BUDGET 2012-13 RECOMMENDATIONS
CPD urges govt to cut bank borrowingStaff Correspondent
The Centre for Policy Dialogue recommended that the government should reduce borrowing from banking systems to finance its budget deficit in the next budget for fiscal year 2012-13 in order to promote private sector investment for accelerating economic growth.
At a press briefing held at its conference room in Dhaka on recommendations for the coming budget, CPD suggested the government should intensify mobilising foreign resources to finance its budget deficit and implement development projects instead of depending on borrowing from the banking channel.
‘Private investment promotion should be one of the main objectives of the coming budget for accelerating growth and to achieve this objective the government should contain its borrowing from banking sectors as it narrows the credit inflow to the private sectors,’ CPD’s distinguished fellow Debapriya Bhattacharya said.
The government has to take all possible measures to ensure private sector investment alongside increasing government investment, he said, adding that two other major issues of ensuring social justice and upward economic stability have to be addressed in the next budget.
In reply to a question on the size of the budget, Devapriya said that the size of the budget might be a expansionary one to promote investment, but at the same time the government has to be careful about the bad impact of expansionary budget like increasing inflation.
Speaking at the briefing, CPD executive director Mostafizur Rahman said that the government should take steps to expedite foreign aid disbursement as slow disbursement badly impacted on the economy and resulted in putting pressure on balance of payment, foreign exchange reserve, inflation and bank borrowing.
The country’s leading independent think-tank put forward a set of proposals for the national budget for fiscal year 2012-13. CPD’s head of research Fahmida Khatun presented the recommendations.
In its proposal, CPD also recommended the National Board of Revenue should increase the tax exemption limit of income to Tk 2,00,000 for individual taxpayers, Tk 2,20,000 for female assesses and Tk 2,75,000 for assesses with disability from existing Tk 180,000, Tk 2,00,000 and Tk 2,50,000 respectively in the budget for fiscal year 2012-13 considering the high inflation in the country.
It also proposed increasing the minimum threshold of tax to Tk 2,500 from existing Tk 2,000 in the next budget.
CPD also proposed for introduction of ‘infrastructure bond’ in the capital market to finance big infrastructure projects and make tax identification number (TIN) mandatory for all beneficiary owners (BO) account holders in order to bring transparency in the transactions.
The civil society think-tank also said that the government should go for medium (100-200 MW) and large (500 MW) base-load power plants instead of smaller oil-based rental and quick power plants to reduce the huge subsidy burden and to secure long-term power supply.
The government should also finalise the coal policy urgently and initiate more coal-based power plants instead of gas and oil-based ones as the country is suffering due to gas crisis and high price of oil, the CPD recommendation said.
‘The government should take steps to import gas from Myanmar and initiate bilateral cross-border hydropower trade with Nepal and Bhutan which would help mitigate the country’s power deficit,’ the proposal said.
CPD also proposed considering a provision of truncated rates of value-added tax for different sectors instead of introducing a single VAT rate of 15 per cent for all products.
It also proposed withdrawal of three per cent custom duty on import of capital machineries for agro-processing industries to promote the sector and extend tax exemption on income of poultry sector up to 2015 considering spread of avian influenza virus.
It said that the government should reduce custom duty on import of capital machineries for domestic oriented industries, particularly small and medium enterprises, to one per cent from existing three per cent and introduce a special fund for providing low interest credit facility to the light engineering manufacturers.
In order to ensure wider accessibility and develop information and communication technology, VAT charged over the use of internet service could be reduced and import duty on computer parts and accessories mostly used in academic institutions could be reduce to zero, the CPD said.
The proposal included reintroducing food rationing for workers in major industrial clusters in view of rising cost of living due to high inflation.
The research organisation also stressed on building institutional capacity for qualitative and timely implementation of development projects and proper and effective use of foreign assistance.
It also demanded a time-line and institutional framework in the next budget for designing modalities with the objective of moving towards district level budget.
Giving importance on integrated transportation system, the CPD recommended that all the major roads should be expanded to four lanes and be able to bear load capacity up to 15-18 tonnes as existing capacity of 8-10 tonnes is not fit for transit vehicles, particularly Indian trucks, the proposal said.
About social safety net, CPD suggested the government should gradually move towards a more comprehensive social safety net programme.
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