Bangladesh's large budget also brings concerns
Agamir Somoy image regenerated by AI.
The budget grows larger every year, and this year is no exception. The budget for the 2026-27 fiscal year, amounting to 9.38 lakh crore taka, has been announced. This is the first budget of the elected BNP government following the uprising. It is the current Finance Minister's first budget, and due to the global situation, the public had both expectations and apprehensions about it. Analysis and criticism of the budget will continue throughout the month, but how does it appear at first glance? Some answers to this question need to be sought. The budget is entirely about money and the manipulation of numbers. Although it is difficult to explain, its impact on public life is direct and simple. Therefore, discussing the budget's objectives is very necessary. The discussion of where the money will come from and where it will be spent is entirely guided by political perspectives. Hence, alongside interpreting the budget, the politics of the budget also needs to be discussed.
Before the budget, two different good news had emerged. The country's GDP has surpassed 500 billion US dollars, and the per capita income of the people has exceeded 3,000 US dollars. In taka terms, the per capita income is now over 3.68 lakh taka. This income is 251 US dollars or 30,600 taka higher than in the 2024-25 fiscal year. This calculation has been prepared by the government agency BBS. Now, the question may arise: who is included in this average per capita income? What percentage of people earn below the average income, and what percentage earn above it? The country has 7 crore 60 lakh working people, none of whom earn a monthly family income of 1.20 lakh taka, nor even close to it. The income of 2 crore 90 lakh farmers is nowhere near that figure. Even if both spouses work in jobs paying 25,000 taka, they cannot earn an income equal to the per capita figure. This means there are a few exceptionally wealthy people in the country whose incomes are so high that when averaged, the per capita income reaches this level. To understand the inequality, one does not need the Gini coefficient; seeing the difference in per capita income alone makes it clear.
Nineteen years ago, in the 2006-07 fiscal year, the BNP government's Finance Minister announced a budget of 69,000 crore taka. Now, the 54th budget has been announced at 9.38 lakh crore taka. However, although the budget size has increased 13 times, the ratio to GDP has not increased much. In the 2006-07 fiscal year, the budget was 12.68 percent of GDP, and now it stands at 13.06 percent. This is a matter of concern. The budget is growing, but the government's financial capacity is not increasing accordingly. Considering this ratio, we should not be satisfied with just a large budget; we need to find the reasons why capacity is not increasing. The burden of domestic and foreign debt is rising, the amount of defaulted loans in the country is increasing, reaching 6.45 lakh crore taka, which is over 30 percent of total loans disbursed (although after rescheduling, it stands at 5.57 lakh crore taka—which is even more dangerous). Due to weak revenue collection, the wealthier evading more taxes, and various institutional limitations, we must consider how difficult it will be to implement this budget.
Why was the anti-discrimination movement so popular? Because the pain of inequality touched most people. Consequently, expectations have been created that the budget will reflect this in increasing revenue and determining expenditure sectors. Since the wealthy have higher incomes, they should pay more taxes; since the wealthy consume more, they should bear greater responsibility—this should be the tax policy. The expenditure sectors should not be based on creating surprises but should be determined keeping in mind the needs of the people and economic stability.
The budget needed to shift from a debt-dependent economy to a pressure-free economy, include agricultural modernization and farmer-friendly economic plans, allocate funds for healthcare with proper utilization, and increase funding for education, especially quality education for children from low-income families.
However, while the numerical figures have increased, the percentages have not. There are three main reasons why the number of poor people in the country has not decreased. Farmers do not get fair prices for their crops, yet the cost of agricultural inputs is high. The cost of education has risen excessively, making it difficult for ordinary people to afford. Additionally, people are becoming destitute by breaking their savings and taking out loans to cover medical expenses. The budget did not give significant importance to these three sectors.
Are there no positive aspects to the budget? Duties have been reduced on heart rings, eye lenses, kidney treatment equipment, raw materials for the pharmaceutical industry, gold jewelry, and electric vehicles. VAT on content creation and freelance services has been withdrawn. Some people will benefit from these measures, and their impact will be felt in society. However, what ordinary people want is access to medicine and treatment in hospitals. Employment in the digital sector is good, but we must consider how sustainable it will be and whether ordinary people will have entry opportunities. Moreover, how close will the relationship be between looking abroad for employment and solving the unemployment problem? In the end, will the benefits be concentrated among a few?
The tax-free income limit has been raised from 3.50 lakh taka to 3.75 lakh taka. But if inflation is 9.42 percent according to official figures, this increase will not provide much relief. Bangladesh has one of the lowest tax-to-GDP ratios. Is it possible to genuinely increase revenue without raising tax rates on the wealthy? What will be the steps to increase revenue collection, and will those steps be people-friendly? An announcement has been made to move away from a debt-dependent economy, but what will be the path to recover defaulted loans? It has been said that an initiative has been taken to restructure five bankrupt banks at a cost of 40,000 crore taka, but what are the visible results? Is the announcement to free banks from family control consistent with the ground reality?
The revenue collection target has been set at 6.95 lakh crore taka, of which the NBR's target is 6.04 lakh crore taka. Many things depend on achieving this target. Everyone will agree with the announcements to raise GDP growth to 6.5 percent and bring down inflation to 7.5 percent, but experience shows how difficult it is to achieve these rates.
The budget deficit has been projected at 2.43 lakh crore taka. To finance this deficit, the budget proposes borrowing 1,09,850 crore taka from foreign sources, 1,12,000 crore taka from banks, and 15,000 crore taka through savings certificates. This year, interest payments on loans will amount to 1.27 lakh crore taka, the largest sector in the budget. Keeping these facts in mind, the budget proposal and implementation steps must be taken. Otherwise, the government will continue on the old path by speaking of new hopes.
Author: Political organizer and writer