Finance Minister AMA Muhit, MP, proposed the National Budget for 2016-17 FY in the National Parliament on 2nd June 2016. The size of the proposed budget is Tk. 3 Lac 40 Thousand 605 Crore, where non-development expenditure is 2 Lac 29 Thousand 900 Crore, development expenditure is Tk. 1 Lac 10 Thousand 700 Crore and total deficit is Tk. 97 Thousand 853 Crore, which is 5% of GDP. In the proposed budget, the total revenue was targeted at Tk. 2 Lac 42 Thousand 752 Crore, where NBR earnings were projected as Tk. 2 Lac 3 Thousand 152 Crore which is 35.4% higher than the corrected target of the running FY, and non-NBR earnings were projected as Tk. 39 Thousand 600 Crore. This target of revenue earnings, without any doubt, can be termed as ambitious and seems to be ‘not so easy to achieve’, especially when we count and analyze the trends of revenue earnings by NBR in the past.
But acquiring the capacity to propose a budget having a size of Tk. 3 Lac 40 Thousand 605 Crore,comparing with the first budget of Bangladesh amounting Tk. 786 Crore declared 44 years ago, is really encouraging for which we would to earnestly thank to the Finance Minister, says an IBFB press release.
It is really a praiseworthy attempt that priorities were given to infrastructural development including physical infrastructure and initiatives for separate monitoring for mega development projects were also taken in the proposed budget. But since the scenario of Annual Development Plan implementation in the past are not found satisfactory, the Govt. should give special emphasis in appropriate implementation of development expenditures in the days ahead. On the other hand, overall economic development cannot be sped up without ensuring public, private and foreign direct investment up to a certain level, which in turn may adversely affect the government’s achievement of revenue earnings target. For this, it would be more inspiring if certain guidelines could be prescribed to enhance local investments in the proposed budget. Therefore, apart from infrastructural development, priorities should be given to the development of power and energy sector, improvement in investment climate, reformation in financial sector, bringing down bank interest to a single digit, reducing cost of doing business, reducing existing complexities in starting and doing a business etc. in the proposed budget.
The factors like huge private investment, rapid industrialization, development and expansion of local industries play a critical role in a country’s economic development. For this, IBFB strongly believes that top most priorities should be given to sustainable expansion of local industries in any economic policy and planning. But it was observed that prevailing VAT and related other facilities for locally manufactured products including locally produced Motorcycles were waived in the proposed budget, for which the prices of such local products will increase that will lead them to a imbalanced competitions with the same imported products. As a result, imports will be encouraged leading to an adverse affect in expansion of local industries, which in turn will hamper the employment generation and economic development in the country. For this, IBFB would like to strongly suggest for continuation of prevailing VAT and related other facilities for locally manufactured products including locally produced Motorcycles, at least for another two years.
As desired the business communities, instead of imposing the new VAT law to come into effect from this year, existing package VAT system was kept and areas of VAT was expanded in the proposed budget, which is really a praiseworthy attempt. However, increasing the amount of VAT may lead the entrepreneurs, especially those of the SME sector, to an increased financial burden, which may eventually have impacts at the general consumers’ level. Therefore, existing package VAT system, without an increase in the amount, may be kept in the amended budget.
The fixed income and general middle class group of the community would be much more benefitted if the individual tax ceiling could be raised from Tk. 2 Lac 50 Thousand to Tk. 3 Lac. IBFB suggests for individual tax ceiling at Tk. 3 Lac in the upcoming budget amendment.
In spite of different criticisms from various corners, the proposed budget can easily be termed as courageous, inspiring & challenging. The success of such huge budget will depend on achieving the target of revenue earnings and appropriately implementing the ADP and all other development expenditures.