THE budget for the 2026 financial year that the finance adviser to the interim government has proposed appears rhetorical, with largely no direction on how to achieve the goals that the budget puts forth. The interim government, which assumed office in August 2024 against the backdrop of a student led mass uprising that had sprung from protests against discrimination, has failed to put the budget in a meaningful perspective that is required to eliminate the discrimination that has happened for decades and the structural weaknesses that have plagued the nation. The budget, of an outlay of Tk 7,900 billion, also seems to be largely an exercise by bureaucrats that has ambition but no direction. The amount of allocation that has been made for various sectors does not also appear commensurate with what the sectors need for development and improvement.
The proposal does not specifically speak of ways to create employment and facilitate investment, for which political stability and law and order are requisites, which are still largely absent. There have been complaints of an energy crisis, specifically from industrial consumers, but the proposal has given no effective solution. The allocation for power and energy has, rather, been cut down to Tk 225.20 billion from Tk 303.17 billion of the budget for the 2025 financial year. The budget has proposed an increase in value-added tax on the production of yarn and artificial fibre, from Tk 3 to Tk 5 on a kilogram. With an increase in tax at source on the rent of space, the proposal would certainly throttle down the local industry. An increase in tax on business turnover, from 0.6 per cent to 1 per cent, and not on profit, would put many of the businesses at risk. A loss at the end of the year may relieve businesses of paying corporate taxes, but they would still need to pay the turnover tax. The proposal is illogical.
The proposed budget, with the smallest deficit in a decade, has trimmed the annual development programme down to Tk 2,300 billion from Tk 2,650 billion in the 2025 budget. The allocation for education, which accounts for 12.1 per cent of the total outlay, marking an overall increase in the total amount, has still been 1.53 per cent, or 1.53 per cent of the gross domestic product, as proposed in the 2026 budget. The allocation, which was 11.88 per cent of the 2025 budget outlay, was 1.71 per cent of the gross domestic product in the budget for the 2025 financial year. As a share in the gross domestic product, this has been a decline for the sixth consecutive year. The allocation for health, which has gone up by 1.03 per cent against the figure for the 2025 budget, accounts for 5.3 per cent of the total outlay. Experts believe that the allocation is too small for what is needed to improve the health sector. The allocation for agriculture, impacted most by climate change, has remained almost unchanged at 5.9 per cent of the outlay, which comes down to Tk 272.14 billion in the budget proposal as opposed to Tk 272.24 billion proposed in the budget for the 2025 financial year.
The government must, therefore, engage in intense consultation with all stakeholders to set directions right and make allocations meaningful before the passage of the budget.