The government is likely to announce a Tk568,000 crore budget for the fiscal year 2020-2021, projecting an 8.2% economic expansion amid an upsurge in Covid-19 cases and deaths in the country.
The debt-dependent budget will have specific plans on implementing stimulus packages of more than Tk 1 lakh crore to revive pandemic-hit businesses and reshape the economy to enable it to create adequate numbers of jobs.
It is not clear how Finance Minister AHM Mustafa Kamal, in the budget to be placed before parliament on Thursday, plans to infuse hope among the new poor and unemployed emerging on the heels of the coronavirus crisis.
Kamal is expected to ignite enthusiasm among affected businesses through budgetary allocations to implement a bailout package.
However, the hard-pressed middle class, the main engine of creating domestic demand for goods and services, will be expecting relief and incentives to survive, if not to grow, from the mega budget.
The finance minister is likely to announce a Tk330,000 crore tax-revenue target for the next fiscal year.
Revenue officials said the target would be around 51% higher than the actual revenue to be earned as of June 30.
Economists have, however, expressed their doubts over attaining both revised and proposed revenue targets at a time when massive falls in spending and manufacturing contraction have dragged down the economy and dented investment badly.
Bank borrowing for the next fiscal year has been estimated at Tk85,000 crore, which has been Tk47,364 crore for the current fiscal year.
The deficit is likely to be 6.25%, or Tk185,000 crore of next fiscal’s gross domestic product (GDP).
Getting nearly Tk35,000 crore as budget support from a number of donor agencies will be a stimulant for the government, and a firm demonstration of confidence from the multilateral lending agencies in the government and its debt-servicing capacity.
At a time when household consumption has declined alarmingly with massive falls in spending, the budget is likely to estimate a 5.35% inflationary target for the entirety of an uncertain and gloomy 2020-2021 financial year.
Targeting an income of Tk379,500 crore from the NBR, non-NBR and non-tax revenue in the next fiscal year amid a struggling business environment hit by the pandemic, the finance minister is on course for a grilling even by his trusted business community.
A soaring budget deficit, bigger bank borrowing and staggering revenue earning target in the budget will hound Kamal in pre-budget discussions in the middle of the financial year and even in the whole of the next fiscal year.
How is he going to manage the nation's financial portfolio --- spending, income, investment, employment and the uphill task of reshaping the economy?
“No quick fixes, as no model exists,” Ahsan H Mansur, executive director of Policy Research Institute, told Dhaka Tribune.
The finance minister has to stimulate domestic demand through cash handouts to the poor and unemployed on one hand, and partronize small and medium enterprises that generate huge employment in the economy on the other, suggested Mansur.
He, however, urged Kamal to shed the ambitious idea of achieving a growth of more than 8% in the next fiscal year. “Achieving a 4% to 5% GDP growth is a possibility.”
The next budget will have an annual development programme (ADP) of Tk205,145 crore.
Of the development outlay, the government plans to provide Tk 134,643 crore through internal sources and Tk 70,502 crore in foreign funds.
The transport sector is likely to get Tk52,183 crore in the ADP, the highest allocation receiving sector for the next financial year.
Physical planning, water supply and housing are likely to come by Tk25,795 crore, with the power sector getting Tk24,804 crore in allocation.
Though the health sector needs more ADP allocation amid the Covid-19 situation, it is getting only Tk13,033 crore.
The government approved the revised ADP for the current fiscal year worth Tk201,198 crore recently.
The proposed budget may increase excise duty on big account balances in banks to collect more taxes from the well-off to attain the increased revenue collection target for next fiscal year.
Account holders, who have bank balances of more than Tk10 lakh, are likely to see up to 20% in excise duty, budget officials of the finance ministry have said.
Currently, account holders with bank balances exceeding Tk10 lakh but less than Tk1 crore at any time during a year face a Tk2,500 deduction as excise duty by banks in line with the government rules.
The proposed budget is likely to give full coverage of social safety coverage in 100 upazilas. All forms of allowances under the current safety net programmes will be made available in those upazilas, according to budget officials at the finance ministry.
The number of beneficiaries for safety net programmes is likely to be increased to 10 million, from the current 9.7 million.
