Finance Minister AMA Muhith, on Thursday, unveiled a Tk. 222,491 crore populist budget for the 2013-14 fiscal year, in Jatiya Sangsad, by avoiding imposition of any significant tax burden and by expanding social safety net programmes. The budget, having a deficit of 4.6 per cent, eyes 7.2 per cent GDP growth for the next fiscal year and Muhith expects that the space created by fiscal and monetary sectors would have a conducive impact on investment environment, and would raise the GDP to 8 per cent in FY 2014-15.
In presenting the last budget of the present government, Muhith envisaged scaling up the revenue collection programme, through comprehensive reform initiatives, ensuring public expenditure control and channelising additional resources to vital growth-supportive projects.
Muhith stuck to the policy of continuity in pursuing existing monetary and fiscal policy strategies and sustaining macroeconomic stability in his budget, which does not include any drastic measure, in terms of sectoral allocations and tax measures.
Expressing hopes to keep the inflation rate at 7 per cent, Muhith said that he expected food inflation to come down to a tolerable level, due to satisfactory domestic agricultural production, and downward trend of food prices in the international market.
“On the other hand, we will keep on pursuing our strategies of tight monetary policy and fiscal consolidation. In addition, the increase of foreign exchange supply will keep the exchange rate of Taka stable. In these circumstances, I hope that overall inflation will be reduced to 7.0 percent in the next fiscal year and to 5.5 percent in the medium term,” he added.
The revenue income for FY 2013-14 has been estimated at Tk. 167,459 crore, which is 14.1 per cent of GDP, of which, NBR tax revenue is Tk. 136,090 crore.
Revenue from Non-NBR sources has been estimated at Tk. 5,129 crore. In addition, Tk. 26,240 crore will be collected as Non Tax Revenue (NTR).
The total expenditure for FY 2013-14 has been estimated at Tk. 222,491 crore. The allocation for non-development and other expenditure has been estimated at Tk. 156,621 crore.
The overall budget deficit will be Tk. 55,032 crore, which is 4.6 per cent of GDP. Of this amount, Tk. 21,068 crore will be financed from external sources and Tk. 33,964 crore from domestic sources. Of the domestic financing, Tk. 25,993 crore will come from the banking system, and Tk. 7,971 crore from savings certificates and other non-banking sources.
Keeping the holding of the general election in the ensuing fiscal, the allocation for the Election Commission is increased to TK 1649 crore from TK 345 of the previous year.
Education, communication, agriculture, rural development and health sectors are given the highest allocations in the budget. Allocation for the agriculture sector is reduced to Tk. 17,471 crore from the Tk. 19,842 crore of the previous year, but the minister pointed out that the slash caused by the payment of arrears by the agriculture ministry, in the current fiscal year.
About the Annual Development Programme, the minister said the government has determined the size of ADP by taking into account regional parity, improved infrastructure and quality of expenditure.
In the ADP for FY 2013-14, the human resource sector (education, health, and other related sectors) will receive 23 per cent, overall agricultural sector (agriculture, rural development and rural institution, water resources and other related sectors), 25.4 per cent; power and energy sector, 17.2 per cent; and communication sector (road, railway, bridges, and other related sectors), 23.1 per cent; and other sectors, 11.3 per cent; of total allocation.
The budget offers tax related incentives to individuals and a number of sectors. Income tax exemption ceiling for individuals has been raised to Tk. 220,000, from the existing Tk. 200,000. For women the ceiling has been raised to Tk. 250,000, from the existing Tk. 225,000.
It proposes to reduce and fix the minimum tax for the individual taxpayers living in municipal areas of district towns, at Tk. 2,000, and the taxpayers belonging to other places, including villages, at Tk. 1,000, while retaining the minimum tax at Tk. 3,000, for taxpayers living in city corporation areas. “Such reduction in payment of minimum tax, I believe, would motivate the taxpayers in the rural areas to pay tax with effectual impact in widening the tax net,” Muhith said.
The budget also proposes to retain the corporate tax rate for FY 2013-2014 same as FY 2012-2013, except for cigarette manufacturing companies.
“However, considering the public health and environmental hazards, I would propose to increase the tax rate for publicly traded and non-traded cigarette manufacturing companies, along with rationalisation of tax at source on banderole of biri. Apart from that, I would propose to reduce the gap of tax rates between publicly traded and non-publicly traded mobile company,” the minister said.
Muhith proposed to increase the investment ceiling for the individual taxpayers, in certain cases, from Tk. 1 crore to Tk. 1.5 crore, and also proposed to increase the ceiling, from 20 per cent, to 30 per cent of the total income eligible for tax rebate, and the rate of tax rebate, from 10 per cent, to 15 per cent.
The budget includes a string of measures to boost the ailing capital market like rescinding the existing provision of charging 3 per cent tax on the premium, over the face value of shares of a company, repealing of the provision of charging 0.05 per cent tax at source, on the total income from bond sale, allowing 15 per cent tax rebate on investment in private and public mutual funds. Apart from that, the minister also proposed to increase the threshold of tax-exempted income from dividend, from Tk. 5,000, to Tk. 10,000. Furthermore, the government has a plan to consider tax exemption, when the proposed demutualisation of stock exchanges is effected.
Existing tax-holiday facilities for selected industries have been extended, from June 2013 to June 2015, with a view to providing incentives to new industries and creating employment berths.
The budget also emphasised on the railway sector and proposed a master plan for Bangladesh Railways, with an objective to expand and modernise the railways.
“Under the short-, medium- and long-term programmes under this master plan, the long-neglected railway will be revitalised and connected with the regional and international railway network,” the minister said. The scope and coverage of social safety net programmes have significantly been expanded in the proposed budget. Monthly allowance of Tk. 350 is being provided to 101,200 poor pregnant women all over the country. The coverage has been raised by 15 per cent. The monthly allowance for working mothers in RMG sector has been raised to Tk. 4,000, and the coverage would be raised by 10 per cent.
Coverage of the old age allowance and allowance for widows, divorced and distressed women has been increased by 10 per cent.
Flanked by Prime Minister Sheikh Hasina, Muhith, who said that he would not be the finance minister if the AL government comes to power again, entered the House at around 3.15 pm, and started delivering his budget speech at 3.30 pm. He took the support of multimedia presentation, during his three-hour-long speech.
While concluding his budget speech, perhaps his last, the minister said, “I have just become an octogenarian.
“Throughout my life, I have seen the twists and turns of events. In this long journey, life has offered me vicissitudes of despair and hope. I always found tranquility amidst turmoil. I could discern not just the silver lining over the clouds, but an array of golden possibilities.”
-With The Independent input
