The Policy Times Dhaka Bureau (June 03) :
Bangladesh Finance Minister AHM Mustafa Kamal Thursday (3 June) placed a Taka 6,03,681 crore national budget for fiscal year 2021-22 (FY22) in the Bangladesh Jatiya Sangsad with a 7.2 percent GDP growth target attaching priority to the lives and livelihood of the country’s people in tandem with development amid the COVID-19 pandemic.
“In the budget for the next fiscal year, in tandem with development, the lives and livelihood of the marginalized people of the country are receiving priority,” said Kamal in his budget speech.
This is the 50th national budget for Bangladesh coinciding with the golden jubilee of the country’s independence.
Kamal while placing his 192-page budget speech, wearing traditional Mujib Coat over Panjabi, under the title “Bangladesh Towards a Resilient Future Protecting Lives and Livelihoods” highlighted various steps of the government to mitigate the shocks from the COVID-19 and the way forward to a sustainable economic recovery.
The total budget size for FY22 is 17.5 percent of GDP. Total allocation for operating and other expenditures has been set at Taka 3,78,357 crore, while the allocation for the Annual Development Product (ADB) is Taka 2,25,324 crore.
The overall budget deficit for FY 22 will be Taka 2,14,681 crore, which is 6.2 percent of GDP while the budget deficit in the last fiscal year was 6.1 percent.
Out of the total deficit, Taka 1,01,228 crore will be financed from external sources, while Taka 1,13,453 crore from domestic sources of which Taka 76,452 crore will come from the banking system and Taka 37,001 crore from savings certificates and other non-bank sources.
The growth rate for FY22 has been fixed at 7.2 percent remaining consistent with the government’s long-term plan and taking the post-COVID-19 recovery situation into account.
“It is expected that the inflation rate will be 5.3 percent during the period,” added Kamal.
The Finance Minister in his budget speech said Bangladesh has changed in many ways in the last five decades. However, there has been no change in Bangabandhu’s everlasting ideals and his lively presence is felt in all spheres of national life.
Since this year marks the golden jubilee of independence and the birth centenary of the Father of the Nation, Kamal said the addition to these two strong streams is Bangladesh’s successful transition from LDCs to a developing country.
“Bangladesh has reached a new height in the world stage with this transition. Similarly, Insha’Allah, all our dreams including those for 2030, 2031, 2041, 2100 will be realized,” he hoped.
Kamal said Bangladesh is now at a critical juncture in its development journey. “Bangladesh a decade ago and today’s Bangladesh are not the same,” He said Today’s Bangladesh is in the process of transformation. “We have passed a golden era in the history of Bangladesh, which is highly acclaimed.
After Bangabandhu, Hon’ble Prime Minister Sheikh Hasina has brought Bangladesh to the pinnacle of success in all areas, including economy and development, social policy, culture, law and order, and foreign policy.
Out of the original budget size of Taka 5,68,000 crore in the current fiscal year, the expenditure was reduced by Taka 29,017 crore in the revised budget and thus the size stood at Taka 5,38,983 crore. The size of ADP has reduced by Taka 7,502 crore from the original allocation of Taka 2,05,145 crore, and was set at Taka 1,97,643 crore.
To face the COVID-19 challenges, the Finance Minister, like the outgoing fiscal year, proposed an allocation of Taka 10,000 crore in the next fiscal year to meet the emergency requirements.
He said the budget for FY22 has been prepared to keep in consideration the strategies taken to facilitate faster recovery in various sectors of Bangladesh from shocks of the COVID-19 pandemic, especially to meet the challenges arising in the health sector and the issue of the application of vaccine.
“Allocation has been made in the proposed budget to meet the targets of each ministry and division to address the adverse effect of the COVID-19 pandemic,” he added.
Kamal said the pandemic is not only threatening the healthcare system but also putting economic advancement in limbo.
“Given this situation, we are now paying our attention to combat the pandemic by enhancing the capacity of our healthcare system and tackling the economic shocks,” he said.
The Finance Minister said the government believes that every challenge creates lots of opportunities and windows for moving forward. “So, there will be new opportunities for us from the scars of COVID-19 global pandemic and the government will take every necessary step to utilize those,” Giving an utmost priority to the programs and steps taken by the government to address the COVID-19 pandemic, Kamal proposed to allocate Taka 32,731 crore for the Health and Family Welfare sector in the next fiscal year, which was Tk. 29,245 crores in FY21.
Listing the number of current taxpayers at 25.43 lakh, Kamal said emphasis would be given in the next budget to bring eligible taxpayers under the tax net by taking necessary steps to boost tax collection.
“Moreover, our Tax-GDP ratio is low compared to that in other similar economies. Measures will, therefore, be taken to increase the Tax-GDP ratio at a reasonable level,” he added.
The government has set the target for total revenue income in the FY22 at Taka 3,89,000 crore, which is 11.3 percent of GDP. Out of this, Taka 3,30,000 crore will be collected through the NBR sources. Tax revenue from non-NBR sources has been estimated at Taka 16,000 crores, while the non-tax revenue is estimated to be Taka 43,000 crores.
The allocation proposed for the social infrastructure sector in the budget is Taka 1,70,510 crore, which is 28.25 percent of the total allocation, in which allocation for the human resources sector (education, health, and other related sectors) will be Taka 1,55,847 crore.
Allocation proposed for the physical infrastructure sector is Taka 1,79,681 crore or 29.76 percent, in which Taka 74,102 crore will go to overall agriculture and rural development, Taka 69,474 crore to overall communications, and Taka 27,484 crore to power and energy.
A total of Taka 1,45,150 crore has been proposed for general services, which is 24.04 percent of the total allocation. Taka 34,648 crores are proposed for public-private partnerships (PPP), financial assistance to different industries, subsidies, equity investments in state-owned, commercial, and financial institutions, which is 5.74 percent of the total allocation.
Besides, there are allocations of Taka 68,589 crore for interest payment, which is 11.36 percent of the total allocation, Taka 5,103 crore for net lending and other expenses, which is 0.85 percent of the total allocation.
Kamal proposed to further reduce the tax rate for companies not listed in the stock exchange to 30 percent from 32.5 percent, and the tax rate for listed companies to 22.5 percent from 25 percent for FY22.
The existing tax rate of 32.5 percent for companies is also applicable for Person Companies (OPCs). With a view to further formalizing the economy and to encourage the formation of One Person Companies, he proposed a tax rate of 25 percent for the One Person Companies.
The Finance Minister proposed to keep the rate of tax applicable for individual taxpayers unchanged as significant changes have already been brought to this effect in FY21.
The existing tax rate for individual taxpayers is also applicable for the taxpayers of the third gender.
“With a view to achieving social inclusion of the third gender, besides introducing a special provision, I propose to fix the tax-free ceiling at Taka 3,50,000 for this community,” he added.
Considering the impact of the pandemic, the government has made an allocation of Taka 1,07,614 crore in the social safety net sector, which is 17.83 percent of the budget and 3.11 percent of the GDP.
Besides, the decision has been taken to widen the coverage of the Old Age Allowances and the Allowances for Destitute Women by including all eligible persons in another 150 Upazilas which will be implemented in FY22.
To boost the inward remittance flow, the cash incentive at the rate of 2 percent will be continued in the next fiscal year as well. In addition, special ‘package programs’ will be initiated by concerned banks to increase the flow of remittances through the banking channel.
From the next fiscal year, the coverage of 100 percent deserving beneficiaries under the ‘allowance for widows, deserted and destitute women’ program will be implemented in another 150 such Upazilas in addition to 112 Upazilas belonging to the extremely high and high poverty groups.
“This will add 4.25 lakh new beneficiaries and an additional allocation of Tk. 255 crore will be allocated for this purpose,” added the minister.
“The honorarium of the valiant freedom fighters will be increased from Taka 12,000 to Taka 20,000 in the next fiscal year. This will require an increased allocation of Tk. 1,920 crore,” he added.