Dhaka, June 10: Terming the budget for the next fiscal realistic renowned economist Dr Binayak Sen felt that though there are concrete measures in the budget for internal revenue mobilization, mobilising external resources would be a major challenge for the government. He also said many new taxes were imposed to achieve the internal revenue target. Talking to The Independent on Friday Dr Sen also noted that the budget lacked emphasis on decentralization of the public expenditure which he felt was crucial to address the challenges of budget implementation.
‘At least 10 per cent of the budget should be devolved to the local government” he said.
Focusing on the revenue mobilization measures, he said, many new taxes have been imposed to achieve the internal revenue target.
“Once upon a time the revenue mobilization capacity of the country was poor but the government has made significant development in this sector,” Dr. Sen told The Independent. He felt that though the role of foreign aid was going down with the passage of time, concessional foreign loans played a crucial role in the economy during periods of uncertainty.
In this connection he mentioned that during the fiscal uncertainty in 2007-08, the then government had managed to get concessional foreign loans from the World Bank which helped it to face the crisis.
“FDI is a major source of external resources but one cannot attract FDI overnight as it requires a long time strategy. The governments needs to concentrate on it,” he added.
He also felt that the budget lacked guidelines to cope with the rising prices of commodities. The government needs to formulate a strategy to absorb the shock of the high prices of food, oil and instability in the foreign exchange sector.
Dr. Sen, however, observed that lack of preparedness resulted in the recent crash in the capital market. In this connection he mentioned that former finance minister late Shah ASMA Kibria had an advisory council which used to advise him on economic management on a regular basis but the present government does not have any such council.
‘The government should use the expertise of the economists on a regular basis through such a council,” he suggested adding that such institutional mechanism helped a lot during crisis periods.
Sen proposed an alternative outlook to expedite project implementation by prioritizing seven to eight sectors identifying a few projects under these sectors instead of the present culture of identifying over 800 projects in the budget and then facing non-implementation over 40 percent of these projects.
He further offered a formula to implement at a faster pace by decentralizing the annual development project and allocate Tk 1 crore performance incentive to the newly-elected union parishads which perform well in revenue generation and project implementation.
He proposed that the government should introduce health insurance at the mass level like in neighbouring India where the government contributes the funding but implements it by private companies.
“The government could solve many of the acute problems like nutrition and family planning if it set cross conditionality for the people who are already served by the government under the social safety net,” he suggested.
Explaining his satisfaction over the fast pace in reducing poverty he said, ‘This is our economic strength. If the global shocks like high commodity and high fuel prices, low external assistance were not there, the GDP growth rate could be over 7 to 8 per cent in the current fiscal year.”