The proposed budget for the next fiscal year looks quite pragmatic, reflecting the challenges of both external and domestic economies, according to a former governor of Bangladesh Bank.

"In alignment with a contractionary monetary policy, the fiscal policy has been well coordinated, and the budget looks relatively restrained. However, the decision to raise the income tax rate by 5% to 30% for the legally earned highest income groups that are also under inflationary pressure as against 15% income tax for the black money holders may not augur well from the ethical perspective," he said in a budget reaction on Thursday.

 The development economist thinks that the hard-working legal earners may be more frustrated due to this bias towards unethical groups.

"While normally, the budget size has been growing around 14%-15% over recent years, the proposed budget size may grow by only 4.6%. The proposed ADP is planned to grow even less, just by about 1%," added Dr Atiur, a Professor Emeritus at Dhaka University.

Finance Minister Abul Hassan Mahmood Ali presented a new fiscal plan worth Tk7.97 trillion at parliament as he seeks to chart a sustainable path towards a 'Smart Bangladesh' amid global economic turbulence.

The budget deficit is about 4.6% though lower than last year, but could still be further tightened in the face of the slow pace of revenue mobilisation and unusually high inflation rate now running nearly in doubt digits.

The next fiscal year's growth rate and inflation rate have been slated as 6.75% and 6.5% which looks not 'so feasible' to Dr Atiur in the face of the current macroeconomic headwinds.

"The BBS has estimated the growth rate in the last fiscal year to be 5.82%, and both IMF and WB estimates are aligned with it. So, the proposed growth rate looks more ambitious than it was needed," he said.

The noted economist further said macroeconomic stability is indeed more important currently than the hype in growth figures.

"The inflation rate in the next fiscal year exceeds the high rate, hovering nearly 10% over the last 18 months. This looks very sticky, and it may not be easy to tame to that extent in the next fiscal year," he said.

The former BB governor appreciated the government's move to cut the budget in the context of the prevailing high inflationary environment.

"Soft sectors like health, education, training, and social security could get more allocations to make the budget more just for lower-income groups and disadvantaged," he said.

The economist hoped that the budget could shed more light on the imperative for long-term consistent tax policy, profit and capital repatriation for foreign direct investors as the country needs more FDI inflows to keep its financial account balanced.