The
Centre for Policy Dialogue (CPD),
a leading private think tank in
the country, has observed that
the proposed budget for fiscal
2002-03 does not contain a package
of transparent and time-bound
reform measures and development
targets. Although the finance
minister's budget speech mentions
a mid-term (three-year) framework,
it does not give any mid-term
target figures, The proposed budget
also lacked any vision for boosting
investment and protecting the
textile sector from a 'possible
disaster' after 2004,
The CPD said:
It criticised the wholesale provision
of making black money white saying
that it never boosted investment
anywhere any time. "It is very
immoral, counter-productive and
against equality." Presenting
the budget analysis of the CPD
at its conference room yesterday,
Executive Director of the organisation
Dr Debapriya Bhattacharya made
these observations. Increase of
import duty on some goods like
powder milk, sugar and cement
clinker would also create a negative
reaction among the people, he
felt.
The renowned economist noted that
development of backward linkage
industries in the country for
facing future challenges did not
get any emphasis in the proposed
budget. On some budgetary allocations,
Debapriya said transport sector
was given the second biggest allocation
but there was no clear-cut vision
for developing the sector. He
said the proposed budget is a
'document of fiscal consolidation,
continuity of policy approach,
compromise and contention." The
finance minister modestly succeeded
in bringing fiscal balance, which
was one of two major challenges
ahead of him, Debapriya said.
But accelerating investment in
the country, which was another
major challenge, is yet to be
addressed, he added.
"The major crisis is stagnating
depressed investment rate coupled
with depressed saving rate. If
this issue is not adequately addressed,
the country will not come out
of the recession and subsequently,
fiscal balance and balance of
payment will deteriorate further."
The economist said the new budget
is a 'document of consolidation'
because it made efforts to improve
fiscal balance by keeping expenditure
growth below the revenue target.
The overall budget deficit in
the next fiscal year would be
about 0.50 per cent less than
that this year. "Harnessing the
budget deficit is definitely a
right step towards fiscal consolidation".
He noted that the 'continuity
of policy approach' is evident
from the proposed fiscal measures,
which ranged from strengthening
of entrepreneurs and equity funds
for export diversification to
expansion of social safety net
such as old age allowance scheme
introduced by the previous government.
The proposed budget is also a
'document of compromise' because
it attempted to address various
competing interest groups through
tax breaks and institutional support.
The CPD director was not ready
to term the proposed ADP an 'over
ambitious' one, considering the
development needs of the country.
"The main challenge before the
ADP is not financing. Rather,
it is lack of implementing capacity
of the line ministries," he observed.
Regarding tax holiday, Debapriya
said that instead of giving a
time-frame for all industries,
the government could consider
the facility for export-oriented
factories only.
He also supported the move to
bring commercial activities of
the NGOs under tax net, but felt
the necessity of a policy framework
in this regard.
