achieving seven percent GDP growth in the next fiscal year would be tough without massive investments. The CPD suggested 'continuing the momentum in revenue collection', introduction of universal self-assessment system and simplification of VAT registration. It also suggested avoiding volatility in bank borrowing to avoid pressure on private borrowing.

On implementation of annual development programme (ADP), the think tank observed that implementation process should start from the first quarter of a fiscal year. Besides, quality of projects must be ensured while including those in the ADP. Replying to a question, the CPD said it does not find any constitutional barrier to announcement of budget by the caretaker government as constitutional provisions allow the president to implement decisions through ordinance.

Debapriya was critical about foreign aid for the Election Commission's job saying, "Free and fair election should be ensured with our own money, and not with any donor fund, for keeping our decision-making process independent." He also criticised the proposed budget for what he said was lacking adequate emphasis on employment generation as around 12 lakh youths enter the job market every year. The existing economy cannot absorb the unemployed youths in the job market while their will increase in future, he mentioned.

Among the other areas that should get emphasis, Debapriya said, are increasing revenue from non-NBR sectors, resource mobilisation before planning for expenditure and transparency in defence expenditure. Responding to a question Debapriya categorically denied making any black money white. Unscrupulous people hurt by his stand against black money spread such rumours about him, he said.

Stabilising market prices particularly food prices, achieving pro-poor growth, addressing inequality, increasing investment, proper utilisation of funds allocated for power, education and health sectors, raising domestic savings, greater foreign aid flow, improving ADP implementation and pursuing structural reforms are major challenges for the government in the coming fiscal year, according to CPD analysis. The CPD criticised integration of education and religion in one sector and showing it to have the highest allocation in the budget.

It pointed out that no allocation was made for some crucial projects like Padma Bridge, Dhaka elevated highway, Dhaka-Chittagong express way, deep sea port and projects concerning Chittagong port Mongla port. Uttam Kumar Deb, Anisatul Fatema Yousuf, Fahmida Khatun and other CPD officials were also present at the press briefing.