Finance minister AHM Mustafa Kamal on Thursday placed a Tk 5,231.90 billion largest-ever budget for the 2019-20 fiscal with a focus on developing communications infrastructure and human resources.
The finance minister proposed allocating, from the annual development programme, 27.4 per cent for human resource (education, health and related others), 26 per cent for communications (roads, rails, bridges, and related other communications), 21.5 per cent for the overall agriculture sector (agriculture, rural development, water resources, and related others), 13.8 per cent for power and energy sector and 11.3 per cent for other sectors.
Allocation proposed for the social infrastructure sector in the proposed budget is Tk 1,434.29 billion, and Tk 1,646.03 billion for physical infrastructure sector of which Tk 662.34 billion will go to overall agricultural and rural development, Tk 613.60 billion to overall communications, and Tk 280.51 billion to power and energy.
The new budget also gives attention to taking the taxpayers' base to 10 million to increase the Tax-GDP ratio to 14 per cent from the existing 10 per cent in the next two years.
To make that happen, the finance minister also opted to boost revenue collection not by only increasing the tax rate but also by widening the tax net to achieve his 8.2 per cent GDP growth.
The budget for 2019-20 fiscal titled 'Bangladesh on a Pathway to Prosperity. Time is Ours, Time for Bangladesh' was initially placed by the finance minister. When he was unable to read out the budget speech due to his illness, prime minister Sheikh Hasina took over and read out its summary.
Speaker Shirin Sharmin Chaudhury approved her plea and the prime minister started to read out the budget speech in favour of the finance minister.
The overall budget deficit will be Tk 1,453.80 billion, which is 5 per cent of GDP like the previous year.
In financing the deficit, Tk 680.16 billion will come from external sources and Tk 773.63 billion from domestic sources.
Of the financing from domestic sources, Tk 473.64 billion will come from the banking system and Tk 300 billion from savings certificates and other non-bank sources.
The total revenue collection has been estimated to be Tk 3,778.10 billion where the National Board Revenue (NBR) will contribute Tk 3,256.60 billion tax revenue from non-NBR sources have been estimated at Tk 145 billion. Besides, non-tax revenue is estimated to be Tk. 377.10 billion.
The total allocation for operating and other expenditures is Tk 3,204.69 billion, and allocation for the annual development program is Tk 2,027.21 billion, while Tk 1 billion has been proposed to provide startup capital to promote all types of startup enterprises among youths.
To achieve the double digit GDP by FY 2023-24, the GDP growth rate has been projected to be 8.2 per cent for FY 2019-20 as the GDP grew consistently at a very high rate in the last decade.
He pledges to enhance the competitiveness of business sectors, including agriculture, industry, commerce, exports, real estate and services sectors.
A total of Tk 1,236.41 billion has been proposed for general services, which is 23.63 per cent of total allocation. Tk 332.02 billion is proposed for public-private partnerships (PPP), financial assistance to different industries, subsidies and equity investments in nationalised corporations, banks, and financial institutions.
To mitigate the burden of increased expenses in sending foreign remittances and to encourage bringing in foreign remittance through legal channels, an incentive at the rate of two per cent on money remitted by expatriate Bangladeshi will be provided from this financial year.
For this purpose, he proposed to allocate Tk 30.60 billion in this year to significantly increase the remittance flow through legal channels and discourage the 'hundi' business.
The budget also proposed to introduce insurance for the expatriate Bangladeshi workers and their families as they often face financial losses and risks due to accidents and various other causes.
About banking sector reform, he mentioned that the government did not observe any mentionable reform initiative.
For the sake of a strong capital market which is required for any strong economy, the Finance Minister proposed to make tax free dividend income from the listed companies' upto Tk 50,000.
With a view to promoting business and investment, augmenting export and creating employments, he proposed the tax holiday facility to continue and also to include some potential manufacturing sectors such as agricultural machinery; furniture; home appliance - rice cooker, blender, washing machine etc.; mobile handset; toys; leather and leathergoods; LED television; plastic recycling.
Under the existing law, 21 industrial sectors and 19 physical infrastructure development sectors have been enjoying tax holidays on the basis of geographical locations at different rates for different periods of time. This benefit was supposed to expire on 30 June of this year.
Along with the standard VAT rate of 15 per cent, there will be reduced rates of 5 per cent, 7.5 per cent and 10 per cent for specific goods and services. As a special measure, considering the sensitivity of the product, the rate of VAT at the trading stage of pharmaceutical and petroleum products shall be 2.4 per cent and 2 per cent respectively.
In the stock market at present, dividend up to Tk 25,000 received from the publicly traded company is exempted from tax.
With a view to incentivising the small investors and strengthening the capital market, he proposed enhancing this limit up to Tk 50,000.
Education and technology
A total of Tk 794.86 billion was allocated in the proposed budget for the education and technology sector, which was 15.2 per cent of the Tk 5,231.90 billion budget.
The finance minister said necessary funds have been earmarked in the proposed national budget for 2019-20 fiscal year for enlisting new schools in the Monthly Pay Order (MPO) scheme which remained suspended for a long time.
He proposed allocating Tk 240.40 billion for the primary education sector, Tk 296.24 billion for the secondary and higher education sector and Tk 74.54 billion in FY 2019-20 for technical and madrasa education.
The minister said 28 ministries and divisions are currently implementing programmes related to education and training. The allocation for this purpose in FY 2019-20 is Tk 876.20 billion, which is 3.04 per cent of GDP and 16.75 per cent of total budget allocations
An amount of Tk 140.53 billion has been earmarked for the development of agricultural sector in the proposed budget, up by 139 crore from last year's allocation.
Mustafa Kamal said activities for the innovation of crop varieties tolerant to flood, drought, salinity and high temperature by conducting applied research will get priority in the next fiscal year in order to adapt to the adverse effects of climate change.
The Finance Minister also proposed an amount of Tk 321.01 billion for the defence ministry and other services under the ministry in the national budget.
The proposed allocation is higher by Tk 30.17 billion of the budget of 2018-19 fiscal year.
The finance minister proposed allocating Tk 257.32 billion for the Health Services Division, and the Health Education and Family Welfare Division.
Power and Energy
Mustafa Kamal proposed an allocation of Tk 280.51 billion for the Power Division and the Energy and Mineral Resources Division, Tk 614.55 billion for the communication infrastructure sector, Tk 662.34 billion for the agriculture and rural development sector.
To bring all third gender people under the net, the number of beneficiaries of Third Gender Livelihood Development programmes to be increased to 6000, additional 20,000 beneficiaries from the gypsies and disadvantaged communities to be included in the current list of 64,000.
The finance minister said the government expects to create some one crore new jobs by establishing 100 Economic Zones (EZs) across the country. "Establishment of 100 Economic Zones across the country is in progress for employment generation through increased investment. Almost one crore new jobs will be created in these Economic Zones."
No price spiral
Mustafa Kamal said there is no component in the budget for the 2019-2020 fiscal year, which may cause a price spiral of essential commodities.
"The budget has been prepared to fulfil the demands of people of all occupations, including fisherman, weavers, businessman, different ethnic groups, teachers, doctors and engineers, of the country," he said.