Finance and Planning Minister Amir Khosru Mahmud Chowdhury deserves kudos for coming up with a budget that nobody possibly would dare in a situation marked by some daunting challenges both at home and external fronts. However, scepticism about meeting budgetary goals of appeasing almost everyone remains in place. Businesses, economists and relevant others in their post-budget reactions have found the finance minister's intention pious, but they are not sure about the final outcome.
The national budget for the fiscal year 2026-27 has already gathered lots of adjectives for its total outlay. Truly, the proposed budget deserves a few. For, the situation on the ground is not conducive for taking up such a capital-intensive budget. The finance minister has either preferred to follow his predecessors' inclination towards playing to the gallery or he has something up his sleeves to meet a bagful of budget objectives that are very much populist in nature.
The budget has a lot of paradoxes also; it offers fiscal concessions to businesses to help lower their cost of doing business and relief to consumers in the form of cheaper daily essentials. There is also a long list of domestically produced goods that will receive tariff protection, a move that goes against the much-touted trade liberalization campaign supported by multilateral institutions. Their response is awaited. The campaign, however, has lost much of its relevance due to the controversial protectionist measures launched by none other than the so-called leader of the free world, the USA, in recent months.
Of all the budget numbers, the ones concerning revenue receipt, deficit, development expenditure etc., have raised many eyebrows. The main reason behind widespread scepticism about these numbers is the poor track record of the National Board of Revenue (NBR) in achieving budgetary revenue targets. The revenue mobilization by the Board during the outgoing fiscal year is likely to fall short of the revised target by a notable margin.
Thus, setting a tax revenue target 51 per cent bigger than the likely revenue collection during FY'26 appears unrealistic.
The budget, as mentioned by the finance minister, has been crafted keeping in 10 priority areas, namely, (a) development for all; (b) quality education and healthcare for all; (c) universal social security; (d) building an investment-dependent and employment and production-oriented economy; (e) deregulation; (f) stable financial sector; (g) energy security; (h) growth of information and communication technology; (i) proper management of life, Nature, environment and water resources; and (j) creating a transparent, efficient and accountable public entities and administrative system. The priorities are right. Yet those cannot be met overnight. Most people would be happy if the incumbent government can initiate actions in these areas as a good beginning during the execution of the fiscal year (FY) 2026-27 budget. There will be hurdles as the capacity to execute plans and programmes by most government agencies is far from perfect.
For instance, the government, as per its electoral promise, has raised the health sector allocation to more than 1.0 per cent of GDP in the proposed budget. But the performance level of the most public sector health entities has been dismally poor. Larger allocation is unlikely to make any difference as far as their service delivery is concerned. Education is yet another area where the government is promise-bound to raise allocation and also service delivery. Then again, safety net operations that are used to extend social security to millions of poor and low-income people are flawed and need necessary correction.
Every time the national budget is presented, the issue of poor revenue-GDP ratio comes to the fore. The ratio is now hovering well below 7.0 per cent, one of the lowest in the region. Time and again, government policymakers have laid emphasis on expanding the tax-base to mobilise more revenues and reforms to help raise the ratio. Unfortunately, that has not happened. In every budget, more tax burden is imposed on loyal taxpayers. When the demand is to do away with tax exemption cultures, the new budget proposes to expand the exemption net.
The reform of the NBR through its bifurcation and automation has taken a backseat. The finance minister, deliberately or otherwise, has skipped the NBR bifurcation issue in his budget speech and promised 'End-to-End- Automation' of the revenue system. Automation of NBR has been a buzzword for more than one and a half decades. Even donor-financed projects and programmes could not make any headway in this respect. So, if the government wants to raise revenue earnings to help materialise the tax revenue target, it should concentrate more on reforms on the ground and less on rhetoric.
The budget has rightly placed emphasis on renewable energy and fossil fuel-saving strategy. Tax cut on solar panel and electric vehicles is being seen a positive move.
Overall, the budget has created a 'feel good' environment. Almost everyone would find something positive in the 178-page budget speech of the finance minister. Whether he would be able to deliver what he has promised is a question most people are asking.
What is, however, important is that a democratically elected government has diagnosed ills that are hurting the economy and offered a revival programme. It may not be that perfect but it has made a welcome departure from the recent past.
The government should have made the budget a bit smaller and stuck religiously to its '3R' (Recovery & Stabilisation, Restoration and Reconstruction) strategy to revive the economy. The economic recovery is supposed to take place in a year's time when the government's sole aim should be to ensure efficient revenue collection and quality public service delivery. Moreover, a few challenges---both domestic and external--- the government is encountering now are daunting. And, the finance minister has also referred to those in his budget speech. However, we would hope for the best and expect the budgetary measures work so that the economy makes a turnaround and offers the common people some respite from the high inflation.
