Budget for economic development of the country

--Md Shahadat Hossain FCA

Budget of the country is a very important document. It is not only a statement of annual Income and Expenditure but also a document which impacts on a nation’s citizens in terms of how much taxes needs to be paid and in terms of the benefits individuals and groups receive from the government. Budget is a fiscal tool in the hands of the government which is effectively used for the accomplish-ment of various socio-economic objectives. Poverty is one of the Socio-economic  problems in our country. At present 31 percent people of the country live below the poverty level. Again according to global hunger index, 41.4 million (4.14 crore) people i.e. almost 26 percent of total population are affected for want of nutrition.

In this connection one of the main objectives of economic policy of a country is to maintain the rate of inflation at an acceptable level. But there remain questions how far this objective of the economy is being fulfilled. During the last couple of years prevailing average rate of inflation was abnormally high. As per one calculation, if food price increases at 10 percent, 2.5 percent people of the country come below the poverty level. So, the main reasons for which people remain below the poverty level and are affected for want of nutrition is the high rate of inflation. Another important objective of the economic policy of a country is to create a fairer distribution of income and wealth. But the economic policy especially monetary policy, fiscal policy and allocation of resources are not in favour of ensuring fairer distribution of income and wealth. There are various reasons of high rate of inflation of which some are beyond the control of the government or economic policy of a country such as abnormal price hike of fuel and other essential commodities in international market. But some of the reasons of abnormal inflation are within the control of economic policy of a country, for example fiscal policy. Abnormal dependency on indirect tax and dependency on deficit finance cause the inflation of a country. In our country more than 80 percent fund of budget comes from sources which is inflationary in nature. The policy of allocation of resources in the national budget is also not in support the poor people of the country. As an agricultural country a major part of poor people are under the agricultural sector. If we look at the allocation of resources for agriculture sector in recent past, it can be seen that the allocation is downward- trend. In the agricultural sector, total development and non development expenditure has been estimated in the budget of financial year 2012-13 Tk. 144,670 million which is only 0.77 percent higher than that of the pervious year. Total budget has been increased 19 percent compared to  that of the previous year. If we consider the inflation, allocation in agricultural sector has been reduced by nine percent. Similarly, to support the poor people, another sector is health. Poor people are not able to take modern medical treatment from modern hospitals.


They are to depend on district, upazilla and union parishid level government hospitals.  In the budget of financial year 2012-13 Tk. 89,670 million has been allocated under health sector which is only seven percent higher than that of the last year. If prevailing inflation is considered, the allocation under the heading health sector has been actually reduced by three percent. Shortage of doctor, nurse, medical equipment, medicine is a common scenario in all levels of hospitals. Due to shortage of sufficient budget, people of almost every upazilla are not being able to get proper medical treatment. In some cases, it is found, ambulance is available in the hospital but there is no posting of a driver, and in some cases generator has been given to the hospital but there is no budget allocation for fuel. According to the opinion of the expert, through utilizing the present staff strength and instruments, proper health service is possible to be provided up to 60% people, but   according to a survey report published in the daily news papers, only 22% people of the country are getting health service from the public health organization. It is very much reasonable to raise a question that despite prevailing such a situation in health sector of the country how far only seven percent increase in the budget is feasible.

In the budget of financial year 2012-13 the amount of subsidy, which is only for the poor people, has been allocated Tk. 144,450 Million which is 18 % higher than that of the previous year. But there remains a doubt about perfect distribution of subsidy among the genuine poor people of the country.  According to the result of one research, only 12 percent of hard core poor people are getting benefit of government safety net activities and those, who are getting benefit of such safety net activities from 16 to 20 percent, are not eligible to get such benefit. Proper performance of various activities under social safety projects is another important issue. In many cases it happens that the money of employment program for hard core poor people has not been utilized due to not implementing the program for the negligence of implementing authority.

Inaddition to this in the budget of financial year 2014-15 various changes as regards to budget allocation have been taken place compared with that of the previous year. For example, government has decided to achieve the status of a middle income country by 2021 for which industrialization is essential. To achieve the target various plans have been taken including expanding infrastructure facilities, establishing institute of plastic engineering and technology, improving and renovating tourism facilities of different area of the country for developing tourism industry. Undoubtedly all the plans are in favour of industrialization, but how far materializing those plans is possible, there remains a doubt because budget allocation under industrial sector has been reduced by 33 percent compared with revised budget of the last year. Similarly there is an adverse correlation between the plan of activities and the resource allocation in the sector ‘civil aviation’. In this sector among the various plans remarkable are the procurement of two Boeing aircrafts, continuation of the work for expansion and up gradation of another airport including Hazrat Shahajalal International Airport and up gradation of Cox’s Bazaar Airport into an international one. Here is also a doubt about materializing the plan because budget allocation under this sector has been reduced by 44 percent compared with the amount of the revised budget of last year. Likewise, as regards to environmental issue Bangladesh is one of the most vulnerable countries exposed to global climate change. The level of pollution in rivers surrounding Dhaka is severe.


To overcome the situation, as per contents of the budget speech, lots of steps are going to be taken by the government, such as arrangements have already been made: to transfer the tanneries from Hajaribagh to Savar by March 2015,all-out supports to the programme for converting wastes to compost fertilizer with the wastes collected from all city corporations and municipalities in an eco-friendly waste management system, the action of conversion of existing brick kilns to hi-tech environment friendly brick-kilns  to reduce the severity of air pollution, to continue Quality Air Monitoring Stations to monitor the quality of air in the atmosphere etc. If we pay our attention to the budget allocation, it may be observed that allocation for the concerned ministry of environment and forest has been increased only by 3.8 percent compared with the revised budget of the previous year. Taking into cognizance of existing huge environmental problem, future steps to overcome such problems and prevailing inflation, it may be said that the real picture is, budget allocation for ministry of environment and forest has been reduced by three percent. With this less budget how the plan for combating environmental pollution will be executed, there remains a question.

Budget, these days, is not merely a statement of government receipts and expenditure, but it has got a functional role to play. It is not only desirable but necessary to formulate such a budget which may enable the government to allocate resources in a manner so that it may take care of its social and economic objectives. According to the international best practice, major dimensions of budget formulation process are, setting up the fiscal targets and the level of expenditures compatible with the targets, formulating expenditure policies, allocating resources in conformity with both policies and fiscal targets and addressing operational efficiency and performance issues. Lack of allocating resources in conformity with expenditure polices is also beyond the major dimensions of the budget formulation process. Considering the circumstance as described above it stands to believe that the budget has not been prepared following the internationally acceptable core processes of budget preparation. Finally we will have to keep in mind that budget is the most potent instrument which is the financial mirror of economic policies of the country. So, it will have to be prepared in such a manner so that there remains no lack of confidence of professionals and general people which is harmful for the socio economic development of the country.