Good budget, bad budget

The finance minister on Thursday placed the budget for fiscal year 2024-25, which is 4.6 percent bigger than the ongoing one. The increase is much lower than the average inflation seen in the last few years, reflecting the monetary constraints the government is facing as well as some of the realities of the crisis which commands a certain extent of belt-tightening.

The focus of the budget obviously had to be the restoration of macroeconomic stability, reduction of inflation, and containment of ongoing pressure on our foreign currency reserves.

Besides, the minister emphasised the need to curb corruption. On the other hand, he also offered a black money whitening facility. This once again raised the question: Why is the budget favouring the corrupt over honest and hardworking ones? And why are our laws continuously being formulated in a way that makes honest individuals lose out to corrupt ones?

It would not be unjust for honest taxpayers to ask: What is the point of paying taxes every year when those who are evading taxes can get away with paying a much lesser amount on their undeclared income to bring it into the mainstream.

Through budget allocations, the government, on the one side, had to rein in its expenditure. On the other side, people were unhappy to see where the government's priorities truly lie. The allocation for education actually went down from 1.76 percent of GDP in the current budget to 1.69 percent in the proposed one, the lowest in the last 16 years. Many felt it conflicted with "Smart Bangladesh," vision.

The same applies to the healthcare sector, whose budgetary allocation went slightly up from 5 percent of budget in the current budget to 5.19 percent of budget in the ensuing one. In a country having one of the highest out-of-pocket healthcare expenditures in the world and experiencing rising inflation simultaneously, healthcare costs have become a massive burden for the people.

However, it is good to see the government allocate Tk 2,000 crore for health emergencies, which we hope will be used properly to provide some relief to struggling ones. Additionally, we are encouraged to see the government allocate Tk 1,000 crore on health research, like the current one.

However, questions remain over the ministry's ability to utilise its budget as there was a significant decrease in budgetary usage compared to the allocation in the last fiscal year.

The corporate income tax has been brought down to 25 percent and new slabs have been created in the income tax incidence structure. This should help companies leave more money to distribute among employees and tax-paying employees.

The budget deficit is historically lower than the earlier budgets, depicting that the authorities have taken a very practical stance. But again, the way the allocations have been made shows that the authorities have failed to take into account what common people are most concerned about.

While the government's growth estimates seem to be more practical compared to previous overly optimistic ones, a 6.5 percent inflation target seems far from the current reality, with the average inflation around 9 percent for the past two years.

These contradictions and inadequacies, as well as the lack of specific strategies to address what has been the worst economic crisis facing the country since the pandemic, show that even though the budget admits to the existence of this crisis, it does not provide much way out.
We hope that before giving the final seal of approval on the budget, the esteemed public representatives in the parliament, along with the government, will debate enough among themselves and genuinely take these and other public interest concerns raised by experts and many into account.
The author is an economic analyst.