- 2021-06-06 17:14:58
- LAST MODIFIED: 2021-07-23 18:11:22
National Budget 2021-22
The national budget for the financial year 2021 -22 was placed in
the national parliament by Finance Minister AHM Mustafa Kamal on June 3 2021.
This is his third national budget, country's 50th since independence. The
budget was placed at a time when the economy of the country, already struggling
to recover from the impacts of the first wave of the Corona pandemic, is hit by
a resurgence of the Covid. The second covid wave prompted the government to
enforce a nationwide shutdown, dealing a massive blow to the poor and
low-income groups. The crisis has put the government in a precarious situation
as it is trying to save the lives of citizens on the one hand and revive the
economy to protect the livelihoods of millions on the other.
The Finance Minister unveiled a proposed budget Tk 6,03,681 crore for the 2021-22 fiscal year. The new budget is about 17.4 % of the GDP and around 12% higher than the revised budget of the current fiscal year. Out of the total expenditure, recurrent expenditure Tk. 2,25,324 crore and others Tk. 49,517 crore. Total revenue income has been proposed Tk. 3,89,000 crore of which NBR-tax revenue Tk. 3,30,000 and other sources Tk. 59,000 crore. Overall deficit is Tk. 2,14,681 crore. The deficit will be met from bank borrowing, non-bank borrowing, foreign credit and foreign grants. The inflation rate has been estimated 5.3 %.
The government has targeted a GDP growth rate of 7.2 % for fiscal year 2021-22 taking the post covid recovery situation into account. It had revised down the economic growth projection to 6.1% for 2020-21. Bangladesh’s per capita income has risen to 2,227 US dollar in fiscal 2021-22 despite devastating impacts of the Corona pandemic. It was 2,064 US dollar in fiscal year 2019-20 . Foreign currency reserves have shot passed 45 billion US dollar riding on higher remittance inflow, lower imports and moderate exports. The government hopes the reserves will touch 50 billion US dollar by December 2021. Remittance inflow had increased by 40.1 percent to 22.75 billion US dollar as of April 2021. Funds committed by the multilateral and bilateral development partners have shot past 50 billion US dollar.
Some major changes have been proposed in tax rates for the next fiscal year. It has been proposed that the corporate tax imposed on listed and non-listed companies, sans lenders, merchant banks, tobacco and mobile network companies, be reduced by 2.5 percentage points. However, the corporate tax levied on listed mobile financial services (MFS) providers may soar by 5 percentage points. A 10-year tax exemption has been proposed for the local producers of washing machines, microwave oven, electric sewing machines, induction cookers, kitchen hoods, and kitchen knives in order to promote “Made in Bangladesh” products. Same facilities have been proposed for fruits processing, vegetable processing, milk and its by product production and baby food production. Due to new tax measures prices of some products like imported smartphones, premium brand cigarette, perfumes, tiles, sanitary items and imported processed meat etc. will go up while prices of products like medical devices, imported fruits, puffed rice, agricultural machinery, microbus etc. will go down.
While placing the budget in the parliament the Finance Minister said, “the main impetus for our economic activities is our people. This year’s budget will attach the highest importance to the lives and livelihoods of people.” All eyes were on how the Finance Minister would plan to revamp the country's ill equipped and covid battered health sector when he presented the 50th budget on Thursday. The health budget for the 2021-22 fiscal year offers nothing new compared to the last one. The Finance Minister earmarked around Tk. 32,731 crore or 5.42 % of the total budget or only 0.95 % of GDP. In the outgoing fiscal year government allocated Tk. 29247 crore or 5.15 % of the total budget and 5.84 % of the revised budget. Besides a block allocation of Tk. 10,000 crore has been kept to meet the expenses related to unanticipated emergency requirements, like in the previous fiscal year. There is a plan to vaccinate 80% of the population in phases -25 lakh each month. Health experts and right activists said a considerable increase in budgetary allocation focusing on primary health care would have been a true recognition from the government for the health sector which is battling against the pandemic.
The government has proposed higher allocation for social safety net programs. The government has created two separate funds worth a combined Tk. 12,300 crore under its massive social safety net programs in the next fiscal year for targeted populations and low paid informal sector workers.Of these funds, Tk. 7,300 crore has been earmarked for the purpose of providing cash assistance to the poor and vulnerable and addressing Covid-19 health risks. Another Tk. 5,000 crore fund has been created for assisting affected day laborers, farmers, domestic workers, and those imperiled by natural calamities. However, the government is yet to come up with the details of the beneficiaries of these funds. With these two newly created funds, the government has proposed to allocate Tk. 1,07,614 crore for social safety net programs in fiscal year 2021-22, aiming to bring around 14 lakh new people under social protection.
From the next fiscal year, coverage of 100% deserving poor elderly people will be extended to 150 most poverty-stricken upazilas, from the existing 120 upazilas. This will add 8 lakh new beneficiaries and an additional allocation of Tk. 481 crore will be provided. Similarly, coverage is being increased for widows, deserted and destitute women, which will add 4.25 lakh new beneficiaries and an additional Tk. 255 crore will be allocated for this purpose. There will be an increase in the monthly honorarium of the freedom fighters from Tk. 12,000 to Tk. 20000 in the next fiscal year.
The budget has not proposed any direct cash support to revive the cottage, micro, small and medium enterprises (CMSMEs) sector, where millions of workers lost jobs though the government proposed some short tax relief measures. The Finance Minister emphasised proper implementation of the previous stimulus packages. Economists and businesses said the previous stimulus packages have not come too much use of the CMSMEs and informal sectors that were affected the most during the pandemic beginning early last year. Experts opine that the tax measures will help the businesses buy or import raw materials but direct cash support or stimulus fund will help the CMSMEs owners revive businesses and retain and create jobs.
The new budget has been traditional, yet business-friendly. There have been some good allocations and some tax measures.Considering the size of the budget and past records, it seems proper implementation will continue to remain the big challenge.
S.M. MIZANUR RAHMAN
Additional Inspector General of Police (Retd.)
Ex- Police Commissioner, Dhaka Metropolitan Police.
Ex- Director General, RAB.