Changing the financial year

Moving the financial year from existing July-June to a more suitable 12-month timeline has gradually been gaining support. The development momentum of the country combined with rapid growth in allocations of the government's annual development programme (ADP) is placing more importance on this issue. It is being pointed out that difficulties are faced in delivering quality work, especially during the rainy season that starts in May every year.

 Professor Anu Muhammad in an article in a local daily on May 29 supported April-March or January-December financial year to have lesser impact of climatic factors on development works. In another article, published in another local daily on June 06, 2018, Member of Planning Commission Professor Shamsul Alam explained the suitability of current timeframe for development works and wanted its continuation. It is important to continue the discussion along with further technical and economic analysis that may help the government take a pragmatic decision soon.

A review of ADP expenditures of 2016-17 financial year shows that Tk 772.04 billion was spent from July to May, meaning an average monthly expenditure of Tk 70.18 billion in the first 11 months. On the other hand, Tk 293.77 billion was spent alone in June, which is the last month of the fiscal year in Bangladesh. The scenario was far worse in 2017-18. Only Tk 989.78 billion was spent in the first 11 months against the revised full-year allocation of Tk 1.56 trillion. In general, less than 50 per cent of the ADP is implemented during the first nine months of a fiscal year or by March each year.

During monsoon season in Bangladesh, the average monthly rainfall is more than 300mm from the month of May to September. Rainfall is the highest in June and July ranging around 500mm. The remaining seven months are mostly dry. Temperature levels are also high from April till September. As such, these are two major climatic factors that significantly impact proper delivery, quality and completion of development projects.

Planning, programming and procurement processing of development projects usually take around three months on an average. Once this phase is over, contract awarding and mobilisation takes another 1.5 to two months. So, implementation works generally start five months into the financial year.

Inefficient project management, bureaucratic tangle, scarcity of quality construction materials, skill shortage, lack of professionalism in the construction industry, late fund disbursement and many other factors often delay or extend the delivery time. The scenario is the same in respect of the big projects implemented over two or more years. Fund release issue and a general post-June shutdown for nearly two months create pressure during the months of May and June.

 Due to the mad rush towards completion, most of the civil works related projects face severe quality issues. In construction, quantity of water and final compaction time are two very important factors for strength of concrete structures. Contractors generally rush for roof casting, as a milestone activity, in June to get fat bills for paying suppliers, labours, banks and others.

In case of road works, after completing the lower layers, contractors speed up the process of bituminous surfacing in June. As a result, the hydrophobic characteristics of bitumen leads to very poor-quality surface. This leads to rapid deterioration during the rainy months. Despite their best possible efforts, engineers often fail to stop unspecified works due to unforeseen circumstances. On the other hand, maintenance works cannot go at the right pace during the beginning of the new financial year. So, damages to the roads increase manifold.

For water works, embankment maintenance often cannot be completed before the flood season. The devastating crop loss due to embankment failures in the Sylhet region during the 2017 flood is a glaring example in this regard. 

Other sectors also suffer the same fate since civil work is a big component of any infrastructure project. For a developing country like ours, infrastructure improvement is the main focus of the ADP accounting for two-thirds of the budget and so is the impact of the June factor.

The low quality of work coupled with quick deterioration of the infrastructures not only undermines the designed economic impact of the development expenditures mostly funded by interest-paying loans, but also burdens the nation with significant maintenance and early rehabilitation needs. The tremendous delivery pressure during a hostile climatic period and the consecutive massive maintenance needs allow scope for misuse of funds.

A detailed economic analysis can give a clearer picture. The cost of low quality works in May and June are likely to outweigh the investment benefits significantly from a life cycle viewpoint that considers the additional maintenance and rehabilitation needs appropriately. If the financial year starts in May, then the June rush will be in April when the rainfall is one-third of the June level. So, the economic benefits are likely to be significantly higher because of better quality work as well as lesser maintenance and rehabilitation needs.

The need of average five months' time for the pre-construction phase gives a full seven months dry work period starting from September for a May-April financial year. This will allow contractors to collect a good portion of the construction materials via water transport before the dry period starts. Ground preparation using sand and leftover bricks from the previous season, and foundation concreting would require two-three months. By then, new bricks and river-quarried stone will be available for superstructure works. Brick manufacturers can also take advantage of the big sale by April to make some stocks for the next year, which is difficult to predict under the prevailing time frame of financial year. As such, supply chain efficiency will improve through optimum use of different transportation modes and industry reorientation.

Neighbouring country India has been following April-March fiscal year for long. India is a big country with many different climatic, social and economic issues. The average monsoonal rainfall is also half of Bangladesh's. May-April would be more suitable for Bangladesh and it may also signify the cultural aspect of Bengali year that starts in mid-April, to streamline our socio-economic life towards a stronger nationalistic spirit.

The proposed shift or status quo can only be confirmed through a proper economic and technical assessment. The government should undertake such exercises as soon as possible.

Dr. Shafiq Alam, CPEng is a Road Infrastructure Specialist working in Australia.

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