Budget of excellent balance between life and livelihood

Our life and livelihood or the economy at large now has been under serious risks in every sphere for a year under the impact of the Covid-19 pandemic. “An abnormal, surrealistic, restive, uncertain, risky, dangerous and extremely risky situation still prevails,” says Prof Dr M Selim Uddin in appreciating the government’s budgeting wisdom in such an ambiance which is euphemistically called ‘new normal’. 

Professor of Accounting in Chittagong University and currently Chairman of the executive committees of Bangladesh House-building Finance Corporation and Islami Bank Bangladesh Limited, Dr Selim noted that under such a situation, the budget for 2021-22 fiscal year was formulated in a meticulous manner focusing the safeguarding of life through minimizing health risks and injecting dynamism into livelihood and the economy at the same time.  

“In an overall appraisal it can be stated that the proposed new budget reflects a fine balance between life and livelihood from different dimensions,” Prof Selim said, stressing its effective implementation for reaping the desired benefits. 

He mentioned a wish list laid down in the Tk 603,681-crore budget buttressed with a progressive GDP growth target at 7.2 per cent. 

The set priorities encompass health, social safety, agriculture, economic recovery, infusing impetus into economic activity, attracting new investment, grooming new entrepreneurs and the like. Budget allocations have been enhanced for achieving these ends, alongside attaching priorities to various tax breaks like tax holiday and tax waiver.  

But there remains a flip side in budgeting and budget execution, as evident from the lapses in the years gone by. Reviews show that budgets are not executed fully and proposed expenditures remain unspent. As a result, the planned works under the allocations, such as healthcare, social -safety net, other infrastructures, are not being properly accomplished. 

 As a consequence of such unfinished tasks, the cherished public welfare and economic advances cannot be derived from the budgetary targets. And the committed objectives of alleviating public sufferings, improving investment environment and so as a positive outcome of the budget spending remain unfulfilled. 

“So, the benefits and success of the proposed budget is subject to its proper implementation,” says the accounting professor. 

He suggests the spending plan should be monthly or three-monthly (quarterly) in proportion. Or else, securing the quality and results of works remains uncertain. 

As an example, the ADP implementation in the health sector in the outgoing fiscal can be cited. The development budget was Tk 13,865 crore for the 2020-21 financial year. But only about Tk 4,000 crore or 29 per cent of the funds could be utilized in ten months to April 2021. 

Meanwhile,  positive and fruitful outcomes of the aims, policies and allocations in the new budget can be ensured by way of pooling a dynamic leadership in revenue collection and deficit financing.

The current and the proposed new budget, both in the corona period, carries some major measures aimed at combating the pandemic and economic recovery under specific policies, strategies and stimulus packages. Apart from applying those, the budgets contain different basic commitments of the government. These include  time extension for implementing the prime minister-announced 23 stimulus packages worth about Tk 128,441 crore, focus on job generation in government spending, avoiding extravagance, introducing loan for CMSMEs at low interest, extending social safety-net recipe, and increasing money supply to the market.  “Expecting higher stringency in their implementation,” Prof Selim said.

It may be mentioned here that small and medium enterprises and service providers, especially agro based and exporting ones, have not yet properly received the money from the large stimulus packages.

Ensuring disbursement of the stimulus funds by adopting special measures and extending more assistance would enable the CMSMEs to contribute to job generation, bolstering rural economy and spurring demand.

Dr Selim says another significant feature of this budget is an allocation of some Tk 107,614 crore which is 17.83  per cent of the budget and 3.0 per cent of the GDP. This government had allocated Tk 13,845 crore for this purpose in the 2008-2009 budget, which now increased seven times. The target has been set to implement the social-safety-net recipe through over 130 programmes. Among those are an increased number of old-age allowances, enhanced freedom fighter allowance, establishing shelters for the disabled, and cash assistance.

Dr Selim listed the different measures and stimuli, health-sector measures, importance on agriculture and safety nets planned for slashing the rate of extreme poverty from 12.3 per cent to 4-5 per cent by 2023-24. “Such thinking and spirit, I think, is a notable dimension of the budget,” he said in his detailed budget reaction.

From a critical analysis of the sector-wise allocation in the budget would reveal that different strategies get priority on various sectors like  social welfare and security oriented programmes,  tax- tolerance and GDP generated mega projects and in investment availability of the stagnant private sector.

About the traditional big-size budget, Mr. Selim said in consideration of the endless development potentialities of Bangladesh, expectations of the masses, gradual upward tendencies of consumers, increase of demands, present economic stability and progress of various economic indexes, the budget should not be conservative. Many people believe that big sized budget create opportunities and scopes for wastage and misuse of money, he said adding, “Rather I should say it is good to have liberal attitude in allocation of money and it brings positive results in many cases. However, I think that most of the expectations made in this budget could be achieved if wastage of money could be halted in various projects and strict surveillances is ensured in the current fiscal, good results could be derived if CAVID could be bring under complete control world-wide by few months , may be by 2021”.

Dr, Selim said, “Strict measures and hard surveillance must be kept in the cases of short-medium and long term macro and micro economic indexes of  Bangladesh economy viz. commitment of  keeping inflation rate within 5.3 per cent, strictly maintaining mid-term economic strategy, keeping commitment of keeping agriculture, industry, trade, exports, housing, remittances, attracting foreign investment, creating employment opportunities, enhancing  service sectors and controlling income disparity under tough competitive levels.” 

Dr. Selim observed that the proposed budget could play a significant role, even without imposing new taxes if this high ambitious budget could be implemented proportionately month-by- month  with honesty and sincerity and the allocated money could ensure qualitative utilization.  In fact, the budget implementation would depend upon monthly or quarterly evolution of the progress and achievements of budget targets. In this connection, he said, for the last few years the rate of budget implementation has enhanced from 10 per cent to 21 per cent. 

He said the current investment scenario is not satisfactory to achieve higher growth; especially the government investment is not increasing at the expected rate for lack of proper implementation of ADP and absence of skill and capacity.

In the context of the aforesaid challenges, he suggests, it is imperative to identify real risk factors involved in time overrun and cost overrun in project execution and opting for implementation evaluation on a monthly basis. 

Strong monitoring and supervision are essential In respect of ensuring foreign loan flow for augmenting private-sector investment, stabilizing exchange rate and inflation, confidence boosting, and smooth completion of works in power, energy, transport and communications sectors. Stability is also one of the cardinal factors. 

Besides, budget implementation can be accelerated in a proper manner by enhancing execution capability, outlining a clear roadmap in budget implementation, bringing transparency and accountability in revenue collection, and a qualitative change in project implementation.  

“Many challenges and hurdles in budget implementation will be gone if these factors are taken into consideration,” said Dr Selim.

There has been substantial fund allocation in this proposed budget for social and physical infrastructure building with the aim of attracting foreign investment, lowering the cost of doing business, consolidating global competitive footing,  inclusive growth, and poverty reduction.

However, it is in the best interest of the country that a standard is set for the quality of spending, timing of implementation, total project cost et al.

There should be regular press briefing on implementation status of the ongoing mega-projects for public appraisal, he suggested.

Reaping dividend depends on execution