Finance Minister AHM Mustafa Kamal unveiled a budget of Tk 603,681 crore for fiscal year 2021-22 on June 3. This is his third budget and coincidentally is the 50th budget of Bangladesh. Of the total budget, Tk 378,357 crore is allocated for expenditure and the rest Tk 225,324 crore for development purpose. In the revenue side, Tk 389,000 crore has been set as the NBR sources and non-NBR sources. The overall budget deficit for FY 2021-22 will be Tk 214,681 crore, which is 6.2 per cent of the GDP.
While this budget holds many positive aspects, few areas remain unaddressed. Moreover, lack of planning to implement the budget might hurt the financial performance of Bangladesh in the upcoming fiscal year. The war against the deadly Covid-19 is still going on full pace throughout the whole world including Bangladesh. But unfortunately, the proposed budget did not reflect strong measures to face these current and upcoming challenges. Hence, the government should focus on exact implementation of the budget to secure the future of this nation with a COVID-19 pandemic hit economy.
Finance Minister AHM Mustafa Kamal as well as many claimed this budget to be business-friendly. The budget creates a scope to promote the ‘Made in Bangladesh’ brand to accelerate establishment of mega industries and production of import-substitute industrial goods in the country. The government has proposed tax exemption on products made in Bangladesh – three and four wheelers, home and kitchen appliances, light engineering products etc. for ten years. This exemption can be even extended for another ten years upon fulfillment of certain conditions.
Moreover, the budget proposed a reduction of tax for non-listed companies to 30 percent from 32.5 percent and the rate for listed companies to 22.5 percent from 25 percent. But it has proposed an increase in the tax rate from 32.5 percent to 35.5 percent for listed MFS companies and 40 percent for non-listed ones. But experts oppose the decision because the sector is still booming and requires further investments.
Clarity remains the key to a budget. The current COVID-19 situation, ongoing lockdown and arrival of new variants are making lives difficult for both the people and the policymakers. The budget provided for FY2021-22 was short on specifics, especially in health budget plan, failing to light up the road to the future. The government devised plans to vaccinate 80 percent of the people in phases. In the first phase, people with risks will be inoculated and 2.5 million vaccines will be given a month. But the finance minister was quiet on how the massive task would be executed in a country with a vaccine supply shortage.
Moreover, the allocation for the health sector is 5.4 percent of the total outlay. From another perspective, the budget allocation for health is not even 1 percent of the GDP while the outdated health sector structure needs to be reformed for good. The COVID-19 pandemic provided a chance to reform the health sector but the proposed budget missed the opportunity, as per experts.
The Transparency International Bangladesh (TIB) has cautiously applauded the government for not keeping the provision to legalize black money in the proposed national budget for the FY2021-22. But, at the same time, they expressed concerns over the lack of a clear roadmap to ensure transparency and prevention of corruption in the overall budget implementation, as well as the lack of sufficient allocations to critical sectors, such as the health sector to control Covid-19. According to the World Health Organization’s most recent data, patients bear 74% of treatment costs and the government bears 26%, which is a very poor for Bangladesh as a signatory to the UN Universal Declaration of Health.
The largest opposition party, BNP has criticized the budget describing that the proposed national budget for FY2021-22 as anti-poor one saying people’s debt burden will get heavier if it is implemented. But they also before and after the presentation of the budget did not provide any solid guidelines for the budget to the government or to the people.
The government has widened its social safety net program by increasing the budgetary allocation by 12.5 percent in the FY2021-22 as part of the efforts to lessen the difficulty of lower-income and vulnerable groups. Finance Minister also outlined the plan to protect the people with disabilities, third gender, senior citizens and homeless. Though the allocation for social protection has increased but it is not as big as it seems because it includes the pension of government employees. Moreover, experts claimed that, the budget does not depict any plan about bringing back those who lost their jobs due to the COVID-19 pandemic into the job market.
To contain the impact of the Covid-19 pandemic, the budget has also proposed Tk9,500 crore in farm subsidies. The national budget for the 2021-22 fiscal year has raised the allocation for the Agriculture Ministry by Tk759 crore from Tk15,442 crore in the outgoing fiscal year to Tk16,201 crore. The government has decided to exempt tax facilities for agro-based industries and entrepreneurs for 10 years to facilitate the industries and generate employment. Agricultural entrepreneurs who will process fruits, vegetables, produce dairy and dairy products, and produce children’s foods, will get the benefit. Besides, 10-year tax exemption facilities will be continued for the entrepreneurs who produce agricultural machinery.
More than 65 percent people of Bangladesh is still dependent on agriculture. But though the allocation for the agriculture sector has increased, it may still not be real inflation-adjusted. Moreover, the increased allocation seems to be directed to the large businesses but the fate of the farmers and agricultural workers might not change a lot as a certain investment will be required to avail the benefits of the increased allocation.
The unemployment rate is expected to reach around 6 per cent by the end of 2021. Around 46 per cent of the unemployed are university graduates and it is increasing. Moreover, this pandemic has created new unemployed groups and income of many declined making them half-unemployed. The budget for FY21-22 does not depict any plans for creating employment for these unemployed people. Co-operative modern agro farms can be a solution to address this issue. It will also increase self-dependence. Most of our talents come from families with agriculture-based income. If they cannot sustain, then the future human resource will be destroyed. Hence, terrorism, fundamentalism, violence, drugs and political unrest will increase. So, the government should focus on protecting lives and income of the 65 percent agriculture-based people.
The education sector allocation is also not satisfactory, as per the experts. As the educational institutes are closed for more than a year, the children, teenagers and youths are facing serious dilemma. Moreover, there is no proper recreational facility for them. This is driving them towards drugs, wrong recreational activities and violence. The fate of the future generations of Bangladesh is a real concern today. The talented youths of today are migrating today in Western countries enslaving themselves as we cannot provide a good future. There is no proper incentive for the well mental growth of the youth. If we cannot protect the next generations, all the developments of the country cannot be sustained and all our progress will be meaningless.
The tax-free income remains Tk 3 lac, which is same as before. But inflation, we mean real inflation, is not adjusted here. Moreover, increasing commodity products’ prices andutility prices along with increased medical cost during the COVID-19 pandemic is creating lots of burden. Additionally, the income generating group is bearing the load of family members who became jobless during the pandemic. On top of that, we are paying VAT regularly which depicts in increasing VAT income. Hence, the tax-free income limit must have been increased.
Most importantly, implementation of the budget will remain the greatest challenge. Even after the COVID-19 pandemic, the health sector could not utilize the allocated budget fully during the current fiscal year. Hence, we hope the government focuses on implementing the budget honestly eliminating the corruption and irregularities. We believe, despite many shortcomings, if properly implemented, the proposed budget might bring good fortune for the people of Bangladesh. The whole country will eye on that.
The writer is Chief Editor at Mohammadi News Agency (MNA), Editor at Kishore Bangla and
Chief Patron, Bangabandhu
Shishu Kishore Mela