The Parliament approved a $22b (Tk. 1.63 trillion) budget for FY 2011-12, 26 per cent higher than the outgoing revised budget. The budget includes Tk. 1163.13bn for non-development expenditure and Tk. 472.76b for development expenditure. The deficit of Tk. 452.04b (5 per cent of GDP) is almost the same size of Tk.460 billion ADP (Annual Development Plan). Of the outlay, 56.2 per cent will come from tax revenue, 13.8 per cent from non-tax revenue and 11 per cent from foreign loan and grants. A big chunk of the budget (16.6 per cent ) is to come from domestic sources, mostly from bank loans, according to the Editorial of the current ICCB News bulletin of International Chamber of Commerce-Bangladesh (ICCB) released Wednesday.

The National Board of Revenue (NBR) should be congratulated for increasing the revenue collection by almost 27 per cent or Tk.166.5b more than the last fiscal year (FY10). Therefore, the government could easily meet much of the deficit by consolidating its efforts in increasing revenue collections and by settling huge long outstanding tax and custom cases instead of borrowing from commercial banks and thus help banks to provide much needed loan to the private sectors for investment.

The budget FY12 sets a spurring 7 per cent growth target with a check to runaway inflation. Even though experts have warned that the ambitious growth target will be difficult to attain, the businesses feel that against a 6.7 per cent growth in FY11, the growth target is achievable with political stability and all out efforts by both public and private sectors. An increase of 26 per cent is definitely ambitious and big. However, the business leaders opined that to achieve a higher growth a bigger target and of course selection of right kind of projects are needed with ensuring timely efficacious implementation and close monitoring.

Lots of questions arise about the quality of the projects selected for each ADP and the capacity of the executing agencies. Political priorities outplays development requirement in project selections. Besides, in every third quarter of a financial year, the ADP is invariably downsised due to poor project selection and rate of execution. There is always a rush during the last quarter for completion of many projects, taking a toll on their quality.

One of the major reasons, as sighted by experts, is the disbursement of fund by the Ministry of Finance as well as by the development partners. This is evident from the fact that during last FY, several ministries have surrendered allocations of foreign funds worth 12 to 100 per cent in 37 projects. Besides, the government has slashed the just concluded ADP (FY11) by more than Tk 30 billion.

In order to avoid such a situation, the Finance Ministry could ensure that concerned ministries/agencies are immediately provided with necessary fund (at least 25 per cent or so) within the first quarter of the fiscal and the balance in a staggered manner. Similarly, all out efforts should be made to have the fund available from the development partners at the same time.

One, therefore, needs to look into whole mechanism of project selection, monitoring and implementation. It is always seen that during the last 2/3 months of each fiscal year, there are seminars, dialogues, talk shows etc. covering topics such as the size of the budget, tax ceiling, provision for tax holiday, whitening of black money and lot of other things. But how much of the suggestions made are actually reflected or adopted in the Budget is a matter to be analyzed. Once the Budget is approved, talking shop is over.

The budget is for the benefit of the people and for the tax payers. Therefore, it is high time that the budget preparation mechanism should be revisited and steps initiated forthwith for the selection of projects for inclusion in the next ADP and lining up of necessary funds from the development partners.

Priorities need to be given to selection of projects in ADP for sustained development growth. Smaller and routine projects could be included in the revenue budget. In preparation, selection and execution of projects, private sector should be included along with public sector, rather than the present practice of occasional consultation with the private sector.