Budget must send clear reform signal: Debapriya
The upcoming national budget should not be presented merely as an account of income and expenditure; rather, it must carry a clear political and economic message on reforms, economist Debapriya Bhattacharya has said.
He said the government needs to place a well-defined economic strategy and reform roadmap alongside the budget to restore confidence among citizens, investors, entrepreneurs and development partners.
“A budget cannot succeed through isolated measures alone.
The government needs to explain its broader economic strategy through a coherent policy paper,” said Debapriya, a distinguished fellow of the Centre for Policy Dialogue and convener of Citizen’s Platform for SDGs.
He made the remarks at a roundtable titled “Budget in Times of Crisis and Public Expectations,” organised by Bangla daily Prothom Alo at a hotel in the capital on Thursday.
Debapriya said the next budget will be a difficult balancing exercise for the government as it faces pressure from inflation, debt management, IMF commitments and external financing constraints, while public expectations from the newly elected government remain high.
“On one side, there is pressure from inflation, debt management, IMF commitments and external financing constraints.
On the other hand, there are strong political and public expectations.
Balancing these two realities will be the government’s biggest challenge,” he said.
The economist observed that the government is still operating within the framework of the International Monetary Fund programme and must maintain fiscal discipline while also mobilising external resources.
He said people should not expect the finance minister alone to resolve all economic challenges, as the success of the budget would depend largely on coordination across the entire state machinery.
On macroeconomic management, Debapriya said policymakers must first decide the main “anchor of stabilisation” — whether the priority will be controlling inflation, stabilising the exchange rate or managing interest rates.
He identified inflation as the most urgent challenge, saying it is directly linked to food security, living costs and the pace of economic recovery.
Debapriya suggested keeping the budget deficit within 4 percent of GDP, calling it a realistic target under the current economic situation.
However, he said achieving this would require stronger coordination in revenue collection, expenditure control and development spending.
He urged the government to expand the tax net instead of depending only on higher tax rates. He also called for improving the efficiency of tax administration.
Pointing out that tax exemptions currently account for nearly 6 percent of GDP, Debapriya said many such exemptions should be reviewed.
“Subsidies, tax waivers and large-scale development expenditures must be reviewed carefully, particularly in the power and energy sectors, if the government wants to restore fiscal stability,” he said.
He also recommended offloading shares of profitable state-owned and multinational companies in the stock market, saying such a move could generate revenue for the government and help deepen the capital market.
Debapriya further supported introducing wealth tax and inheritance tax, arguing that inequality cannot be addressed through income tax alone.
“There needs to be a political narrative around taxing wealth and inheritance. Unearned income should also come under a fair taxation framework,” he said.
Calling for deregulation and liberalisation to improve economic efficiency, he said efficiency gains become crucial when resources are limited.
“Ultimately, a budget is not just an accounting exercise of income and expenditure; it is a political message about economic reforms and future growth,” Debapriya said.
