The proposed budget for the fiscal
2003-04 failed to design any
illustrative plan for poverty reduction,
said Executive Director of the Centre
for Policy Dialogue Debapriya
Bhattacharya yesterday.Although the new
budget closely followed the mid-term
macroeconomic framework agreed under the
Interim-Poverty Reduction Strategy Paper
(I-PRSP), a poverty reduction recipe of
the World Bank, it did not give any
clear indication of reducing poverty,
Debapriya and his team told a press
briefing on initial assessment of the
budget.
Presented by Finance Minister M Saifur
Rahman, the budget is mainly based on a
high foreign aid flow and an ambitious
target of revenue collection, said
Debapriya.He fears if the government
fails to fulfil the conditions set by
multilateral agencies, they may stop
providing further assistance. "Increased
foreign aid may also hamper the
government's revenue earning process,"
he said.
About the proposed annual development
programme (ADP) of Tk 20,300 crore, he
said the budget dose not provide any
significant formula for implementation
of the ever-large ADP.Only 50.7 per cent
of the ADP for FY2002-03, with its
revised figure of Tk 17,100 crore, has
been implemented until March, Debapriya
quoted from an IMED (Implementation
Monitoring and Evaluation Division)
report.
Saifur did not present any specific
measure to ensure the accountability of
ministers in implementation, nor did he
mention the law and order slide in his
budget speech, which has a negative
impact on business, Debapriya said.
Inefficiency in the utility sector, port
problems, delay in separation of the
judiciary, lax decentralisation of the
local government, non-formation of an
independent anti-corruption commission
and slow privatisation are among the
topics the finance minister ignored, he
said. "These are extremely needed for
investment to rally."The minister did
not reveal the reform plan agreed by the
government with development partners
during the recent Bangladesh Development
Forum meeting, he said.
Saifur attempted to change the format of
restructuring the economy but never
mentioned the way, he said.However,
Debapriya applauded the budget for
providing discreet support for
agro-based industries, textiles and
readymade garment sector.
Saifur proposed an allocation of Tk 50
crore for agro-based industries, as the
government utilised only Tk 31.5 crore
of Tk 100 crore allocated in the
outgoing fiscal.Reduction in corporate
tax from 30 per cent to 10 per cent up
to June 2006 will provide the sector
with a breathing space, said
Debapriya.Lessening and re-fixing the
corporate tax at 20 per cent for
textiles for the same period will help
the sector sustain in the post
multifibre agreement (MFA) reality, he
said.
He suggested that withdrawal of
value-added tax (VAT) exemption on
credit cards should not be applied on
customers.The withdrawal of VAT on
travel agencies will not boost tourism,
as the sector's development does not
depend much on it but largely on
infrastructure and law and order, he
said in his assessment report.
Increase in customs and supplementary
duty on sugar will up the price of sugar
on the domestic market and encourage
smuggling, he said. Upswing in
supplementary duty on powdered milk and
salt will tax commoners.
Debapriya criticised the budget for
extension of concession on import of
reconditioned taxicabs and said it will
deteriorate urban pollution. Reduction
in supplementary duty on spirit, wine
and other alcoholic drinks has also been
criticised.However, he appreciated the
increase in customs duty on rice to 22.5
per cent from 7.5 per cent.
Debapriya identified three major factors
as instrumental in implementation of the
budget: flow of private investment,
resurgence in exports and implementation
of ADP.CPD research fellows Ananya
Raihan, Uttam Deb, Fahmida Akhter Khatun
and Head of Dialogue and Communication
Anisatul Fatema Yousuf attended the
briefing.
