GDP growth, earnings targets sky-high: Economists say
The government wouldn't normally be able to accomplish its targets on revenue mobilisation and economical growth in the next fiscal year because they are unrealistic beneath the present circumstances, top rated economists of the country have said.
"The mark for the development and revenue collection is sky-high and unrealistic," said Ahsan H Mansur, executive director of the authorities Research Institute of Bangladesh.
The projected GDP growth of 8.2 percent is highly unrealistic and there are potential dangers of taking such an way, said Rizwanul Islam, a former particular adviser for occupation sector at the International Labour Business office, Geneva.
"First, it can lead to practical concerns in managing the economy. With unrealistic projection of output growth, estimates of resource mobilisation must be unrealistic. So, the implementation of the spending budget will stay uncertain."
"Secondly, unrealistically substantial projection of output development may cause false expectations about the employment and profit situation which, subsequently, will create a sense of complacency."
Mustafizur Rahman, a good distinguished fellow of the Center for Policy Dialogue, said the assumption that worked in formulating the cover FY21 will not fully reflect the issues brought on by the coronavirus pandemic.
The budgetary proposals which range from resource mobilisation to expenditure paint a business-as-usual scenario and it seemed from the proposals that the country would get from the Covid-19 very quickly and the economy would return to its past trends, he said.
"But given medical risks we happen to be witnessing we will not get respite from the Covid-19 rapidly."
The resources mobilisation target of Tk 378,000 crore is Tk 20,000 crore higher than the revised budget of Tk 348,000 crore in FY20. But the revenue collection would not become more than Tk 250,000 crore in FY20.
This means, in regards to a 50 percent spike in revenue generation target has been set for FY21.
"This projection isn't realistic," said Mustafizur found in a virtual mass media briefing.
Relating to Mustafizur, both profits and consumption inequalities happen to be widening. But the way tax rates have been slashed, the gain would be practically the same for both low money and high-income groups.
The amount of money whitening scheme has been expanded. But this is not suitable from a moral and economics viewpoint.
Honest taxpayers would pay 25 percent in tax, whereas untaxed money-holders would legalise their money just paying 10 %. This is simply not acceptable, he said.
The CPD welcomed the priorities directed at health, job creation, social safety nets and agriculture.
Prof Selim Raihan, executive director of the South Asian Network on Economic Modeling, said the budget assumed that financial activities will quickly grab the normal tempo and the economy will encounter a "V-shaped recover".
"However, the issue remains whether fact corroborates this assumption. As we are witnessing increasing side effects, rising cases of an infection, and deaths, when might it be practical to resume full-fledged financial activities is an enormous question."
This budget has seen an increase in allocation for medical sector. But the management of medical sector must be better. Without the improvement of supervision, effective usage of the heightened allocation will maintain dilemma, said Prof Selim.
The professor of economics at Dhaka University welcomed the increasing allocation for social protection.
In today's crisis, a wide array of people have slid below the poverty line and in the coming days a lot more will follow. A wide array of folks have lost their jobs. Allocation for social coverage in addition to the health sector should have been increased even more, Prof Selim said.
The budget deficit might upsurge in the upcoming days, particularly if the revenue target is not met and cost pressure increases, he said.
"However, I don't respect it as a huge problem. Actually if the funds deficit rises to 6-7 percent, we will need to accept that for the next two financial years."
PRI's Ahsan said the health budget reflects the good intention of the federal government. Allocation provides been improved and another Tk 10,000 crore provides been set aside to meet up future needs in the sector.
He welcomed the increased spending for the sociable safety nets but you will find a insufficient targeting. A non permanent scheme should have been taken for individuals who have been let go or lost careers, he said.
The plan to borrow Tk 85,000 crore from the banking sector would affect the credit availability for the private sector, Ahsan said.
The export sector is phoning for the depreciation of the taka but it has not been addressed in the spending plan, Ahsan said. The government can't support the export sector simply by giving out subsidies.
"The devaluation allows the government to save lots of a large number of crores of taka from the budget because it would supply the incentive to the export sector automatically."
Your debt servicing cost has risen drastically to Tk 63,801 crore. The government must be careful about it, he said.
"We have to make your debt control proper and increase revenue generation," said Ahsan, likewise a previous economist of the International Monetary Fund.
Given the problem arising from the Covid-19 pandemic, the cover 2020-21 has rightly centered on addressing the twin task of conserving lives and attaining monetary recovery, explained Rizwanul Islam.
For aiding economic restoration, the finance minister seems to be relying on the normal neo-liberal strategy of cutting down taxes, he said.
"But funds saved in the kind of lower taxes are not immediately put in - either on usage or for expense, while money directed at the poor is put in immediately and contributes right to boosting demand and stimulating the overall economy."
In order to generate earnings, there is large reliance on VAT which is not a good strategy because consumers are unlikely to open up their wallets an excessive amount of in today's situation to invest on goods and services that take the indirect tax.
Nothing features been mentioned about the primary minister's announcement in 2019 of fabricating 1.5 crore jobs in five years, he explained.
