A budget of luxury targets: CPD

The Centre for Policy Dialogue (CPD) has lauded the proposed budget for 2014-15 fiscal, but voiced doubts about the optimistic targets.

The research group said the budget was ‘average’ in quality, with very weakly estimated government finance structure but good tax reform.

The targets were ‘luxuriant’, they said.

“The budget estimates a 7.3 percent GDP growth. What is the logic behind this?” CPD’s distinguished fellow Debapriya Bhattacharya said at a news conference in Dhaka on Friday.

“It will be impossible to achieve this growth if private investment is not increased to 25 percent of the GDP,” he said.

“That means private investment will be raised by 4-5 percent. But that is impossible because it means another Tk 750 billion in investments.”

“But we don’t have all the facilities needed for that,” he remarked.

The economist said private investment had never grown by more than 1.5 to 2 percent in any fiscal year.

Annual Development Programme (ADP) has grown by 41 percent in the new budget. It allocates Tk 820 billion for 1,034 projects.

CPD expressed doubts about the implementation of this ADP, saying there had been no significant administrative reforms in the government to successfully execute it.

“Foreign resource mobilisation is targeted to be $4 billion, but there’s little chance that it will come by,” Bhattacharya said.

“The government hasn’t even utilised the funds that are in the pipeline.”

He raised questions about the base year of the GDP growth being 2004-05, while everything else was calculated on the base year of 1995-96.

“This will just create confusion.”

He expressed concerns over the increased interest payment, which is 12.4 percent of the budget this year.

He also observed that the subsidy was decreased to 2 percent of GDP.

But Bhattacharya praised the proposals on tax and VAT.

The CPD called for a tax-free income slab of Tk 250,000.

It said the tax-free slab of Tk 220,000 was unreasonable, considering the inflation and the increases in other sectors.

But it lauded the 30 percent income tax for high income groups.

The CPD recommended that the government form four commissions, for statistics, agricultural prices, local government financing and auditing government spending.