Budget to see main cuts as earnings, spending drop
The government is likely to downsize its income and expenditure targets in the revised budget as a result of lower earnings growth, slower implementation of expansion programmes and a fall in spending due to the pandemic.
The fiscal coordination council talked about the issue at a gathering on Thursday. Financing Minister AHM Mustafa Kamal, mind of the council, chaired the appointment through a virtual program from Singapore.
The finance division prepared a draft about the revised budget, taking into consideration the incomes and expenditure within the last six a few months and placed the file at the meeting.
Sources at the financing ministry said the Tk 568,000-crore budget may be slashed by Tk 30,000 crore.
The Tk 205,145-crore annual advancement programme (ADP) will be trimmed by Tk 8,000 crore through a decrease in the allocation for foreign-aided projects.
Other areas which will also see a trim include subsidy and block allocations. The federal government has reserve Tk 54,695 crore for subsidy expenditure and Tk 10,000 crore in block allocation for the current fiscal year.
The revised budget will be finalised in March.
The federal government has set a target to earn Tk 378,000 crore in income in FY21, and given the National Board of Revenue (NBR) the duty to raise Tk 330,000 crore.
The mark for the NBR may be slashed by Tk 29,000 crore, according to sources.
The finance ministry is also likely to revise down the GDP growth target to 7.4 % from 8.2 %, commensurate with the Eighth Five-Season Plan.
The budget implementation in the outgoing year came under challenges as the pandemic-induced lockdown slowed the global trade and brought the country's economy to a halt.
One of the reasons for the likely downsizing of the spending plan is the mismatch between the ambitious income target and some of the generation: the mark for the NBR is 53.60 % higher than the true receipts in the last fiscal year.
The revised target for the NBR was Tk 300,500 crore in FY20 and you see, the collection stood at Tk 214,836 crore.
Established data from the finance ministry showed that the revenue collection rose 3.4 % year-on-year in the July-October period. Non-NBR tax collection declined 18.95 per cent.
As the government cannot spend a good deal amid the slowdown in monetary activities, expenditure dropped 12.87 % from July to October, that was 26.27 % in the great territory in 2019.
The implementation of the revenue budget was down 2.52 per cent during the period although it was 20.14 % in the black in the corresponding period this past year.
Development expenditure plunged 35.06 per cent in the first four months of FY21, whereas it possessed risen 48.13 % through the same period previous fiscal.
How big is the budget could be Tk 592,000 crore in the next fiscal year, and Tk 213,000 crore could possibly be reserve to implement the ADP, said the official of the finance ministry.
The earnings generation goal could be set at Tk 385,000 crore, up Tk 7,000 crore from the existing fiscal year. The allocation for back-up programmes may rise by 5 %.
