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24 June, 2019 02:03:14 AM

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Budget likely to increase cost of living for middle class: CPD

STAFF REPORTER, Dhaka
Budget likely to increase cost of living for middle class: CPD

The Centre for Policy Dialogue (CPD) yesterday said the proposed measures in the budget for FY2019-20 are likely to disproportionately increase the cost of living for low- and medium-income groups compared to the affluent section.

The private think-tank made this observation at its annual customary ‘CPD Budget Dialogue’ held at a  hotel in the capital yesterday.

The CPD, in its analysis, said there was no special effort to rectify the longstanding structural marginalisation of deprived sectors in the proposed budget.

Presenting the budget analysis, CPD executive director Dr Fahmida Khatun said the government's infrastructure-oriente, public finance-driven and economic growth-centric approach is now showing its limitations to establish an inclusive society.

About the allocation for social safety net (SSN), the CPD said it has been increased by 15.5 per cent, from Tk. 64,404 crore in budget FY19 to Tk.

74,367 crore in budget FY20.

But in FY20, the SSN allocation, excluding pension, is only 1.8 per cent of GDP, much lower than the target of 2.3 per cent of GDP.

The budget allocation for a number of safety net programmes have fallen short of the targets set out in the National Social Security Strategy (NSSS), said the CPD.

About the ADP, the think-tank said revenue surplus as a share of financing ADP is increasing in terms of allocation, but it is declining in terms of actual expenditure.

Out of 1,358 investment projects, 1,237 (91.1 per cent) are at least two years old—almost double from FY19. Average age of these 1,237 projects are four years, said Fahmida Khatun, adding that the implementation rate has also been lower than the average.

The think-tank said while the target of public investment has been met, the total investment is still lagging behind due to low contribution of private investment.

Speaking on the occasion, Planning Minister Abdul Mannan said the Sheikh Hasina-led government has targeted poverty and taken a number of steps to remove it.  “We are attacking poverty from different fronts, including education, healthcare and access to electricity,” he added.

Mannan also said the number of hardcore poor in the country is not more than 50-60 lakh. “Poverty is like permafrost in the country. It has been there for many years. We have attacked it. We have broken the edges. We are reaching the middle areas and heading towards the centre. So now, the rate at which we launch our attack is very slow,” he added.

The planning minister further said that for underserved groups of the budget, the government will take steps if specific proposals are placed to them. “We are delivering the allocated money to the tables of project directors directly to cut the latency in implementing the projects,” he added.

About the increasing income inequality, Mannan said since the country is in the first upwards curve of the development process, the income inequality and disparity are bound to increase as per economic theory. “But fwe do not like it and want to flatten that curve of disparity as much as possible with our social safety net programmes,” he added.    

Barrister Rumin Farhana, a BNP lawmaker, said a budget depicts the character of a government and the budget for FY20 depicts the character of the AL-led government, which is pro-rich with no interest in getting people out of poverty. “Bangladesh now has the highest rate of increase in the ultra-rich. At the same time, it has over two crore ultra-poor people. This differentiation in wealth is increasing day by day,” she added.

She cited data from 2001 to 2010 to support her statement. The rate of decreasing poverty during this period was 1.8per cent. Between 2010 and 2019, it has reduced further to 1.2per cent.

“This budget has nothing for the poor. It is a budget for the rich,” she said.

Bangladesh is passing the time of reaping the benefits of demographic dividends, she added.

She said as per the report of BBS, the number of unemployed people in the country is 4.82 crore. “Strangely, this budget said by 2030, three crore more people will be brought under employment opportunities, but didn’t explain how!” she added.

The budget has a deficit of Tk. 145,000 crore, out of which Tk. 47,000 crore will be sourced from banks. “Given the frail condition of the banks, especially the state-owned ones, I do not know how the government dares to source such a large sum from them,” she said.

Speaking at the programme, M Sayeduzzaman, former finance minister, said most of the projects taken under the Annual Development Program (ADP) have time and cost overruns. The quality of implementation is also very poor for the budget.

Echoing other experts, Sayeduzzaman said the budget is businessmen-friendly rather than being business-friendly. “The cost of doing business and the ease of doing business are marking some negative trends, indicating that the country has become less business-friendly,” he added.

The budget also did not say much about inclusive financing for the poor. “However, I laud one thing about the budget: it allocated a Tk. 100 crore for the aspiring young entrepreneurs,” he said.

The former finance minister, who is now a member of the board of trustees of CPD, said nothing has been said in the budget about the trade policy. “The trade policy is extremely important  in the context of three things—the current external situation, especially the attitude of the US and Europe in going towards protectionism, the trade competitiveness coming from south and southeast Asia, and the automation of the RMG sector,” he added.  

“Personally, I would have loved to see the budget speak about these extremely important factors of the trade policy. Unfortunately, nothing has been mentioned,” said Sayeduzzaman.

Senior banker Nurul Amin said there are three deductions from the depositors—tax at source, excise tax and incidental charges—that the banks cut twice a year. These three charges hinder the growth of depositors, he added.

About increasing non-performing loans, Amin said that the power mismatch between the board of directors of banks and the management of banks, especially in the state-owned ones, is partially responsible for the bad debt. “In many cases, the bank board tries to influence the management in giving out loans,” he noted.

CPD chairman Rehman Sobhan said while the budget discussion remains confined within the allocation and spending of budget, very little is actually being discussed about the actual outcome of the expenditure. “Budgeting as a tool of analysis of the government’s performance is a very old practice. But I have not seen successive governments actually putting themselves under their own scanner to do a performance analysis through their own budgets.”

EA

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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