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Budget: Price increase, Price decrease

02 June,2016

RTNN News Desk: Finance Minister AMA Muhith proposed to climb tax and duties on a number of products including imported rice, mosquito killing bat, drawing book for kids, talcum powder, low priced cigarette, mobile SIM card (services) while placing the budget for fiscal 2016-17.

Price of rapeseed cake and soya cake may be hiked as the duty was increased to 10% from existing 5% for production of these products locally. However, supplementary duty on stabiliser for milk was decreased at 10% from existing 20%.

Price Decrease

The finance minister has recommended cutting tax and duties on some products which is to be expected to reduce price of some consumer commodities including liquefied petroleum gas cylinders, petroleum jelly, baby food sago, LED lamp and LAN (local area network) card for using Wimax and wifi services.

The minister also proposed to cut duties on import of materials for tyres, locally assembled motorcycles, hybrid cars, and also raw materials for construction sector such as cement.

The import duty on entertainment rides were reduced at the budget considering the entertainment purposes of people.

 

 

—Key Features of Budget—

The finance minister placed Tk 3,40,605 crore budget for the 2016-17 fiscal year in Parliament on Thursday.

In the proposed budget, the target of gross domestic product (GDP) growth has been set at 7.2%.

A cabinet division meeting chaired by Prime Minister Sheikh Hasina was held on Thursday at the cabinet room of National Parliament for approving the fiscal bill.

This is the country’s 45th national budget while the 17th budget of the Awami League government and the 10th for Muhith.

The budget is around 30% bigger than the current fiscal year’s revised budget.

The revenue collection target for the next fiscal year has been set at Tk 2,42,752crore, which is 12.4% of GDP, of which NBR tax revenue is Tk 2,03,152 crore. Revenue from Non-NBR sources has been estimated at Tk 7,250% crore. In addition, Tk 32,350 crore will be collected as Non-Tax Revenue.

Annual Development Programme (ADP)

Tk93,895 crore has been allocated to the revised Annual Development Programme (ADP), which is 27.57% of total budget, and Tk 2,895 crore more than the revised budget for 2015-16 FY.

In the proposed budget for ADP, 24.6% has been allotted in human resource development sector i.e. education, health, and others; 24.5% in overall agro sector; 13.5% in power, and electricity; 25.8% in communications sector; and 11.6% has been allocated in other sectors.

Budget deficit

The budget deficit for the next fiscal year is Tk 97,853 crore, which is 5% of total GDP. Tk 36,305 crore or 1.9% of the budget will be drawn from the foreign sources, and Tk 22,610 crore or 1.1% will be collected from non-bank borrowing. Bank borrowing is Tk 38,938 crore, which is 2% of GDP

In the 2016-17 fiscal year’s budget, primarily it is mentioned that Tk 36,305 crore will be collected from external sources. However, in the revised budget plan of 2015-16 FY it was mentioned Tk 24,990 crore.

Since the proposed budget for FY 2016-17 is a lofty one, enough money may not be available from foreign sources. In that case, government will have to rely on the commercial banks to balance the deficit budget.

Independent entrepreneurs will receive fewer loans. Since the government will have to borrow money from Bangladesh Bank, that will increase the inflation.

Inflation target

Inflation rate for the next fiscal year has been set at 5.8%.

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