(The following is the excerpts of text of budget speech by Finance Minister Abul Maal Abdul Muhith in Parliament on Thursday, 5th June 2014.
Chapter I
Introduction and Background
2. This is the first time in the history of Bangladesh that an elected Government has stepped into its second term in office having successfully completed the first one. This bears testimony to the unflinching trust that the people have chosen to bestow on us. We believe that this continuity will enable the Government to take forward its development initiatives to a higher trajectory. The Honourable Prime Minister Sheikh Hasina took steps to hold the national election under an all-party government despite not being bound by any constitutional obligation. However, I have to say with deep regret that a large political party, by boycotting the election, vainly tried to disrupt our democratic process. 3. Tribute: At this historic moment, as I stand before you in this august House, I remember with profound respect the greatest Bengalee of all time, Bangabandhu Sheikh Mujibur Rahman, the Father of the Nation. I respectfully recall our four martyred national leaders, the illustrious aides 2 of Bangabandhu. I pay homage to the martyred freedom fighters for laying down their lives at the altar of our freedom. I also recall with deep respect the supreme sacrifice of countless other martyrs who were killed at the brutal hands of autocratic regimes and undemocratic communal forces working against the trial of war criminals. We draw inspiration from their selfless sacrifices in the march towards realizing our dreams of building a prosperous Bangladesh. I thank all the civil and military officials who put their lives at peril by effectively performing their duties during the last national election.
4. Acknowledgements: I am grateful to the Honourable Prime Minister Sheikh Hasina for having confidence in me once again and entrust upon me with the responsibilities of Finance Minister even at the twilight of my career. I am committed to devote my utmost efforts to live up to the unwavering trust placed on me by the Honourable Prime Minister.
5. Like the previous years, I had several rounds of consultation with the honourable members of parliamentary standing committees, eminent citizens, renowned economists, professionals, businessmen, NGO leaders, journalists and secretaries to the government while setting this budget. I also travelled to Sylhet to be present in an open discussion session with the farmers in a bid to have their perspective on budget. I am grateful to all for providing me useful insights. I have tried to accommodate their suggestions as far as I could. I take this opportunity to thank all officers of the Finance Division, NBR and other ministries who have worked hard for accomplishing the arduous task of preparing this budget.
Chapter II
Future Roadmap: Building on the Successes of the Past Madam Speaker 6. At the outset of our last term, we formulated the Perspective Plan (2010-2021) with the goal of elevating Bangladesh to a knowledge based 3 and technology driven middle-income country by 2021. This is the first long term plan in the history of Bangladesh with elaborate programmes for development. Here, I want to assert unequivocally that all the development initiatives of our last term will continue in the present tenure as well. 7. In the last term, our aim was to put the economy on a firm footing. With that end in view, we laid emphasis on building of infrastructure, development of power and energy sectors, improvement of information technology and creation of an investment-friendly environment. Our concerted reform initiatives beginning from 2009 made the economy so resilient that even the violence unleashed by the opposition parties prior to the 10th parliamentary election could not destabilise it. We have successfully mitigated the pre-election damages and the economy, now, is back to its robust best.
8. Now, let me give you a brief description of what we have achieved in our last term. I would not claim that all that we committed have been met, rather I have categorized the plans, policies and programmes which have been implemented, those which are under implementation and those which are yet to be implemented and they have been presented in three appendices.
9. Facing Recession: One of the major achievements of our Government is tackling the impact of recent recession that swept through the whole world. Our action agenda to combat the possible impact of recession were widely acclaimed. Steady economic growth over the last five years (6.2 percent), tolerable inflation, macro-economic stability, robust export growth, favourable current account balance , record buildup of foreign exchange reserve, sustaining sovereign credit rating – all are glaring examples of our success in managing the impacts of recession.
10. Establishing the Rule of Law: We have implemented the judgment of the highest Court for the brutal killing of the Father of the Nation and most of his family members. In implementing our pledge of trying the war criminals, we have made commendable progress by establishing International Crime Tribunals. So far, ten war criminals have been tried and the death sentence of one has been executed.
11. Elevating Living Standards: The real income and purchasing power of people have increased substantially following introduction of new pay scales and dearness allowance for the government employees, income generating activities, increase of minimum wages, expansion of social safety nets and many other interventions. At the same time, there has been significant improvement in social indicators like education, health and sanitation. Per capita income has increased to USD 1190 in 2014 from USD 843 in 2009. The rates of poverty and extreme poverty have gone down to 26.4 percent and 11.9 percent respectively in 2013 from 33.4 percent and 19.3 percent in 2009.
12. Power and Energy: Our persistent endeavours over the last few years to improve the power situation in the country have paid off greatly. Power generation capacity has now gone up to 10341 MW which was only 4931 MW in 2009. The people are now free from sufferings caused by terrible load shedding. However, the power production capacity could not be utilized fully due to deficiency of transmission and distribution lines and a drop in effective power generation capacity of a few very old power plants. We are taking special measures to get rid of this adverse situation soon. We have made remarkable strides in the energy sector too. Thanks to our earnest endeavours, we have been able to add 895 million cubic feet gas to the national grid.
13. Digital Bangladesh: Over the last five years, we have created an enabling environment and infrastructure for ICT. Following this, Bangladesh has already reached the threshold of becoming a technology driven modern state. Every day, on an average, 40 lakh people are getting e-services from 4 thousand 526 union information centres. Tele-density and internet-density have gone up to 77.8 percent, and 23.7 percent respectively. The coverage of e-commerce, e-payment and e-governance has expanded substantially. Moreover, Bangladeshi software and ICT services are being exported to 30 countries including USA, Canada, Japan, Australia and several European countries. In addition, a report on digital land zoning map of 152 upazilas of 21 districts has been prepared and the land zoning operation in other 40 districts is well in progress. 14. Agriculture and Food Security: We took a number of steps for the development of agriculture sector. Included among them are: keeping 5 the fertilizer price within the affordability of farmers, ensuring adequate budget provision for agriculture subsidy, providing facilities for opening bank account with a deposit of Tk.10 only, introducing agriculture input assistance card and distributing fertilizer through union and block level sales representatives. All these integrated efforts have culminated into self-reliance in food. Storage capacity of food go-downs has been enhanced. Distribution of food is continuing at a minimum price or free of cost through TR, VGF, VGD, FFW etc. These programmes have saved people of northern region from recurrent monga. We have formulated the ‘National Agriculture Policy 2013’ with the targets of sustaining the achievements in agriculture, commercializing this sector and ensuring food and nutrition security.
15. Education: At the very outset of the last term, we formulated ‘Education Policy 2010’.Our fundamental aim was to eradicate illiteracy, expand quality education and develop skilled human resources. A law titled ‘Education Assistance Trust Act, 2012’was enacted to facilitate the poor but meritorious students. We also formulated a policy called ‘Creative Talent Hunt Policy 2012’ to hone and recognise the creative faculties of students. We are distributing text books free of cost among all students from primary through secondary levels and providing stipends from Class VI to graduate levels. Public examination has been introduced in Class V and VIII where students are evaluated under uniform grading system. At the primary level, as many as 26 thousand 193 schools have been nationalised while 1 lakh 4 thousand 776 teachers have been absorbed. Besides, 3 thousand 901 headmasters and 83 thousand 392 assistant teachers have been recruited. Under non-formal education system, as many as 1 lakh 66 thousand working children (of 10-14 age group) have been imparted basic education through 6 thousand 646 learning centres in 7 divisional towns. Following the recruitment of huge number of teachers, the teacher-student ratio has improved to 1:49. In order to recruit additional teachers at the pre-primary level, as many as 37 thousand 672 posts have been created. Apart from primary and secondary levels, adequate infrastructural work was undertaken to facilitate expansion of higher education. I appeal to the private sector to come forward and invest, not only in providing stipends, but also in building school infrastructure and improving the conditions of teachers.
16. Health: In fulfillment of our pledge to expand health facilities to the grass-root level, we have established new hospitals, increased the number of hospital beds and recruited nearly 40 thousand employees to infuse vitality in this sector. We have established 12 thousand 577 community clinics, 5 medical colleges, 12 nursing institutes, 5 institutes of health technology and 149 union health and family welfare centres. In addition, there has been considerable penetration of information technology in the health sector. People living at union and upazila level can now avail more advanced and specialized health care through telemedicine and internet service. Child mortality (under 5) rate has fallen to 41 (per one thousand live births) and maternal mortality rate to 1.94 (per thousand live births). You will be heartened to know that, Bangladesh now exports medicines to 91 countries of the world after meeting nearly 97 percent of domestic demand.
17. Communications: We are making all out efforts to develop transport sector and improve road safety. National Integrated Multimodal Transport policy 2013, 20 year Road Master Plan and National Road Safety Strategic Action Plan 2011-2013 have been formulated for proper management of communication and safe transportation. Last few years have been quite productive in terms of construction and renovation of roads and other communication infrastructure. A number of fly-overs have been built in and around Dhaka and Chittagong; a few notable ones are: the flyover at the Bishwa road -Airport intersection, Mirpur-Airport flyover, Banani flyover and MayorMohammad Hanif flyover. The Begunbari Hatirjhilproject, with all its splendour and aesthetics, not only reduced traffic congestion but also has added to the beauty of the capital city. Nabinagar-DEPZ-Chandra road has already been upgraded to four lanes, while upgradation of Dhaka-Chittagong highway into four lanes is going on in full swing. In addition, we have completed the construction of Teesta Bridge. As you all know, we have decided to construct the Padma Bridge with our own resources and have already completed some preliminary work. We have created a new Ministry for Railways considering the importance of railway communication. New train services have been added while existing services and networks are being expanded. A circular river route has been built around Dhaka city and some water buses have been introduced.
18. Social Protection: We have widened the coverage of social protection programmes and also increased the rates of different allowances to alleviate poverty, reduce social disparity and establish social justice. A country-wide survey is being conducted to identify people with disability of all forms. We have re-fixed the monthly labour wage from a paltry sum of Tk. 1600 to Tk. 5300 and also amended the Labour Policy. However, we must understand that in a poor country like ours, we need more time to ensure overall social security.
19. Women and Children Welfare: We are making continuous efforts to improve the living condition of women and children. Our commitment to their advancement is expressed in Women Development Policy, 2011 and National Children Policy 2011. In order to prevent violence against women and children a new law titled Domestic Violence Act (Prevention and protection) 2010 has been enacted. We understand the intricacies associated with gender and the need for creating gender sensitivity. Therefore, we are preparing Gender Budget for 40 ministries. Measures have been taken to prohibit child labour in industries. Autism Trust Fund has been established for the welfare of autistic children. Alongside, a number of programmes have been undertaken at the national and international levels. Our intention to empower women has been manifested in the increase of the number of reserved seats for women in the national parliament and raising the number of women reserved seats in the local government institutions to one-third of the total seats under direct election.
20. Expatriate Welfare and Employment: Over the last five years, nearly 1crore people have got overseas employment. As a result of our successful diplomatic efforts, it has been possible to export manpower to 159 countries including 62 new ones, more than 8 lakh Bangladeshis have been legalized in Saudi Arabia. Now we are exporting labour in many countries at a reasonable cost on G to G basis. Moreover, digitisation of immigration management facilitates completion of all immigration formalities online. Introduction of Expatriate Welfare Bank has made life much easier for the expatriate workers. They can avail themselves of expatriate loan at a minimum interest and can also safely remit their earnings. A new law titled ‘Overseas Employment and Expatriate Welfare 8 Act 2013’ has been enacted repealing the ‘Immigration Ordinance 1982’ for more meaningful protection and welfare of expatriate workers. 21. Public Administration: Public administration is now more people-centric and modern. A number of measures have been taken to instill confidence and a sense of security in public servants. Raising retirement age to 59 years, extending maternity leave from four to six months, construction of a hospital, establishment of Pay and Services Commission-are all directed towards the welfare of government officials. We have fulfilled our constitutional obligation by separating the judiciary from the executive and introduced a separate pay scale for the judiciary. We have created independent Human Rights Commission and Information Commission. The Right to Information Act has been enacted. Furthermore, we have drawn up the National Integrity Strategy to establish integrity at all levels of the society. We are expecting that pay and services commission will be able to provide valuable recommendations on administrative reforms. Additional reforms will be initiated in this area after receiving the report of the commission. 22. International Recognition: Our achievements over the last five years have transcended the length and breadth of Bangladesh and got huge appreciation from abroad. Bangladesh and her Prime Minister earned the distinction of achieving the MDG Award, Indira Gandhi Peace Award, UNESCO Cultural Diversity Award, FAO Diploma Award and South-South Co-operation Award for advancement in relevant spheres.
Madam Speaker
23. Our Targets: Our policy is to enhance public expenditure in the next five years and to this end domestic resource mobilization has to be scaled up. Over the past 5 years, revenue collection has increased from 10.7 percent to 13.3 percent of GDP. At the same time, the size of public spending has increased from 15.7 percent to 18.3 percent of GDP. The target over the next 5-years would be to augment resource mobilization to 17 percent and increase the size of the budget to 22 percent of GDP. Side by side, it would be our core objective to transform Bangladesh into a middle-income country by 2021 through structural and other reforms, especially in the areas of strengthening local government, land 9 management, institutional development and good governance. In the current tenure, human development will be high on our priority agenda. I shall provide a run-down of our policy strategies and action plans to attain these goals. I hope the proposed budget will represent a significant milestone in our journey towards establishing a prosperous Bangladesh. Reorganization of Local Government and Decentralization 24. We want to ensure participation of people of all strata into the mainstream of nation building. Decentralization of local government has always been our priority and one of the election pledges. In compliance with the constitutional obligations, we have taken many initiatives to strengthen local government institutions. In our last term, we had widened the responsibilities and jurisdictions of Union Parishad, Upazila Parishad and Zila Parishad. After being elected to office this time, Upazila Parishad elections were held throughout the country amid fervor and festivity with the participation of all major political parties. I firmly believe that this trend of holding local government election will continue and that of Zila Parishads will take place very soon.
25. We will take a holistic approach encompassing all relevant issues to make the local government institutions more powerful and equally responsible. Establishing good governance with transparency and accountability at all levels is our motto. We want to shift the seats of power to the local levels, as far as possible, doing away with the heavily centralised administration. ZilaParishad, UpazilaParishad and Union Parishad will be vested with more power and authority.This will require us to revamp the present shape of local government which we will do gradually. We will try to make an effective hierarchical division among local government bodies and will leave issues like education, health, law enforcement, social safety in their hands to take care of. We will also expand the scope of e-governance for enhanced accountability and transparency.
Administrative reform and strengthening local government 26. With the decentralisation of power, we will have to take appropriate measures for administrative reforms. Having said that, we have to keep it in mind that it will require massive administrative reforms to introduce decentralisation in its truest meaning in our country, because of the fact that here centralised administration is so deeply rooted that it is quite hard to dismantle. It is not enough to just to arm the local government bodies with more power and responsibility; it will also require an efficient bureaucracy to make proper policies so that the people can enjoy the fruits of decentralisation. On the whole, the following issues will have to be carefully looked into to make the local government more effective:
n A careful scrutiny has to be made to decide what subjects of the central government can be transferred to the local authority and in what manner ? A clear division of work among Zila, Upazila and Union Parishads ? A specialised bureaucracy suited for the local government has to be created with provision for imparting appropriate training ? A fair system of revenue sharing between the central and local government institutions has to be established. 27. I have shared my ideas on these issues earlier in this august House. There should be wider deliberations on these issues both in the Parliament and beyond. The administrative system of a country gradually develops within the framework provided by its society, history and political system. Therefore, administrative reform process is not only slow, but also difficult. However, I am optimistic that we will be able to formulate and implement a strategy for decentralisation, administrative reforms and strengthening of local government system through national consensus.
Madam Speaker
28. Authoritative Land Records: There is no alternative to proper land management system for attracting investment in agriculture and industry sectors. I must admit that we are trailing behind in this sector. I have always maintained that we want to ensure food security together with rapid industrialisation. To fulfill this goal, our main task would be to implement scientific land management and digitise the land records of our country. In the case of land management, our core targets would be to carry the land-related services to the doorstep of the common people and make the whole process business-friendly. Accordingly, we want to introduce Authoritative Land Records (ALR). Steps have already been taken to provide Authoritative Land Records in 3 upazilas by establishing networks in the Assistant Commissioner (Land) offices, Settlement Offices and Sub-register’s offices. Gradually, we will extend this programme countrywide. We are actively considering the use of PPP for rapid implementation of this initiative.
29. Land Survey and Record: You may know that we took the initiative in our last term to digitalise land settlement and record keeping. Land zoning process is underway in another 40 districts. Besides, the process of digital surveys and record updating has begun in 5 mouzas of Savar upazila in Dhaka district and 48 mouzas of Palash upazila in Narsingdi district. Implementation of Digital Land Management System (DLMS) in 45 upazilas of 7 districts and operationalisation of 20 land information service centres in 20 upazilas are underway. Computerisation of existing records of right in 55 districts will be completed by the next fiscal year.
Madam Speaker
30. Rural Infrastructure: We laid emphasis in our last term on building rural infrastructure to improve the livelihood of the rural people. We built approximately 25 thousand km road and 1 lakh 51 thousand meter bridges and culverts during this period. We ensured the maintenance of existing 48 thousand km metal road. Besides, 1 thousand 137 km canals were re-excavated to efficiently manage the surface water and to expand 12 the irrigation system. Consequently, irrigation can now be extended to 91 thousand hectares area of agricultural land.
31. Pure Water and Sanitation: We have established 1 lakh 37 thousand arsenic-free water sources and also introduced water supply through pipe line in 86 villages. Our success in increasing the sanitation facilities in the country is commendable as well. Thanks to our constant efforts, more than 95 percent of the families in Bangladesh use sanitary latrine which is the highest in the SAARC region. 32. Growth Centre: We have completed the process of developing as many as 1414 growth centres and rural bazaars to revamp the rural economy. Ninety five percent growth centres are now connected with the district headquarters through upazila, rural and other roads. As many as 484 cooperative markets have been established so that necessary items reach the consumers at a fair price. 9 milk cooling centres have been established to increase the production of domestic milk through cooperatives.
Chapter III
Budget for FY 2013-14: Adjustments and Revisions Madam Speaker 33. Political Instability and Revision of Budget for FY 2013-2014:
Now I would like to reflect on the adjustments and revisions in the budget for FY 2013-14. In the run up to the 10th national election there had been a serious political unrest in the first six months of the current financial year. Various political parties and alliances observed a total of 45 days hartal and blockade during July 2013 to January 2014. These hartals and blockades were not limited to 12 or 24 hours, rather at times even continued for a week. Communication was disrupted, port activities came to a halt, retail and wholesale buying-selling came down to almost zero which had a debilitating effect on government revenue collection. Frenzied destruction of government properties was another salient feature of these hartals and blockades. The main targets of attack were Bangladesh Railway and government and non-government transports. Government offices and educational institutions were not spared either. Alongside the mass destruction of properties there had been a number of death incidents as well. According to the World Bank, this political vandalism caused loss of Tk. 11,000 crore in the national economy which is around 1 percent of GDP.
34. It is important at this stage to give some reflections on how negatively political instability affected revenue collection. The target of tax revenue collection was set at Tk. 95 thousand 785 crore in the budget of FY 2011-12 and was increased by Tk. 500 crore in the revised budget.
It was Tk. 1 lakh 16 thousand 824 crore in the original budget of FY 2012-13, which remained unchanged in the revised budget. On the other hand, due to political unrest, the target of tax revenue had to be revised downward at Tk. 1 lakh 30 thousand and 178 crore in FY 2013-14 by reducing Tk. 11 thousand crore. Taking these factors into consideration, I am presenting the revised budget separately in Table 1 below. Now, I ampresenting an analysis of the overall revenue, expenditure and deficit of the government along with the implementation of Annual Development Programmes (ADP):
Revised Revenue Receipts: In the budget of FY 2013-14, the target for revenue income was set at Tk. 1 lakh 67 thousand 459 crore (14.1 percent of GDP). In the revised budget, the target for revenue receipts was reset downward at Tk. 1 lakh 56 thousand 671 crore by reducing Tk. 10 thousand 788 crore from the original target. I hope the revenue collection target of this fiscal year will be achieved. At the same time, it would also be possible to have an increase in revenue income (1 percent of GDP) as against the actual collection of the previous fiscal year.
Revised Expenditure Estimates: The total government expenditure was estimated at Tk. 2 lakh 22 thousand and 491 crore in the current fiscal year’s budget (18.7 percent of GDP). Now, it has been revised downward to Tk. 2 lakh 16 thousand 222 crore (18.3 percent of GDP) by reducing Tk. 6 thousand 269 crore. Due to reduction in project aid, the allocation of ADP now stands at Tk. 60 thousand crore. However, the overall revised ADP of FY 2013-14 will actually amount to Tk. 63 thousand 705 crore taking into account the self-financed projects of the autonomous bodies and corporations amounting to Tk. 3 thousand 705 crore. On the other hand additional allocations have been made for meeting expenditure against newly introduced dearness allowances, pensions and gratuities of government employees, supplies and services, construction and public works and honorarium of the freedom fighters. These additional allocations were made by reappropriating funds from the allocation of PPP, investments in share and equities, ongoing development programme under nondevelopment budget and unexpected heads of expenditure.
Budget Deficit: In the original budget, deficit was estimated at 4.6 percent of GDP, which has been marginally increased to 5.0 percent of GDP in the revised budget. Of which, 1.6 percent of GDP will be financed from external sources and the rest 3.5 percent from domestic sources. Out of the domestic financing, 2.5 percent will come from the banking system.
Implementation of Revised ADP: Since assumption of office, we have been diligent in speeding up the ADP implementation
16 processes by enhancing our absorptive capacity of project aid. As part of this, the Planning Commission has been closely monitoring the progress of project implementation of 10 large ministries. I personally met the officials of all ministries and divisions on different occasions. Tripartite meetings were held between Economic Relations Division, project implementing ministries and development partners. Field monitoring of projects facing implementation problems is going on. Besides, the Economic Relations Division has identified 50 projects with slow implementation progress and has taken an initiative to physically inspect them. First Track Project Monitoring Committee headed by the Honorable Prime Minister is regularly monitoring the progress of important projects. We shall continue our endeavour to scale up the use of project aid. During the last tenure of our government we achieved remarkable success in implementing ADP. In FY 2008-09 actual expenditure of ADP was TK 19 thousand 438 crore (3.2 percent of GDP). And this time, it will be Tk. 63 thousand 705 crore (5.4 percent of GDP).
35. I would like to inform the citizens that despite the destructive activities of the opposition, the revised estimate will be only 2.8 percent less than the original estimate determined at the beginning of the current fiscal. It means that even in adverse situation, we could sustain the momentum of ADP implementation and maintain effective cooperation with our development partners.
Smooth implementation of revised budget will depend, to a great extent, on stable political situation that is prevailing after the election held on 5th January. I would like to call upon everyone through this august House: Let us resist collectively all nefarious activities that damage the economy of the country.
Chapter IV
Our Economy in the Global Context
Madam Speaker
37. Now, I want to say a few words regarding our economic development and probable growth in the context of the global economy. 38. Global Economic Trend: Following the adoption of accommodative monetary policy and fiscal consolidation, global economy, especially, advanced economies have been showing signs of progress since the fourth quarter of the last year. As a result, not only unemployment has gone down in these countries but consumer and investor confidence has been restored as well due to higher aggregate demand. Over all, economies of USA, Japan and Euro area have been experiencing a solid recovery. This is reflected in the latest IMF forecast of the world economic growth of 3.6 percent and 3.9 per cent respectively in 2014 and 2015. In 2014 and 2015, this growth would be 2.2 percent and 2.3 percent in the advanced economies and 6.7 percent and 6.8 percent in the developing Asian economies.
39. Domestic Economic Scenario: We have maintained satisfactory economic growth amidst global economic slowdown. Despite political tension in the second half of the FY 2012-13, we could achieve 6.01 percent growth (base year 2005-06). Attainment of 10 percent growth in the industry sector contributed significantly to this achievement. On the other hand, due to adverse weather condition and lower crop price, growth in broad agriculture sector was rather low. While there was significant growth in forestry, fisheries and livestock sectors, growth in the crop sector was relatively small. At the same time, due to interference in the transport sector because of strike, blockade and political violence, service sector growth stood below expectation. From the demand side perspective, despite increase in personal consumption expenditure due to inflow of remittances, investment did not show up any significant growth. In comparison, public investment registered substantial growth. On the other hand, while there was robust growth in export, it was not matched by 18 import growth. A table containing macro-economic indicators on economic situation of Bangladesh is given below.
You are aware that at the outset of FY 2013-14, our GDP growth target was set at 7.2 per cent. However, due to political unrest that continued from the previous year d
