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Pre-budget thinking : Address main economic policy issues

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06th-Jun-2018       
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Dr. Md. Shairul  Mashreque :
Economic growth/ development in any country depends on proper formulation and implementation of economic policy objectives as well as appropriate premeditated governmental action to address the cardinal issues. The state through strategic policy framework seeks to achieve macroeconomic stability through resistant economic growth. Growth in GDP, GNP and increase in per capita income is considered of utmost importance. One of the requirements for sustained economic growth is an efficient fiscal policy. Monterey policy projects to ensure 'price stability', 'exchange rate stability', 'financial discipline', 'equilibrium in the balance of payment' and development of domestic money and capital market. At times it aims at checking inflation (Hossian and Chowdhury 1994: 4). Investment policy is intrinsically connected with economic growth.  
It needs to be mentioned that there have been substantial changes in various aspects of economic policies including macro enterprise development and financial institut6ions and investment.
A rapt attention has been given to agriculture sector, which is fraught with the contemporary issues like poor land management, exploitative agrarian relations and withdrawal of subsidies. Because of poor land management agricultural land is subjected to micronutrients deficiency with dependence on rice mono-culture  
Tendency to attain food self -sufficiency in an era of agricultural modernization with the use of chemical fertilizers and upto date irrigation techniques impair indigenous bases of cultivation.
The issue of sustainable agricultural development is thus a matter of utmost policy priority with conservation of scarce resources, prevention of depletion of land fertility, water resource management and use of age long practices in crop and non-crop sectors.
The issue of agrarian relation is conceptually connected with the exploitative system of economic relationship with skewed distribution of land, usurpation of land, share cropping and mortgaging. Legislative measures, notwithstanding, land redistribution has failed to reduce marginalisation of the small farmers and the landless.
As for the issue of subsidization of production inputs, unrealistic policy postures embedded in recent economic reforms in line with SAP go against the interests of primary producers of rice, cotton and jute. Agriculture sector has been left to fend for itself without favorable state patronization. The major elements of policy reform package recommended to agriculture and food sector are: gradual phasing out of the price stabilization and buffer stock operations, elimination of subsidies on minor irrigations equipment, seeds and fertilizers .
The forthcoming budget would be election oriented. This will be to placate the people who will participate in the election as voters. Expectedly the burden of taxation will not be borne by the tax payers and traders. A large list of development projects and huge money from budget will became inordinately ambitious thinking.  Even then the government should address the contemporary economic policy issues.  
Nevertheless the budget is expected to be election budget. The government is considering popular opinion while planning for the upcoming budget which will be the last one in its current tenure, with the next general election likely to be held in December.
Following an order from the Prime Minister's Office, the Finance Ministry has already started preparing the proposed budget for the fiscal 2018-19 focusing on tapping into the opportunities of the global economy, increasing remittance inflow and exploring new export markets. The work in this regard is in progress despite the fact that a new government will be in power when the next financial year ends on June 30, 2019.
Sources said the government, focusing on capacity building, is mulling an increased allocation in several sectors, significantly social safety, education and health.
The allowances, including those meant for freedom fighters, under the social safety net programme can be increased. Allocation for rural and agricultural development sectors is likely to soar noticeably while more employment opportunities will be created, the sources said, adding that the government will also give importance on human resource development.
Under the plan of infrastructural development, the ports, rail and road communication, and power and energy sectors will be prioritised. The issue of skill development to tackle climate change, on information and communication technology, and to help build a Digital Bangladesh will also be on the priority list. Finance Minister AMA Muhith had previously said that the budget size will be below Tk500,000 crore.
The proposed budget will be raised by nearly 16.5% compared to the current fiscal year's budgetary allocation. If so, the next budget will be of more than Tk468,000 crore. Meanwhile, the Annual Development Programme (ADP) allocation can be estimated at Tk178,296 crore, whereas the figure for ADP in the current fiscal year is Tk153,331 crore. The target of gross domestic product (DGP) growth and inflation rates could be set at 7.6% and 5.5% respectively over the same period when Tk340,770 crore is likely to be the overall revenue collection target. In order to increase revenue earnings, a law can be amended as well.
Mentionable, the total GDP volume will be of Tk2,574,100 crore in the fiscal 2018-19  against the ongoing financial year's GDP target set at Tk2,223,600 crore. The budget, the Finance Ministry sources said, will be designed keeping the matter in mind that the voters do not feel pressure due to it.
Unnecessary taxes and duties will be abolished and the government may launch e-payment and e-filling services to curb hassle in submitting income tax returns. The government can also introduce a 37-digit budget and accounting classification system aiming to ensure accountability and transparency regarding the spending from the revenue collected. Incentives and budget deficit may cover 1.1% of the total GDP, with the budget deficit being predicted to go up.
There will be low concerns about inflation rates since the possibility of fuel oil getting dearer is very little in the current year. According the Planning Ministry, the government has crafted plans for visible development centring the next polls, to keep the masses happy.
In doing so, it will push up allocation for several top priority projects, including Padma Bridge, Payra and Sonadia deep seaports, Rampal coal-fired and Rooppur nuclear power plants, Dhaka metro rail and liquefied natural gas (LNG) terminals in Moheshkhali that received Tk33,182 crore in the current fiscal year.
Thinking about increased allocation for sustainable agricultural development is a good one. The target of economic growth if reached will definitely contribute to economic resilience. In the national to be announced in 7th June 2018 the main economic issues would be addressed. Even then I suggest to prioritize the other economic sectors or sub-sectors like irrigation, small industries, food processing and fish processing and garment and jute products.
(Dr. Md. Shairul  Mashreque is a retired professor of Chittagong University).

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