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Pull of the strings

Saifur walks into JS for 10th time to present a crucial budget today

INAM AHMED
When M Saifur Rahman walks into parliament for the 10th time in his career as finance minister to place a budget, he will certainly feel a diverse pressure.
With the election year looming, he will feel the pinch of constituencies. He will have the pressure of GDP contributors, the dilemma and challenge of getting finances for all the things he promised, the urban voter pressure, the global challenge knocking at the door and a political challenge to see that noone is hurt in the process, that a feel-good sense prevails for at least another year.
Will he waver under such diver-
gent exigencies? Can he balance all these crystal balls? But then again, Saifur is a seasoned finance minister, he knows many tricks and already weathered many a challenge.
Talking about challenges, the Centre for Policy Dialogue has pointed out that spreading GDP growth equally to reach the rural poor is now a key challenge.
Saifur has already spelled his mantra -- to focus on the rural poverty, to give a greater fillip to agriculture. He has planned an around Tk 850 crore subsidy for agriculture, up from this year's Tk 300 crore, much of which will go into cutting costs of inputs including seeds and waiving agriculture loans.
But this will address a factor that only contributed to about 11 percent of the incremental GDP growth this fiscal and will not address a host of other factors and questions like why a farmer sells palwal at Tk 1.5 at his end while the same sells at Tk 12 in the city. Input subsidisation is important, but other pulls are no less important too.
With GDP growth reaching a plateau of around 5.5 percent for a long time, Saifur will have to find boosts for sectors giving more incremental growth to GDP like manufacturing. And he had better know that some comparisons are stark enough
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to breed some kind of national inferiority -- that is if one looks at the Chinese and Indian growth trajectory. And that with 5.5 percent rate, the country can reach nowhere near the millennium development goal of halving poverty by 2015.
So, like the past two years, he has to find new blips in manufacturing. And the manufacturing sector has a strong pressure group impact. Here, he has to perform a delicate balancing act -- cut tariff rates and protect local industry. Moreover, the textiles sector in the backdrop of an impending quota-free regime remains his Achilles' heels. He has already promised a backward linkage fund to heal some of the malaise, though some may say it is a step two years too late.
His strategy for a rural-based growth paradigm will help him attain at least one additional gain -to crate the rural demand with a casacading effect on import substitute industry.
And then Saifur has to spend more both on ripping through the growth plateau and satisfying the political constituencies. He has already finalised an around Tk 60,000 crore revenue and development budget combined, a 15 percent increase from this year.
But this then poses the multiplicity of problems -- where will the money come from? Foreign financing has dropped 69.58 percent during the first nine months of this fiscal year against last fiscal year's same period. A hosts of reasons are attributed to such dismal external finance picture such as a more stringent public procurement policy to cut corruption and the
failure to address reforms. If the existing indications are anything to go by, donors will be more clench-fisted and asking for more steps to cut corruption and reforms. With the election year looming, one may doubt how far these targets will be fulfilled.
So, foreign finance remains a constant headache. In that case, Saifur will have to look inwards in a situation where revenue collection of the National Board of Revenue (NBR) depicts a business-as-usual scenario. For some unknown reasons, collection of import duty has fallen Tk 470 crore short of target in 10 months till April despite high import activities. And Saifur has to look at other sources like income tax and non-tax and non-NBR collection. This certainly require political courage on his part. Otherwise, he will have to go into high borrowing -- either from non-inflationary savings instruments or from the banks, neither of which ultimately bodes well for economy. Saifur's revenue budget balance sheet is already studded with a high interest payment component that eats up 22 percent of the outlay.
One of Saifur's saving graces may be that he will not have to face any political alternative to his maneuvering of the finances. The opposition, by and large, has failed to challenge his ideas with a development paradigm.
And so, Saifur may take his cue from the Indian elections -- that you cannot win the polls with an urban-centric growth, swanky restaurants and dazzling cars. He wants to step into the rural path. Only he has to watch out for the uncarpeted unevenness. A tumble will only spill his crystal balls.