National Budget FY2010-2011

: A Critical Analysis

Dr. M. Mizanur RahmanEconomist and Researcher

Introduction This is a budget for 150 million people of a country having

US$ 100 billion GDP at current price, US$684 Per capita income and US$750 GNI

This is the 39th national budget of the country and the 11th

of the Awami League government which has been presented on 10th June 2010 using visual aid which is appreciated;

This budget is important as if FY2009-10 has been the year of preparation; FY2010-11 will be the year of delivery. So, this budget should have taken into account the targets set by the government in their election manifesto.

To me, the budget has a lot of good side but might have a lot more things to do

Objectives Highlight the budget presented by the F.M. for FY2010-11; Critically analyze the overall budget; Compare the budget with some other budgets presented in

different recent years; Draw some suggestions which might be helpful to make the

budget more realistic.

Resources Coming from

Resources Spend for

Non-development Expenditure

Development Expenditure

Sector-wise Distribution of Total Expenditure (Non Development

and Development)

Sector Share in BFY11

(Crore Tk) Share in RBFY10

(%)

Change in FY11B over FY10R

Crore Tk %

Fuel and Energy 4.6 3.4 2328.0 61.5

Public Service 14.2 12.3 5215.0 38.4

Industrial and Economic Services 0.9 0.8 315.0 34.8

Recreation, Culture and Religious Affairs 1.2 1.1 373.0 31.7

Transport and Communication 6.7 6.2 1993.0 29.1

Social Security and Welfare 7.3 7.3 1604.0 19.9

Health 6.2 6.2 1296.0 19.0

LGRD 8.2 8.3 1730.0 18.9

Defence Services 6.9 7.1 1300.0 16.5

Education and Technology 13.9 14.6 2206.0 13.6

Agriculture 8.6 9.7 646.0 6.0

Housing 1.0 1.1 23.0 1.8

Public Order and Safety 5.2 6.1 122.0 1.8

Interest 11.1 13.3 63.0 0.4

Total Expenditure 100(132170) 100(110523) 21647.0 19.6

Analysis of Revenue Expenditure

Indicators GrowthFFY11/

RBFY10Share B

FY11Share RB

FY10

Incremental Share FY11B

Pay and Allowances 19.5 26 23.8 48.5

Goods and Services 7.4 13.3 13.5 10.5

Interest Payments 0.4 18.8 20.5 0.9

Domestic 0.1 16.9 18.5 0.2

Foreign 3.4 1.8 1.9 0.7

Subsidies 6.7 38 39 27.1

Block Allocation 146.3 1.9 0.8 12.8

Acquisition of Assets and Works 11.9 4.1 4 4.9

Total Augmented Non-Development Revenue Expenditure 9.6 100(78420) 100(71562) 100(6858)

Targeted GDP Growth Attaining a significant performance in the agricultural

sector will be a major challenge. Specially 3.8% growth can be challenging and may be unreachable when agricultural subsidy has been reduced and natural disaster is a common phenomenon.

Expectation of a performance of 6.8% in service sector in FY11 may be difficult to attain.

Lagged impact of Global Financial Crisis adversely affected the industrial sector in FY10, particularly manufacturing sector. Gas and electricity crisis has brought down the industrial production time almost half of the actual production time. So, 9% growth would be difficult to attain.

Therefore, 6.7 per cent growth rate is too ambitious to achieve

GDP Growth Rate

Source: http://www.indexmundi.com/bangladesh/inflation_rate_(consumer_prices).html

GDP Growth Rate

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Perc

ent

GDP - real growth rate (%)

Inflation Target Because of large deficit budget and imposing different new

tax, this budget can fuel inflation. Besides, in the international market fuel and other essential commodities prices are going up which also will push the inflation up. So, keeping the inflation with in 6.5% can be difficult.

The following measures can help to control the price of

essential goods: Widening the area of food security programme Continuation of zero customs duty rate on commodities

such as rice, wheat, onion, pulse and edible oil, seeds, fertilizer, medicine and cotton

Reduction of import duty from 12% to 5% on milk powder and withdrawal of 5% regulatory duty on milk powder

To reduce the inflationary pressure CRR and SLR of scheduled banks have been reduced by 0.5%

Inflation Rate

Source: http://www.indexmundi.com/bangladesh/inflation_rate_(consumer_prices).html

Inflation Rate

0.01.02.03.04.05.06.07.08.09.0

10.0

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Perc

ent

Inflation rate (consumer prices)

Annual Development Program (ADP)

ADP of FY11has been targeted at Tk.38,500 crore. 26.3% higher than ADP FY10 and 35.1% higher than RADP FY10 (in

reality this could even be (50.1) % higher than expected actual expenditure for FY10)

Project aid component of the new ADP is targeted at 40.0% (42.1% in the original ADP of FY10),while the local currency share will be 60.0% (57.9% in ADP of FY10)

Annual Development Program (ADP in crore Tk.)

Items 2006-07 2007-08 2008-09 2009-10 2010-11

Main ADP 26000 26500 25600 30500 39694Revised ADP 21600 22500 23000 28500  Implemented ADP 17917 18450 19700 16701*  % Implemented 83 82 86 59  

 * Upto 31March-2010, Source- The Daily Prothom Alo

Value Added Tax (VAT) Positive measures

Enhancement of annual turnover threshold to Tk 60 lacs from Tk 40 lacs to enjoy turnover rate of 4% will encourage SME business

VAT exemption on waste paper at import stage will help keep the newsprint prices low

Tax free import of all types of medical equipments and wheel chairs for sick and paralysed travelers is a noble measure

Negative impact Increasing VAT rate from truncated to actual (15%) on services

provided by dockyard, advertising agency, printing press, courier service, consultancy and supervisory firms, audit and accounting firm will increase the company cost

VAT at the rate of 4.5% will be imposed on private university and English medium school is apprehended to increase the cost of education since this tax burden will ultimately be shifted to the guardians of students

Income Tax Personal

Level of tax free income and all tax slabs remain unchanged in the budget for the last three consecutive years, which should have been raised

Corporate Corporate tax structures and incentives remain unchanged,

which should have been reduced Tax holiday

Tax holiday for industries engaged in manufacturing solar panel, energy saving bulb will reduce energy consumption.

Income Tax Tax rebate

Assistance to schools and colleges under MPO for improving computer and English education and on donations made to conduct camps for voluntary sterilisation will be considered as CSR and will be eligible for tax rebate, which will help improve the quality of these schools and colleges.

Concessionary tax imposition At 10% on income of a company earned from trading of shares

of listed companies in any stock exchange At 5% on income of sponsor shareholders or directors of a

company listed with any sock exchange At 3% on the premium value of shares of companies being sold

at a premium value This will help expand the tax collection effort of the

government as a large section of people engaged in this section remain out of tax net

Changes in Some Tax Measures

Items 2009-10

(%) 2010-11

(% ) Change Milk powder 125 50 Decrease Air conditioner parts import 45 20 Decrease Television parts imported 0 20 Increase Parts for energy saving lamps import 0 0 Unchanged Parts for energy saving lamps import 0 12 Increase Energy saving light 60 0 Decrease Solar operated storage water heater 25 12 Decrease Paper/paper backed aluminum foil 20 30 Increase Surface colored paper/paper board 20 30 Increase Microbus upto 1800cc 20 30 Increase Car 1500-1600cc 30 45 Increase

Tax Administration Measures Measures to increase the tax net and collection

include: E-filing of income tax returns on a limited basis; Installment of tax calculator software on the website of NBR; Restructuring of manpower and other facilities of income tax

department; Motivational programme for taxpayers of income tax and VAT; Introduction of tax card for highest taxpayers; Initiation of e-VAT software; Reforms in judicial process for easy settlement of VAT related

cases; Reforms in VAT administration including setting up more VAT

offices, setting up VAT offices in each upazilla.

Deficit Financing Budget deficit (excl. grants) has been estimated at Tk 39,323 crore

(5.0% of the GDP) for FY11 (Tk 31,039 crore in revised budget of FY10, 4.5% of GDP).

Share of domestic financing will be 60.2%: Tk 25,680 crore (66.2%) of the domestic financing will be from the

banking system (Tk 8,661 crore or 50.0% in revised budget of FY09).

Tk 8,000 crore (33.8/%) will be from non-bank instrument (Tk 8,664 or 50.0% in revised budget of FY09).

Share of foreign financing will be 39.8% in FY11 (43.1% in the revised budget of FY09).

There is a conscious effort to reduce non-bank borrowing Implications:

High interest rate on NSD certificates will be contained. However, crowding out impact on private borrowing from banks

should be monitored

Sources of Deficit BudgetSources of Deficit Budget

02468

101214161820

2006-07 2007-08 2008-09 2009-10 2010-11

Perc

ent

Foreign Loans Foreign Grants Domestic Financing

Sources of Deficit BudgetSources of Defecit Budget

050

100150200250300350400450

2006-07 2007-08 2008-09 2009-10 2010-11

Bill

ion

Tk

Foreign Loans Foreign Grants Domestic Financing

Amount to be paid for Interest

18

76

21

108

17

126

19

158

16

147

-20406080

100120140160

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Amount to be Paid on Interest

Percent Amt. (Crore Tk.)

Agriculture Total allocation for agriculture and allied sectors (crop,

livestock, fisheries, forestry, land, and water resources): Tk 20769 crore (6.1% higher than RB-FY2009-10, 26.5% higher than budget FY2009- 10).

Allocation for Ministry of Agriculture: Tk 6738 crore (0.6% higher than RB-FY2009-10 and 12.25% higher

than budget FY2009-10) 3.4 % less than that of FY2008-09

Allocation for Ministry of Livestock and Fisheries: Tk 859 crore (18.5% higher than RB-FY2009-10 and 1.3% higher than

budget FY2009-10) 69.1 % higher than that of FY2008-09 Total Allocation for Ministry of Water Resources: Tk 11,409

crore (6.0% higher than RB-FY2009-10 and 20.3% higher than

budget FY2009-10 19.4 % higher than that of FY2008-09

Agriculture ADP allocation for Agriculture: Tk 2495.11 crore (6.48% of

the total ADP allocation) (38.51% higher than RADP of FY2009-10 and 47.0% higher than ADP FY2009-10) 34.0 % higher than that of FY2008-09

Subsidy for Fertilisers and Inputs Allocated Tk. 4,000 crore as subsidy for fertiliser and

agricultural inputs (11.1% higher than in FY2009-10 budget and 19.2% lower than the revised budget of FY2009-10).

Agriculture

Power and Energy The power and energy sector got approval of total 99 projects

under the ADP allocation. The plan proposes to add 837 km of power grid lines, 17 sub-stations and more than 15000 km of distribution lines over the next three years.

Power Tariff & Subsidy: Budget proposed to increase the power tariff by 20-30% over

the next two to three years. If the existing tariff rate prevails about Tk.3,800 crore as subsidy for the FY2010-11 will be required.

System Loss: The budget proposal mentioned about minimizing existing

system loss by undertaking some renovation and upgradation of power distribution and transmission systems but failed to identify any specific target for reducing system loss by a certain percentage by FY2010-11.

Tax Incentives: The budget has provided tax incentives for energy saving light,

safety or relief valve for LPG, submerge welding flux, etc.

Investment Total investment target of 26.4% of GDP in FY2010-11

(24.6% in FY10) by doubling growth of investment (from 12.2% to 22.5%) appears to be challenging since major role to be played by ADP. Poor state of ADP implementation in major infrastructure

related ministries during FY2010 has raised concerns as regards higher utilisation of fund under these ministries in the FY2011

PPP implementation is crucial Issues related to business enabling environment but no guide line has been drawn yet

Investment

Private Public Partnership (PPP)

Budget allocated Tk. 3 billion to private Public Partnership program which share 2.2 per cent of the total budget. In last year budget it was Tk. 2 billion which remain mostly unutilized. So, increasing allocation in this sector may not be justified.

Although, some positive steps in order to translate the PPP agenda has already been taken

This program may not be that feasible as objectives, administration and salary structure of private and public office are quite different

SME A target of Tk 23,995 crore for 2010 (Jan.-Dec.) as SME

loans to be disbursed by banks and financial institutions Expanded limit for turnover tax up to Tk. 60 lakh (from Tk.

40 lakh); revision of VAT at very low fixed rate for small businessmen: Will positively contribute to SMEs

Reduction of import duty of several industrial raw materials particularly used in chemical and electronics industries likely to reduce cost of production and improve competitiveness.

ICT Total allocation under Min. of Science Technology and ICTis

Tk. 450 crore which is 19.1% higher over RADP of FY10) and 40.5% higher over development budget

Exemption of duty could be extended to computer networking parts

Should be taken initiative for 2nd sub-marine cable for uninterrupted and faster internet connection with the world

Labour and Skills Development Allocation to ministry of labour and employment (Tk.72

crore) is only 4.35% higher than previous allocation. Overseas Employment and Remittance

Allocation for Ministry of Expatriates Welfare and Overseas Employment: TK 224 crore (37% higher) where in ADP TK 85 Crore (98% higher)

The government has approved the Expatriate Welfare Bank Bill 2010 to provide financial assistance to overseas jobseekers.

Export Promotion and Diversification

Total Allocation for Commerce Ministry: TK185 Crore which is 35 % higher compared to last year and in ADP Tk123 Crore which is 69 % higher

Stimulus Packages in FY 10 First Package (April, 2009): Tk. 3420 Crore was allocated. In the

budget for FY2009-10 this package was further replenished by Tk. 2400 Crore.

Stimulus Packages in FY 2010-11: TK 2000 Crore has been proposed

Infrastructure and Communication

Total Allocation for Transport and Communication : TK8843 Crore (6.7 % of total Budget ) which is 29 % higher compared to last year

Transportation (Roads and Railways): Total allocation : TK 6613 (4.7 % of total budget) which is 12.6 % higher compared to last year

Allocation in ADP: TK 3402 (9 % of ADP) which is 12.3 % higher than last year

Climate Change and Environment The government has proposed an allocation of Tk. 700

crore in the FY2010-11 budget (as in last year’s allocation of Tk. 700 crore, however only Tk. 319 crore was disbursed in the first 10 months of FY2009-10)

There is need for developing strong monitoring and evaluation mechanism for ensuring better utilization of climate funds;

Rural Development One House One Farm project: Tk. 1,197 crore for five years (July

2009 to June 2014) with an allocation of Tk. 68 crore for FY2009-10. Revised allocation is Tk. 8 crore. Expenditure up to 9th June Tk. 7 crore.

Rural Infrastructure: Proposed construction of cyclone shelters, rural hat-bazars and aforestation along 18,600 km roads.

Budget speech mentioned that local government institutions (Union Parishad and upazila parishad) have not been able to function properly.

Zila parishads should be restructured to turn them into strong local government institutions.

Regional Development The Budget has allocated Tk 70 crore for skill development.

Under this program 30 new Technical Training Centers and 5 new Marine Technology Institutes in 35 districts will be established.

Regional Cultural Centres will be established under a programme titled Development of Indigenous Culture which has allocation of Tk 100 crore.

Social Sector Education

Highest budgetary allocation at 13.9% (Dev. + Non-Dev): 13.5% higher than the revised budget of FY10

Health Allocation for FY11: Tk. 8,149 crore (16.7% higher than FY10

allocation) Social Safety Net

Total allocation Tk. 19,497 crore (14.98% of total budget; it was 15.22% in FY10)

Cash Allowance: Widening of coverage and allowances for various schemes is praiseworthy Employment Generation Schemes EGHP: Tk. 1,000 crore allocated for FY11 (expanded for 16 to 64 districts during Phase II in FY10)

Gender Gender Equity Expenditure is 25.9% of total Budget; 4.4% of

GDP

Resources Coming From

Items2006-2007 2007-2008 2008-2009 2009-2010 2010-2011% Amt % Amt % Amt. % Amt. % Amt.

Tax Revenue (NBR) 59 411 55 384 55 545 54 610 55 726Tax Revenue (Non-NBR) 3 19 3 17 2 23 3 30 3 35Non-Tax Revenue 14 96 14 100 13 126 14 155 13 169Domestic Financing 13 88 15 103 17 170 18 206 18 237Foreign Loans 8 59 8 55 7 72 8 87 8 108Foreign Grants 4 25 5 37 6 64 5 51 4 48

Total 100 697 100 697 100 1000 100 1138 100 1322Amount in Billion Tk.

Resources Coming From (cont.)

Resource Coming from of Budget

0

10

20

30

40

50

60

70

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Perc

ent

Tax Revenue (NBR) Tax Revenue (Non-NBR) Non-Tax RevenueDomestic Financing Foreign Loans Foreign Grants

Resources Coming From (cont.)

Resource Coming from of Budget

0100200300400500600700800

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Bill

ion

Tk

Tax Revenue (NBR) Tax Revenue (Non-NBR) Non-Tax RevenueDomestic Financing Foreign Loans Foreign Grants

Resources Coming From (NBR)

Resource Coming from (Tax Revenue- NBR)

05

10152025303540

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Perc

ent

VAT Import Duty Income Tax Supply Duty Others

Resources Coming From (NBR)

Resource Coming from (Tax Revenue- NBR)

0

50

100

150

200

250

300

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Bill

ion

Tk

VAT Import Duty Income Tax Supply Duty Others

Comparison of Resources Use of Five Budgets

Amount in Billion Tk

Items2006-2007 2007-2008 2008-2009 2009-2010 2010-2011% Amt % Amt. % Amt % Amt. % Amt.

Education & IT 15.9 111 14.5 115.4 12.3 123 12.6 143.4 13.9 183.7Interest 11.0 76.7 13.5 107.5 12.6 126 13.9 158.2 11.1 146.7

Trans & Com 10.3 71.8 8.5 67.7 6.1 61 6.5 74.0 6.7 88.6LGRD 9.7 67.6 9.3 74.0 7.3 73 7.7 87.6 8.2 108.4Energy 6.1 42.5 5.8 46.2 11.3 113 3.8 43.3 4.6 60.8Health 6.8 47.4 6.6 52.5 5.9 59 6.1 69.4 6.2 81.9

Agriculture 7.5 52.3 5.7 45.4 9.1 91 7.9 89.9 8.6 113.7Defence 6.1 42.5 5.8 46.2 6.4 64 6.2 70.6 6.9 91.2Public Admin. 3.4 23.7 2.4 19.1 9.1 91 16.2 184.4 14.2 187.7Social Security 4.7 32.8 4.8 38.2 8.2 82 7.8 88.8 7.3 96.5Others 18.5 129 23.1 183.9 11.7 117 11.3 128.6 12.3 162.6

Total 100 697 100 796 100 999 100 1138 100 132

Use of Resources (Education & IT)

15.9

110.9

14.5

115.4

12.3

123.0

12.6

143.4

13.9

183.7

-

50.0

100.0

150.0

200.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Education & IT)

Percent Amt.

Use of Resources (Interest)

11.0

76.7

13.5

107.5

12.6

126.0

13.9

158.2

11.1

146.7

-20.040.060.080.0

100.0120.0140.0160.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Interest)

Percent Amt.

Use of Resources (Transport & Comm.)

10.3

71.8

8.5

67.7

6.1

61.0

6.5

74.0

6.7

88.6

-

20.0

40.0

60.0

80.0

100.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Transport & Communication)

Percent Amt.

Use of Resources (LGRD)

9.7

67.6

9.3

74.0

7.3

73.0

7.7

87.6

8.2

108.4

-

20.0

40.0

60.0

80.0

100.0

120.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (LGRD)

Percent Amt.

Use of Resources (Energy & Power)

6.1

42.5

5.8

46.2

11.3

113.0

3.8

43.3

4.6

60.8

-

20.0

40.0

60.0

80.0

100.0

120.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Energy & Power)

Percent Amt.

Use of Resources (Health)

6.8

47.4

6.6

52.5

5.9

59.0

6.1

69.4

6.2

81.9

-

20.0

40.0

60.0

80.0

100.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Health)

Percent Amt.

Use of Resources (Agriculture)

7.5

52.3

5.7

45.4

9.1

91.0

7.9

89.9

8.6

113.7

-

20.0

40.0

60.0

80.0

100.0

120.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Agriculture)

Percent Amt.

Use of Resources (Defence)

6.1

42.5

5.8

46.2

6.4

64.0

6.2

70.6

6.9

91.2

-

20.0

40.0

60.0

80.0

100.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Defence)

Percent Amt.

Use of Resources (Public Admin.)

3.423.7 2.4 19.19.1

91.0

16.2

184.4

14.2

187.7

-

50.0

100.0

150.0

200.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Public Admin.)

Percent Amt.

Use of Resources (Social Security)

4.7

32.8

4.8

38.2

8.2

82.0

7.8

88.8

7.3

96.5

-

20.0

40.0

60.0

80.0

100.0

Perc

ent /

Bill

ion

(Tk)

2006-07 2007-08 2008-09 2009-10 2010-11

Use of Resources (Social Security)

Percent Amt.

Experts’ Comments Dr. Mirza Aziz” It will be extremely difficult to achieve 6.7 per cent

growth as power and energy situation will not be improved by another 6 to 9 months”.

Deficit financing is 5 per cent of GDP which is quite reasonable The Tk. 385 billion ADP is too ambitious and it will not be achieved About PPP he said private sector will not be interested unless profit is

ensured He supported the energy subsidy given to the rental power plant as the

benefit from the subsidy will be much higher than the expenditure. Dr. Zaidi Sattar “Cheers, fears and no surprises” and 6.7 per cent

growth is too optimistic. The revenue growth target of 18.5 per cent is plausible and consistent

Notable moves are the increased share of social spending and quite expectedly on physically infrastructure i.e. power.

Experts’ Comments Dr. Salehuddin “Lacs policy investment-related problems”. Setting

up PPP cell instead of setting up the office of Board of Investment may create complications in implementing PPP projects”.

Direct tax network should be expanded instead of expansion of VAT coverage as it would affect the masses. Proposed budget is reasonably ambitious but the main challenges is to implement.

Dr. Wahiuddin Mahmood “Proposed budget is large with 20 per cent growth in the overall outlay and 35 per cent in development spending. Development spending is less than 30 % inspite of ambitious ADP which was around 40 % since the early nineties.

Budget did not suggest any wide ranging change in the duty structure. So, such an approach is conducive to maintaining continuity in the industrail policy and the structure of producer.

The proposed widening of the VAT net is justified on ground of strengthening revenue mobilisation from domestic sources.

Experts’ Comments FBBCI: Budget is pro-growth, but may fuel inflation BEA: Budget lacks measures to cut cost of doing business DSE: Budget is anti-growth as hiking commission on trading

and taxes on companies and sponsors’ profit would effect earning

Azizur Rahman “Experts doubt government capacity to spend such a big budget

Shaikh Siraj “Budget has ignored agricultural sub-sector”.

Recommendations This study cautionly appreciates the proposed budget and strongly

recommends to take necessary measures to implement the budget;

Instead of considering the short term benefits of power and energy sector this paper recommends to the government concerned for taking long-term plan for the benefit of this sector as well as for the economy of the country;

This paper suggest the government concern to look at the timely allocation of the budget as government growth target would largely depend on how well the budgetary allocations are to be spent;

Higher ADP is encouraged for countries development but qualititative implementation of annual development program has to be ensured.

Recommendations Big deficit budget and Proposed VAT expansion and imposing of

additional taxes would hike prices of goods and commodities across a broad spectrum would hike prices which has to be checked any way;

In the outgoing fiscal year the government could spend 70 per cent of its development allocation although the question remains how much of it was quality spending. So, quality has to be ensured for implementing ADP;

Bangladesh corporate taxes are the highest in South Asia, which discourage companies to pay taxes, hence should be reduced. Personal taxes ceiling has to be raised atleast upto 2 lacs;

This paper appreciate crop insurance initiative and suggest to make special allocation for this sector. Paper also suggest to increase more subsidy on agriculture sector which was Tk. 49.50 billion last year has come down to Tk. 40.00 billion this year;

Recommendations The paper suggest investment friendly budget to reach to

the middle level country faster The paper suggest to incorporate measures to control the

law and order situation to make the budget investment friendly;

The paper also suggest widening tax payers instead of widening VAT as its create burden for the poor consumers as well;

Government should take measures to reduce sufferings of social safety beneficiaries to get their allocation and also make union level deserving beneficiaries lists so that right persons can get the benefits;

The final budget should stop whitening black money for good as it is unethical and also discourage the actual tax payer to pay taxes.

That is the End

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