I expected a stern policy against loan defaulters and hundi business in the proposed budget for the next fiscal. However, the budget speech totally disappointed me as there was no mention of any action against defaulters and the hundi system.
According to the figures of the Bangladesh Bank (BB) the total size of defaulted loans stood at Tk 1.82 trillion as of March. However, this is not the actual figure. In reality, the total default loans in the banking sector have surpassed Tk 5 trillion now.
A separate tribunal must form to ensure strict actions against the loan defaulters if we want to bring down the size of default loans. Otherwise, there will be no respite from it and there would be no way to learn the details of the loans taken by influential persons.
The proposed budget this time could be termed a shrinking budget. It will be hard to achieve the goals set in terms of inflation, tax-GDP ratio and the budget deficit- GDP ratio. It will definitely be a praiseworthy achievement if the government actually can achieve its goal overcoming all these factors.
The proposed budget aims to lower the inflation rate to 6 per cent, which currently stands at a little more than 9 per cent. Given that, it is a big challenge to bring inflation down to 6 per cent from the existing rate. I have doubts whether it will be possible to overcome this challenge.
The budget also aims to increase the tax-GDP ratio to 60 per cent. It too will be a commendable achievement if this target is attained as we are the last in terms of tax-GDP ratio in South Asia. It will be great if the proposed budget deficit remains unchanged.
The allocation for the education sector in the proposed budget is quite frustrating too. A budget allocation of Tk 947.1 billion has been proposed for the two divisions under the education ministry and the Ministry of Primary and Mass Education together. Although the allocation saw a little rise as compared to the previous fiscal in terms of size, it lessened as compared to GDP.
We already have the lowest allocation for education compared to the GDP in South Asia in the current fiscal. Now it’s going to shrink further in the upcoming fiscal.
The total allocation for education was some 2.4 per cent of the country’s GDP, which rose to 2.5 per cent in 2016. Now it has declined to 1.69 per cent of the GDP. Given that, it can be said education is not getting due importance under this government. With the rise in the population, the allocation for the education sector should be increased accordingly.
The finance minister has proposed to add or reduce tax burden on various products. However, the government needed to discourage the import of packaged powdered milk. We are yet to be self-reliant in terms of milk production. Instead of reducing the tax burden on packaged powdered milk, the government should have taken more initiatives to be self-reliant in milk production.
At the same time, the government should have subsidised solar power and the tax burden on different relevant equipment, including solar panels, could have been reduced. It’s quite unfortunate that it was not done. We could have solved a number of problems prevailing in the power sector, by increasing the production of solar power.
*This opinion piece was published on the print and online versions of Prothom Alo and has been rewritten in English by Ashish Basu