Fairy tale budgets are for the rich

After listening to the first budget speech of Finance Minister Abul Hasan Mahmud Ali, it may seem that it is a jumble of various kinds. The language has grown sweeter in the budget speech, but the numbers have become tougher. Mr. Ali has given a budget to divert people’s attention from the problems and crises of the country by creating noise.

The government presented the budget for the new financial year amidst extreme inflation, rampant corruption, foreign exchange reserve crisis, dollar crisis, investment stagnation, banking and financial sector turmoil. Finance Minister Abul Hasan Mahmud Ali today presented the budget proposal titled ‘Commitment to Building a Happy, Prosperous, Advanced and Smart Bangladesh’ in the National Parliament with a size of Tk 797,000 crore. The budget for the outgoing financial year was 7 lakh 61 thousand crores. That is, the budget for the fiscal year 2024-25 will increase by 4.6 percent. The budget for the current financial year 2023-24 has been revised to Tk 7 lakh 14 thousand 418 crores.

This budget is slightly more than 14 percent of GDP. Budget size is usually above 20 percent of GDP in middle-income or developing countries. Somewhere there are 25 or 30 percent. This time the rush has been drawn to the tendency of the budget size to swell from 12 to 14 percent over the years.

As before, two-thirds of the budget allocation of around five crore rupees will go to non-productive sectors, for payment of salaries, incentives, allowances and subsidies. Apart from this, 1 lakh 13 thousand crore rupees have been allocated for the payment of interest on the loans taken by the government from the banks through bills, bonds and savings instruments. The electricity-fuel and agriculture sectors are receiving the most subsidies. The budget also proposes to slightly increase the amount of social security allowance.

People are in trouble due to the increased prices of daily commodities. Inflation was close to 10 percent in May as well. Government employees will get a 5 percent incentive with their salary adjusted for inflation, while direct revenue measures to control overall inflation are also not visible this time.

In the proposed fiscal year 2024-25 budget, the National Board of Revenue (NBR) has got an ambitious revenue target of Rs 4 lakh 80 thousand crores. The total revenue target in the upcoming budget has been set at Tk 5 lakh 41 thousand crores. Out of which 4 lakh 80 thousand crores will be collected by NBR and the remaining revenue will come from non-tax sources. NBR has to collect Tk 4 lakh 80 thousand crore, which is Tk 50 thousand crore more than the budget target for the current financial year (2023-24). The revenue target is Rs 70 thousand crore higher than the revised target.

In this year’s budget, the overall deficit has been estimated at 2 lakh 51 thousand 600 crores. In this case, 90 thousand 700 crore rupees will be provided from foreign sources. One lakh 60 thousand 900 taka will come from internal sources. The government plans to take a loan of about 2 lakh 57 thousand crores from

In the outgoing financial year, the budget deficit was estimated at 5.2 percent of GDP, but this time it is 4.6 percent. Since the 2013-14 financial year, the deficit has always been above 4.9 percent. The real challenge for the new finance minister will be to tame the rampant inflation. Because despite following the contractionary policy inflation has been suffering for two years. The government has set a tough target of bringing inflation down to 6.5 per cent by the end of the next fiscal year, although time will tell how much it can ultimately achieve.

The economy has not been able to come out from the sword of indirect tax for many years. There is no good growth in revenue. Against the target, there is a deficit of Tk 26,000 crore in 10 months (July-April). NBR has been more aggressive this time to cover up the revenue failure. Taxed as much as possible from the pocket of the common people. Additional taxes are levied on various goods and services used in daily life. The cost of talking on mobile phones is increasing, the cost of internet is increasing. LED lights, AC, fridge, water purifier, CC camera, juice are all extra. Supplementary duty has been increased on mobile phone calls and internet services. Currently, 15 percent VAT is levied on talktime and internet services. It has been further increased by 5 percent to 20 percent.

When people become more expensive to live, tax-free life expectancy is usually increased to provide relief. But this time it is not increasing. However, the budget has provided for legalization of illegally earned money. There is no inheritance tax on transfer of wealth which is helpful for rich people. The budget has also given an opportunity to buy flat-plots and ‘white money’ in cash. This budget is for the people who got rich illegally. Focusing on the rich, the core luxury sector has been excluded from the tax structure and the tax burden has been placed more heavily on the middle class and low-income earners.

Looking at the budget proposals, the government seems to have come out of the illusion of higher GDP. The target has been fixed at 6.75 percent, breaking the tradition of holding high growth rates year after year. Finance Minister Abul Hasan Mahmud Ali said that the country’s economy is currently under some pressure due to high inflation, but due to the implementation of prudent and correct policies, GDP growth continues. From the fiscal year 2009-10 to the fiscal year 2023-24, the average growth rate of Bangladesh was 6.71 percent; It was one of the highest of any country in the world at that time.

The finance minister said that this trend of growth shows the inherent strength of Bangladesh’s economy. In order to maintain this pace of GDP growth in the coming days, all kinds of logical support will be continued to encourage the production of agricultural and industrial sectors. Along with this, all necessary policy support will be maintained. He expressed hope that the GDP growth rate will reach 7.25 percent in the medium term.