Reform roadmap essential alongside budget to ensure credibility: Debapriya

The government must present a clear economic strategy and reform roadmap alongside the national budget to ensure that reforms are credible and effective, Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue, has said.

"A budget cannot succeed through isolated measures alone. The government needs to explain its broader economic strategy through a coherent policy paper," he said at a roundtable titled "Budget in Times of Crisis and Public Expectations," organised by Bangla daily Prothom Alo at a hotel in the capital today (21 May).

According to Debapriya, the upcoming budget will essentially be "a balancing act" between difficult macroeconomic realities and mounting public expectations from a newly elected government.

"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 noted that the government remains within the framework of the International Monetary Fund programme while also seeking to mobilise external financing and maintain fiscal discipline.

"People should not expect the finance minister alone to solve every problem. Much will depend on how effectively the entire state machinery functions in a coordinated manner," he added.

Focusing on macroeconomic management, Debapriya said policymakers must first determine the "anchor of stabilisation" — whether controlling inflation, maintaining exchange rate stability or managing interest rates will be prioritised.

"In the current context, inflation remains the most critical policy challenge. It is directly linked to food security, the cost of living, and economic recovery," he said.

Debapriya also suggested keeping the budget deficit within 4% of GDP, calling it a realistic target under prevailing economic conditions. However, he stressed that such a target would require stronger coordination between revenue mobilisation, expenditure management and development spending.

The economist urged the government to expand the tax net rather than rely solely on higher tax rates and to improve the efficiency of tax administration.

He pointed out that tax exemptions currently account for nearly 6% of GDP and said many of those exemptions deserve reassessment.

"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.

Debapriya also recommended offloading shares of profitable state-owned and multinational companies in the stock market, arguing that it would both generate state revenue and deepen the capital market.

The economist further voiced support for wealth tax and inheritance tax, saying inequality cannot be reduced 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 a structured strategy paper to accompany the budget speech, Debapriya said the government must clearly communicate its broader economic direction to build confidence among investors, entrepreneurs and the market.

"When resources are limited, efficiency gains become the main source of new growth. Deregulation and liberalisation are therefore essential for improving economic efficiency," he said.

"Ultimately, a budget is not just an accounting exercise of income and expenditure; it is a political message about economic reforms and future growth."