Budget is an estimate of income and expenditure for a set period of time.
From the perspective of Bangladesh the most important issues that are going to impact middle and poor class people need to be discussed
3. • Budget is an estimate of income andBudget is an estimate of income and
expenditure for a set period of time.expenditure for a set period of time.
• From the perspective of Bangladesh theFrom the perspective of Bangladesh the
most important issues that are going tomost important issues that are going to
impact middle and poor class people needimpact middle and poor class people need
to be discussed.to be discussed.
10. Key futures of Budget 2014-15
The size of the 2014-15 Budget, that at Tk 2.5 trillion, is 12 percent
higher than the Tk 2.22 trillion for 2013-14 FY.
The GDP growth target in the new budget is 7.3 percent. In the last
budget this target was 7.2 percent, but later it was revised down to 6.5
percent.
The new budget plans to keep the average inflation within 6 percent.
In the last budget this target was 7 percent.
Tk 675.52 billion deficit that is one-fourth of the total budgetary outlay
and five percent of the current GDP.
The proposed budget’s revenue target has been set at Tk 1.82 trillion,
almost 73 percent of the budgetary outlay.
The FY 2013-14 budget proposed extension of the scope for
whitening undisclosed income for investment in the real estate
11. Tk 810 billion for the Padma bridge project in the 2014-15 budget, the
single biggest allocation for an infrastructure project so far.
Revenue target of Tk 1.82 trillion, bridging the difference between it
and expenditure seems to be the major challenge for the government.
High-earners with annual income above Tk 4.42 million to be taxed at
30 percent instead of the current 15 percent and those sending
children to English-medium schools will have to pay more.
Gold will be dearer, stationary cheaper and cancer drugs will cost
less.
The latest in Bangladesh’s budget exercise is district-wise
budget.Presented budgets forSylhet, Khulna, Chittagong, Tangail,
Barisal, Rajshahi and Rangpur.
14. Agriculture
Average share of AAS in total budget was 10.8% during FY10-
FY14, but reduced
to 7.6% in FY15
Average share of AAS in total GDP was 1.64% during FY10-FY14,
but reduced to 1.43% in FY15
Allocation for the Ministry of Water Resources increased by 30.6%.
This is mainly due to rise in development budget by 40%.
Agricultural subsidy remains constant at Tk. 9,000 crore. It was 4.2
% of total budget in FY14 which with decline to 3.6% in FY15.
15. Industry
Curiously, proposed budget allocation for the Industrial sector in
FY15 is lower than that that of RADP14 (less than 21% and share of
total public expenditure to fall by 0.6% point) .
43 projects related to industry sector are currently under
implementation: a total of 24 projects are supposed to be completed
by FY15 as per project timeline.
A number of those projects remain far behind the targeted timeline:
Shahjalal fertiliser (87%), API Park (70%), BSCIC industrial estates
in Sirajgonj (38%), and Borguna (54.9%), Comilla industrial estate
(1.7%), strengthening of BSTI (88%), establishment of four textile
vocational institute (18%); BMRE of existing cloth processing centre
at Narshingdi (17%): overrun of time and cost is likely to reduce the
expected return from these projects
16. RMG and Textile: Reduction of tax at source from 0.8% to 0.3% (till
June, 2015) along with other financial support have given relief to
entrepreneurs and help undertaking necessary retrofitting measures to
make the factories compliant: Enforcement of minimum wage should be
contingent
Special Economic Zones: Four SEZs will be set up under
Bangladesh Economic Zones Development Fund at a cost of
Tk.81.95 crore with 97% financial support from IDA, WB’s soft-
lending facility: Should be set up immediately
17. Capital market
• Capital market has remained stable during FY14: DSEX index has
increased by 11.7%; total trade value by 9.4% and market
capitalisation by 16.3%
• Proposal for tax exemption facilities for demutualised stock
exchanges for over 5 years in graduated rate would help to build
confidence on the bourses to potential international institutional
strategic partners
• Retail investors will get some relief because of rise in tax exempted
dividend income fromTk.10,000 fromTk.15,000
19. Infrastructure
Transport ,Communication and the power sector are more capital
centric. The proposed allocation in these two sectors in the budget
for FY 2014-15 is Tk. 23,136 crore and Tk. 11,540 crore
respectively.
These are higher than the allocation in the budget of FY 2013-14 by
Tk. 14,226 crore and Tk. 9,902 crore respectively.
Rooppur nuclear power plant (1st Phase) is a fast track project:
50% of the project cost has been allocated for FY15 (completion
due in FY17)
Energy & mineral: Allocation will be increased by16% but reduced in
share of total expenditure (-0.25% point)
20. Defense
Defense Budget as % of Total Budget
Explicit allocation for
Defense services is
6.6% of total
expenditure (7.0% in
RBFY14)
21. Social Sector
Allocations for the Ministry of Education (MoE) & the Ministry of
Primary and Mass Education (MoPME) have increased by 16.4%.
Allocation for the Ministry of Health and Family Welfare (MoHFW) in
FY15 has been increased by 17.7%.
However, the allocation as percentage of total budget is 4.5% which
is lower than the average allocation of 5.7% during FY10-FY14.
Figure: Share of MoE & MoPME inTotal Budget Figure: Share of MoHFW in Total Budget
22. Tax free income for women has been raised fromTk. 2.5 lacs in FY
2014 to Tk. 2.75 lacs in FY 2015.
The proposed allocation for the social safety-net and welfare sector
is estimated at Tk. 139.74 billion, which represents only 13 percent
increase over the amount in the previous budget
FY15 budget has proposed to introduce 1% ‘Environment Protection
Surcharge’ or ‘Green Tax’ on ad-valorem basis on all kinds of
products manufactured in Bangladesh by industries which pollute
the environment.
24. The objectives of the budget
The objectives of the budget for FY15 appear to be:
• Attaining fiscal consolidation backed up by high growth of revenue
• Revitalizing economic growth momentum
• Reverting the downturn of private investment
• Further control of inflation
It also seems that the Budget for FY15:
• Has finally abandoned the Sixth Five Year Plan targets
• The Seventh Five Year Plan has not been picked up
• Has little reference to new and specific commitments of the recent
election manifesto
25. Some feature to make Budget effictive
Set up an Independent Statistical Commission to validate the
Macroeconomic correlates
Set up Agriculture Price Commission
Set up Local Government Financing Commission
Constitute Public Expenditure Review Commission
Food adulteration is a huge problem in Bangladesh. The Pure Food
Act,2013 has been enacted but its implementation has not started
yet. Pure Food Authority needs to be established urgently
Formulation of the National Shrimp Policy 2014 would help Shrimp
farming.
27. Vision for future
Eight Tasks as part of the road map ahead
include:
1) Current Account Deficit: CAD will be inevitable for some more years
which can be financed only by foriegn investment. Hence, there is no
room for any aversion to foreign investment.
2) Price Stability and Growth: In a developing economy, a high growth
target entails a moderate level of inflation. BB must strike a balance
between price stability and growth while formulating the monetary
policy.
3) Financial Sector reforms to be completed as laid down by Financial
Sector Legislative Reforms Commission.
28. Vision for future
4) Massive investment in infrastructure: to be mobilized through the
Public Private Partnership.
5) Garments sector to be the base of Bangladesh’s development: All
taxes that go into an exported product should be waived or rebated.
There should be a minimum tariff protection to incentivize domestic
manufacturing.
6) Subsidies, which are absolutely necessary should be chosen and
targeted only to the absolutely deserving.
7) Urbanization to be managed to make cities governable and livable.
8) Skill development must be given priority at par with secondary and
university education, sanitation and universal health care.