Debapriya calls for investment-driven national budget, clear reform-roadmap

Distinguished fellow at the Centre for Policy Dialogue (CPD) Debapriya Bhattacharya yesterday (14 May) called for an investment-driven national budget, warning that Bangladesh risks slipping back into "old-style economic management" unless the government adopts a clear reform roadmap.

Speaking at an NTV budget discussion in capital's Tejgaon titled "Kemon Budget Chai 2026-27", Debapriya said the government has yet to clearly explain the economic situation it inherited or present a coherent strategy for overcoming the ongoing crisis.

"The government came amid a difficult situation and is under immense pressure. But even after four months, there is still no clear strategy paper explaining how it plans to tackle the crisis," he said.

He argued that stability is important, but investment should have been the government's top priority from the outset.

"If you ask me what should come first, I would say investment. The upcoming budget should clearly show what kind of measures the government is taking to revive investment," he said.

The economist also criticised what he described as unrealistic budgeting practices over the past 15 to 20 years, saying governments routinely overstate both revenue and expenditure projections.

Debapriya said the government's reform commitment has become questionable because several promised initiatives remain stalled.

He mentioned the lack of progress on an economic reform commission, unresolved National Board of Revenue (NBR) restructuring and delays in separating tax policy from tax administration.

"Even the IMF is withholding funds because of concerns over reforms," he said, adding that international ratings agency Fitch recently downgraded Bangladesh partly due to reform-related uncertainties.

"We ended up in a situation where inflation did not come down, but interest rates remained very high and investment stalled," he said.

Debapriya urged the government not to increase taxes in the upcoming budget.

"No new taxes should be imposed in the coming budget," he said, suggesting that revenue should instead come from expanding the tax net and improving efficiency.

He also called for reviewing tax exemptions to ensure they support productive investment.

The economist proposed raising the tax-free income threshold from the current Tk350,000 to between Tk450,000 and Tk500,000 for at least two years.

At the same time, he cautioned against excessively high effective tax burdens on higher-income earners.

"When a person ends up paying more than 40% of income through taxes and surcharges, the incentive to earn and invest declines," he said.

Debapriya further recommended offloading shares of state-owned enterprises and multinational companies in the stock market to strengthen the capital market.

"The government's shares in different enterprises should be brought to the capital market. This is one of the major steps needed to revitalise the stock market," he said.

On the proposed Padma Barrage project, Debapriya expressed support, saying the initiative is necessary to address water scarcity and irrigation challenges in affected areas.

"The Padma Barrage is needed for irrigation and other purposes because dryness has increased in that region," he said. However, he said the government must clearly explain how such a mega project would be financed and implemented.

"Mega projects are still necessary because the country has major infrastructure backlogs. The issue is ensuring the right project is done at the right cost and implemented properly," he added.