As a visible expansionary approach of the government, the Finance Minister has proposed a mega Tk.3.4 trillion budget for the upcoming fiscal year 2016-17. It is about 29 per cent higher than the revised budget of the outgoing fiscal year. Though the growth of the size of the budget is rather a conventional thing, it is likely to trigger this time a general expansion of economic activities in the next fiscal year including increased aggregate demand and supply of physical infrastructure. There are some notable new approaches regarding some mega development projects. For instance, a separate allocation has been made for initiating some mega infrastructure and energy projects like Padma Bridge, Rooppur atomic power plant, Matarbari coal-fired power plant and metro rail projects.
An initiative was taken last year to separate the nationally important projects as multi-year public investment programme as an effort towards reforming the Annual Development Programme (ADP). However, both of these measures now seem destined to maintain their peaceful coexistence.
The size of ADP, including the allocation for autonomous institutions and authorities, is about 35 per cent of the proposed budget. Given the slowest rate of implementation, about 50 per cent in the first ten months of the outgoing fiscal year, is the lowest in the last few years. Implementing another 40 per cent by May and June will likely result in extremely bad quality of work besides recurrent spike in last month - a "June syndrome". Ironically, a sincere effort will lead to sluggish rate of execution by most of the implementing agencies. With the existing modest and declining capacity of project management and monitoring compared to the expansion of ADP, accelerating execution and maintaining quality will present a formidable challenge to the implementing agencies.
The government will continue to remain a heavy borrower from the banking system. It would create a sense of satisfaction at the end of the lending banks because the government would absorb a part of excess liquidity to finance infrastructure and at least will not turn out to be defaulter like many heavyweight businesspersons.
As the Finance Minister' budget speech indicates, the proposed budget is mainly about accelerating growth, economic development and attaining social equality. However, no specific programme has been clearly outlined in the budget to achieve these three goals.
It is assumed that public investment in transportation infrastructure and energy projects would pave the way to achieve the stipulated 7.2 per cent growth. Expecting such a growth rate over the next fiscal year should not be considered as a 'dream'; it can be achieved in the prevailing circumstances. Rather, we could have easily set 7.5 per cent growth target with a 'mini big push' in private investment, particularly in manufacturing which would have created in turn an encouraging effect on employment.
Why has the proposed budget carefully avoided more direct measures in attracting private investment, particularly from domestic sources? Perhaps because the Finance Minister thought of lack of readiness in terms of transport infrastructure, energy supply, especially natural gas, and easing the procedures of doing business. Indeed, Bangladesh is now enjoying the best macroeconomic conditions in its history with political stability, magnificent foreign currency reserves, decent export performance and per capita income, low inflationary pressure, and impressive external balance. Indeed, the economy is ready both horizontally (expand) and vertically (take-off) to facilitate steady interplay between private investment and rapid economic growth with aggressive job creation. We are missing out the golden opportunity of administering the aspired 'inclusive' growth as per the Seventh Five-Year Plan.
Overall, the proposed budget has set a weak linkage between growth and development, let alone addressing the persisting high income inequality over one and a half decades. Surprisingly, the Finance Minister has not spent even a second in spelling out how to reduce the skyrocketed income disparity through fiscal operation and redistributive measure. Without a serious measure of taming this economic polarisation, it would be very difficult for the government to lessen social disparity. Thus, the budget has remained largely traditional in nature as an assimilation of catchy jargons, which has partly been criticised by experts and analysts. In may be due to the fact that the budget-making apparatus is not yet prepared for fundamental change keeping in mind the country's transition to the lower middle-income country.
Some critical development issues have also been overlooked in the proposed budget. It has not been explained what changes the budget would make to reform the social safety net programmes (SSNPs) as per the recent National Social Security Strategy (NSSS). The budget speech has mentioned about an incremental approach through increasing coverage and amount of cash transfer. However, a fundamental reform was expected in terms of overhauling the SSNPs to make it more productive, return-oriented, and sensitive towards spatial aspects of extreme vulnerability and climate change adaptation. A part of the major programmes like employment generation for the poorest, vulnerable group development, etc. could be made adaptive with or without allocative implications.
The greatest philosophical deficit of the proposed budget, despite its gigantic size, is living with the traditional notion of poverty. Poverty is no longer a matter of threshold level of income or expenditure linked with a bundle of food and non-food items. More than a hundred countries in the world are now ready to recognise poverty to be multidimensional with the elements of education, health and standard of living with ten basic indicators.
About half of the population of Bangladesh is now living in multidimensional poverty as per the latest calculation. Failing to conceive a development paradigm placing multidimensional poverty at the centre of public expenditure, the proposed budget has merely created a sense of allocative hike.
The proposed budget, in general, has given rise to a few fundamental questions: will it help develop human skills and capacity to attain double-digit growth? Will it curb corruption and lessen delays in project implementation that lead to cost escalation? Where are the pledges of social justice and equity, especially to establish the dignity of the poor and marginalised? Are the intended SSNP beneficiaries going to get their due share through strictly maintaining the implementation guideline? Whatever the size is, deriving the real benefit of budget must depend on timely and quality execution, which must be ensured in the upcoming fiscal year.
Dr Mahfuz Kabir is Senior Research Fellow at the Bangladesh Institute of International and Strategic Studies (BIISS).