Comparative Analysis of the National Budget of Bangladesh for Financial Year 2011- 12

1 Introduction

Before going to discuss the brief analysis of national budget of Bangladesh for financial year 2011- 12, it is demand of this paper to take the definition of ‘Budget’ on account. Usually it is defined as, an itemized summary of estimated or intended expenditures for a given period along with proposals for financing them.

The national budget of financial year 2011-12 has been announced at the midpoint of the present government’s five years tenure, marred by challenges to maintain the balances and the achievement of the targets for which it was voted to power. The current situation of macroeconomic balances, particularly triggered by volatility of prices and contractionary monetary policies, may be further pressurized by the possibility of fiscal squeeze. But, the condition says, government cannot be able to pursue the contrationary policy as it will need to meet the increased budget deficits. And if the government forces Bangladesh Bank to pursue expansionary monetary policy then it will eventually make a rise on price level which will may lead further creation of poverty. The noted economist of Bangladesh, Barakat just said before some days that 83% of Bangladeshi are now living under the poverty line, which is actually found out by considering the recent 11.29% point to point inflation and decreasing motive of savings comparing to consumption.

2 Comparison between national budgets of FY11 & FY12

Table 1.1: Comparison between FY11 & FY12

We can see here, the total national budget expenditure for this year is BDT 1,63,589 crore where as the  expenditure size of national budget of the last financial year was BDT 1,32,170 crore, which means budget expenditure is increased by 25.82% comparing with last year. And this year budget expenditure is 18.2% of gross domestic product (GDP) whereas last year budget was 16.5% of that year GDP.

Another remarkable matter is that, the size of annual development program (ADP) has raised from BDT 35,880 crore that of last year to  BDT 46,000 crore of this year. The major differences between national budgets of FY11 & FY12 are shown on above with Table 1.1

3 Positive Side

In this national budget there are some positive sides such as an increase of allocation in annual development program, 18% increase of the allocation in local government sector. And this year’s slogan of budget is "Towards Building a Happy, Prosperous and Caring Bangladesh", which enables us to dream a happy Bangladesh.

4 Negative Side

The first problem would be financing this bigger budget. As we can see from the Table 1.1 that the present budget expenditure is increased by 25.8% this year, which will be really a great matter to finance. So, after all if the government increases taking loans from domestic source (i.e., 9% increases than to FY11) then it will either create pressure on Bangladesh Bank to take expansionary monetary policy which will may cause a price hike of the commodities or if present contractionary policy is not cancelled then interest rate will rise eventually, which will surely decrease domestic private investment.
The second problem will be with the production of agricultural sector. As our finance minister declared a subsidy allocation of BDT 4,500 crore, which is BDT 1,200 crore lower than to the last year subsidy allocation. Bangladesh agricultural sector, mainly the root level farmers are highly depended on this subsidy allocation. In this year as it is decreasing at a high rate, it will surely cause a decrease in production of root level farmer at agricultural sector.

The third problem is with the allocation of BDT 2,228 crore in Water Resource development & non development works, which is actually insufficient regarding present pure & sweet water demand.

And the final thing is in national budget expenditure FY12, there is no such detailed recommendation and clear cut allocation for rural housing which is a matter of great frustration.

5 What Should to Do

After viewing the overall budget of FY12 it can be said, it will look better if the following expenditure & finance realted points are undertaken,

  

     5.1 Expenditure

                   I.            Though the budget expenditure emphasized the educational sector with most importance but there is no such scheme for appreciating research works which are needed to solve our present & upcoming national problems through own invented technologies & techniques. It can be shown that if government allocates BDT 100 crore from this FY then with BDT 10,000 per month allowance to the students of post graduate level such that to the students of PHD level, then more people will be attracted to do so and Bangladesh will able to get minimum 2,000 PHD holder every year. The main thing is, this will help us invent more efficient techniques in every sector which will make Vision 2021 easily achievable.

                II.            In the budget FY12 it was demand of time to allocate a special expenditure for reducing unrest situation of hilly places of Bangladesh, which should actually aim at raising their living standard & making them to mix up with mainstream people. For doing so, the best tool would be making an International University there preserving minimum 50% quota for those eligible people of ethnically minor groups & 20% quota for students of countries of SAARC area. A lump sum amount of BDT 30 crore will be needed to establish and run this primarily.

             III.            For capturing the huge worldwide outsourcing market, 64 outsourcing hub should be made in total locating each hub in each district along with 100 computers plus broadband internet connections respectively. This agenda will enable 6,400 previously trained & skilled people to earn foreign currencies at huge scale. At a time BDT 18 crore will be needed for starting this program which will help to attain the goals of ‘Digital Bangladesh’.

             IV.            In this year budget, it is already expressed that Bangladesh should approach as Economic Hub such as Switzerland. But, before going through it government should fix up the ‘Transit Fee’, summing up environmental pollution, maintenance cost of infrastructures & specially the export earning which are till now earned from those states, but will fall on threat at Transit Time.

                V.            It is high time to make the Stock Market stable. To do so, a new institution named Stock Market Rehabilitation should be officially structured for pressurizing the present & upcoming foreign entrepreneurs & companies to put at least 10% share of their respective companies within a year at Bangladesh share market. This program will eventually rise the supply of good quality shares which will surely cause a qualitative change of share market. And for this, primarily BDT 10 crore should be allocated.

    5.2 Finance

                            I.            For collecting the income tax properly after finding out the eligible people by endowing job seekers for a short period, National Board of Revenue can earn more than its estimated earnings. And primarily this program will may need to absorb BDT 12 crore but will turnover more than BDT 100 crore within a year if it is done based on every upazila (i.e., 509 upazilas in total) of Bangladesh. So, in this national budget for FY12 it should be included.

                         II.            New kind of taxes such that ‘Coal Import Tax’ & ‘Carbon Tax’ should be introduced. By imposing ceiled yearly BDT 240 ‘Coal Import Tax’ on every earner person of the country, in total approximately BDT 1200 crore can be earned by which we can buy coal from international market to meet our increasing demand for energy production & allocation. On the other hand, ‘Carbon Tax’ should be imposed primarily at lower rate on the all companies which leave carbon gas in nature. This will help us step by step, recovering our polluted nature by creating planned forestation in every city & industrial area.

 © Enamul Hafiz Latifee
enamul.hafiz.sust@gmail.com