Md Kamrul Hasan Chy

Roll 1291

WHAT IS BUDGET

• Budget is an estimate of income and expenditure for a set period of time.

• From the perspective of Bangladesh the most important issues that are going to impact middle and poor class people need to be discussed.

BUDGET SUMMARY (FY-14-15) Budget FY 2014-15 Growth (Y to Y)

Budget Size 2505.1 15.9%

Sources of Fund (fig in bn) Growth ( Y to Y)

Target Revenue 1829.1 16.8%

Budget Deficit 675.5 13.4%

Bank Borrowing 312.2 4.1%

External Borrowing 242.8 30.7%

Application of Fund (fig in bn) Growth (Y to Y)

Non Development Exp. 1,282.3 15.9%

Development Exp. 863.4 16.8%

Annual Development Plan 803.1 13.4%

Other Exp. 359.3 4.1%

SOURCE OF FINANCING

Huge borrowing from bank may hinder private investment and can put pressure in inflation

Key Features of Budget

Personal Income Tax

Personal income tax threshold has been increased to Tk. 220,000 from 200,000

Corporate Tax

Tax for publicly traded mobile phone company has been increased from 35% to 40%

Tax rate increased for cigarette companies

Good move public health

Black Money Whitening

The FY 2013-14 budget proposed extension of the scope for whitening undisclosed income for investment in the real estate

• Only Tk. 38 crores was received as tax as against the total whitened amount of Tk. 1,305 crores during 2009-2013

Import duty

Import Duty

Has been reduced

from 3% to 2% on the import of capital goods

from 12% to 10% on raw materials

Import Duty for essential goods

Full exemption of customs duties will continue.

Budget for Agriculture

Tk. 17,471 crores,

which is 11.95% lower than budget of FY2013

Subsidy is sufficient only for fertilizer. A higher subsidy may be needed for other agricultural inputs

Budget for Poultry Farms and Garments

Tax exemption for another two years; reduction of duties on raw materials and spare parts

The Budget proposes to reduce supplementary duty on

This is beneficial for domestic consumers.

woven fabrics from 30.0% to 20.0%

knitted fabrics from 45.0% to 30.0%,

track suits and other garments from 45.0% to 30.0%,

various clothing accessories form 60.0% to 45.0%.

Budget for Education

Initiatives to be taken to eradicate illiteracy by 2014

Raise teacher-student ratio

Set guidelines for inclusive education for all

Implement Primary Education Development Program-3 (PEDP-3)

Establish Primary Teacher Training Institutes (PTIs)

Establish of model schools at upazila levels

Impact on Overall Industry

The budget has proposed a number of measures to stimulate industrial Sector, which will

facilitate new investment and

help retain or improve competitiveness of different industries

Continuation of tax holiday will help industry to grow

(17 industrial undertakings, 17 physical infrastructure, jute goods, fabric & dyeing, poultry, fisheries, shrimp, fish etc.)

Impact on Pharmaceutical Company

Supplementary Duty (SD) has been proposed to reduce to 5% from 10%

Bangladesh pharmaceutical industry imports around 80%-90% of the raw materials. Therefore, reducing SD on raw materials and raw improve the Gross profit margin of the industry.

Impact on Power Sector

Tk. 9053 crore (17.2% of total allocation)

14.6% higher than in FY13 respectively

A total of 54 projects will be implemented in FY14

5 power generation plants to be completed in FY14:capacity 1480

Challenge

Target Revenue

high

Political unrest

Huge bank

borrowing