Budget for economic recovery

With the aim to breathe new life into a corona-ridden falling economy, Finance Minister AHM Mustafa Kamal on Thursday tabled the national budget for fiscal 2021-22, the biggest in the country’s history in a brief parliamentary session.

The budget is designed with special priority to social safety nets, employments, health, agriculture, food and disaster management and food security apart from addressing the Covid-19 related issues.

Continuing with the theme of safeguarding lives and livelihoods amid the pandemic, Kamal’s third national budget of Tk 6.04 trillion (Tk 6,03,681cr), about 17.4 per cent of the GDP, is about 12pc higher than the revised outlay for the outgoing fiscal year. And it is a 6.34pc increase from the original spending plan for the outgoing year.

Facing the headwinds of the crippling coronavirus pandemic for a second year, Kamal once again faces the task of keeping the economy afloat while at the same time charting a path to growth and expansion. Special arrangements have been made to prevent the spread of the coronavirus during the ongoing budget session with Prime Minister Sheikh Hasina in attendance. MPs were once again seen wearing face masks and gloves while maintaining physical distancing norms.

The finance minister has come up with the new budget, reducing their tax burden to make daily life easier at a time when the pandemic has hit middle-class people hard with job cuts and income losses accelerating economic inequality. 

In an attempt to bring more marginalized people under its wing, the government has proposed to allocate Tk 1,07,614 crore for the social safety net programs for the FY2021-22.

The amount has been set at 17.83pc of the total budget and 3.11pc of the gross domestic product (GDP). For the first time in the history of budget allocations, the amount meant for the poor and vulnerable crossed the Tk 1 lakh crore-mark. The allocation was Tk 95,574 crore in FY2020-21 revised budget.

The funds are expected to be utilized to implement and expand the boundary of various social security programs to reduce poverty in the country. “To protect the country’s poorest segment from unemployment and loss of income due to the pandemic, our government has taken steps to widen the coverage of the social safety net,” Finance Minister AHM Mustafa Kamal said.

From the next fiscal year, the amount set aside for the deserving poor elderly people is scheduled to be extended to 150 most poverty-stricken upazilas from the existing 120 upazilas. This will add another 800,000 beneficiaries, and an additional allocation of Tk 481 crore.

Similarly, the coverage is being increased for widows and destitute women, which will add 425,000 new beneficiaries and an additional allocation of Tk 255 crore.

The government proposed to increase the number of beneficiaries of the Insolvent Disabled Person Allowance Programme by 202,000 as per the latest disability identification survey. As a result, the allocation of this program will increase by Tk 200 crore in FY 2021-22.

As the pandemic-ravaged economy appeared to be turning the tide late last year, hopes of a revival were dented by a second wave of the pandemic in 2021 which once again saw the country enter a lockdown. Revenue collections have also fallen off the pace for the last two years as trade and commerce reels from the impact of the pandemic.

But the government is seeking to finance 64.45pc of proposed expenditures from this sector, setting a revenue target of Tk 3.89 trillion, about an 11pc increase over the current fiscal year.

However, the proposed budget runs a record deficit of Tk 2.15 trillion, or 6.2pc of the GDP, crossing the conventional ‘red line’ of 5pc gap, much of which will be offset by heavy borrowings from domestic and foreign sources. The government plans to borrow Tk 1.01 trillion from foreign sources and Tk 1.13 trillion from domestic sources to cover the shortfall.

Allocation for public order and security up by 8.07pc

The government has proposed an allocation of Tk 26,888 crore for public order and security sector in the budget.

The proposed allocation is 8.07 per cent higher than that of the preceding budget which was Tk 24881 crore. In the original budget of the outgoing financial year, Tk 26,516 crore allocation for public security division and security services division under home ministry was proposed. But in the revised budget the allocation came down to Tk 24,881 crore. Meanwhile, the finance minister has proposed an allocation of Tk 3,808 crore for the security services division of the home ministry.

Allocation in main sectors at a glance

Transport and Communication: For the 9th consecutive year, the allocation for the transport and communication sector in the development budget in the proposed national budget for 2021-22 fiscal was the highest.

In the new fiscal, percentage-wise allocation for the sector in the development budget is 25.8 per cent. The percentage increased this year as it was 25.2 per cent in the outgoing fiscal. The government has proposed to allocate Tk 69,417 crore for the transport and communications sector for ensuring modern, safe, sustainable and environment-friendly commuting.

Education: Allocation for the education sector remains almost unchanged in the proposed budget. The government has proposed a budget of Tk 71,951 crore for the education sector in the next fiscal year. Tk 26,311 crore allocated for the primary education sector. Allocation for the budget for the secondary and higher education sector saw a significant rise, going from Tk 33,117 crore in the 20120-21 fiscal year to Tk 36,486 crore in the 2021-22 fiscal year. In addition, Tk 9,154 crore was allocated for technical and madrasa education.

Health: The finance minister proposed an allocation of Tk 32,731 crore for health services and health education sector, up Tk 3,484 crore than last year’s allocation, as the Coronavirus pandemic has taken its toll on human health.

Emergency response to pandemic: The government plans to set aside Tk 10,000 crore in the coming fiscal year to meet expenses related to unanticipated emergencies due to the Covid-19 pandemic.

Power and Energy: The allocation for the power and energy sector has been raised by Tk 726 crore in the national budget for 2021-22 fiscal year. The new amount is proposed at Tk 27,484 crore, up from Tk 26,758 crore in 2020-21.

Mega Projects: The government has proposed an allocation of Tk 50,951 crore for implementing 10 mega projects in the country to boost the economy.

Climate Crisis: The government has set an allocation of Tk 25, 124.98 crore, which is 7.26pc of the total budget to 25 ministries for preventing the adverse impacts of climate-induced hazards and for adaptation and mitigation. However, government has set an allocation of Tk 346,106.40 crore to these ministries and divisions, according to a climate budget report titled “Climate Financing for Sustainable Development: Budget Report 2021-22,” published by the Finance Ministry.

This is the 50th budget of the country, the 21st budget of the Awami League government. In keeping with its vision of propelling Bangladesh to the status of a developed nation by 2041, the Awami League government placed greater emphasis on the development sector in previous years. 

Comfort to middle-class life