Finance Minister AHM Mustafa Kamal is set to place over Taka 6.03 lakh crore national budget for fiscal year 2021-2022 (FY 22) in the Jatiya Sangsad (JS) today (03 June 2021) amid the COVID-19 pandemic aiming to expedite economic recovery and bolster the government efforts to save the lives and livelihoods of country’s people.
This will be the 50th national budget of the country coinciding with the golden jubilee of the country’s independence while the 13th in a row for the Awami League government.
The size of the national budget for FY 22 is likely to be Taka 6,03,681 crore which is 6.28 percent or Taka 35,681 crore higher than the original budget size of the current fiscal year which was Taka 5,68,000 crore.
The next budget will also be the 3rd straight budget for the incumbent Finance Minister AHM Mustafa Kamal.
The theme of the budget this time is “Jiban O Jibikar Pradhanno, Agamir Bangladesh”.
Officials at the Ministry of Finance said that the budget will give special priority to health, agriculture, social safety nets, employments, food and disaster management and food security apart from addressing the COVID-19 related issues.
The budget is also likely to incorporate some short, mid and long-term plans to address the various economic and social risks due to the pandemic.
A Finance Ministry official, preferring anonymity, told the media that the budget is likely to set a GDP growth target of 7.2 percent for the next fiscal year while the government would eye to contain inflation within 5.3 percent.
The original GDP growth rate for the current fiscal year was earlier set at 8.2 percent which was later revised at 6.1 percent. The size of the overall GDP in the next fiscal year would be Taka 34.56 lakh crore and in comparison to that the size of budget would be 17.47 percent of GDP.
The operating or non-development expenditure is likely to be about 60 percent or Taka 3,61,500 crore of the next budget outlay, up by Taka 13,320 crore from the allocation for the current fiscal year and Taka 37,812 crore from the revised amount.
The maximum amount from the operating expenditure amounting to Taka 68,589 crore will be spent on loan interest payments – some Taka 62,000 crore on internal loans and Taka 6,589 crore on external ones.
As part of austerity measures, the government is likely to reduce land acquisition meant for implementing development projects, construction and public works, investment in shares and equities in the next fiscal year as compared to the current financial year.
Around Taka 32,660 crore as capital expenditure is likely to be earmarked for such sectors in the next fiscal year’s budget, down from Taka 36,490 crore allocated for FY21 that was later slashed to Taka 21,141 crore in the revised budget.
In the next fiscal year, Taka 2,37,078 crore will be spent on development activities under the Annual Development Programme (ADP) including those of city corporations and self-governing bodies. The amount was Taka 2,15,043 crore in the original budget for FY21. The allocation in the revised budget was reduced to Taka 2,08,025 crore.
Of the development expenditure, Taka 2,25,324 crore has been allocated for the Annual Development Programme (ADP), which is Taka 20,179 crore more than in the original budget for the current fiscal year. The FY21 allocation in the revised budget was trimmed to Taka 1,97,643 crore because of a bit slow implementation rate of the ADP owing to the pandemic.
The revenue collection target of the National Board of Revenue (NBR) is not going to rise in the new budget compared to the original budget for the outgoing fiscal year although the government has a plan to spend an additional Taka 35,681 crore this time.
The same revenue collection target of Taka 3,30,000 crore is likely to be maintained in the upcoming budget although the revised target of the NBR for FY21 was reduced to Taka 3,01,000 crore.
A target is likely to be set to collect Taka 43,000 crore in non-tax revenue as well as Taka 16,000 crore as non-NBR tax revenue and Taka 3,490 crore as foreign grants.
The overall budget deficit for the next financial year has been estimated at Taka 2,14,681 crore, which is 6.2 percent of the GDP. Because of the pandemic situation, the deficit in the current fiscal was Taka 1,90,000 crore, which was 6 percent of the GDP.
For this reason, the government’s dependence on foreign debts will increase in the next fiscal year to meet the deficit financing. The government is likely to borrow Taka 97,738 crore from foreign sources, which was Taka 76,004 crore in the current fiscal’s original budget.
On the other hand, the government is likely to borrow Taka 1,13,453 crore from internal sources to meet the deficit. Of the amount, Taka 76,452 crore will be borrowed from the banking system while Taka 32,000 crore through sales of savings certificates.
In the original budget for FY21, a target was set to borrow Taka 84,980 crore from banking system, which was reduced to Taka 79,749 crore in the revised budget. The target was set to collect Taka 20,000 crore through sales of savings certificates.
The government is likely to allocate Taka 1.25 lakh crore against various social safety net programmes which will be around 24 percent higher than the outgoing fiscal year. The allocation against various social safety net programmes in the outgoing fiscal year was Taka 95,574 crore.
Around 5.25 lakh widowed and abandoned women will come under the allowance scheme afresh. Currently, each of 20.50 lakh women receives Taka 500 as allowance. Besides, the number of old age allowance recipients may increase by 8 lakh.
Apart from this, the number of beneficiaries from the Hijra, Bede and lagging behind communities would be raised to 95,000 in the next budget which is currently around 86,000.
Besides, the road transport workers and river transport workers would come under the social safety net programmes for the first time as road transport and river transport remained suspended for some days across the country to rein in the COVID-19 infection rate. Cash support will be provided to these transport workers under the new budget.
To face the impacts of COVID-19 pandemic, there will be Taka 10,000 crore special allocation in the budget.
The provision for legalising undisclosed income unquestioned in the next fiscal year’s budget would continue.
The budget might see 2.5 percentage points cut in corporate tax, a longstanding demand of the private sector.
At present, the corporate tax range from 25 percent to 45 percent. The one-person company law would be implemented from the next fiscal year, and the corporate tax for such companies would be fixed at 25 percent.
The budget for fiscal 2021-22 might also see a tax holiday for 10 years for manufacturing import-substitute products like cars.
According to Finance Ministry officials, the tax holiday would be extended for another 10 years on certain conditions.
The provision of a 10 percent value-added tax on locally-manufactured sanitary products would be lifted while the advance income tax for raw material imports for domestic manufacturing could be trimmed by 1 percentage point.
From the experiences of the pandemic, the government might extend a tax holiday for 10 years for constructing hospitals outside Dhaka with at least 250 beds.