Opinion

A budget by the oligarchy, for the oligarchy
M. Shahidul Islam
06 Jun,2015

The 2015-16 budgets are politically attuned to make the oligarchs happy. It’s an oligarchs’ undertaking to satisfy other oligarchs who matter most in keeping the government in the sit of power. The message is pretty obvious: when the votes of the ordinary people do not matter, there is no compulsion to cater for their well being either.

A glance at the major heads of the budgets convinces us to say that the priorities accorded in the budget to the heads are those where money spins more money in commissioning and rent-seeking and, the needs of individual households are totally missing.

Poor prioritization

As we hit the press with only the preview of the budget in hand, the pros and cons of salient allocations fail to convince us that the budget is fully attentive to the need of the ordinary mass. No doubt its size is nearly 20 per cent bigger than the previous fiscal (taka 2.97 trillion as opposed to taka 2.5 trillion in 2014-15), much of the increase, however, is due to the implementation of a new pay scale for public servants which needs double the money needed under the previous pay scale. Implementation of the new pay commission recommendations alone needs additional taka 220  billion for the 2015-16 fiscal.

The LGRD keeps the army of party loyalists involved in central and local contracting happy with hefty infrastructural contracts. No wonder, the LGRD ministry will get the biggest chunk of the budget, taka 188.72 billion, followed by the ministry of defencce which is slated to get taka 183.77 billion. Third in the receiving end is the ministry of education, which will get taka 171.13 billion.

With an estimated allocation of taka 970 billion for ADP, deficits will hit taka 880 billion, slightly shy of 5 per cent of the GDP. On the income side, revenue earning is slated to reach only taka 2.12 billion while taka 301.34 billion will be collected from foreign sources to meet the deficit, Further shortfall will be met by borrowing from domestic sources, according to information received.

These major allocations speak of a reality-devoid, poor prioritization in public health, public transport, public housing and employment creation; which are the fundamental needs of the people.

Keynesian intervention

Finance Minister AMA Muhith would have gone down the history as being the artisan for a progressive fiscal policy making if his prioritizing of the budgetary allocations were unconventional and focused mainly on reducing imports by facilitating the establishment of an import-substitute industrial base. This alone could lift the GDP by over 2 per cent in the next 3-4 years by creating employment and spurring demand of goods and services.

It needs no reminding that conventional approach to economic prioritization produces only conventional results, which are hardly what is needed to achieve 7-8 per cent GDP in coming years, as the Finance Minister had hoped for. But politics and economy must jibe at a time when the government suffers from an acute crisis of legitimacy. The budgets are reflective of that reality.

Introducing a basket of welfare measures that can reach individual households with lower income ¬as childcare benefit or old-age care money, could also spur demands for goods and services and contribute substantially in surging the GDP.

The conventional methodologies to increase growth are spurious due to their impact on exacerbating income disparity and dragging the employment acceleration backward. To uplift the economy in the fastest possible time, some Keynesian intervention, backed by public-private joint ventures in import-substituted enterprises, would work magic for an economy like Bangladesh which is on the way to lifting off toward the next rung of development as a mid-income nation.

Money alone cannot achieve that aim, although the new budget does have nearly 20 per cent increased money flow ingrained in it. As well, indexed with the surging inflation, lack of private investment and the hindrances posed by an explosive mix of bad governance, corruption, lack of gas, electricity and other infrastructural amenities, nearly Taka 3 trillion budget  seems to be lacking in urgently-needed micro-level priorities and more engrossed with macro level mega projects in the civil and military sectors.

Regional ranking & weak foundation

Is the government unaware of what’s best for the economy? Seems to be, for the budget came on the heels of the publication of a well-researched international report on the Bangladesh economy that had summarized the acute pitfalls bedeviling Bangladesh’s uplift and progress.

In the 2015 Index of Economic Freedom, prepared jointly by The Heritage Foundation and the Wall Street Journal, the following remarks were endorsed on Bangladesh economy: “Bangladesh’s economic freedom score is 53.9, making its economy the 131st freest in the 2015 Index. Its overall score has decreased by 0.2 point since last year, with improvements in labour freedom, freedom from corruption, and monetary freedom outweighed by notable declines in investment freedom and business freedom. Bangladesh is ranked 27th out of 42 countries in the Asia–Pacific region.”

The report pointed out that, “Over the past five years, Bangladesh’s economic freedom has fluctuated at the lower end of the “mostly un-free” category. Modest score improvements have occurred in just four of the 10 economic freedoms (financial freedom, labour freedom, freedom from corruption, and trade freedom), and overall policy reform appears to have stalled.”

The report categorized Bangladesh as having weak foundation and said: “A general disregard for the rule of law, rampant corruption, and a judicial system that suffers from political interference provide a weak foundation for economic modernization. Lack of a national consensus on the direction of future policy changes has diminished the momentum for economic reforms, and deteriorating prospects for near-term improvements in economic freedom make it unlikely that the relatively high growth rates of recent years can be maintained.”

We feel it’s time to fix the nagging governance pitfalls and re-model the conventional fiscal and monetary policies based on the need of a time when the rich people are sending their children and money abroad in droves and the poor ones are drowning in the sea while trying to reach foreign destinations. As the older way of governing the nation is not working, the budgeting too must change their prioritization.