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It has 20 sectors including revenue & expenditure such as NBR-Tax, NonTax, Non-NBR Tax, Domestic Financing, Foreign Financing, Agriculture, Power & Energy, Industrial & Economics, Public Administration, Education &IT, Interest, LGRD, Defense, Transportation & Communication, Social Security, Health, Public order & Safety, Recreation & Culture, Housing & Others. Every sectors & government sanction for these sectors are based on experience current need, social needs & economical needs. Most of the case the sanction is governments policy variable. Through budget we can know in which sector government emphasis most that is the most important sector to the government. This is also based on mathematical mechanism used by the economist & financial analyst. In budget its shows that the amount of VAT collection has been projected at 343.04 billion taka which is higher than the last fiscal year that indicates people are willing to pay VAT for development of the country which represents a good trend of our economy. The amount of Non Tax revenue has increased by 40.07% compared to FY 10-11 RE. The extra amount of non tax revenue will help the government to reduce budget deficit and infrastructural development of the country which may bring strong economy. The Non NBR tax revenue during the present fiscal year projected to increase by 663 Crore taka which indicates that people are more interested to contribute for well being of the country. In budget FY11-12 the government has increased allocation in Agriculture, Industrial & Economic, Public administration, LGRD, Defense sectors & decreased in Power & Energy, Education & IT, Interest, Transportation & Communication, Social security, Health, Public order & Safety, Recreation & Culture, Housing sectors rather than the previous year FY10-11 actual budget. But the above allocation in some cases is higher than the reversed budget of FY10-11 RE. The current Govt. is trying to meet up the maximum portion of budget deficit around 60% from its internal sources that are from within the country. At the same time the Govt. has started taking huge amount of loan from the banking sector which is too alarming situation for our economy to control. A positive signal from the Govt. is that the rate of paying back loan amount has increased which indicates that Govt. is trying to finance the budget deficit from the internal source thats may reduce the countrys dependence on foreign loans. At the same time the Govt. is getting more subsidies from foreign countries like World Banks climate fund which is made by developed countries.
Budget?
A budget (from old French bougette, purse) is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending.[1] A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms. In summary, the purpose of budgeting is to: Provide a forecast of revenues and expenditures, that is, construct a model of how our business might perform financially if certain strategies, events and plans are carried out. Enable the actual financial operation of the business to be measured against the forecast. A government budget is a legal document that is often passed by the legislature, and approved by the chief executive-or president. For example, only certain types of revenue may be imposed and collected. Property tax is frequently the basis for municipal and county revenues, while sales tax and/or income tax are the basis for state revenues, and income tax and corporate tax are the basis for national revenues. The two basic elements of any budget are the revenues and expenses. In the case of the government, revenues are derived primarily from taxes. Government expenses include spending on current goods and services, which economists call government consumption; government investment expenditures such as infrastructure investment or research expenditure; and transfer payments like unemployment or retirement benefits.
budget of present government. With lots of hopes Finance Minister Abul Maal A. Muhith announce the 42nd Bangladesh National Budget in the parliament on 7, June 2012 for the th year 2012-13 which is the 6 budget of this minister. With lots of investment scope & with the priority of power, energy and agriculture sector present government announce its 4th budget. This budget is passed on 30June, 2012 & implement from 1,July, 2013 for FY12-13.
Budget Summary
Budget No Budget Announcement Budget Announcer 42nd 7th June, 2012 Abul Maal A. Muhit M.P Honorable Minister Ministry of Finance, Peoples Republic of Bangladesh Budget Implementation Total Budget 1st July, 2011 191738Crore Taka (18.41% of GDP)
Total Income (Revenue & Grants) 145714 Crore Taka (13.99 of GDP, 75.99% of Budget) Tax Revenue Foreign Grants ADP Total Expense Total deficits (with Grants) Financing Foreign Debt Internal Debt Total GDP 139670 Crore Taka (13.41% of GDP, 72.8% of Budget) 6044Crore Taka ( 0.58% of GDP, 3.15% of Budget) 55000 Crore Taka (5.2% of GDP) 191738Crore Taka (18.41% of GDP) 46024 Crore Taka (4.4% of GDP, 24.6% of Budget) 46024 Crore Taka 12540 Crore Taka (1.20% of GDP, 6.5% of Budget) 33484 Crore Taka (3.2% of GDP, 17.46% of Budget) 1041360 Crore Taka
Non-Development and development budget: 2012-2013 (TK 1,91,378 crore) Resources coming from: Tax Revenue (NBR): 58.5% (VAT 36%, Import Duty 12.9%, Income Tax 31.5%, Supplementary Duty 17.8%, Others 1.8%) Tax Revenue (Non-NBR): 2.4% Non-tax Revenue: 11.9% Domestic Financing: 17.5% Foreign Loan: 6.5% Foreign Grants: 3.2% Non-Development and development budget: 2012-2013 (TK 1,91,378 crore) Use of resources: Education & Information technology: 11.5% Interest: 12.2% Transport & Communication: 7% Local government & Rural development: 7.4% Energy & Power: 5% Health: 4.9% Agriculture: 7.5% Defense: 6.7% Public Administration: 12.6% Social security & Welfare: 5.7% Public order & Security: 4.8% Housing: 0.8% Recreation, Culture & Religious affairs: 0.8% Industrial & Economic services: 1.4% Miscellaneous Expenditure: 11.7% ** Sector-wise resources distribution (Including subsidies and pension)
UP
Mobile telephone users have to pay 2 percent more than before. Smokers have to pay more, as supplementary duty has been proposed at 100 percent increase from last year's 60 percent. Mediocre people's dream for air conditioners to wither away with a total of 213 percent taxes compared to 152 percent last fiscal. Price of laundry soap goes up. All fruits except dates to be dearer. Bed sheets, toilet papers, cleaning tissues, sanitary and kitchen wear to be costlier. Undergarments of both men and women will be dearer. Knit fabrics will be costlier. Jams, jellies and juices to be dearer. Private car owners to pay higher fitness tax. Frozen fish and meat to be dearer. DOWN Consumption of edible oils including soybean and sunflower to be cheaper.
Life-saving drugs, insulin pen and nutritional foods for maternal health to be cheaper. VAT on raw material of newsprint paper has been exempted. Farmers to smile with agricultural machineries at cheaper price. The poor can buy plastic and rubber shoes and sandal at low cost. Info-tech is to thrive with low-cost multimedia projector, flash drive and flash card. Private medical and engineering colleges to get VAT exemption. Pharmaceutical and ceramic industries to enjoy huge tax rebate on imported machineries and raw materials.
#4-With dark clouds of a topsy -turvy world Analysis of the Budget economy and a menacing iceberg like current account deficit-the fate of the budget in a choppy sea(i.e. national economy plagued with sharks like corruption, red tape, slow aid disbursement,etc.) was easy to foretell
The present Budget of Bangladesh for the year FY11-12 has been presented at a time when the Bangladeshi economy is heading towards a high growth trajectory, albeit certain challenges such as elevated inflation, high Current Account Deficit (CAD), and moderating growth of industrial production, lack of capital investment, poor level of power & energy, low level of liquidity, etc. At the current juncture, what was required from the Budget was to address the issue of inflation and support growth momentum, while maintaining the focus on fiscal consolidation and continuing ahead on the reform agenda. Increased allocation of planned resources towards infrastructure projects along with the proposals to direct foreign funds and private saving towards infrastructure sector will unlock much of the growth potential of the sector. Although the continued force on infrastructure along with power & energy, agriculture and education sectors is expected to provide significant impetus to economic growth in the medium-term, measures to control inflation in the immediate future were missing in the budget announcements. On the fiscal deficit front, the budgeted fiscal deficit is 4.4% of GDP (including grants) where 5.0% of GDP (excluding grants) for FY12-13. This indicates government will face lot of trouble in near future. This can be reduce through increasing Tax revenue, reduce debt service liability and etc.
Critical Analysis
Income tax revenue has reduced by 3.9% compared to last fiscal year which indicates that income has become stable but the price of other utilities become higher compared to last year. It indicates the higher rate of inflation. Government has projected higher Income tax revenue by 65.56 billon taka which cannot be met up during the fiscal year that causes a great increase of Budget deficit. The amount of VAT collection has been projected at 343.04 billion taka which is higher than the last fiscal year that indicates people are willing to pay VAT for development of the country which represents a good trend of our economy. Present budget proposed 1.5% tax at source form all export proceeds which is zero percent during the last fiscal year. It will reduce the gap between the import and export of the total amount of the balance of payment. In a word, the total tax income has increased 21% over the FY 10-11 RE.
Fiscal Arithmetic (Non-Tax) for FY11-12 Analysis of Non-Tax Revenue for FY12-13
Non-tax revenue, on the other hand, is budgeted to record a significant increase of 22.82% during FY12-13 compared to the RE of FY11-12. This increase is primarily due to substantially higher non-tax revenue collections & taxpaying tendency during FY11-12. The present budget proposes to collect 22846 Crore Taka in the budget for FY 201213which is 2.19% of GDP and 15.67% of the total budget income. The rate is higher than the last year actual budget by 1.87% and also higher than the reversed budget of FY11-12 as well. Critical Analysis The amount of Non Tax revenue has increased by 22.82% compared to FY 11-12 RE. The extra amount of non tax revenue will help the government to reduce budget deficit and infrastructural development of the country which may bring strong economy. Although last year, the amount has been increased but the collection of non tax revenue has been decreased which indicates low contribution tendency or a high level of corruption from the officials. Govt. should take needed steps to collect highest non tax revenue
Fiscal Arithmetic (Non-Tax) for FY11-12 Analysis of Domestic Financing for FY12-13
Overall budget deficit will reach to Tk. 52068 Crore, which is 5.0 percent of GDP out of which Tk. 33484 Crore (3.2 percent of GDP) from internal sources. Of domestic financing, Tk. 23000 Crore (2.2 percent of GDP) will come from the banking sector & Tk. 10464 Crore (1.00 percent of GDP) from the nonbanking sources. The present budget proposes to collect 33484 Crore Taka in the budget for FY 2012-13 which is 3.2% of GDP and 22.97% of the total budget income. The rate is lower than the last year reversed budget by 1005 Crore Taka. Critical Analysis The current Govt. is trying to meet up the maximum portion of budget deficit around 60% from its internal sources that are from within the country. At the same time the Govt. has started taking huge amount of loan from the banking sector which is too alarming situation for our economy to control.
Fiscal Arithmetic (Industrial & Economic) for FY11-12 Critical analysis of Power & Energy Budget for FY12-13
Developing power plant for meeting up electricity may be a good initiative but these plants are dependent on oil, coal etc which is more expensive and will reduce the amount of our natural resources. So government must concentrate on less expensive plant on long term basis like air based plant, solar based plant, nuclear plant etc. Government already reduced tax on solar plant products, started conversation with China & Russia for nuclear plant for support in long term.
Fiscal Arithmetic (Industrial & Economic) for FY11-12 Critical analysis of Industrial & Economic for FY12-13
Proposed rise of SD on imported fabric (20% to 45%) is likely to make domestic textiles more competitive. Although different project has been taken but necessary allocation is
required for land and infrastructure development. For different steps taken by the govt. will increase the aggregate amount of export along with the support of ICT.
Fiscal Arithmetic (Industrial & Economic) for FY11-12 Critical analysis of Public Administration for FY12-13
As the budget increased in public administration it has increased govt.s ability to recruit more employees which will increase productivity of the labor force of our economy.
Critical analysis of Transport & communication) for FY11Critical12 analysis of Interest for FY12-13
Taking loan from internal sources by the government has affect on total economy for example our inflation has increased and day by day our economy is becoming vulnerable. So government must take initiative to manage its loan for the betterment of our economy.
Critical analysis of Transport & communication) for FY1112 Critical analysis of Health for FY12-13
To build strong health system government has taken several steps. Those are: implement telemedicine system, alternative healthcare, upgrade doctor-nurse-assistant ratio, establish new training center & etc. Steps has been taken by government is good but the government must try to provide health benefits to the rural area and poor people because they are still deprived of health benefit of the government.
Fiscal Arithmetic (Public order & safety) for FY11-12 Critical analysis of Housing for FY12-13
Government has taken several steps. One of this is like that. 10 Crore has been allocated for constructing a housing colony for Dhangar ethnic community. Another is development of workers housing facilities in major industrial zones under PPPs should be considered. I m pa ct: Government must control the housing sector of the country because this sector is running at its own will; the price is unlimited and more than practical. So govt. must take the reins of this sector for the betterment of our economy.
Conclusion
Budget shows the government revenue & expenditure (Investment) project for a given fiscal year (FY 12-13). It has 20 sectors including revenue & expenditure. Every sectors & government sanction for these sectors are based on experience current need, social needs & economical needs. Most of the case the sanction is governments policy variable. Through budget we can know in which sector government emphasis most that is the most important sector to the government. This is also based on mathematical mechanism used by the economist & financial analyst. In budget its shows that people are willing to pay VAT for development of the country which represents a good trend of our economy. The amount of Non Tax revenue has increased that may bring strong economy. The current Govt. is trying to meet up the maximum portion of budget deficit around 60% from its internal sources that are from within the country. Taking huge amount of loan from the banking sector is alarming situation for economy. A positive signal is that the rate of paying back loan amount has increased.
Fiscal Arithmetic (Public order & safety) for FY11-12 Bibliography Articles
Abul Maal Abdul Muhith; Budget Speech; FY 2011-12. (Ministry of Finance, Government of the peoples republic of Bangladesh).
Web Sites
1. www.mof.gov.bd 2. www.en.wikipedia.org 3. www.nbr-bd.org
4. Dialogue on State of the Bangladesh EconomyAnalysis of the National Budget FY2011-12,organized by CENTRE FOR POLICY DIALOGUE (CPD)