Lofty budget eyes big growth

Hasibul Aman

14 June, 2019 12:00 AM printer

Lofty budget eyes big growth

The government unveiled a Tk 523,190 crore (Tk 5.23 trillion) budget on Thursday to set the country on a higher growth path with wider tax net, more investment and jobs, higher domestic demands and exports while expanding social protection.

The proposed budget projected the GDP growth at 8.2 per cent and inflation at below 5.5 per cent in fiscal 2019-20.

For executing the ambitious expenditure plan for fiscal 2019-20, Finance Minister AHM Mustafa Kamal vowed to bring some 80 lakh more people under the tax net to raise the number of taxpayers to one crore.

“All eligible taxpayers will be brought under the tax net. We want to raise the taxpayers’ number to one crore which is now only 21-22 lakh whereas four crore people are in the middle-income group,” the finance minister said in his budget speech in parliament.

Kamal also seeks to raise the tax-GDP ratio from existing around 10 per cent to 14 per cent in the next two years as low revenue compared with other peer countries remains a major concern for the country.

For doing so, he will resort to new multi-rate VAT law, curbing tax evasion through false declaration during export and imports, expanding tax offices and making the tax administration more taxpayer-friendly. 

The move, however, will not increase prices of essential commodities, the finance minister assured, stating that they want to widen tax net; not tax rates. 

The total revenue collection target has been set at Tk 377,810 crore where NBR’s target is Tk 3,25,600 crore, which is 16.29 per cent higher than outgoing fiscal’s revised target of Tk 2,80,000 crore.

Besides, the government seeks to collect Tk 14,500 crore non-NBR taxes, Tk 37,710 crore non-tax revenue and Tk 4,168 crore grants from foreign sources.

The expected revenue mobilisation is going to be an uphill task for the government as the targeted growth in NBR revenues is higher than the last five years’ average growth of 15.16 per cent.

The new budget outlay is 18.1 per cent of the estimated GDP of FY20 and Tk 58,617 or 12.62 per cent higher than current fiscal’s original budget of Tk 464,573 crore. 

But it is Tk 80,649 crore or 18.22 per cent larger than current fiscal’s Tk 442,541 crore revised budget, which was passed at the parliament on Thursday. 

Tk 3,10,262 crore has been allocated for the government’s operational cost, while development expenditure’s size will be Tk 2,11,683 crore including Tk 2,02,721 crore Annual Development Programme (ADP).  

The government’s development aspiration reached a new height with ADP allocation crossing two lakh crore thresholds in new budget keeping an eye on a higher 8.20 per cent growth in FY20.   

A lion’s share of Tk 2,02,721 crore ADP money will go to mega projects and rural infrastructure in line with the government’s electoral pledge to create civic amenities in rural areas.     

New ADP is Tk 35,721crore or 21.39 per cent bigger than Tk 1,67,000 crore revised ADP for FY19.

Keeping rural development in mind, the transport sector got the highest Tk 52,805.69 crore or 26.5 per cent of total ADP, while as a single agency Local Government Division enjoyed the highest allocation of Tk 29,776 crore.

Special importance has been attached to large infrastructure projects in the new budget in a bid to secure more progress of the dream projects in the next fiscal year.

A total of Tk 35,318 crore has been allocated against nine mega projects in the FY20 Annual Development Programme (ADP) with Roopur nuke power getting the highest priority followed by metro rail and Padma bridge project.

The operational cost in FY20 budget includes Tk 2,77,934 crore recurring cost that will cover Tk 52,797 crore domestic loan interests, Tk 4,273 crore overseas loan interests and Tk 32,328 crore as the government’s capital expenditure.

In the development expenditure segment, the government will spend on special schemes and Food for Work Programme (FWP) other than the ADP. Next year, Tk 2,184 crore will be set aside for FWP.

Budget deficit without grants will remain at Tk 1,45,380 crore or which is IMF’s permissible risk-free limit—5 per cent of GDP.

To meet the deficit financing, the government seeks to bank on Tk 63,848 crore net foreign borrowing and Tk 77,363 crore domestic borrowing including Tk 47,364 crore banks loans and Tk 27,000 crore loans from savings certificates.

Enough protection has been given to local industries while incentives have been announced for emerging export-oriented industries to help diversify export basket. 

The finance minister also rolled out some reform proposals for the banking sector, capital market, savings certificate sales and social security schemes.

Even though MPO for private educational institutions teachers remain halted for nine years, Kamal will allocate money in the new budget to accommodate new institutions and teachers.

Some 13 lakh more impoverished people will be brought under the government’s social safety net schemes to raise the number of total beneficiaries to 89 lakh.

Besides, start-up fund for unemployed youth, the introduction of crop insurance on a pilot basis will be new features of the budget, while people going abroad may be brought under the insurance facility.

Earlier, a special cabinet meeting led by Prime Minister Sheikh Hasina at Parliament secretariat approved the proposed budget.