Photo: Messenger
Finance Minister Abul Hassan Mahmood Ali presented the proposed budget of Tk 7,97,000 crore for the fiscal year 2024-25 in the National Parliament on Thursday. This is his first budget as the finance minister. In the proposed budget, the gross domestic product (GDP) growth target for the next financial year has been set at 6.75 per cent in addition to giving a message of hope to bring down inflation to 6.5 per cent.
The finance minister presented the budget proposal under the pressure of inflation. Inflation in the country has been over 9 per cent for the last 14 months, and recently food inflation has risen over 10 per cent. In such a situation, the finance minister expects inflation to be 6.5 per cent in the next financial year. The inflation target was 6.5 per cent in the current fiscal year budget as well, but the government has failed to implement it.
Those concerned said that the finance minister gave a contradictory statement during the budget presentation. On the one hand, he has promised to bring down inflation to 6.5 per cent. On the other hand, he has increased VAT and tax on many essential goods. That is why it may ultimately boomerang.
In this regard, Ghulam Rahman, president of Consumer Association of Bangladesh (CAB), told The Daily Messenger that the finance minister expressed hope to reduce inflation in the budget speech. “But he did not say anything about how to do that. On the contrary, in many cases, the increase in taxes will cause the prices of goods to go up, as we have seen in the past.”
The budget proposal presented by the finance minister expressed hope for big growth by reducing inflation, and deficit has been estimated at Tk 2 lakh 56 thousand crore without grants. The overall deficit, including grants, has been estimated at Tk 2 lakh 51 thousand 600 crore. In addition, a target of Tk 4 thousand 400 crore has been set.
To meet this deficit, the foreign loan target has been fixed at Tk 1 lakh 27 thousand 200 crore. Tk 36 thousand 500 crore of foreign debt will be repaid. In this, the net foreign debt will stand at Tk 90 thousand 700 crore.
Domestic loan of Tk 1 lakh 60 thousand crores will be taken. Out of this, Tk 1 lakh 37 thousand 500 crore will be taken from the banking system, out of which Tk 72 thousand 682 crore is long-term loan and Tk 64 thousand 818 crore is short-term loan. Tk 23 thousand 400 crore of non-bank loans will be taken. The target for the sale of savings bonds is Tk 15,400 crore.
In the proposed budget, the interest payment cost of loans has been estimated at Tk 1 lakh 13 thousand 500 crore. Out of this, interest on domestic debt is Tk 93 thousand crore. Foreign loan interest is Tk 20 thousand 500 crore.
This time, the revenue target has been fixed at Tk 5 lakh 41 thousand crore. Out of this, the target of the National Board of Revenue (NBR) is Tk 4 lakh 80 thousand crore. Tk 15 thousand crore of non-NBR tax has been assessed. The target of receiving outside tax has been fixed at Tk 46 thousand crore.
In the proposed budget, the operational expenditure has been estimated at Tk 5 lakh 6 thousand 971 crore. Out of operating expenses, recurrent expenses are Tk 4 lakh 68 thousand 983 crore. The interest payment of domestic and foreign loans is Tk 1 lakh 13 thousand 500 crore. Capital expenditure has been estimated at Tk 37 thousand 989 crore.
In the proposed budget, development expenditure has been estimated at Tk 2 lakh 81 thousand 450 crore. Out of this, the scheme will spend Tk 5 thousand 943 crore. Expenditure on special projects other than
ADP has been estimated at Tk 7 thousand 627 crore. The expenditure on the annual development programme (ADP) has been estimated at Tk 2 lakh 65 thousand crore. In exchange for work, food programme (non-ADP) and relocation has been estimated at Tk 2 thousand 884 crore.
The tax-free income limit has not been increased in the proposed budget for FY25. That is, as in the previous financial year, this year also the annual tax-free income limit of individual taxpayers has been kept at Tk 3 lakh 50 thousand. However, with the aim of increasing revenue, the maximum income tax limit has been increased from 25 to 30 per cent.
Regarding the tax-free income limit, the finance minister said, “I propose to keep the tax-free income limit of existing natural person taxpayers, firms and Hindu undivided families unchanged for the financial year 2024-25. At the same time, we propose to increase the existing maximum tax rate from 25 per cent to 30 per cent by adjusting the tax brackets for natural individual taxpayers, firms and Hindu undivided families.”
Meanwhile, the proposed budget has increased VAT and excise duty on several products. As a result, the cost of common people will increase. As every time, supplementary duty and price level has been increased at the manufacturing stage of cigarettes. A supplementary duty of 65.5 per cent has been proposed on three-tier cigarettes. As a result, the price of all types of cigarettes may increase. Besides, the maximum retail price of 10 grams of jorda (chewing tobacco) has been proposed at Tk 48 and the same amount of gul at Tk 25.
Besides, it has been proposed to increase the duty on the import of water filters from 10 per cent to 15 per cent and to increase the duty on the import of materials for the production of LED bulbs and energy saving bulbs by 10 per cent. The duty on import of cashew nuts is being increased from 5 per cent to 10 per cent. VAT and duty are being increased on compressors and all types of materials used in the production of fridges and air-conditioners in the country.
A 1 per cent duty has been levied on the import of raw materials for 33 items used in industries. In economic zones and hi-tech parks, import of capital parts and construction materials of industrial establishments is being withdrawn and 1 per cent duty is being imposed. It has been proposed to increase the VAT on ice cream and carbonated beverages. As a result, the price of ice cream and soft drinks will increase.
Supplementary duty has been proposed to increase by 5 per cent to 20 per cent against the services provided in mobile phone SIM usage. This will increase the cost of talking on mobile and using the internet. The budget has proposed a 10 per cent increase in import duty on more than 200 medical devices and equipment. As a result, the medical expenses of critically-ill patients will increase.
Meanwhile, the finance minister said that 11 issues have been prioritised in the budget for the fiscal year 2024-25. He said that by 2041, all necessary activities will be given special priority to transform Bangladesh into a developed, prosperous, and smart country. He said, “In order to implement the pledges, we have made in this year's election manifesto to build a developed, prosperous, smart Bangladesh, with the aim of ensuring suitable employment for all the able-bodied, development of agriculture, expansion of investment and industry, right to proper health and education, etc., besides providing protection to people's quality of life. Above all, the main goal of our budget this year will be to lay the foundation for the implementation of the promises made in the election manifesto.”
The issues that have been prioritised in this year's budget are: 1. Protecting economic stability 2. Ensuring a supportive learning environment for science education, scientific research and innovation 3. Providing necessary support to agriculture sector and ensuring food security 4. Improving and expanding basic health services 5. Ensuring provision of youth training and self-employment 6. Use of technology at all levels including digitizing all possible services 7. Development of physical infrastructure, optimal utilization of marine resources, ensuring financial sector discipline 8. Eradicate extreme poverty by 2031 and reduce general poverty to three per cent by 2041 9. Ensuring conducive environment for setting up industries and investment 10. Taking action to deal with the effects of climate change and 11. To develop public welfare oriented, accountable, efficient and smart administration and continue zero tolerance policy against corruption.
Messenger/Disha
