BUDGET 2010-11

(Total outlay of TK. 1, 32,170cr proposed)

Introduction:

Budget is generally being arranged for a Fiscal Year of a country. In the Fiscal Year 2010-11 Bangladesh Finance Minister Abul Maal Abdul Muhith proposes a budget for Bangladesh. The step for making the budget has been taken on 11 May. Then it has been proposed on 10 June in the Parliament. The budget has been made keeping the target to make a Bangladesh with high performing growth supported by advanced and innovative technology with prices of commodities stabilized, income and human poverty brought to a minimum level, health and education for all secured and capacity building combined with creativity enhanced, social justice established, social disparity reduced, participatory democracy firmly rooted and capacity to tackle the adverse effects of climate change achieved. Information and communication technology will by that time take us to new heights of excellence giving the country a new identity to be branded as Digital Bangladesh. In order to realize the vision, in the last budget speech, implement various short, medium and long term policies and strategies, plans, programs and projects have been taken for the direction of achieving our goals. Eventually, prepare a Perspective Plan covering a period from 2010 to 2021 for making a DIGITAL BANGLADESH

Graphical Representation of the Proposed Budget

Macroeconomic Scenario of the country: The world economy was close to a collapse due to the recent global economic crisis. However, the global economy has turned around and recovered from recession faster than expected. The process and pace of recovery, however, varied in different regions of the world. In the recovery process, the developing Asian economies made remarkable strides. According to the latest forecast, the world economic growth is expected to reach 4.2 percent in 2010 whereas it shrank to 0.6 percent in 2009. According to this economic outlook, the growth of developing Asian economies has been projected at 8.7 percent in 2010. In the case of South Asia, it will be 7.4 percent. In 2009, among five ASEAN countries, Malaysia and Thailand experienced negative growth, Philippines recorded a growth of 1 percent and Indonesia and Vietnams growth was around 5 percent. According to the final computation, Bangladesh recorded 5.7 percent growth in FY2008-09 in place of the estimated 5.9 percent growth. I shall inform Parliament of the macro-economic trends in the current financial year in my discussion on various macroeconomic indicators later in my speech. In brief, these are (1) our export posted a growth of 19 percent in April 2010, (2) from available information, it is expected that BoroAaman will register growth and potato and maize will yield good harvest. Other agricultural produces including fish and meat are having higher production, (3) private sector credit flows grew by 19.5 percent while industrial term loan recorded a growth of 42.5 percent. We also know that the growth of combined credit flows to agriculture and SME sectors are in the neighborhood of 20%, (4) during July-April period of the current fiscal year based on L/C opening, import of capital machineries and raw materials increased by 54 and 12.5 percent respectively, (5) domestic demand has increased by around 25 percent. We have to admit that two important sectors of the economy showed weak performance. We know that although supply is increasing in the power and energy sector, it cannot cope with the growing demand. Besides, manpower export though increased in the context of the trends prior to 2006, it fell compared to 2007 and 2008 and even compared to 2009. Considering these, we estimate that overall economic growth in FY2009-10 will be 6 percent. Import-Export Scenario of the country: While export of commodities and services had shrunk by 20.4 percent globally due to economic downturn in 2009, Bangladesh managed to

achieve a 10.3 percent growth in export. This is obviously a commendable achievement for Bangladesh. As recently has occurred the global recession export earnings have increased by only 1 percent during July- April of FY2009-10. On the other hand due to recession the Import also has declined. While imports shrank by 12 percent in the developed countries and by 8.4 percent in the emerging and developing economies, import growth of Bangladesh stood at 4.1 percent in 2008-09. Beside this scenario a good news is that by opening L/C the import of capital machineries and raw materials has increased by 54 percent and 12.5 percent respectively, which represents a good economical condition for the future of country. Public Private Partnership: According to my opinion, Public Private Partnership (PPP) is very important for the development of a country. Govt. has taken some steps to strength this relationship. Agreements have been signed to construct 4 power plants on rental basis with a capacity of 300MW and two 200 MW peaking power plants under the PPP. Five land ports out of the 13 commissioned under the PPP have begun their operations. Steps have been taken to run the management of new mooring container terminal at Chittagong and of another one at Mongla under joint public and private ownership. The prequalification of the bidders of the Elevated Expressway in Dhaka has just been completed. Revenue-Expenditure of the budget 2010-11: In Fiscal Year (FY) 2010-11, total estimated revenue income will be Tk. 92,847 crore, which is 11.9 percent of GDP. Of this, the estimated NBR tax revenue will be Tk. 72,590 crore (9.3% of GDP). The estimated tax revenue

from non NBR sources will be Tk. 3,452 crore and from non-tax sources Tk. 16,805 crore (2.6% of GDP). On the other hand, the total expenditure has been estimated at Tk. 1, 32,170 crore. This is 16.9 percent of GDP and 19.6 percent higher than the revised allocation for FY 2009-10. In the coming year, allocation for nondevelopment budget stands at Tk. 93,670 crore (12.0 percent of GDP) and for ADP it is Tk. 38,500 crore (4.9 percent of GDP). Financing: Overall budget deficit will be Tk. 39,323 crore, which is 5 percent of GDP. The deficit will be financed up to Tk. 15,643 crore (2 percent of GDP) from external sources and Tk. 23,680 crore (3 percent of GDP) from domestic sources. Domestic financing includes Tk. 15,680 crore (2 percent of GDP) from banking sources and Tk. 8,000 crore (1 percent of GDP) from non-banking sources, the major portion of which will come from National Savings Certificates. Like in the previous years, this year also, we are attaching preference to concessional external financing having fewer conditionality. Expenditure Framework: We may classify the ministries and divisions under three major categories depending on their allocation of business:
1. Social infrastructure

2. Physical infrastructure 3. General service sector In the proposed budget, 33.3 percent of total outlay has been allocated to social infrastructure of which, 23.9 percent is allocated to human

development (education, health, science and technology and other related sectors). Allocation of 30.4 percent of total outlay has been proposed for physical infrastructure of which 16.9 percent goes to wider agriculture and rural development, 7 percent to overall communication sector and 4.6 percent to power and energy. 21.1 percent of total outlay has been proposed for general service sector that includes an allocation of 9.6 percent of total outlay for PPP projects, cash incentives for various industries and implementation of last years pay commission. Apart from these three major categories, the rest 15.1 percent will be spent for interest payment and net lending, wherein the share of interest payment is 11.1 percent. An acceptable policy to rationalize the limit, amount and interest rates of borrowings will be taken. Budget at a glance: Before explanation of the budget in a table. This table is given below:
Description Budget 2010-11 Revised 2009-10 Budget 2009-10 Actual 2008-09

Revenue and foreign grants: Revenue statement: Tax revenue NBR Tax revenue Non-NBR Tax revenue Non-Tax Revenue Foreign grants/1 92,847 76,042 72,590 3,452 16,805 4,809 Total 97,656 Expenditure: 79,484 63,956 61,000 2,956 15,528 3,742 83,226 79,461 63,955 61,000 2,955 15,506 5,130 84,591 64,098 52,867 50,214 2,653 11,231 2,123 66,221

Non-Development Expenditure Non-Development revenue expenditure of which Domestic Interest Foreign Interest Non-Development Capital Expenditure /2 Net Outlay for food account Operation Loan & Advance Net/3 Structural Adjustment Expenditure Development Expenditure Development programmes Financed from Revenue Budget/4 Non-ADP Project Annual Development Programme Non-ADP FFW and Transfer/5

85,786 75,230 13,271 1,438 10,556 241 3,223 150 42,770 1,498 1,578 38,500 1,194

77,129 68,711 13,255 1,391 8,416 60 1,188 332 31,817 1,009 1,180 28,500 1,127

77,243 69,504 14,471 1,337 7,739 326 1,631 332 34,287 1,420 1,228 30,500 1,139

64,428 61,103 13,839 1,341 3,326 62 1,833 122 21,618 393 558 19,372 1,295

Total-Expenditure: 1,32,170 1,10,52 3 Overall Deficit: -34,514 -27,297 (in percent of GDP) -4.4 -3.9 Overall Deficit: -39,323 -31,039 (In percent of GDP) -.50 -4.0 Financing:
Foreign Borrowing-Net Foreign Borrowing Amortization Domestic Borrowing Borrowing from Banking System Long-Term Debt(Net) Short-Term Debt(Net) Non-Banking Borrowing(Net) National Saving Schemes Others/6

1,13,81 9 -29,228 -4.2 -34,358 -5.0 8,673 13,215 -4,542 20,555 16,755 12,577 4,178 3,800 3,277 523

88,064 -21,843 -3.6 -23,966 3.9 2,580 7,245 -4,665 19.257 13,793 9,900 3,893 5,464 3,496 1,968

10,834 15,968 -5,134 23,680 15,680 12,570 3,110 8,000 7,477 523

9,972 14,492 -4,520 17,325 8,661 6,511 2,150 8,664 8,407 257

Total- Financing 34,514

Memorandum item GDP 7,80,290

27,297
6,90,571

29,228
6,86,730

21,837
6,14,943

Some Key Points: In this section some key points will be discussed like Power, Agriculture and Rural development, Livestock, Water Resources, Food Security, Communication Model, Roads and Bridge, Science and Technology- Digital Bangladesh, Women Empowerment and Children Welfare, Culture, Religion, Industry and Trade, Climate Change etc. Now let discuss about these points on which, how much the Budget has been proposed. Power: The whole country is facing the power crisis as the industries, offices, Shopping Mall are very dependent on the Electricity and Gas Power. To make a solution of this is very necessary. For this reason Budget shows a good future of this sector as govt. has realized the fact. 2010 2011 2012 2013 2014 2015 792 MW 920 MW 2269 MW 1675 MW 1171 MW 2600 MW

On the other hand to protect instant lack ness of electricity everywhere will be used the energy saving light. For this reason if Govt. becomes success to implement it, it will be a great success of the Govt. If they take necessary steps to make it possible we believe that its possible without any hesitation. As we have a Coal cave. The Total US is running with only 3 Coal cave. Its enough to run our country with this Coal cave if u makes it done.

Agricultural Development: Bangladesh is very dependent on Agriculture. An allocation of Tk. 4,000 crore for subsidy in agricultural sector in the budget for FY2010-11 has been proposed. Another major input of agriculture is seed. Under the program of supplying high yielding variety seeds to the farmers, in FY2010-11, targets have been fixed to produce and distribute 1,18,450 MT and 84,838 MT of high yielding variety of seeds through Bangladesh Agricultural Development Corporation (BADC) and Agricultural Extension Department respectively. Besides, actions are being taken to increase the capacity of seed storages from 40,000 MT to 1, 00,000 MT. In 2010-11, we have adopted schemes to grow hybrid paddy in 12 lakh hectares and salinity resistant Bri-47 in 50 percent of salinity affected 10 lakh hectares of land. A plan to expand irrigation facilities in the southern part of Bangladesh by utilizing surface water, mitigating water logging problems in the south-west region and widening the area of cultivable land and facilitating multi-crop production through draining out water in Haor areas, propose an allocation of Tk. 300 crore in the next fiscal year. Propose to allocate Tk. 7,492 crore, for development and non-development budget combined, for the Ministry of Agriculture in FY 2010-11. Livestock: In FY2010-11, production target for cattle and poultry vaccine has been fixed at 41.63 crore doses. A project called Modernization of Vaccine Production Technology and Expansion of Research Center is being implemented to increase the production and supply of vaccines. Steps have

been taken to establish regional duck reproduction farms and hatcheries to increase supply of chicks at a reduced price. To implement this, propose to allocate Tk. 861 crore, development and non-development budget combined, for fisheries and livestock sector in the next fiscal year. Post and Telecommunication: Digital Bangladesh: Due to the sincere efforts of the Government, teledensity is increasing rapidly in the country. At present, teledensity has gone up to 38 in every 100 persons and the number of internet users to 6 in every 100 persons. Besides, in the last budget speech we made another pledge to connect Bangladesh with the 2nd sub-marine cable network. For this new sub-marine cable connection, a licensing policy has already been prepared and public opinion has been sought. With the objective of installing optical fiber line to facilitate nationwide internet connectivity as 37 Second Sub-marine Cable New and Modern Airport Development of Existing Airports promised, steps have been taken to extend broadband connections to 200 upazilas by bringing them within the fold of optical fiber network through the Next Generation Network (NGN) based Telecommunication System Project for Bangladesh. Two WiMAX licenses have been issued for providing speedy broadband services. 4409 Union Parishad bhaban will be brought under optical fiber network. Steps have also been taken to establish 1 crore land phone connections across the country and turn 8 thousand rural post offices in phases into Community Information Centers (CIC) within a short span of time. Summary of the total discussion:

Budget is a huge thing to describe in this few pages. Now let see the summary of the total discussion. That is which commodities price will be high and which will get less price, VAT exclusion, higher VAT etc.

Price might get decreased

1. Powder Milk 2. Country made Refrigerator 3. Country made Motorcycle 4. Coconut Oil 5. Energy Saving Light 6. CNG vehicles 7. Plastic Shoes, Suji(create from Wheat.) Vacuum cleaner, air filtering system, printer, color photo paper, plastic lens, LED, Agar, Chocolate milk, Mango milk, Imported Airconditioned tools etc.

Price might get increased

1. Car, Microbus etc. 2. Flat, Housing 3. Cigarettes 4. Sugar 5. Juice, Fruit Drinks 6. Mineral Water 7. Foreign Motorcycle 8. Tiles, Mujaik, Bathtab, Shampoo, Medicine, Soap, Cosmetics, Shoe and Sandle, etc.

--------------------------------------------------