A budget is only as good as its implementation, and so we shall see how much of the government’s income and expenditure over the 2020-21 fiscal is consistent with the document proposed by Finance Minister A.H.M. Mustafa Kamal on June 11. Certainly, this year the task presented extra difficulties, with the Coronavirus pandemic looking set to linger on for a while, along with all its attendant uncertainties. Even a seasoned economist such as Dr Debapriya Bhattacharya likened it to the impossibility theorem!
The Finance Minister in his 130-page budget document, including the speech with the slogan 'Economic Transition and Pathway to Progress' said that since the beginning of the COVID-19 pandemic, the government has taken various steps to combat its fallout. Mustafa Kamal acknowledged that since the government enforced general holidays, lockdowns, closure of factories and businesses to prevent the spread of coronavirus infections, incomes for the common people have reduced, which now threatens the country’s achievements in poverty alleviation and social security. In order to overcome the situation, the government has taken an initiative to make direct cash transfers to 5 million people in the outgoing fiscal to alleviate the sufferings of the poor working people.
At least two items would seem to respond to the need of the hour: firstly, the budget allocated Tk 95,574 crore for programmes under the social safety net for the 2020-21 fiscal, with a proposal to expand the coverage of some programmes to specifically alleviate the plight of the poor amid the situation arising out of the Coronavirus pandemic. Secondly, an allocation of Tk29,247 crore for health services and health education sector, up by 23.44 percent from last year’s revised allocation, and the highest sectoral allocation in the proposed budget. One wouldn’t foresee too many obstacles cropping up to that.
The challenge would present itself however, in the financing of the budget. The revenue collection target of Tk378,000 crore would seem highly ambitious - the CPD, in an instant-reaction, speculated this would be in the region of Tk 250,000 crore. The budget deficit, which has been estimated at 6 percent of GDP - a break from years of fidelity to a 5 percent target - may well balloon even beyond that figure. And it is possibly with an eye towards that probability that the scope of whitening black money has been proposed to return by Mustafa Kamal. This has proved of very little practical benefit in the past however.