The budget has a risk of making a benefit-dependent society, not a welfare state

For an ordinary viewer, what is a national budget actually meant to do? Is it simply an arithmetic of income and expenditure, or is there a philosophy, and a politics, sitting inside it?

Waresul Karim: A budget is not merely a quantitative expression; it is a reflection of your direction, your philosophy and your choice of priorities. Economics is the science of constrained resources, and with those limited resources you must chart a journey towards the priorities you value most. A state budget can shape behaviour, taxing narcotics to discourage use, or cutting the surplus tax on private universities from 15-10%  to signal friendliness. Politics is not a contaminant here. Politics is precisely how a state decides who receives what, and how.

Business leaders are calling this the most reform-minded budget in the country's history, while economists warn that the foundation is weak. Where do you land between those two readings?

Waresul Karim: My central observation is that the budget is premature. We do need ambitious budgets, because we are a growing nation, but we first needed two to three years of scaffolding. It is like restoring the Taj Mahal: you keep the historic structure intact, and during the repair you give businesses room to recover, with lower taxes and pressure. What the economy was asking for was not more spending but smarter spending. If you run a subsidised truck-sale scheme and most of the benefit is lost to bureaucracy, transport and overhead, the drum ends up costing more than the rent. Controlling overhead is the first discipline of any government.

You keep returning to education, health and agriculture. If the answer is smart spending rather than bigger allocations, what would that actually look like in a sector such as education?

Waresul Karim: I would spend on classroom modernisation, on smart classrooms, and on hiring and properly paying qualified teachers, so that good teachers are retained, including in the villages. I would not, at this moment, create many new posts. We have primary schools with 1,200 or 2,000 students and only 40 teachers, and others with five teachers and 50 students. Rationalise that first, redirect the savings to raising the productivity of the teachers, nurses and constables already in service, and only then attempt the next leap. Allocation without a strategy is meaningless. I can see the money for education and health, but I cannot see the curriculum, or the roadmap, behind it.

The headline figure is a Tk 9.38 lakh crore budget, with the development programme at roughly Tk 3 lakh crore. How much of that do you expect to be delivered, and what does the real growth look like once that is taken into account?

Waresul Karim: Last year's budget was Tk 7.88 lakh crore on paper, but the annual development programme is implemented at perhaps 70 to 75%, and barely 11 to 12% of it in the first six months. So while the headline rise looks like 19%, the real jump against what was actually spent is far steeper, closer to 30 or 40%. The revenue target tells the same story: a leap of around 40%, from roughly Tk 4 lakh crore towards Tk 6.95 lakh crore. That is divorced from reality; the revenue board itself has grown collections by only about 10.5% a year over the past five years. The arithmetic does not meet.

A signature feature is the expansion of family and farmer cards and cash support, framed as a step towards a welfare state. Is the economy ready to carry that, and who actually benefits?

Waresul Karim: The instinct, shaped by long exposure to European welfare states, is admirable, but Bangladesh is not ready for it. The original idea of cards for four crore families, billionaires included, was neither necessary nor affordable; we do not have the muscle. Good sense has now prevailed: the government is targeting around one crore families, reaching some 41 lakh vulnerable women, and I had urged exactly such a cap. There is a real social benefit: sustained inflation has forced families to cut food budgets, producing malnutrition, stunting and children who cannot stay in school. But this contributes nothing to GDP, and the political beneficiary is the government itself. For farmers, a token Tk 2,500 changes little; seeds and fertiliser I would give free, because they raise productivity.

The medium-term framework points to substantial further borrowing. Some warn that we must avoid a debt trap; others say we are already in one. Which is it, and does the official debt-to-GDP ratio reassure you?

Waresul Karim: The forecast is straightforward: next year's debt equals this year's debt, plus interest, minus free cash flow. Our free cash flow is negative, because the operating budget itself now runs a deficit, so the entire development programme and the revenue shortfall become new borrowing. Current debt of around Tk 24 lakh crore could reach Tk 33 to 34 lakh crore, and it will compound rather than rise in a straight line. The framework signals up to Tk 12 lakh crore in further loans by 2029. The government insists the ratio remains manageable, but only because the denominator keeps swelling, and that denominator is the Bureau of Statistics' estimate, which I distrust. The claim that per-capita income has crossed 3,000 dollars, higher than India's, is something no sane person believes. That is about Tk 30,000 a month, an average that includes newborns, the elderly and retirees with no income. If the denominator is inflated, a comfortable ratio is an illusion.

What is the institutional fix you would put first?

Waresul Karim: I want the statutory institutions, the central bank, the University Grants Commission, the Public Service Commission, the Auditor General, the Bureau of Statistics and the Election Commission, to be genuinely independent, neutral and accountable. A professional says what he sees. The Finance Minister, alongside those who prepare these forecasts, should answer to a functioning parliamentary committee at least every six months. The medium-term outlook carried a footnote admitting it had not even incorporated the Middle East conflict. If a shock of that size can be overlooked, how strong are the underlying assumptions?

On revenue, who bears the weight of these targets, and is the burden falling where it should?

Waresul Karim: The burden is falling most heavily on lower- and middle-income earners. The 5% tax slab has been removed, meaning the first taxable Tk1 lakh is now taxed at 10% instead of 5%. As a result, all taxpayers will pay more tax.  Most of our revenue is indirect, which is regressive, because the poor spend proportionately more on salt, kerosene and rice. And the same income is taxed several times: on earning, again as 15% when spent, again on savings-certificate interest, on dividends, even on bonus shares that move no cash. Meanwhile telecom pays 45% and banks 40%. Is telecom an illegitimate business? We squeeze the few identifiable, successful firms instead of broadening the base. Revenue should come from growth, not from raising the cost of doing business.

The Finance Minister argues that higher public salaries will curb corruption, and you close on the idea of a benefit society. Can you tie those two together?

Waresul Karim: There is no evidence that higher salaries reduce corruption. Consider the fraud triangle: need, opportunity and justification. Paying more addresses need, but if you leave the opportunity open, through weak enforcement and courts that are not independent, corruption survives. Do the people who took Tk 2 lakh crore look poor? My fear is that we are building a benefit society rather than a welfare state. We already run some 90 social-safety programmes, and the payments are pocket money. I would rather empower the four lakh teachers, the nurses and the constables: lift their capacity and their incomes, and the shops will sell more and hire more. That is how a human being becomes a resource, and that is what a welfare state actually requires.