Wednesday | 15 January 2025 | Reg No- 06
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Wednesday | 15 January 2025 | Epaper

A big budget is coming: How much big it is?

Published : Thursday, 27 April, 2017 at 12:00 AM  Count : 320
Haradhan Ganguly
Definitely, a gentle blowing occupies our finance minister AMA Muhith. A big budget is in the offing. Our economy is getting big. So a big budget for the economy is out of chestnut to reality. AMA Muhith dreamt for a big budget at the near fag end of this government's tenure and it is coming. The total amount of budget might come to the tune of BDT 400,200 crore. Annual Development Programmes (ADP) would be BDT 150,000 crore. Revenue Earning BDT 282,000 crore. NBR revenue: BDT 236000 crore. Budget deficit: 5.8 per cent of GDP and GDP growth 7.4 per cent.
The size of the current fiscal year's budget is BDT 340,605 crore, but it is going to be downsized to less than BDT 310,000 crore in the revised budget to be known within a few days. If we follow the reality, as per the medium-term budgetary framework, the size of the next budget should be about BDT 390,000 crore. So the coming budget would be BDT 400,200 crore. Is it overly big or ambitious?
If we judge it in the frame of the ratio in relation to revenue or expenditure to GDP, it is not a big one. It is much less in comparison with others.
But, is it too much relevant to pass time on determining whether the budget is big or small? The cat is black or white that is not the thing to be questioned. The question is whether it kills the rat or not. Likewise not the size of the budget, the real success lies in its extent of implementation.
We are taking about this issue to the front line. A study shows, during past six years, 20 per cent deficit is always found in every budget implementation and quality implementation of ADP is ever being questioned. At the outset of the financial year we see a size of the budget is presented and at the end of the year, we are accustomed to seeing it being scissored upon. This practice is running with no exception.
One exception, the coming budget will show its exceeding deficit of 5 per cent of GDP. It is a breaking out from the years long practice. The 2017-18 budget will have deficit about 6 per cent of GDP. Although there is no clause in the budget management act specifying an upper bound on the deficit. But in the last several years the budget was diligently prepared such that the deficit stayed within 5 per cent. But in the course of the fiscal year, the deficit would come to below 4 per cent. One of the reasons for the budget deficit to settle on the 5 per cent of the GDP mark was that the IMF put it as a condition for the Extended Credit Facility programme (ECF).
The tenure of the IMF's ECF programme ended at the beginning of last year, meaning there is no condition that deficit be kept within 5 per cent. At this government expenditure would get some free hand provided its multiplier effect be positive then its salutary is to be realized.
The revenue collection target for 2017-18 may be more than BDT 282,000 crore of which the National Board of Revenue (NBR) will have to contribute BDT 236,000 crore. The NBR's target of the current fiscal year is BDT 180,000 crore, which means the revenue authority would be working with a 24 per cent higher clout. Remember, in the first eight months of the fiscal year, the NBR's collection grew around 20 per cent which is still satisfactory when viewed historical perspectives. But the thing to be in mind, as per the revenue target set at the beginning of current fiscal 2016-17, its growth should be nearly 44 per cent from the previous year's actual collection. Time has not come to say final, but chasing a revenue growth target of more than 40 per cent is quite impossible. Yet NBR's efforts are commendable.
As we said before, we are prone to lion share of quality implementation of the budget. But ADP implementation often disappoints us. CPD calculates, in nine months, 45 per cent of ADP is achieved. But 55 per cent are to be implemented within last three months. What the Implementation, Monitoring and Evaluation Division (IMED) is doing? Why is it reluctant to reveal any result-oriented evaluation of ADP implementations?
We know the agriculture markets are not favourable for the real producers. Pricing determinants go against the interest of real producers and final consumers like us. This is the eternal scenario of our agricultural marketing. To deter this trend, there is a talk from long to form a price commission. But still, it is far off to see it the light of reality.
The budget should come up with a set of associated reform agenda including banking commission, independent financial sector reform commission, agricultural price commission and public expenditure review commission. If all these commissions are formed and activated, finance minister can tackle the irritants of the economy and breathe the sigh of relief. But will it happen?
Haradhan Ganguly is secretary of the United Nations Association of Bangladesh (UNAB)






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