Dhaka, Bangladesh
Balancing redistribution seen imperative

Budget bigger at Tk 5.23 trillion

Balancing redistribution seen imperative

News Report A bigger-sized new national budget worth around Tk 5.23-lakh crore is set to be placed in parliament today amid expectation that the government would outline reforms needed for balanced redistribution of the allocations. Economists are of the view that a balanced development of the country presupposes redistribution of national wealth among regions, sectors, population groups and individuals. They say an important measurement yardstick is Gini coefficient About budgeting and development paradigm, some of them are of the view that there have emerged disparities of different types in the country's development pursuit over the years, such as urban-rural, regional, rich-poor, gender-specific and age groups of the population. Parity was the main objective of the independence war the people of all strata fought in 1971. But the economists and analysts point out a yawning income inequality in Bangladesh for what they say a lack of proper focus on redistribution of wealth. Some of them often say in different forums that there has been high wealth concentration in few hands, creating a hiatus between the top 5.0 percent and the rest 95 percent of the population. In this context, they point out an alarming imbalance shown in the Gini coefficient-the matrix of inequality of a distribution system. It is defined as a ratio with values between 0 and 1. Gini index measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution. A Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality in the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. By World Bank count, in 2016, GINI index for Bangladesh was 32.4. Though the GINI index has fluctuated substantially in recent years, it tended to increase through 1988 - 2016 period ending at 32.4 index in 2016. Last difference could be wider. Some ruling-party leaders and analysts, however, say income concentration is a universal phenomenon in a rapidly developing country in capitalist system. And that builds a base for industrially developed country. However, industrialization in an economy these days does not follow the traditional capitalist system evolved centuries back. Some other ways are followed now in economic development through building up industrial base. China, Russia, NICs of the East by their different ways. The budget coming today holds some new features in taxation, stimulus, banking operations regarding mounting amounts of NPL and interest incongruities and so. Finance Minister AHM Mustafa Kamal is set to unfold the proposed national budget at 3:00 pm. This would be the country's 48th national budget and 20th by the Awami League government in its five terms since the 1971 Independence, says a BSS report. The budget is presumed to propose a number of welfare-oriented initiatives and reforms in the banking sector, capital market, savings certificates and social- safety-net programmes and generate employments. This would be the first budget to be delivered by Kamal while its size would be approximately Tk 58,000 crore higher than that of the last fiscal presented by his predecessor Abul Maal Abdul Muhith. Muhith last year presented a Tk 464,573-crore budget before he went on retirement by serving as the first finance minister to unfold the budget for the 10 times in a row since 2009. Finance ministry officials said the budget would propose developing a "Startup Fund" for the first time in the country for young entrepreneurs who could take soft-term loans to launch and run their ventures. They said the new budget would pave the way for enlisting new educational institutions under government's Monthly Payment Order (MPO) system. Kamal, they said, is set to propose a crop-insurance scheme on pilot basis for several districts with a plan to expand it across the country in phases. The budget would also unveil an insurance plan for stimulating expatriate Bangladeshi workers and minimizing their income-related concerns. The officials said the budget would propose a widened safety-net coverage allocating Tk 5,321 crore to include afresh some 13 lakh beneficiaries and increasing their number to 89 lakh while current number of recipients is 76 lakh. A finance division official familiar with the budget-formation process said the new budget would eye a GDP growth of 8.2 percent in the coming fiscal. He said the target was based on the provisional GDP growth-rate estimation of 8.13 percent in the outgoing fiscal (FY19). The new budget would target to keep inflation rate at 5.5 percent assuming that the fuel and oil prices on the global market would remain unchanged. A National Board of Revenue (NBR) official, meanwhile, said the new VAT law which would come into effect from July 1 would intensify the revenue- mobilization campaign. "The new budget will eye to create some 80 lakh new taxpayers in addition to the existing 20 lakhs in our efforts to raise the number of taxpayers to one crore," he said. The NBR official added that some 9 lakh capable businessmen would be identified across the country, especially in the rural and semi-urban markets. He said the tax and VAT rates, however, would not be increased on any item, rather it would be reduced in some cases. NBR, the official said, would appoint some 10,000 fresh university graduates on temporary basis to identify the new taxpayers visiting their doorsteps. The finance minister himself on a couple of occasions recently, however, assured that none would be harassed or burdened in imposing and realizing the taxes. Under the expanded safety-net coverage, the budget would propose inclusion of some 4 lakh fresh old-age-allowance recipients and expand the number of widow-allowance recipients to some 3 lakh and insolvent differently able allowance recipients to 5.50 lakh. The budget would make allocations as well for 70,000 maternity-allowance recipients, 25,000 working lactating mother allowance recipients, 10,000 tea workers alongside 15,000 other allowance recipients. Finance ministry officials said proposed budget would be 18.1 percent of expected GDP. Of the total budget amount, Tk 202,721 crore is by now allocated against the Annual Development Programme (ADP) for the coming fiscal. The overall revenue-collection target in the budget would likely to be Tk 377,810 crore, including the grants, which is 13.1 percent of the GDP. The budget is likely to entrust the NBR with a task to realize Tk 325,600 crore as revenue while the non-NBR revenue-collection target is likely to be Tk 14,500 crore. The officials said the non-tax revenue-collection target is likely to be set at Tk 37,710 crore while Tk 4,168 crore is likely to come as foreign grants. The overall budget deficit is likely to stand at Tk 141,212 crore, an amount expected to be less than 5.0 percent of the GDP. To meet this deficit, the government is likely to borrow Tk 63,848 crore from the foreign sources while the remaining Tk 77,363 crore from the local sources. The new budget would focus on celebrating the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman.

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