Finance Minister AMA Muhit presented a Tk340, 605 crore budget in Parliament

on June 2. Abul Maal Abdul Muhit announced that the budget has been declared
for welfare and expected that our country population would be satisfied by this
budget.
This is the countrys 44th budget where Muhit, who has a record of placing
ambitious financial plans, will be placing his seventh budget in a row.
This will be highest consecutive budget placement for Muhit compared to any
previous finance ministers and ninth in his lifetime, including the two during the
regime of HM Ershad.
In 2016-2017 fiscal year total about of budget is 3 lakhs 40 thousands 6 hundreds 5
crore Taka. The budget will be raised 29 percent than last fiscal year budget.
Proposed the budget have 10th mega project, which mega projects will have
specially budget ensure by Finance ministry of Bangladesh.
Finance Minister Abul Maal Abdul Muhit announced that in this budget very
attractive 10th mega project budget. The 10th mega projects are Padma Bridge,
Padma Bridge Railway project, Rooppur Nuclear Power Plant, Rampal Power
project, Matarbari power project, Metro rail with more projects etc. In this budget,
all budget information was mentioned detailed.

Budget of Fiscal Year 2016-17 has been presented at a time when:

Accelerating economic growth, reducing poverty, and creating higher
employment opportunities are required to implement the 7th Five Year Plan
Formulation of action plan to implement the (Sustainable Development
Goals) SDGs is underway and this would call for reflections from the
national budget perspective
A need for formulating LDC (Least Developed Country) graduation strategy
as Bangladesh is well positioned to graduate from the group in next eight
years or so
The objectives of the budget for FY17 appear to be:

 9 High growth of revenue targeted for underwriting overreaching

expenditure
Harmonization of taxes and tariff in line with the new VAT and SD Act 2012
Higher allocation for building physical infrastructure to enhance capacities
Enhanced allocation for social sector
Fiscal year budget has been undertaken in view of:
Sustainability of the current macroeconomic model
Soundness of fiscal framework including alignment with the mid-term plan
and past trends
Pros and cons of proposed changes in fiscal measures
Appropriateness of revealed allocations for different sectors
Sensitivity to social groups (e.g. gender, child and senior citizens)
Regional economic balance (particularly in the context of local
governments)
Follow-up on major economic reform agenda to enhance budget
implementation capacity

Main prospects of Fiscal Year Budget 2016-17:

GDP growth target 7.2%: The government aims to achieve a growth of over 7%
in the 2016-17 fiscal year. Justifying the target, he said he believed government
efforts to develop infrastructure would help maintain positive private sector
investment indicators. As for the Annual Development Program, Muhit said both
its size and implementation would be stepped up. ADP implementation in the
current fiscal is low compared to last several years.
Govt. sets sub-6% inflation target: The government aims to keep inflation below
6% in the new fiscal year. Based on the expectations, the government has fixed a
target to contain inflation at 5.8%.
Budget deficit of Tk. 97,853 crore: Deficit in the new budget stands at Tk97,853
crores, higher than the last fiscal, will certainly create some concerns. The amount
is 5% of the GDP.
Finance Minister said the government plans to meet the deficit by borrowing
Tk61,548 crores from domestic sources, which is 3.1% of the GDP. The rest of the

deficit Tk36,305 crore or 1.9% of the GDP will be financed from external
sources.
Revenue target proposed at Tk242,752 crores: NBR receives gigantic target of
Tk203,152 crores. The government has set the total revenue target tax and nontax revenue - at Tk242,752 crores, which is around 12.4% of the gross domestic
product (GDP) of the country, for the fiscal year 2016-17.
Of the amount, the National Board of Revenue (NBR) was assigned to mobilize
Tk203,152 crores, which is 10.4% of the GDP and 35.4% higher from the revised
target of FY2015-16.
Tax-free income ceiling unchanged at Tk2.5 lakhs: The tax-free income ceiling
for individual taxpayers will remain unchanged at Tk2.5 lakhs in the fiscal year
2016-17. The limit will remain the same for women and senior citizens at Tk3
lakh, and for war-wounded gazette freedom fighters at Tk4.25 lakhs. The tax
exemption threshold for people who are physically challenged will also remain the
same at Tk. 3.75 lakh.
New VAT law to come into full effect from July 2017: The government has
finally backtracked from full implementation of the new Value Added Tax and
Supplementary Duty Act, 2012, from this fiscal year 2016-17 mainly due to lack
of proper preparation. Unfortunately, the preparations are not yet sufficient.
In such circumstances, the government has decided not to implement the law fully
from the full fiscal year 2016-17. Rather it will be fully implemented from July
2017.
Package VAT stays with rates doubled: The government has finally caved to the
widespread protest from businesses as it has decided to continue with the package
VAT (Value Added Tax) system for the small traders in the next fiscal year 201617. However, the existing rates were proposed to be doubled, according to the
budget speech by Finance Minister AMA Muhit, that he placed in the parliament
on Thursday.
Package VAT is a square foot-based rate which the small stores enjoy by paying
VAT annually based on their shops locations and sizes, fixed by the National

Board of Revenue. Earlier, the government planned to impose 15% uniform VAT
rate for all traders, with implementation of new Value Added Tax and
Supplementary Duty Act.

Agriculture Ministry gets Tk13,675cr: The Ministry of Agriculture is getting

around Tk.13,675 crore in the proposed national budget of 2016-17 fiscal year. The
new allocation is Tk976 crore more than what the ministry received in the last
proposed budget. However, in terms of percentage, the Ministry of Agriculture is
getting 0.29% less than last allocation.
Education Ministry gets massive boost: The government has allocated Tk26,847
crore or 7.88% of the national budget to the Education Ministry in its sectoral
allocation for FY2016-17. This is an increase of 57% over last year. Last fiscal
year's proposed allocation was Tk17,103 crores for the sector.
Allocation for primary education up by over 50%: The Ministry of Primary and
mass Education has been allocated Tk22,162 crores in the sectoral allocation of the
FY2016-17 national budget. This accounts for 6.51% of the total budget. The
allocation last fiscal was Tk14,501 crores for the sector, or roughly 4.9% of the
previous proposed budget.
Tk3,738 crore increased for defense: The government has proposed to
increase the allocation of 20.34% for defense services while 38.09% for Armed
Forces Division in the upcoming fiscal year 2016-17.
In the fiscal year of 2015-16, total allocation for defense ministry was Tk18,377
crores which has now increased to Tk22,115 crores for this year while the
allocation for Armed Forces Division was Tk21 crore in last fiscal year which has
now increased to Tk29 crores.
In budget speech, Muhit said our efforts to improve the capacity and efficiency of
army, navy, air force and border guards as well as to modernize the sectors will
continue.

Power allocation drops: The government has allocated Tk15,036 crores to the
power and energy sector for the 2016-17 fiscal, significantly smaller than outgoing
fiscal's Tk18,541 crores.
The government plans to install 29 power plants with a capacity of 7,296MW
capacity this fiscal. It also aims to generate 3,100MW electricity from renewable
energy.
Tk21,322cr allocated for local government: Some Tk21,322 crores have been
allocated for local government in the national budget for the 2016-17 fiscal year.
The new allocation is Tk2,454 crores more than last year's budget. The allocation
is 6.26% of the total budget, down from 6.39% in the FY2015-16 budget.
Health sector allocation up by a third: The sectoral allocation for the Ministry of
Health and Family Welfare is Tk17,487 crores, equivalent to 5.13% of the total
national budget. This year's allocation is a 37.74% rise over last fiscal year.
Ministry of Water Resources gets Tk3,759cr: The government has allocated
Tk3,759 crores to the Ministry of Water Resources in the proposed national budget
of 2016-17 fiscal year. The new allocation is Tk697 crore more than FY2015-16
allocation of Tk3,062 crores. In terms of percentage, water resources are getting
3.4% of the national budget.
28.11% increment for Women and Children Affairs: The government has
increased the allocation for woman and children affairs by 28.11% in the upcoming
fiscal year 2016-17. This year the government proposed an allocation of Tk2,151
crores for the Ministry of Women and Children Affairs for 2016-17, which had
been Tk1,679 crores for 2015-16.
20% corporate tax for RMG: The government has proposed to reduce corporate
tax to 20% from the existing 35% for the country's export-oriented readymade
garment industry. Currently, the sector is paying a 35% corporate tax.
Railways gets significant increase: The allocation for the railways in the
upcoming budget has increased by significant numbers. This fiscal year, the
railway sector received Tk11,950 crores, which comes to 3.51% of the total

budget. In FY15-16 the railway had received Tk7,717 crores (2.62%). The new
allocation is Tk4,233 crores more than last year's budget.
Bridges Division gets Tk9,289cr: The government has allocated Tk9,289 crores
for the Bridges Division in the newly proposed national budget of 2016-17 fiscal
year. The new allocation is Tk336 crore more than the allocation in the FY201516. However, it is 2.73% of the total budget 0.3% less than the allocation in the
last budget.
Tk100 crore allotted for tourism: Finance Minister AMA Muhit has proposed to
allocate Tk100 crore for tourism sector as the government declared "Tourism Year
2016."
Use of mobile phones to cost more: Mobile phone use is set to become more
expensive as the government proposed to hike the supplementary duty on the
services that subscribers use via Subscriber Identity Module (SIM) and Removable
User Identity Module (RUIM) cards.
While placing the budget for fiscal year 2016-17 in parliament, Finance Minister
AMA Muhit proposed to hike the supplementary duty to 5% from the existing 3%.
Currently, users share 15% VAT on the use of mobile phone services, including
voice, data, or other value-added services as well as a 3% supplementary duty.
There is also a 1% surcharge on these services.
Duty-free import of safety equipment for exporters: The government has
proposed duty-free import of fire and safety equipment and prefabricated building
materials for all export-oriented industries from the next fiscal year. Currently, the
government allows such benefits only to 100% export-oriented ready-made
garment industries.
The issue of safety in the RMG sector came under the spotlight following the Rana
Plaza disaster that killed about 1,135 workers in 2013.