Muhith optimistic about hitting bull\'s eye

Finance Minister AMA Muhith, apparently, guided by the idiom, 'think big', Thursday placed before parliament the proposed national budget for the fiscal year (FY) 2016-17 that might appear a bloated one in the context of the government's revenue earning performance in the outgoing fiscal.
The finance minister himself while outlining the main features of the budget for the next fiscal admitted that the size of the proposed budget for the upcoming fiscal might prompt many to consider it 'ambitious'.
But he sounded optimistic about the economy -- the GDP growth projection has been set at 7.2 per cent for the next FY -- as he pinned hope, among others, much on recent changes in private investment situation, higher consumption spending, positive economic prospects in export destinations, possible boost in remittance earning and, most importantly, continuation of the ongoing political stability.
The budget that proposes a total revenue and development expenditure of Tk. 3.4 trillion, however, primarily aims at earning long-term dividends for the economy through the implementation of a number of mega infrastructural and energy projects and spearheading development of social infrastructures.  
Muhith estimates a 5.0 per cent budgetary deficit in the upcoming fiscal. He plans to meet, as usual, the deficit through borrowing from external as well as domestic sources. But as far as foreign financing is concerned he appears to be greatly encouraged by the recent uptrend in the availability of external developmental assistance.
He, however, is aware of the danger of increased dependence on domestic borrowing, particularly on receipts from the national savings schemes as he said the ballooning interest payments might hamper project financing in future.
 Despite an estimated shortfall in tax revenue earning of Tk. 260 billion by the country's revenue board in the outgoing fiscal year, the finance minister has projected a Tk. 530 billion increase in NBR-tax revenue earning in 2016-17. He has proposed the increase despite his retreat from the planned enforcement of the new value added tax (VAT) and supplementary duty (SD) law in the face of opposition from the businesses.
Muhith, however, has proposed a mix of amendments to the existing VAT law to introduce some of the provisions of the new piece of legislation that has been kept in abeyance. The amendments do aim at making payment of VAT by businesses hassle-free and also beefing up the revenue earning through hike in the amount of turnover-based VAT payments by small enterprises.
The finance minister has not proposed any major changes in areas of direct taxation. He has kept personal income and corporate tax rates almost unchanged.
The tax on tobacco sector that has been subject of public scrutiny for many years is likely to go through major changes if the proposals put forward by the finance minister are adopted by the lawmakers.
No food items or daily essentials barring rice have faced any mentionable duty-hike in the proposed budget. The increase in duty on rice is likely to be welcomed by the peasantry. But the hike should have been put into effect some weeks back to benefit the farmers, relevant circles feel.
The finance minister in his budget speech promised to fix a long drawn and serious problem known as under-invoicing or misdeclaration of value. He proposed to fix minimum value of importable essentials, consumables and commercial goods 'in order to verify the basis of declared value'.
The budget for the next fiscal proposes a hike of over Tk. 380 billion in revenue expenditure to about Tk. 1.89 trillion over that of the revised budget for the outgoing fiscal. The hike in expenditure has been proposed mainly on account of the projected increase in subsidy volume (Tk.50 billion), grants-in-aid (Tk. 80 billion), pension and gratuities (Tk. 60 billion), interest payments (Tk. 80 billion) and pay and allowances (Tk. 80 billion).
The finance minister proposed a development expenditure of Tk. 1.17 trillion for the fiscal year 2016-17. The amount is higher by Tk. 210 billion over the revised development expenditure of the outgoing fiscal.
Physical infrastructures got in the proposed budget the largest share -- 29.7 per cent -- of the total budgetary resources, followed by social infrastructures --28.3 per cent. Interest payments against government debts have been projected at 11.7 of the total budgetary resources for the upcoming fiscal.
The finance minister presented a long list of priority tasks for the nation and said 'rule of law' and a 'people-centric' local government system together could help greatly in its journey towards building a just society. He felt that the existing local government system was the main impediment towards the nation's progress.
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