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Let the forthcoming budget be business oriented

The budget is not just a matter of raising and spending government money. In the overall sense, a budget is a combination of fiscal policy and strategy. The proposed budget does not have the opportunity to be like the conventional budget because the work of budgeting has to be done keeping in mind the issue of Covid-19 epidemic.
Majhar Mannan
Let the forthcoming budget be business oriented

The ministry of finance has started the work of preparing the proposed budget for the fiscal year 2021-22. Due to Covid-19 pandemic, big changes are being made in the budget and in this case the government is emphasizing on reducing the expenditure and finding an alternative way of income in the new budget.

The size of the proposed budget for 2021 22 was supposed to be 5 lakh 92 thousand 665 crore taka but due to the Covid-19 epidemic, the size of the budget may be slightly less than the target and it could be 5 lakh 75 thousand crore taka. The target for revenue collection has been fixed at Tk 3 lakh 83 thousand 700 crore. The GDP growth target for the next financial year has been set at 7.7 percent. An inflation rate of 5.3% has been set in the proposed budget. The finance minister will present this budget on June 10, 2021. Nine main targets have been set in this year's proposed budget and the targets are: 1. Ensuring allocation of funds required to deal with the Covid-19 epidemic, 2. Providing additional allocations and incentives to the health sector, 3. Ensuring necessary allocation in agriculture to increase production, 4. Employment and rural development, 5. Expansion of social security activities, 6. Construction of houses for the homeless, 7. Implementation of the packages announced by the prime minister, 8.  Implementation of activities in the year of Mujib, 9. Distribution of free or low cost food among the poor people and development of education sector and human resources. The total investment rate for industrialization and employment in FY 2021 will be 32 per cent of GDP.  Revenue collection may be 10.8 percent of GDP. The sectors that will get priority in the budget are health investment, production, employment, human resource development, poverty alleviation, social security and food security programmes.

It is learned that the implementation of the targets set in the Eighth Five Year Plan will be given priority in the next budget. The new proposed budget aims to reduce poverty, increase revenue collection and move development projects forward. Necessary steps will be taken in the new budget to attract domestic and foreign investment.

The budget is not just a matter of raising and spending government money. In the overall sense, a budget is a combination of fiscal policy and strategy. The proposed budget does not have the opportunity to be like the conventional budget because the work of budgeting has to be done keeping in mind the issue of Covid-19 epidemic. Bangladesh has tackled the first blow of the Covid-19 epidemic but the second wave of is putting a huge strain on our economy. The World Bank's projection for fiscal year 2021 22 is that our growth will be 5.1 percent and the IMF's projection is that our growth will be 7 percent However, both organizations are sending a positive message that Bangladesh's growth will be good. But this second wave of the Covid-19 epidemic could be an obstacle to our high growth. However, in the context of the Covid-19 epidemic, it has become imperative for this year to create a special budget keeping in mind the needs of the country's marginalized people and human health services. The two main goals of this year's proposed budget should be to cope with the economic downturn and improve food and social security. Bangladesh has already made the transition from a least developed country to a developing country and will have time to prepare until 2026 and that should be taken into account in the budget. In order to cope with the economic downturn, this year's budget needs to pay special attention to a number of issues, namely, agriculture, small and large industries, remittances, exports and services. These are the main driving forces of the economy. Last year's remittance flow was satisfactory but this year's remittance flow may be disrupted due to Covid-19 pandemic. Some challenges have already been created in the export sector. Rural agriculture is advancing fairly and it is most urgent at the moment to make coordination among the major driving forces of the economy. The trend of inflation that is being noticed needs to be curbed. The proposed budget should have effective measures and plans to control the price hike of necessary commodities. Manpower exports need to be boosted anyway otherwise it could put pressure on the economy. The government also needs to think about how to make it easier for workers to go abroad. To keep the rural economy strong, special attention should be paid to cottage industries and medium industries.

Necessary steps have to be taken to keep the internal industry and trade going. Timely and effective steps need to be taken to reduce corporate taxes and tariff rates. Employment opportunities have stagnated and about 700 factories have already closed and many people have lost their jobs, so special attention must be paid to employment. Due to the Covid-19 epidemic, the income of marginalized people has decreased (16%) and the expenditure has increased (8%). The field of small businesses is shrinking.  So increasing aid and social security for the poor should be a big goal of the budget. Unemployment benefits, increase in old age allowance and various social security issues including health insurance should be given priority in the budget. The banking sector, capital market, and the financial sectors need to be strengthened through reforms. Ensuring good governance in all these financial sectors and keeping them free from corruption is a big challenge. Bangladesh Bank has launched refinancing scheme for small and medium industries and it needs to be further strengthened. The National Board of Revenue needs to play a stronger role in curbing financial corruption.

The government is thinking of giving a big budget in the health sector due to Covid-19 epidemic and that budget could be around 75,000 crore taka. However, necessary steps have to be taken in the budget to eliminate the mismanagement in the health sector. Rs 10,000 crore was allocated for the purchase of vaccines but it could be doubled now and this money has to be provided in budget.  The finance minister has said that the corporate taxes may be reduced in the proposed budget and at the same time priority will be given to those sectors which are directly related to the public interest. The proposed budget of 2021-22 should be expansionary and there should be incentives for the poor and small business owners. In the budget for the current financial year, the government has given cash assistance of taka 2500 to each of the 35 lakh families and as Covid-19 is a long term matter so this cash assistance to the poor can be increased and it can be given twice or thrice a year. According to a recent survey, about 2 crore 45 lakh people in the country have become newly impoverished due to the Covid-19 epidemic, so an allocation in the budget should be given for them.  The traders have demanded to reduce the advance tax in the proposed budget as well as make it easier to collect it. The finance minister has assured that there would be incentives in the next budget to bring educated youth into agriculture. The damaged economy will recover and luxury spending will be completely discouraged.

To keep the economy afloat, a business-friendly budget will be formulated this year. The NBR wants to increase the number of taxpayers without raising taxes anew. However, considering all this, a budget should be formulated that will play an effective role in the economic development of a country and at the same time will play an effective role in combating the Corona epidemic of the future.

The writer is Assistant Professor, B A F Shaheen College Kurmitola, Dhaka Cantonment.
 

 

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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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