The budget that finance minister Abul Hassan Mahmood Ali presented for 2024-25 fiscal in the national parliament Thursday, has started being discussed in different quarters. Negative criticism is weighing heavier than positive views.
The finance minister presented the budget at such a time when the economic indexes of the country are going downwards and people with a limited income are devastated from the impact of inflation.
In his budget presentation, the finance minister emphasised on keeping the macro economy stable, bringing inflation rate down to 6.5 per cent and putting corruption on leash.
However, his budget speech doesn’t ignite much hope. There is a wide gap between the earnings and the aspirations. It’s true that the finance minister has adopted a policy of austerity. And, he didn’t get down in a competition to increase the size of the budget like his predecessor.
He prepared a budget of Tk 7.97 trillion (Tk 7.97 lakh crore) for the new fiscal year. Out of that, Tk 2.65 trillion (2.65 lakh crore) is the size of the annual development programme (ADP).
The estimated revenue during the same period is Tk 5.41 trillion (Tk5.41 lakh crore). This leads to an overall deficit of Tk 2.56 trillion (Tk 2.56 lakh crore). The deficit in ratio to the gross domestic product (GDP) is 4.6 per cent.
Meanwhile, corporate tax has been reduced in the new budget and this might encourage the industrial entrepreneurs. The tax on 34 daily essentials has been brought down from 2 per cent to just 1 per cent at the source.
However, there’s doubt whether the price of imported goods will reduce or not. In recent past there have been even such incidents where the price of a product did not come down even after duty tax reduction.
No matter how economical the finance minister is in case of expenditure there’s no guarantee of where the money will come from. The government would have to take loan from domestic and foreign sources to fill up the deficit of Tk 2.56 trillion (Tk 2.56 lakh crore) there is in the budget.
Businessmen have logically advised not to take loans from domestic sources. They said if the government extracts a lot of money from the banking sector, the private sector will be jeopardised.
The import duty on laptops, powdered milk, dialysis and dengue kits have been reduced which we believe is a good step. However we don’t think there is logic behind reducing the supplementary duty on foreign clothing items. Similarly, the proposal finance minister has made about increasing the duty on cigarettes and soft drinks is also supportable.
Meanwhile, the budget proposed to increase the duty tax on foreign water filters. Before doing that, the Dhaka and Chattogram WASA along with the people concerned should be held accountable for why are they failing to supply potable water.
Economists had demanded for the tax coverage to be expanded through reformation of the tax sector. But instead of going into that direction, the government has adopted the policy of increasing the burden of tax on those who are paying taxes already.
The opportunity to whiten black money, proposed in the new budget has been attracting criticism the most. Despite providing special facilities to the tax evaders, the government cannot just discriminate against the honest tax payers.
While, they are paying a maximum of 30 per cent tax, people with black money will be excused for only 15 per cent tax. This is not just discriminatory but also unethical.
Another criticism of the proposed budget is on the reduction of allocation in education sector. While the allocation in this sector was 1.75 per cent of the GDP in the current fiscal, it has been proposed to reduce that to 1.59 per cent.
We believe it would be beneficial for the country as well as the people, if the finance minister, instead of disregarding the criticism of the budget made by experts, businessmen and opposition politicians, took realistic initiative to address the issues.