Budget 2004-25: The Good, the Bad, the Ugly

Sergio Leone's 'The Good, the Bad, the Ugly' is probably favourite movie of budget analysts. This movie is always used to analyse the good, bad and ugly aspects of the budget. Here an economist and three businessmen have highlighted the good, bad and ugly sides of the budget.

The decision to increase the allocation for the social safety net sector by Tk 100 billion (10,000 crore) is a positive decision. The finance minister took the decision to impose 25 per cent import duty on the cars imported by members of parliament. The decision to increase allocation to the health sector by Tk 30 billion (3000 crore) is also a positive decision.

There are no specific measures to improve trade in the prevailing economic circumstances. On the other hand, allocations for the power and energy sectors have been decreased, which is alarming for industries.

The budget has no initiatives to provide the common people with any form of relief during these times of inflation. On the contrary, talking over the mobile phone and using the internet will cost more. The government could have avoided this.

Fixing the tax ceiling at 30 per cent will ensure some degree of tax fairness. Duty on several essentials has been reduced. It must be ensured that this influences the market. Among the top five ADP sectors, health and education has been raised higher. Implementation of the allocation in these two sectors must be ensured.

Dependence on bank loans to meet the budget deficit. The deficit this time will be 4.5 per cent of the GDP. Of this, 2.4 per cent will come from bank loans. This will create a liquidity crisis in the banks. The important mid-term indicators are not realistic.

The scope to legitimise undisclosed and black money by paying 15 per cent taxes. This is wrong both from the aspect of ethics and of economics. This is an injustice to the honest taxpayers. This won't even yield significant amount of taxes.

The good sides of the budget are decreasing corporate taxes, keeping the budget deficit low and halving the advance duty on many essentials in order to control inflation.

Imposing taxes on the capital dividends exceeding Tk 5 million (50 lakh) of individual investors in the share market, doubling duty on furnace oil and lubricating oil. Not having any target or guidelines for cottage, micro, small and medium enterprises.

The scope yet again to whiten black money. Not having any target or guidelines regarding investment. Excessive increase in the government's operational costs.

The scope given to purchase flats and apartments by whitening black money, may serve as a boost the housing sector. This is positive for the construction industry. The slight decrease in corporate tax rates will give some relief.

With the increase in the dollar exchange rate, duty on importing raw materials will increase. Tax at source on industrial goods and the import duty on scrap hasn't been decreased.

The most damage is being done because of the dollar crisis and the increase in the dollar exchange rate. The budget has no measures to overcome this situation. The government is once again depending on the banking sector to meet the budget deficit.