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The Centre for Policy Dialogue sees nothing wrong in the budget outlay for the next fiscal but believes that the challenge lies in making the expenditure count.
“The finance minister has set a challenge for himself by proposing the big budget and it is now his turn to ensure effective utilisation of resources,” CPD executive director Dr Debapriya Bhattacharya said Friday while sharing with the press the centre’s initial analysis of the budget.
“A full delivery of the resource package as well as a faithful delivery of the development outlay will be the yardstick for judging the success of the budget.
“It is the question of delivery — effective and quality delivery of public resources to disadvantage groups.”
Debapriya said the increased outlay was rational but it was not explained how the budget would be implemented.
Finance and Planning Minister M Saifur Rahman on Thursday placed before the Jatiya Sangsad a Tk 57,248-crore budget for the fiscal 2004-05.
Bangladesh requires a “big budget to achieve higher growth” but suffers from non-utilisation of resources, said the CPD executive director.
“We have Tk 10 crore in the banking sector, which is ideal, and also foreign aid in the pipeline but cannot invest or use these. Half of the ADP money remains unutilised.”
The budget has little guideline for effective of resource allocation, nor has it identified causes that lead to significant shortfall in development expenditures, he said.
The agriculture sector utilised only 31.5 per cent of subsidies and the rural development and local government sector 40 per cent of the development budget in the first seven months of the current fiscal, he said.
“There is nothing on public administration reforms, strengthening of local governments, means to utilisation of foreign aid, improvement of services in public health and education.”
Continuation of existing social safety net programmes and their further expansion is a ‘reflection of concern of the state and society’ for the disadvantage group, Debapriya said.
He, however, termed allocation for such programmes ‘token’ and feared that an election-oriented expenditure strategy could lead to its misuse.
The economist also praised expansion of the VAT net to cover several services sector but pointed out that professionals were still beyond its coverage.
“There was a proposal last year to include doctors and lawyers in the VAT net but the policymakers backtracked on the proposal in the face of strong protest. It appears that strong stakeholders of society can have the policy revised on their terms.”
Bhattacharya suggested that all professionals, including lawyers, doctors, engineers and private tutors, be brought under VAT and direct tax.
He termed the proposed income-tax structure biased to the richer section of society and opposed the idea of empowering tax officials to choose any tax return for audit as it will “result in hassle for taxpayers and widening of the scope for political oppression”.
The CPD executive director supported imposition of more tax on cars and said the government should control the number of cars and subsidise the public transport.
When asked whether earlier budgetary measures resulted in poverty alleviation through generation of more employment, he said it was difficult to assess since there was no updated data on either poverty alleviation or employment generation