Dhaka: The proposed budgetary measures for FY 2017-18 have fallen short of addressing high prices, sluggish growth in real sector, rising joblessness, dwindling social sector spending, and institutional weaknesses, says an independent multidisciplinary think tank.

The budget speech seems to have lacked providing prudent and farsighted solutions to the current challenges except it earmarks an ambitious target of expenditure amidst inefficient distribution of resources and cost overrun, says Unnayan Onneshan (UO) in its rapid assessment of the proposed national budget.

The Finance Minister concedes 'still have many miles to cover', and stops 'by woods on a snowy evening' (the title of the poem that he quotes is 'Stopping by Woods on a Snowy Evening').

"He could have taken 'the one less traveled by' and that could have 'made all the difference' (the last two lines of Robert Frost' another poem, 'The Road Not Taken') - says the think tank metaphorically referring to the context of the proposed budget.

The fiscal strategies must take account of the circumstances of inflationary pressure caused by new VAT policy-induced declining real wages, rising joblessness in the midst of productive capacity-expansion-less growth and dwindling social sector spending in the milieu of institution-wrecking structural diseases, driven by political expediency.

The UO notes that the political expediency has not only caused cost-overruns, scams, and capital flight, but the reign of uncertainty that kept the ratio of private investment to gross domestic product (GDP) stagnated over the years, slowed down growth in manufacturing resulting in underperformance in external sector.

It said the service sector is facing a critical shortage in supply of skills and the huge outflow of capital and declined levels of inflow of remittances are serious causes of concern. "The country's job growth is the slowest in two decades."

The research organisation noted that the youth unemployment rate in Bangladesh is higher than the regional South Asian average, with a huge sizeable youth population languishing in as NEET (not in employment, education or training).

Pointing to the underachievement of NBR tax revenue collection in recent years, the UO expressed doubts that the target of collecting NBR tax revenue of Tk 248,190 crore may not be feasible in FY 2017-18, whereas a gap of Tk 18,152 crore has been found between the budget and revised NBR tax in FY 2016-17.

In addition, a breakdown of NBR tax shows that Tk 85,176 crore will be collected from taxes on income and profit whereas Tk 91,254 crore will be collected from value added tax (VAT), meaning that the burden of the tax on the poor and low-income groups is much higher that on the rich and high-income groups.

The higher rate of VAT will lead to price hike hurting the livelihood of the poor, adds the research organisation.

"The tax structure is ridden with low base, avoidance and evasion. There is huge missing of distributive justice, characterised by widening income, spatial and male-female inequalities, driven by jobless growth. As a result, need for a pro-active state that would ensure social protection through innovation in social policies is pressing," said the UO.

It said if not dealt with effectively, income inequality together with inequality in access to health and social security, multidimensional poverty, and joblessness particularly among the youth may undermine the development already achieved by the county.

Calling for prudent and farsighted fiscal management, the research organisation stated that proposed actions are inadequate to bring fiscal discipline in the management of revenue, deficit and debt one the one hand and to establish an inclusive society in the absence of distributive reforms in the tax system on the other.