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Text of BUDGET Speech
In the name ofAllah, the Beneficient and Merciful
Mr. Speaker, '
I seek your leas e in accordance with rule 111 of the Rules of Procedure of the Parliament to place before this august House the budget for the fiscal year (FY) 1997-98 and supplementary budget forlhe current year
2. On this momentous occasion of discharging the responsibilities of the Government, I express my profound respect and gratitude to the Father of the Nation Bangabandhu Sheikh Mujibur Rahman. I recall with reverence and gratitude the national leaders who were his able lieutenants and the indomitable sons of Bengal, the freedom fighters. The nation will remain ever indebted to them for their supreme sacrifices The eternal flame of patriotism that they were able to blaze in the minds and hearts of the people of Bangladesh will remain a perennial source of inspiration for all of us. Their relentless struggle, endeavour, bravery and sacrifice resulted in the acquisition of an honourable position for Bangladesh to-day in the comity of nations. As an ordinary citizen my heart fills up with pride and joy when 1 find that within eleven months of the assumption of office by the present Government as many as eight world acclaimed statesmen from abroad visited Bangladesh I am also proud to learn that Prime Minister of the country Sheikh Hasina has achieved the unique distinction of presiding over the world micro credit summit.
3. National budget is the most effective instrument for the implementation of the programmes of the Government. The budget mirrors not only economic promises but also political philosophy of the Government The current budget has been prepared in the light of last fifty weeks' political and economic experience of this Government. The assumption of office by the national consensus Government in the wake of a protracted struggle and an election acclaimed throughout the world has opened a new and bright promising horizon for the country. The dichotomy and misperception regarding the existence, the past and the future of the Bengali nation is behind us. The repeal of the infamous Indemnity Ordinance which is inconsistent with our fundamental values has mollified the remorse of the people. The nation not only welcomed the measure but also heaved a sigh of relief as the Parliament took this bold decision. Bangladesh, illumined by the spirit of liberation war. celebrated the silver jubilee of its independence with deep emotion and joy. Conspiracy, terrorism and communal friction have been banished from Bangladesh, where the rule of law is firmly established through a constitutional process. By bringing the assassins of the Father of the Nation, his relatives and national leaders to the bar of justice it has been demonstrated that there is no power in Bangladesh which can defy the law of the land. The people of this country will never tolerate the insolent defiance of the murderers of women and children. In fact this historic measure undertaken by this accountable and elected Government has unleashed the vitality and creativity of the nation. Relieved of its remorse, the nation is firmly moving towards the next century.
4. We promised in our election manifesto that with a view to resolving Farakka problem on a permanent basis Bangladesh Awami League would engage in bilateral discussions with our neighbour India to conclude an equitable agreement. Bangladesh Awami League has fulfilled their commitment to the nation. Thanks to the wisdom, farsightedness and firmness of the leader of the people Sheikh Hasina, a historic thirty year agreement for equitable share of the Ganges water has been clinched. In fact this extraordinary diplomatic coup was widely hailed both at home and abroad. The bold step to establish peace in the Chittagong Hill Tracts has created an environment for peace and stability on a sustainable basis. Today I recall with happiness and pnde the fact that within one year of its assumption of office, this Government has succeeded in creating a political and economic environment for comprehensive development of the country. We believe that the simultaneous initiatives to strengthen regional and subregional cooperation will accelerate the process of economic growth. A conducive political environment for comprehensive economic development has been established. History will never forgive us if we fail to avail of this extraordinary opportunity.
5. Hon’ble Members of this august House will please recall that I stated in my budget speech for FY 1996-97 “Poverty alleviation in Bangladesh is contingent on the transition of the economy from a sluggish to an accelerated growth path. We will raise GDP growth rate to 5.5 percent in the current year and further raise it to 7 percent in next five years”. I am glad to inform the House that estimates based on trends in first ten months in the fiscal year indicate that GDP growth rate in the current year would be at least 5.7 percent. The actual growth rate has exceeded our target Agriculture is the engine of this growth. Agriculture sector will register a growth of 6 percent this year, communication sector 6.1 percent, commercial services 6.5 percent; industry and construction sectors 3.6 percent each Such growth was possible because of interaction of all sectors This is the third highest growth rate in the history of Bangladesh and the highest growth rate in last seven years.
6. 1 am grateful to Allah, the Merciful, for this success The
real credit is to be attributed to 120 million people of Bangladesh. The untiring and hard work of all specially the peasants and workers made this success possible. The economic policies pursued by the present Government paved the way for this success. Undoubtedly the courageous and innovative decision of the Government to provide subsidy to agriculture sector encouraged healthy growth in agriculture The most seminal contribution to economic policy formulation and speedy implementation came from the victorious leader in our democratic struggle Hon’ble Prune Minister Sheikh Hasina. Her personal initiative, untiring efforts and speedy decisions had infused a new life into the economy. We are confident that under her bold and dynamic leadership we will certainly attain the difficult goal of economic emancipation.
7. In the budget speech for last fiscal year, I expressed the determination of the Government to contain the rate of inflation. You will be glad to know that estimates based on first ten months (based on monthly average of 12 months) indicate that the rate of inflation has dropped to 3 34 percent compared to 4.07 percent in last June GDP growth at 5.7 percent coupled with low inflation is indeed a milestone in the history of our economic development.
8. The struggle for economic emancipation is a long process Sound economic policies and comprehensive development strategy are essential preconditions for success in this struggle The experience of history suggests that rapid growth is the first prerequisite for poverty alleviation. There are five elements in our strategy of growth which we are pursuing in the backdrop of sluggishness in the economy during last two decades. First, we must rectify the anomalies, indiscipline and inefficiency which we inherited from the past. We are certain that we can generate additional resources simply by reducing wastage. Secondly, we must maintain macroeconomic stability with a view to creating a congenial environment for investment. Macroeconomic instability is an omen in the economic horizon Thirdly, private sector will have to be promoted as an engine of growth. This calls for not only provision of adequate physical infrastructure but also elimination of unnecessary restrictions. Fourthly, in the external sector we will have to promote export-oriented industries on a priority basis pursuing an export-led growth strategy. We will have to occupy our place in the world economy on the basis of competitiveness alone. Finally, the largest resource of Bangladesh is its population. The real hero of economic development is man, not machines. We will have to ensure sustainable growth by developing our human resources Economic growth per se is not adequate for us. The benefits of growth do not automatically trickle down to people. Target-group oriented programmes for poverty alleviation constitute an essential element for our strategy. L would start my discussion with a review of the implementation of our development strategies.
9. I highlighted in my budget speech for FY 1996-97 the importance of reforms in various sectors of the economy of Bangladesh The payoffs of successful reforms are enormous, the penalties of failures could also be staggering. As an Italian Philosopher rightly observed, “ There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success than to take lead in the introduction of new order of things”. It is not sufficient to start reforms, one cannot reap the dividends of reforms unless they are completed. We must consolidate ongoing reforms before moving on to new areas. It is not possible to predict about the course of reforms, one has to learn through the process of reforms. Those who lack this flexibility or those who pretend to know everything hke the omniscient in the uncertain world of economy are likely to reach wrong destinations. The pragmatic reformers who do not claim omniscience are likely to reach the exact destination The French writer Andre Malraux was once asked to identify the factors for success. He replied that he does not know how one succeeds, but surely a person who wants to please everybody is likely to fail. Economic reforms cannot satisfy everybody. It is not possible to introduce any effective reform without hurting vested interest groups I assure this august House that the Government of Sheikh Hasina will never hesitate to take action in the national interest against any vested interest group
10. We pledged in the election manifesto of Awami League that implementation of needed economic reforms would be accelerated. The goal of economic reforms is not merely to rectify the mistakes of the past Its main goal is to remove all impediments to the intrinsic ability and creativity of the people The experience of the 20th century has clearly demonstrated that a command economy is not conducive to growth This is why we pledged in the economic manifesto of Awami League to support an open economy based on private initiative, investment and privately owned enterprises
11 In my last budget speech, I drew attention of this august House to hidden budget deficits originating from ever-increasing losses in the public enterprises The adverse effects of state-owned enterprises are not limited to financial losses only The state owned enterprises have hobbled the financial institutions in Bangladesh By promoting unequal competition, the losing state-owned enterprises have impeded the development of private sector Total Government investment in 38 statutory public authorities excluding financial institutions, railways and telecommunications stands at Tk 21833 crore The dividends from these enterprises are paltry However the Government had to pay Tk 688 crore in the form of loans and grants in the current fiscal year to keep these institutions alive. This expenditure represents a fraction of the losses because the Government has not as yet assumed the liabilities for all losses. The Government will, therefore, have to bear additional costs for these enterprises in the foreseeable future. We will have to intensify privatization measures in the interest of economic development. 61 state-owned enterprises were identified for privatization in the current year. Shares of 18 enterprises were planned to be offloaded through stock exchange. The shares of 9 enterprises have already been floated. Five enterprises have already been sold. The sale of 10 more enterprises are expected to be completed in the current fiscal year. The Ministry' of Jute has already sold a jute mill to a foreign investor; the formalities for sale of another jute mill have been completed. Experience suggests that privatization needs prolonged preparation. As the World Development Report, 1996 rightly points cut: “Privatizing large and medium size enterprises has proved far more difficult than originally thought. Policymakers have to weigh complex and competing goals, satisfy a multitude of stakeholders, and cope with the administrative difficulty of privatizing thousands of firms in a relatively short time without mature functioning capital markets". Two measures have already been taken to accelerate the privatization process. First, a chairman with the rank of a State Minister has been appointed from the private sector. This is likely to reduce the bureaucratic complexity. Secondly, a committee consisting of the members of the Council of Ministers and labour leaders has been formed to suggest measures for safeguarding the interests of the workers The committee has already finalized its recommendations We expect that the implementation of privatization programme will be completed with the spontaneous cooperation of the workers 65 enterprises have been identified for privatization in FY 1997-98
12. Macroeconomic stability is an essential condition for economic development. Inflation is not only harmful for growth but also antithetical to social justice The expectation of hyperinflation is much more harmful than inflation itself The spectre of inflation engenders instability and uncertainty in the economic system which in turn discourages saving, domestic and foreign investment Inflation reduces the income of weaker segments of the society. The standard of life of fixed income group is eroded by inflation. It is an invidious tax on innocent citizens. We must always be on guard to contain inflation and the fiscal and monetary policies must be finetuned with this end in view. We are. therefore, pursuing a cautious and realistic monetary policy. In order to encourage small savers, the rate of national saving certificates has been raised by one percent. The bank rate has edged up from 6.5 percent to 7,5 percent. However, the lending rate of commercial banks remained unchanged despite the increase in bank rate. On the contrary , the interest on deposit in commercial banks has gone up. Broad money supply during July-March period of the current fiscal year increased by 5 72 percent compared to corresponding rate of 3 01 percent in the previous year. Domestic credit in this period increased by 8.42 percent as against 13.62 percent increase in the corresponding period of last y ear. Credit to private sector increased by 8 24 percent during first nine months of the current year whereas during the corresponding period last year it increased by 17 19 percent Compared to long term trends, credit growth to private sector in last two fiscal years was unusual. It may be mentioned here that credit to private sector grew by only 6.53 percent during the period 1st July, 199) to 30th June 1994. The growth of credit to private sector in the current year is consistent with long term trends
13 The financial institutions of Bangladesh were impaired by mismanagement during the past Despite all problems, the banking system in Bangladesh is fully safe and secure All deposits upto Taka one lakh in the scheduled banks are insured by Bangladesh Bank under the deposit insurance scheme. Furthermore, the Government has issued bonds to the tune of Tk. 5594 crore for bad and doubtful debts in nationalized banks. The Government is ready to assume any responsibility to ensure the safety of the banks It is not, however, sufficient to ensure the safety of the banks. In the long run all liabilities of defaulters would devolve on the tax-payers The supervision of central bank has already been intensified with a view to realising money from the defaulters in the pnvate and public sector A five year programme to enforce international standards for classification of loan and provision has already been undertaken and will be completed in next two years Memoranda of Understanding have been signed between the problem banks and the central bank Discipline has been restored in the problem banks by enforcing the Memorandum of Understanding The Government has enacted three laws to facilitate the realization of loans from the defaulteis First, Loan Court Act of 1991 has been suitably amended so that the same lourt can enforce its decree Secondly, Bankruptcy Act, 1997 has been promulgated This law is expected to facilitate recover of bad loans Thirdly, the Banking Company Act, 1991 has been amended with a view to disqualifying any director who defaults on any loan from either his own bank or from any other bank Banking Reforms Committee and Law Reforms Commission have already submitted recommendations to the Government regarding the ways of enforcing stricter discipline in the financial sectoi These recommendations aie being examined and will be implemented shortly A commercial banking sector reform pi eject has already been undertaken with a view to infusing dynamism in the banks In order to protect the depositors of the now-defunct financial institution, BCI, an Act for reorganizing the same has already been passed by the Parliament Hopefully, the measures taken so far will further consolidate the banking system 14. Besides financial institutions, the share market always plays a significant role in the mobilization of domestic resources. The present Government inherited a very fragile capital market. Both the stock exchanges in the country are private limited companies. In the absence of modem computerised accounting system, it is very difficult to supervise these exchanges. The principal role of the Governnment in the share market is to protect the investors from fraud through appropriate regulations Unfortunately, the Securities and Exchange Commission in Bangladesh is a new institution. It was established in 1993 and its experience is also very limited. Similarly, most of the investors in capital markets in Bangladesh are new and inexperienced. Though we do not pretend to know everything, we know that the risk is the very essence of capital market. There are dramatic ups and downs in this market. The recent fluctuations in Bangladesh stock market, though dramatic, are not unusual. Similar fluctuations were experienced by all stock markets'including South Korea, Taiwan, Japan, Thailand, India and the USA. Samuelson and Nordhouse have rightly observed, “From time to time, investors lose sight of fundamentals and fall prey to minors, hopes and fears Sometimes speculation gets caught in the grip of mass contagion such as inexplicable dancing crazes that swept medieval villages, the Dutch tulip mania that sent the prices of a single bulb higher than that of a house, the South Sea Bubble in which companies sold stocks at fabulous prices for enterprises ‘which would be later revealed’ or some believe, the rise and fall of the dollar in foreign exchange markets in the 1980s”. The main issue is not why share prices, which were inconsistent with market fundamentals, fell; but how and why these prices rose so high. In such contingencies, the responsibility of Securities and Exchange Commission is to maintain discipline in the market and to prosecute those who try to manipulate the market. In the backdrop of recent events, the Securities and Exchange Commission appointed a committee to probe into the recent developments in the share markets and legal prosecution has been undertaken on the basis of this report. However, short term measures are not adequate for the development of capital market; long term measures will have to be implemented for institutional development of this sector. Steps have already been initiated for the establishment of a National Stock Exchange. Permission has already been given for setting up Merchant Banks Computerized accounting systems will be introduced in the stock exchanges. Finally, measures are being taken to reorganize the Securities and Exchange Commission A project for the development of capital market will be undertaken in the near future w ith the assistance of Asian Development Bank 15. Despite fluctuations in the share market, small investors are show ing keen interest in new issues. The demand for initial offer far exceed • the supply In order to ensure increased access of small investors to share markets, various quota in the initial public offering will be eliminated However, the quota for the non-resident Bangladeshis will be increased from 5 percent to 10 percent with a view to encouraging them to invest in Bangladesh.
16. External balance is essential for macroeconomic stability. To compete in the export market, our entrepreneurs need price stability in domestic market, rise in productivity, and reduction in production cost. The exchange rate management must be flexible In view of the realities of the market, the exchange rate in Bangladesh was adjusted appropriately and taka was devalued by 4.35 percent during the current fiscal year. Initially export growth was sluggish in the current year. However, in the second half of the fiscal year, exports picked up significantly. The estimates based on trends during first ten months of the fiscal year (in dollar terms) indicate that exports grew by 12 88 percent The export target for the current year envisages a growth of 12.8 percent over last year’s actual export Despite shortfalls in some sub- sectors, the target for current year’s total export is likely to be met Excluding foodgrain imports, total imports during first eight months of the current fiscal year (on the basis of settled Letters of Credit) increased by 7 5 percent. Remittances by expatriate Bangladeshis during first ten months of current fiscal year increased by 23 5 percent
17 Foreign investment is contingent on the availability of adequate physical infrastructure facilities Highlighting the crippling effects of inadequate investment in infrastructure during previous five years, I warned in my last budget speech, “The nation will have to bear the cost of electricity, gas and water shortage arising from the failure to make essential investments in time". Our foreboding turned out to be true Despite all-out efforts by the new Government, energy crisis arising from the failures and neglect of the past could not be averted However, the Government has already taken some important long term measures to solve the problems of electricity and gas Production sharing contracts have been signed for exploration of gas in eight out of 23 blocks in the country Two companies have already implemented their programmes From the first half of 1998, 260 million eft of natural gas will be supplied on production-sharing basis These two companies will invest more than Tk 1100 crore The supply disruptions from Bakhrabad and Fem gas fields were compensated by completion of Ashuganj-Bakhrabad pipeline Policies for attracting private investment in electricity have already been formulated Offers for the construction of 300-450 MW combined cycle power generation at Meghnaghat are in the process of screening and construction is expected to commence shortly Initiatives have already been taken to set up in the private sector one 300 MW generator at Hanpur and one 100 MW power plant at Baghaban Three barge-mounted power plants of 100 MW each in the pnvate sector will be constructed at Khulna, Hanpur and Sikalbaha The proposed projects will lead to an investment of Tk 4000 crore in the private sector. Furthermore, a 60 MW gas turbine power plant will be set up in Mymensingh by a Rural electrification company to supply electricity in rural areas Simultaneously, telecommunication sector has been opened for private sector investment Two private companies were given licences to set up digital telephone exchange at Thana level and four private companies were given permission to operate cellular radio telephone Total private sector investment in telephone sector may exceed Tk.5000 crore. An infrastructure development company has been set up with the assistance of World Bank to attract investment in the infrastructure in Bangladesh
18 There is an acute global scramble for resources for private sector investment in physical infrastructure. Despite recent private sector investments we need huge investment in the public sector According to a survey, the estimated requirement for investment in infrastructure in Asia will be over 7 percent of GDP by the year 2000 This suggests that Bangladesh needs a minimum investment of Tk. 10000 crore per annum in the physical infrastructure alone In the current fiscal year, our total investment in physical infrastructure is Tk. 6995 crore. In the next fiscal year it has been proposed to raise it to Tk.7327 crore. Compared to other Asian countries, we have a minimuip deficit of Tk 2800 crore per year for investment in physical infrastructure We will have to take new measures for mobilization of resources for the construction of infrastructure. I propose to discuss some of these new initiatives in the second part of my speech today.
19 In order to attract foreign direct investment, a law has already been enacted for the establishment of export processing zone in the private sector Initiatives have already been taken for establishment of such zones The Board of Investment has been strengthened The statistics furnished by the Board of Investment indicate that 1002 enterprises involving an investment of Tk 5122 crore has been registered during the period July, 1996 to March, 1997. This includes proposals for 100 foreign direct investment. The conducive environment created by the Government has already attracted investment offers from 24 countries Administrative and legal reforms have already been undertaken to attract domestic and foreign investments. These reforms will be completed shortly. Dhaka Export Processing Zone has been expanded and the construction of a new export processing zone at Ghazipur has already commenced. In the current fiscal year, proposals for investment of Tk. 1400 crore in export processing zones have already been approved.
20 Human resource not natural resource is the main determinant of economic development. The real struggle for development does not start in factories or farms, it starts in class rooms In the globalized economic system, there has been a transition from capitalism to knowledge-society In this new world order, large population is the most precious hidden resource of Bangladesh. The increase in productivity through expansion of education and health services is an essential component of the development strategy' of the present Government The real educated persons are never a burden for the state They create jobs not only for themselves but also for others In human resource development, the aim is not quantitative success but qualitative excellence. We must also fully utilize the trained manpower in the country. Specially, the scientists in Bangladesh deserve our support and encouragement. With this end in view. I propose to make a lump allocation of Tli 12 crore in the revenue budget for FY 1997-98 for supporting scientific research. This allocation will be administered through the National Council for Science and Technology
21. We do not believe in growth for the sake of growth. Growth is not an end in itself, it is merely a means to an end. Our goals were articulated by the Bangabandhu: " I want to see smile on the face of our distressed people. I would like to see that hungry people get square meals and clothing. I would like to put an end to all oppression and deprivation". The Father of the Nation dreamt of building the Golden Bengal. He was not given time to realize his dream But the nation still cherishes this Animated by the noble ideals of Bangabandhu, his able daughter Sheikh Hasina has dedicated herself to the goal of bringing smile to the poor and the disadvantaged. More than half of total population in Bangladesh live below the poverty line. The road to the realization of the noble goal of poverty alleviation is arduous. We will have to preserve and enlarge our limited natural resources if we want to free ourself from the clutches of centuries-old oppression, deprivation and poverty. The nation will have to work hard and unitedly to escape from (his terrible curse. Along with measures for economic growth, we will have to launch specific programmes for poverty alleviation.
22. We have already undertaken transfer (such as Food for Works, Vulnerable Group Development, Gratuitous relief, Test relief etc) and direct (such as primary education, rural electrification, health etc) programmes for poverty alleviation. The resounding success in raising crop production in the current fiscal year made more and cheaper food available to the poor people. However, problem of poverty is so acute in Bangladesh that the Government must redouble its efforts in poverty alleviation. Despite resource constraints, we propose to undertake three new additional programmes in FY 1997-98
23 First, 1 propose to undertake bh an experimental basis a programme for the welfare of uncared elderly poor people. It is not very difficult to identify the poor, the hapless and the deprived in our society Those who are acquainted with the realities of Bangladesh would agree that landless, assetlcss and old people who arc incapable of manual work constitute the hardcore of the ultra-poor. Specially the plight of the distressed women is much more tragic and miserable. With social evolution and erosion of values. the tradition for maintaining and caring for the elderly is fast disappearing In this perspective, sanction of superannuation allowance for those elderly people who are passing their last days in dire distress is considered highly desirable from the humanitarian point of view. 1 would like to reiterate that the Prime Minister Sheikh Hasina attaches highest priority to poverty alleviation and social justice. We must recognize that revenue income of the Government is limited whereas the responsibilities and functions of the Government are varied After due deliberation and weighing pros and cons, the Government has decided to pay superannuation allowance at the rate of Tk. 100 per month to at least ten elderly poor people in each ward, of which at least five would be female The launching of this programme would benefit 4.5 lakh distressed elderly persons. Taking into account the needs of the beneficiaries, foodgrains equivalent to the allowance may also be given in kind, if necessary This programme will cost approximately Tk. 50 crore per annum Some people may apprehend that the administrative system for implementation of this programme may be complex and expensive We think that if this allowance is channelized through local government, the administrative costs may be kept at minimum We know that this is an insufficient measure in the backdrop of pervasive poverty Because of limitations, a significant portion of the target group will remain outside tlie orbit of this programme However, this will be an initial but definite and firm step in our struggle against a mighty enemy like poverty With increasing national productivity, growth and revenue generation by the Government the scope and coverage of the pension for the elderly will be expanded With deep gratitude I would like to place on record the fact that we could undertake the implementation of this pledge only owing to the initiative and finn support of the Honourable Prime Minister Sheikh Hasina will be remembered for ever for taking this bold decision to implement this historic initiative.
24 Shelter is a basic human right. A survey indicates that at least 31 lakh families face acute shortage of housing in Bangladesh The great poet Rabindranath Tagore expressed the yearning of people for shelter in is inimitable way:
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(I have cherished a dream for a long time I would love to be left to myself on a patch of the earth. Not wealth, nor prestige, but a small house I crave for). Unfortunately a small shelter is still a far cry for many. We know that most poor people in Bangladesh have no access to credit for housing from the formal sector. I propose to establish a housing fund of Tk 50 crore in FY 1997-98. This fund will provide grant and loans for the construction of housing units to the homeless, the poor and the low income groups through NGOs, other voluntary agencies and local government. Special priority will be given to construction of housing units tor female workers jn Dha^. and pjher c;up>. and rehabilitation of people unrooted by erosion oT Timers. This * * fund will be administered by a Board to be appointed by the Government.
25. Bangladesh has been acclaimed throughout the world for signal success of micro-credit in poverty alleviation. Despite its potentialities micro-credit could not be as yet made available to all in Bangladesh. It cannot be denied that a large segment of our population is accursed by unemployment We must rescue our youth who have immense potentialities from the blind alley of despair, anarchy and terrorism It is feasible to infuse a new life in the economy by awakening inherent potentials and vitality of our youth force through provision of self-empldyinent. The Government has, therefore, decided to set up an employment-generation bank. The main purpose of this bank would be to provide self-employment to the youth. This bank with a difference will help create jobs in profitable and productive sectors and promote necessary skills through provision of technical training This bank will be set up under the supervision of Bangladesh Bank with the active collaboration of commercial banks and financial institutions. It will have a paid-up capital of Tk. 50 crore. The borrowers will be represented in the Board of Directors. We believe that the present Government which is animated by the spirit of war of liberation will succeed in creating jobs for innumerable youth in this country.
26. I have so far dwelt on the main strategies of the economic management of the Government I would like to mention the specific issues relating to preparation of budget. We have inherited a defective budgetary procedure. We will have to undertake speedy reforms in public expenditure We should not continue with unproductive expenditures merely because they had been traditionally included in the budget. With this end in view, initiatives have been taken to streamline auditing, budgeting and expenditure control. A technical assistance project on these reforms is under implementation with the assistance of the British ODA. In order to facilitate economic analysis of budget, a new classification system will be introduced in the budget for FY 1998-99. We will have to gradually eliminate the artificial distinction between revenue and development budgets. Revenue and development budgets are supplementary to each other; it is not possible to segregate them. We must remember that it is not sufficient to complete development projects; we will not reap the benefits of these projects unless adequate resources could be provided for the maintenance of the completed project
27. lam placing first the revised budget for the FY 1996-97 The original allocation for the revenue budget for FY 1996-97 was Tk. 12103 crore. This is proposed to be raised by Tk. 432 crore and thus the revised revenue budget stands at Tk. 12535 crore. This estimate is 6.1 percent higher than the revised budget for the FY 1995-96 and 3.5 percent higher than the original revenue budget for FY 1996-97. Revised revenue expenditure increased owing to increased interest payment of Tk. 336 crore on account of domestic borrowiiyswhich were contracted before the assumption of office by the present Government In the original budget an amount of Tk. 744 crore was allocated for payment of interest on domestic borrowing. However, on the basis of actual payments made during the first 8 months of the financial year the estimate has been raised to Tk. 1080 crore. 78 percent of the increased expenditure in the revised revenue budget is accounted for by increased payment of interests only. It may be mentioned that payment of interest is charged and Government has to honour its obligation. Besides increased interest payment, an additional amount ofTk. 162 crore has been made on account of subsidy for fertilizer and exports Had there been no unexpected increases for interest and subsidy payments there would have been no need for additional expenditure in the revised revenue budget
28 For FY 1997-98 I have proposed an outlay of Tk. 14544 crore in the revenue budget. This is about 16% higher than that of the revised revenue budget and the increase is due to two reasons. First, Tk.700 crore has been earmarked for meeting increased expenditure to take suitable measures in the light of recommendations of the Pay Commission which is expected to submit its report soon. New pay scales will be effective from July 1, 1997. Had there been no increased expenditure on salary and emoluments it would have been possible to increase investment in productive sectors through Annual Development Programme. Reduction of the size of non-essential workforce and productivity increase are essential preconditions for raising pay and allowances of the Government employees. The government employees should keep in mind that not only the Government has responsibilities towards them, but they have obligations towards the nation and its government Second, as per the announced commitments of the Government a few investment proposals (e g subsidy for agriculture, pension for the destitutes etc ) are included in the revenue budget. If these two types of expenditure proposals as described above are excluded, the rate of increase in the revenue budget would have been in line with the rate of increase in the recent past
29 For FY 1997-98. the Annual Development Programme is estimated at Tk 12.800 crore including Tk 553 crore on account of Food for Work and Rural Infrastructure Development. The proposed ADP for 1997-98 is 9 4 percent higher than the revised ADP of 1996-9 7 For FY 1996-97 estimated revenue receipt is Tk. 19624 crore, revenue expenditure Tk 14,544 crore and revenue surplus Tk.5O8O crore Thus 47 percent of the ADP will come from internal resources and 53 percent from foreign resources
30 I would like to review the activities of the public food distribution system before outlining the allocations for various sectors in the revenue and development budgets I he main 'objectives'bf fobd management sy stem are two fold. First, it aims at providing food security in the country Second, it attempts to ensure fair price to the growers through increased domestic procurement. Steps have been taken to build up an adequate stock in the government godowns to ensure food security. On July I. 1996, Government had a stock of 9 33 lakh ton of foodgrains. It is expected that the stock will be 9.02 lakh tons on July I. 1997 Domestic procurement has been increased along with increased food production. In 1994-95, 2 77 lakh ton was procured from domestic markets In 1995-96 the total quantity of domestic procurement was 4.22 lakh ton. In 1996-97 domestic procurement is estimated at 7.69 lakh tons. Share of domestic procurement in the total procurement in 1994-95 was 24.41 percent; in 1995-96, 28.87 percent and in 1996-97, 85.82 percent. As a result of these measures we have not only saved lot of scarce foreign currency but also succeeded in paying fair prices to the growers
31 From time immemorial, agriculture has been the main source of our prosperity. It is observed from histoneal experience that the share of agriculture in the GDP gradually decreases with economic growth. The contribution of agriculture in the Gross National Product in Bangladesh now stands at about 32 percent. Inspite of this trend, agriculture has remained the most important sector in the socio-economic context of our country. Success in agriculture is essential for the macro-economic stability. Failure in foodgrain production will lead to inflation and rising pressure on foreign exchange reserve. Agriculture is also directly responsible for the creation of atleast two-third jobs in the country. In my budget speech of 1996-97 I described in some detail the stagnation created in the agriculture sector owing to negligence by the previous government. With a view to promoting growth in agriculture we allocated initially an amount of Tk. 100 crore in the ADP to provide subsidy. Subsequently when crisis developed in the production of fertilizer we had to spend Tk. 212 crore as subsidy to offset the high cost of imported fertilizer. The fund came from ADP (Tk. 50 crore) and from the unallocated allocation in the revenue budget (Tk. 162 crore). Due to the government policy in the current year there has been no crisis in the availability of fertilizer and prices of all types of fertilizers except TSP have been lower by 15 to 25 percent than those of last couple of years. The courageous decision of giving subsidy has resulted in the healthy growth of 6 percent in agriculture sector. The Government has set up an Agriculture Commission to define the role of the government in the agricultural sector. In the light of the recommendations of the Commission, the Government will finalize long term policies for agriculture. In the meantime Government has formulated new agriculture extension policies in order to speed up growth A National Agricultural Research System has been set up through introduction of appropriate amendments in the laws and regulation of Bangladesh Agricultural Research Council and eight other research organisations. This will enhance the standard and efficiency in agricultural research.
32 Agricultural credit is an essential input for agriculture. Unfortunately acute crisis looms in agricultural credit sector because of lack of appropriate policy and management. Agricultural banks carry on their operations by borrowing funds from tlve Bangladesh Bank But such financing on an indefinite basis by Bangladesh Bank is not desirable for macroeconomic stability The Government has decided to contribute Tk. 100 crore to rural credit fund of Bangladesh Bank A credit programme of at least Tk 1000 crore will be ensured for the cereal sub-sector by Bangladesh Bank with the support provided by the Government as well as from its own resources Effective measures for rehabilitation of agricultural banks will be undertaken in consultation with Bangladesh Bank Fishery and livestock sub-sectors contribute not only to GDP growth but also to poverty alleviation In FY 1997-98 total ADP allocation for these two sub-sectors have been proposed at Tk 130 crore
33 Since the assumption of office by this Government, allocation for the crop sub-sector of agricultural sector has been raised In the revised budget of FY 1995-96, Tk.502.34 crore was allocated in revenue (Tk. 225.94 crore) and development (Tk 276.4 crore) budgets (excluding loans and grants for the liabilities of the BADC) In the revised budget for 1996-97 this allocation has been raised to Tk. 735 66 crore (Tk 382 19 crore in development and Tk. 353.47 crore in revenue budget) - an increase of 46 4 percent Total allocation for crop sub-sector is proposed to be raised to Tk. 843.3 crore (Tk 347 3 in development budget and Tk. 496 crore in revenue budget) in 1997-98 - an increase of 14.6 percent over current year s revised budget
34. Geography and history of Bangladesh was made by her innumerable rivers. Deeply engaged in the turbulent game of creation and destruction, the immense water resource of Bangladesh is on the one hand a blessing, on the other hand a curse. The provision of artificial irrigation and flood mitigation through development of physical infrastructure and protection of land against erosion are essential not only for economic growth but also for social justice. However, much of water in Bangladesh originates in 56 international rivers It is not, therefore, possible for Bangladesh to develop the water resources on her own. In this perspective, the conclusion of a long term agreement for the sharing of the Ganges water has opened a new horizon for harnessing of water resources in Bangladesh It has been proposed to allocate Tk. 1064.4 crore for water sector in the ADP for FY 1997-98 This allocation in the revised ADP of FY 1996-97 stands at Tk 1021.6 crore. In the short run the efficiency of the completed project will be enhanced and provision will be made in flood mitigation projects for pisciculture and navigation. As a long term strategy, measures have been taken for construction of large irifrastructure including the Ganges barrage
35. Private investment is the engine of growth in the industry sector. Anomalies in laws, rules, regulations and policies are being removed with a view to encourging investors. A new Industrial Policy will be announced soon. The taxation measures which are proposed to stimulate investment will be presented in second part of my budget speech. Government’s support to small and cottage industry will continue. Assistance will be provided to raise productivity of traditional weavers, fishermen, ironsmith, potters and other artisans. In FY 1997-98, a sum of Tk 53.97 crore has been allocated including Tk, 19.09 crore in revenue budget and Tk. 20.89„crore in, ADP for Bangladesh Small and Cottage Industry Corporartion, Bangladesh Handloom Board and Sericulture Board.
36. In my last budget speech, I elaborated the gathering crisis in the energy and power sectors resulting from past neglect and failures. In addition to the increase in private investment, the Government allocation for these two sectors has also been increased. In the original ADP for 1996-97, total allocation for energy sector was Taka 1308 crore; it has been proposed to raise it to Tk 1472 crore in FY 1997-98 Tk 612 crore has been allocated for rural electrification. The allocation for oil, gas and natural resource will be raised from Tk. 479 crore to Tk 539 crore.
37. Transportation system constitutes the arteries of the economy through which flow the benefits of development, new technology and new ideas. Though the physical size of Bangladesh is not" large, the maintenance of physical infrastructure in Bangladesh is very expensive owing to her geographical peculiarities. In FY 1997-98 maintenance budget of Road and Highways Department was increased by 8 percent and fixed at Tk. 225 crore. A total allocation of Tk. 2265.66 crore for transportation sector has been proposed for the next fiscal year. This constitutes about 17.7 percent of total development budget. Allocation for road sector excluding the Jamuna Bridge increased by 12.9 percent. However, a significant share of allocation for Jamuna bridge project has already been spent and the bridge is likely to be commissioned before 31st August 1998. As a result the allocation for Jamuna bridge projet has been reduced from Tk. 938 crore in the current fiscal year to Tk.693 crore in FY 1997-98. The implementation of a project for improving the access roads of Jamuna bridge linking Chittagong to North West areas will commence in FY 1997-98. A sum of Tk. 100 crore has been allocated for the construction of railways in the Jamuna bridge. Taking into account the importance of inland waterways, the allocation for this sub sector is proposed to be increased by 29 percent to Tk. 101.37 crore.
38. Significant allocation is also earmarked for rural infrastructure in the rural development sector in addition to allocations in transportation sector In the next fiscal year, a sum of Tk. 677.08 crore has been proposed to be allocated in the ADP for the development of rural infrastructure In the revenue budget, a sum of Tk . 90 crore has been provided for the maintenance of rural infrastructure. The ADP for FY 19978-98 contains proposals for allocation of Tk. 200 crore for assistance to Thana, Tk. 56 crore for Zilla Panshad and Tk. 110 crore for four big City Corporations.
39. Parallel to physical infrastructure, social infrastructure in the country will have to be developed The services of education and health are not immediately consumed, they are investments in the true sense. Taking into account the importance of the education sector, the Government is continuously increasing allocation for education In the current fiscal year, total allocation for education sector stood at Tk. 3850 26 crore including the allocations of revenue and development budgets In FY 1997-98, this allocation is propoled to be raised to Tk 3992 34 crore - an increase of 3.56 percent In the next fiscal year, total allocation for this sector in the ADP is Tk 1652.51 crore and in the revenue budget, Tk.2339.83 crore. In the ADP for FY 1997-98, a sum of Tk. 335 crore has been proposed for Food for Education Project. However, the effectiveness of this programme will be evaluated in near future and the next course of action will be determined in the light of this evaluation. It is not enough to raise allocation for education sector We have to ensure proper utilization of funds. We propose to launch three experimental programmes to promote excellence in education First, NGOs, voluntary organizations and local communites make significant contribution to spread of primary education by running cost-effective programmes In FY 1997-98,1 propose to earmark Tk 25 crore to provide grants to primary schools run by NGOs and local communities. Secondly, non-availability of books in libraries of secondary schools and colleges compromise the quality of education. In the next fiscal year, I propose to allocate Tk. 2 crore for the purchase of books for educational institutions. Thirdly, the quality of science education needs to be upgraded to encourage the spread of technology in Bangladesh. In FY 1997-98 1 propose to allocate Tk. 3 crore for science laboratories of secondary schools and colleges I know that these allocations are too inadequate in view of enormous requirements of educational institutions. However, in future these allocations will be reviewed on the basis of performance of these programmes
40 Health, family planning and nutrition sub-sectors supplement each other. Health for all is not a mere slogan for social justice, it is an imperative for raising productivity In the revised revenue and development budgets for 1996-97, total allocation for health and family planning is Tk 1847.41 crore. In 1997-98, this allocation is proposed to be raised to Tk. 1908.3 crore. In next fiscal year’s ADP, special emphasis has been laid on family planning and the allocation for this sub-sector has been proposed to be raised by 38.8 percent Though in recent years, Bangladesh experienced deceleration in population growth, we have no scope for complacency. There is strong political commitment to family planning programme and all out efforts will be made to implement this programme
41 Because of long-standing discrimination, women in Bangladesh are isolated from and invisible in the mainstream economy The rights of children are equally threatened The development of women and children is therefore a priority of the Government. The allocation for Women and Children Affairs Ministry is proposed to be raised to Tk. 49 98 crore in next year’s ADP - an increase of 44 percent. Not merely in the historical sense, Bangladesh is literally a young country in the demographic sense also We should intensify the activities of youth development both for ensuring social justice as well as for promoting economic growth In FY 1997-98, a sum of Tk. 51 97 crore has been provided in the ADP for youth development programme Additional resources for youth programmes will be provided for micro-credit from the proposed employment generation bank We notice with joy new sparks of enthusiasm in the sports arena As a token of recognition of the success of Bangladesh cricket teanl, I propose to allocate Tk 2 crore in revenue budget for development of cricket? Total allocation in the ADP for 1997-98 for the sports and culture sector has been proposed at Tk 80.1 crore.
42 We are proud of the pristine natural beauty of enchanting Bangladesh Dark clouds of pollution pose a threat not only to her natural beauty but also to human and animal life. A National Environment Management Programme has already been launched Social forestry programme will be further intensified in the future.
43 . Economic growth is an important element in our development strategy Growth and development arc not synonymous The American statesman Franklin Delano Roosevolt nghtly observed. "The test of our progress is not whether we add more to the abundance of those whohave much, it is whether we provide enough for those who have too little” Special emphasis has been laid on poverty alleviation projects in the proposed budget. The allocation of Tk. 4959 crore in the proposed ADP for 1997-98 for agriculture, rural development, water resources, primary education, rural electrification, health, family planning and local government will contribute to poverty alleviation. In the proposed revenue budget for 1997-98, a sum of Tk. 1471 crore has been earmarked for transfer programmes for the poor (such as gratuitous relief, test relief, VGD, FFW, housing ft* the poor, allowance for the aged). In other words Tk. 6430 crore in the development and revenue budgets will contribute directly to poverty alleviation About 23 3 percent of total government expenditure will be spent for poverty alleviation Moreover, the allocation for other development projects will also contribute indirectly to poverty alleviation
44 We welcome the surge in the NGO activities in poverty alleviation since the assumption of office by the present government The initiatives of NGOs in Bangladesh have added a new dimension in devising creative and innovative programmes for poverty alleviation These programmes have been hailed at home and abroad The present Government would like to extend its helping hand to the NGOs In our view, NGOs supplement the activities of the Government It is evident that the government alone cannot eradicate poverty in a country like Bangladesh In the first nine months of 1996-97, the NGOs received foreign donations to the tune of Tk 952 crore for poverty alleviation The Government is providing additional funds to the NGOs through Palh Karma Shahayak Foundation (PKSFj Furthermore, NGOs will have access, to allocation of Tk.75 crore proposed to be earmarked in FY 1997-98 for innovative programmes m housing and primary education sectors
45 Good governance is not a mere means for us, it is also our end It is good governance alone which will galvanize government organizations to do extraordinary things with ordinary people We are also participants in the gioba' quest for reinventing the Government We have already undertaken preliminary steps for administrative reform with the assistance of World Bank and other development partners We are pledgebound to infuse a new life in Government s functioning through planned administrative reforms These reforms will not be confined to the Central Government, Local governments at the grass-roots will also be strengthened Local Government Commission has already submitted its report recommending a four-tier local government. We hope that proposals for local government reforms will be finalized during the current session of the Parliament.
46 Our resources are limited; our goals are wide, varied, and difficult to achieve. All our goals cannot, therefore, be realized in a month, a year or even in five years. We are aware of the complexity of our problems. They are likely to be compounded if they are not solved immediately. Nevertheless we are optimistic We know that the destiny of a nation is not determined by accidents. We cannot wait for the change of destiny, we must conquer our destiny. The same spirit and the vitality which animated us to win the red Sun of Freedom will propel us-to change our economic destiny. We will introduce total transformation through small changes. A Chinese proverb rightly says, a journey of thousand miles begins with a small step. Despite the fact that our goals are difficult to reach, we have already started to move Certainly we will reach our destination in the shortest possible time
SECOND PART
FISCAL MEASURES
Honourable Speaker,
The Honourable members of this august Parliament regularly plead for building of new roads, hospitals, schools, colleges, telephone and electricity services, repair and maintenance of the existing infrastructure and also ask for doctors, teachers, and other personnel and materials for the proper use of these facilities in their respective constituencies. These are legitimate demands from the elected representatives. Being a government elected by the people we are also committed to meet these genuine demands Unfortunately we are not always able to meet these demands Resource constraints and in some cases waste of limited available resources are the main reasons for such a situation. In the first part of my budget speech I have explained the principles of the utilization of the scarce resources available to us. At the beginning of the second part I would like say a few words about our internal resource mobilization efforts. 2 Compared to our neighbouring South Asian countries, we are lagging far behind in our revenue mobilization endeavor Our revenue-GDP ratio is only 12 percent, compared to the revenue-GDP ratio of 20, 19 and 18 percent respectively in Srilanka, India and Pakistan. This weakness in our revenue mobilization efforts has not only resulted in shortage of funds to finance our development needs but has also become an impediment to the rapid economic growth Given the reality of declining availability of foreign aid, without augmenting revenue from its own resources, the government will not be able to meet its recurrent and development expenditures Maintenance of macroeconomic stability and keeping the inflation under control through prudent budgetary management are the two principal objectives of the economic policy of the present government. Therefore, our revenue mobilization efforts have to be strengthened further to make any meaningful development efforts. Considering all these factors, the revenue target for the National Board of Revenue (NBR) for the FY 1997-98 has been fixed at Taka 15.000 crore which is Taka 1960 crore higher than the revenue target of the last year If we fail to mobilize these additional resources, development activities and macroeconomic stability may be hampered, pace of economic development cannot be sustained and the goal of achieving a society free from hunger and poverty will remain elusive
3 . We have inherited an exemption-ndden tax system A large part of our economy is outside the purview of our tax system The rest of the economy within the tax network is also subject to numerous exemptions While some exemptions are sound enough, governments in the past often granted exemptions to serve the different vested interest groups and classes, and at times to gain cheap popularity These exemptions have weakened and distorted our tax system Tax holiday in many forms in case of direct taxes, zero rates of customs duty and different exemptions from the VAT have substantially eroded our tax base There-is no room for such elaborate tax exemptions in any meaningful resource mobilization endeavor, and we have to abolish these exemptions gradually
4 I would now like to highlight before this House some of the basic principles of the tax policy pursued by the present government
i. A progressive tax policy that ensures social justice and equity,
li A broad based tax system, in which existing tax exemptions will be gradually eliminated and every well-to-do person in the country will be brought under the tax net,
in Moderate tax rates and simple collection procedure.
iv A tariff policy in line with its international and regional trend
The tax proposals for the year 1997-98 have been formulated keeping the above principles in mind In many cases tax and tariff reduction have been proposed to reduce the burden of taxes and to promote economic activities We have tried to keep the tariff reduction measures in conformity with the stage of industrialization of our country In this connection. I have to note with regret that due to unnecessary haste in the pace of reduction of customs duty in the past, many industries are now in serious distress. In the light of those experiences and based on recommendation of the Bangladesh Tariff Commission, we have proposed appropriate changes in customs duty on some items to provide legitimate protection to domestic industries To achieve a broad based tax system, I have proposed various steps including amendment of existing Acts and Rules, administrative reorganization and withdrawal of duty and tax exemptions.
5. As a government accountable to the people, we had extensive pre-budget consultation with representatives from all relevant sections of the society. I have personally written to the major political parties inviting them to a dialogue. Unfortunately, I did not get favourable response from all the parties. We received a large number of proposals from different Chambers, trade bodies and professional groups and held detailed discussion on their proposals. I have also met and exchanged views with my Economic Advisory Council and gave special considerations to their recommendations. Suggestions with positive developmental implications have been accepted in spite of potential revenue loss. Steps have been taken to incorporate the suggestions on which there was consensus. In a number of cases we had to establish a balance among divergent and multi-dimensional interests of trade and industry. Consumer's, trader's and producer's interests are at times conflicting. We have tried to balance their divergent interests and tried to establish an equilibrium acceptable to all. We have accepted most of the recommendations made by the Tariff Commission after holding public hearing With these preliminary remarks, I would now like to place before this august Parliament the important tax proposals for the fiscal year 1997-98, which reflects the need for enhanced revenue, national priorities, international economic context and public opinion.
DIRECT TAXES
Honourable Speaker,
6. Income tax is the principal source of our revenue among direct taxes. This year a good number of changes have been proposed in respect of income tax with a view to reduce the tax rate, widen the tax base, check tax evasion, encourage investment, reduce the complexities of tax law - in short to make the income tax system modem and realistic. I now present the income tax related proposals:- 7. At present, we have four-tier tax rates for individual tax payers of which the lowest is 15 percent In order to reduce the tax burden of the low income group, it is proposed to reduce the lowest tax rate from 15 percent to 10 percent and introduce five- tier tax rates for individuals. I also propose to reduce the amount of minimum tax from Taka 1200 to Taka 1000. As a result, it is expected that the tax payers will voluntarily submit their income tax returns showing taxable income.
8. According to the existing law, non-resident Bangladeshi tax payers are treated differently from the resident individual tax payers This is discriminatory to non-resident tax payers Therefore, I propose to introduce the same tax rate based assessment system for both the resident and non-resident Bangladeshi individual tax payers.
9 Most of the countries in South and South East Asia have lowered their corporate income tax rates to attract foreign investment. To. attract foreign investment we have to provide similar incentives At present, publicly traded companies and non-publicly traded companies are taxed at the rate of 35 and 40 percent respectively, while the banks, insurance companies, financial institutions and non-resident companies are taxed at the rate of 45 percent To rationalise as well as to make the corporate tax structure more equitable, I propose a uniform tax rate of 40 percent for non-publicly traded companies, banks, insurance companies, financial institutions and non-resident companies It is expected that this two-tier corporate tax rate structure will attract foreign investment in Bangladesh
10. Contribution of the private limited companies to our tax revenue is less than 10 percent of the realisation from this sector. The number of private limited companies showing income in their returns is only 8-9 percent, which is very negligible. Considering this dismal and frustrating state of affairs, it is proposed that the taxes department will accept the return of a private limited company without any question if it files a return showing ten percent higher income over the last assessed income and pays tax on the basis of such income or pays tax which is not less than ten percent of the equity or two and a half percent of turnover and shows income which is proportionate to the tax so paid However, the minimum amount of tax under this procedure shall be Taka 25,000 Amount of income thus shown in the return shall be highest of the incomes computed in the manner mentioned above
11 In our country a huge amount of income remains outside the tax net and being untaxed this income does not come into investment flow In view of this, it is proposed to exempt such untaxed income from tax if it is invested in setting up new industries within the period from 1st January, 1997 to 31st December, 1999 However, an industrial unit set up by such investment will not be eligible for tax holiday Alternatively, tax holiday will be available to such an industrial unit on condition of payment of tax at the rate of seven and a half percent on the investment Tax department will accept the investment in both cases without raising any question
12 In order to induce tax payers to pay more taxes voluntarily, it is not sufficient to reduce the tax rates; it is also essential to simplify tax assessment and payment procedures. With this end in view, some amendments in the Income Tax Rules have been proposed for making self assessment more attractive. It is proposed that a new assessee shall be allowed to disclose his initial capital up to the amount of Taka 25 lakh without any question being asked as to its source provided that one-fourth of this amount is shown a- his income in the concerned year. Submission of wealth statement will be required once in every three years if the total income exceeds two lakh Taka, but does not exceed five lakh Taka and every year if the total income exceeds five lakh Taka. This provision shall also be applicable to other individual assessees.
13. To mobilise more internal resources it is necessary to widen the tax base. It is true though unfortunate that out of the total population of twelve crore in Bangladesh, the number of tax payers is under seven lakh which is less than half of one percent of our total population. Out of these even smaller percentage of assessees actually declare taxable income. In order to widen our tax base, it is proposed that -
a) a person, residing in the area of the metropolitan cities of Dhaka, Chittagong, Rajshahi & Khulna, divisional towns of Barisal and Sylhet and in other district towns and owns a building which is more than one storied and plinth area of which exceeds 1,600 square feet or owns a motor vehicle or subscribes a telephone must file his/her income tax return, whatever his/her income is during the relevant income year. If the person fails to file the return voluntarily, legal steps will be taken by the Tax department for non-submission of return. These persons may also file their return under selfassessment scheme.
b) In order to identify new assessees and to ensure collection of tax from them, it is proposed to introduce the system of submission of TIN certificate to the concerned authority at the time of opening letter of credit for the purpose of import, renewal of trade license and submitting tender documents by the contractors / suppliers.
c) At present Bangladesh Bank Bills are exempt from tax deduction at source, but all other government securities are subject to tax deduction at source. To remove this discrimination and to expand the tax base it is proposed to deduct tax at source from discount on the real value of Bangladesh Bank bills at the rate applicable to government securities
14 Now I am proposing some changes and amendments in respect of certain provisions and procedures regarding income tax law :-
a) At present the amount of actual provision for bad debts or a sum equal to 5 percent of the total outstanding loan including interest thereon whichever is less, can be shown as business expenditure by a scheduled bank Alternatively, banks can take the option of showing interest income from classified bad and doubtful debts on actual receipt basis. In view of the overall situation prevailing in the banking sector, it is proposed to extend both these facilities to the scheduled banks. But I also propose to reduce the rate of provisioning from 5 percent to 3 percent. This facility will be available up to the assessment y ear 1999-2000.
b) Under the present law, a tax payer at the time of appeal to the Appellate Tribunal is required to pay 40 percent of the tax payable by him Considering that payment of this amount of tax, in many cases, creates hardship for the tax payers. I propose to reduce the amount from 40 percent to 30 percent
c) Under the existing law. time limit for disposal of appeal cases varies from one to two years. To remove this discrepancy and expedite the disposal of appeal cases, it is proposed that the cases in appeal should be completed within one year from the date of filing of the appeal.
d) Under the existing law, there is no time limit for sending the order passed by the Appellate Tribunal to the assessee and the Commissioner of Taxes It is proposed that the order of the Tribunal should be sent to the assessee and the Commissioner of Taxes within 120 days from the date of passing the order.
e) At present, a tax payer is required to file returns for a period of five years after closing of business This requirement is proposed to be reduced to 3 years
f) Presumptive taxation is a difficult process as under the system taxpayers are issued notices based on some estimated income and the taxpayers are asked to provide evidence to the contrary This process is arbitrary and causes difficulties for the taxpayers Because of the expanded scope of self-assessment, section 84A of the Income Tax Ordinance has lost its usefulness I, therefore, propose to delete the section
g) At present there is a provision for charging simple interest for delayed payment of tax Because of the complexities in counting the period of delay, this provision cannot be enforced Therefore, I propose to delete this provision.
h) It is proposed to introduce the system of serving notices under registered post in order to ensure the service of various notices on the assessee
i) It is proposed to consider purchase of saving certificates as allowable investment for giving tax credit within the prescribed limits of the Income Tax Act
Wealth Tax
15 Now I propose the following amendments in the Wealth Tax Act
a) At present theie aie provisions in Wealth Tax Act to initiate proceedings for the assessment of wealth tax cases which have escaped assessment or have been under-assessed but no time limit has been set for completmg these assessments I therefore propose to amend the relevant section of the Wealth Tax Act by setting a time limit for such cases.
b) For the benefit of the tax payers and for greater compliance, self-assessment procedure in the Wealth Tax Act is proposed to be introduced this year Taxpayers are expected to avail themselves of this simplified procedure and pay due taxes along with the return 16 The main objective of the proposed amendments in the income tax law in this year is to contribute to the growth of mutual trust between the tax payers and die tax administration, to create a conducive environment for investment, to widen the tax base and mobilise domestic resources at an accelerated pace by making the income tax law modern and tax payer friendly I hope that in the new environment tax payers will come forward to pay their taxes voluntarily and contribute to make income tax play a more substantial role in the mobilisation of domestic resources
INDIRECT TAXES
Import Duty
Honourable Speaker,
17. I would now like to highlight the salient features of the customs duty related proposals for the FY 1997-98. Competition is the soul of the market economy. One of the major advantages of international trade is its favorable effects on competition. Competition increases efficiency in local production, enhances quality of products and enables consumers to buy better quality products at a cheaper price To achieve these goals our neighboring countries have reduced their top customs duty rates. To maintain competitiveness of our economy we have to take similar measures But we have to prepare our local industries gradually to face international competition So, instead of a drastic reduction of customs duty as was done in the past, I propose to reduce the highest rate of customs duty from 45 to 42.5 percent We will incur substantial revenue loss due to this reduction, but such tariff reduction is essential to lower the average tariff rate in keeping with the global trend of trade liberalisation and to promote efficiency in the economy.
18. Transport sector plays a vital role in our national economy Due to lack of a co-ordinated policy, modernization of this sector could not be done in the past. As a result, traffic congestion, environment pollution and road insecurity has become a day to day feature of our transport system. Bearing in mind the limited availability of resources, we have to assign top priority to the development of a rapid mass transport system With this objective in mind, customs duty on double decker bus was reduced from 30 percent to only 2.5 percent in the FY 1995-96 budget. While retaining this concession, I further propose to reduce the customs duty on completely built up (CBU) bus, minibus and truck from 30 to 22 5 percent To promote competitiveness of the local assembling industries. I also propose to reduce customs duty on the import of completely knocked down (CKD) bus, minibus and truck from 15 to 7.5 percent
19 in addition to lowering the cost of mass transport vehicles like bus, minibus and truck, we would also like to encourage the local production of parts and accessories of these vehicles At the initial stage, it will not be possible to manufacture all the parts and accessories locally as huge investment will be required for this purpose. Therefore, to encourage the motor vehicle assembling industry in producing vehicles with both imported and locally manufactured parts, I propose to reduce the duty on most of the auto parts from 30 percent to 22.5 percent. In addition to providing adequate incentive to the assemblers, I believe this will also make auto parts easily available, thereby promote road security, improve the standard of vehicles and reduce pollution on the street, through lower maintenance cost.
20. An important feature of every modem city around the world is an efficient taxicab service charging moderate fare. There were attempts in the past to introduce taxicab service through special tariff incentives Some unscrupulous persons with a view to evade tariffs imported vehicles as taxicab and later converted them into personal car. Now, in the light of the experiences of the past, by bringing about adequate changes in the law and procedure, we would like to re-introduce the taxicab scheme. Under the proposed system, only a registered private or public limited taxicab company with a tax payers identification number (TIN) and a paid up capital of at least Taka 10 lakhs will be allowed to import vehicles up to 1600 cc, on payment of 7.5 percent customs duh in place of 45 percent customs duty at present, and without payment of supplementary duty. Any abuse of the concessional facility will be seriously dealt with within the existing legal framework.
21. In order to facilitate the expansion of the Dairy sector, I propose to reduce customs duty on insulated road milk tanker from 45 percent to 2.5 percent. Various facilities extended to the transport sector will result in a revenue loss of Taka 20 crore approximately. This estimate of loss is exclusive of the tax rebate proposed for the import of taxicab. However, I believe that despite the loss of revenue, facilities provided to the transport sector would result in remarkable improvements in this sector and would benefit people of lower and middle income groups.
22. Electronics sector has tremendous potential as an export industry. We would like to take appropriate steps to encourage this sector. At present all electronics parts are subject to 30 percent import duty. To encourage assembling of electronics products, I propose to bring proper amendment of the existing SRO related to electronics sector allowing import of certain electronic parts and accessories at 15 percent customs duty instead of 30 percent at present
23. We firmly believe in the basic principle of free market economy. But we are not indifferent to the legitimate protection needs of our local industries. On the basis of the recommendations of the Bangladesh Tariff Commission and demands from various Chambers to provide due protection to local industries and rationalization of the tariff structure, I propose to reduce customs duty on computer accessories like toner cartridge and ribbon from 30 percent to 15 percent, on all other parts of battery except plate and grid from 30 percent to 22.5 percent, on plastic and paper made diagnostic agents (strip) from 45 percent and 30 percent respectively to 15 percent, on mercury, potassium iodide (feed grade) and natural rubber from 22.5 to 15 percent, on M.S. wire above 10 mm from 45 to 30 percent and on gypsum anhydrite (other) from 7.5 to 2.5 percent. In addition, to support domestic cement industry 1 propose to reduce customs duty on limestone from 15 percent to 7.5 percent and withdraw 5 percent supplementary duty on paper bags and sacks used by this industry Similarly, in the interest of domestic industry I propose to reduced customs duty on silico manganese steel bars from 45 percent to 30 percent.
24 In order to promote local production of hydrochloric acid, I propose to reduce the duty on its raw materials heavy normal paraffin and liquid chlorine from 45 and 30 percent respectively to 15 percent In addition, I also propose to withdraw 15 percent supplementary duty on heavy normal paraffin, reduce customs duty on the irrigation pump's raw materials ERW pipes and stainless shafting from 45 to 30 percent, on raw materials for razor blade industry, perforated one half inch stainless steel blade, from 45 to 22.5 percent, on raw materials for woolen blanket industry, wool waste from 30 to 15 percent. It is hoped that because of these concessionary measures, local industries will become more competitive and the tendency to misdeclare goods to evade tariffs will also be discouraged
25. Without mordernising our physical infrastructure we will not be able to achieve the ultimate goal of poverty alleviation through rapid economic growth In fact, our people are deeply interested in the development of physical infrastructure especially in building up of the rural infrastructure Honourable members of this Parliament frequently raise demands for building roads, culverts and bridges in their constituencies Present government is making all out efforts to attract foreign investment in this sector and has attached high priority to allocation of resources for the modernisation and upliftment of this sector In spite of the allocation, the widespread demand for rural infrastructure remains largely unfulfilled Honourable members of the Parliament are unable to fulfill these development needs essential for the improvement of standard of living of the people of their constituencies I have already mentioned in the first part of my speech that there is a deficit of about Taka 2800 crore in our investment to this sector To fulfill the aspiration of the entire nation we have to allocate additional resources for the development of physical infrastructure and we have to raise additional revenue for this purpose Therefore, I propose to introduce a separate infrastructure development surcharge at a rate of 2.5 percent The proposed surcharge will be applicable on all imports except on defence stores, imports for diplomatic and privileged persons, imports for blind-deaf and dumb and other handicapped persons, relief goods imported for disaster management, and imports for export purposes Apart from the imported goods the proposed surcharge would also be levied on certain locally produced goods and services as may be notified
26 At present, many goods are exempted from customs duty under various notifications. As explained earlier, this type of unjustifiable zero rated imports were allowed to satisfy vested interest groups Zero tax rate narrows the tax base, loosens administrative control and creates opportunity for rent-seeking For the sake of efficiency all types of imports should be subject to a minimum rate of customs duty. As a modest beginning, 1 propose to impose 2.5 percent customs duty on some mineral products, diesel engine (3 to 45 Hp), aircraft, ocean going vessels above 3000 DWT, testing equipment, laboratory equipment's, some medicine and their raw materials, raw cotton and cotton waste, and 7.5 percent customs duty on textile airconditioner and textile machinery
27. Adequate quantity of syringe and saline giving sets are now being produced in the country There are 15 to 45 percent customs duty on the raw materials of these products but the duty on the finished product is zero. Local producers are facing uneven competition due to the above tax anomaly Therefore, on the basis of the recommendation of the Bangladesh Tariff Commission I propose to impose 15 percent customs duty on the import of syringe and saline giving sets.
28. Bangladesh Tariff Commission has recommended to increase customs dun on scrap vessels to provide support to the billet based construction materials manufacturing industry. This will discourage production of lower quality rods produced by re-rolling or melting scraps. Agreeing with the recommendation of Bangladesh Tariff Commission, I propose to increase customs duty on scrap vessels from 7.5 to 15 percent. Despite the possibility of mild price effects on construction materials, this measure should improve quality of construction and is desirable in the greater interest of the country.
29. Bangladesh Tariff Commission has also made several other recommendations of tariff enhancement for the purpose of rationalization of tariff structure and protection of local industries. In line with their recommendations I propose to enhance import duty on crown cork, crude china clay and quartz from existing 7.5 to 15 percent, on rice huller parts from 2.5 to 15 percent, on writing and printing paper from 15 to 22.5 percent, on bicycle and cycle rickshaw chain from 30 to 45 percent, on bicycle and polymethyl mythacrylate, reed wire and other photographic film from 22.5 to 30 percent; and to enhance customs duty on tractors from 2.5 to 7.5 percent, and allowing import of CKD tractors at 2.5 percent import duty.
30. Pollution free environment is essential for healthy life. The black smoke emitted by three wheeled vehicles poses a serious threat to the health of both our present and future generations. Roads of Dhaka metropolitan city have become a serious threat to the public health of its residents. Environmental scientists consider vehicles with two stroke engines especially responsible for such pollution. Different organizations and the concerned Ministries have urged to ban or at least discourage import of three wheeled vehicles. Therefore, I propose imposition of 25 percent supplementary duty on the import of completely built up (CBU) three wheeled vehicles, enhancement of customs duty on CKD three wheeler from 15 to 22.5 percent along with imposition of 25 percent supplementary duty.
31. Import of automotive vehicles have gone up substantially as a result of continuous reduction of import tariff over the past few years. For the sake of additional revenue, I propose imposition of additional supplementary duty of 25 percent on all kinds of cars, station wagons and jeeps.
32. After presenting the tariff adjustment proposals, I now would like’to propose a few significant amendments to the Customs Act and procedure. In order to provide protection to the local industries from the foreign goods, I have proposed suitable amendments in the Customs Act for the introduction of Safeguard duty.
33. At present, only the Commissioners of Customs have the right to appeal to the Appellate Tribunal against imports under preshipment inspection scheme. For the sake of natural justice, 1 propose to allow any person aggrieved by any decision relating to preshipment inspection imports to appeal to the Appellate Tribunal At the same time, I also propose to constitute a Committee to be formed in different import stations for making quick decision on the PSI consignments. Apart from representatives of the government, the Committee will consist of a member from the Bangladesh Federation of Chamber of Commerce and Industry and a representative of the PSI company. Necessary amendments in the Customs Act and existing PSI rules is being made to bring about transparency in this regard.
34. After reviewing the outstanding arrears, it has been found that some arrears payable to the govt, are being accumulated for decades without any realistic hope of their realisation. Therefore, I propose amendments to the Customs Act enabling the government to write off those irrecoverable amounts due to the government. 35 Steps are also being taken to modernize the custom valuations system to suit the needs of the 21st century by introducing the transaction value under the GATT Valuation Agreement Proposed changes in the Customs Act. will bring about transparency in the valuation system and also contain provision for scrutiny and verification of all information and documents related to customs valuation by the concerned authority
36 Local manufacturers complain that they are facing uneven competition from the imports under PSI scheme at a price much lower than the international market price Such imports have eroded the competitiveness of local industries and deprived the government of its due revenue Different Chambers and industrial manufacturers have requested for the withdrawal of PSI on all finished products except primary and intermediate raw materials, capital machinery and packing materials After a thorough examination, in the interest of domestic industry and to prevent leakage of revenue, 1 propose withdrawal of PSI system on all items attracting highest effective rate of customs duty and a few other selected items.
37. To ensure that importers do not face difficulties due to withdrawal of PSI facilities, two new schemes are being introduced Firstly, a special scheme is being introduced for the reputed leading foreign exporters Under the proposed system the foreign exporters will register value, H S Codes, description etc of their exported goods with the National Board of Revenue before actually exporting their goods After verifying these information NBR will direct Custom Houscs/Stations for the quick clearance of such consignments on the basis of the declaration Secondly, selfassessment system for certain class of imports and exports is being introduced on an experimental basis Under the new system importers and exporters or their clearing and forwarding agents will be allowed to assess consignments and pay duties on the basis of such assessment Government revenue will be safeguarded through appropriate physical examination at the time of delivery
Honourable Speaker,
38 Present Non-Tourist Baggage Rules allow passengers to import gold and silver of not more than 2 kg on payment of duties and taxes irrespective of duration of stay abroad In order to liberalize the import of gold and silver through authorized route, I propose amendments in the Baggage Rule allowing import of gold upto 5 kg and silver upto 15 kg on payment of duties and taxes However, in the interest of the local jewelry sector, 1 propose that the Baggage Rule be amended curtailing male passengers duty free entitlement from 200 gm to 50 gm. only.
Value Added Tax and Supplementary Duty
Honourable Speaker,
39. In the last fiscal year (1996-97), the Value Added Tax (VAT) network was extended upto retail level only on ten items. It will be possible to reap the benefits of VAT if it is applied in a simple and smooth manner to all levels of retail transactions. That is why, a phased expansion of VAT network upto retail and wholesale level is required to be carried out. In view of this, I propose the expansion of VAT on some more electronic, electrical, sanitary items and three wheeler and motor cycle upto their wholesale and retail levels This measure will not require, with the exception of a few, fresh and new registration for payment of VAT For, registered businesses that sell the items brought under VAT network upto retail level last year generally sell the items, proposed for retail VAT this year. Besides, Value Added Tax on footwear and condensed milk is proposed to be imposed on retail price at production stage. Taking the growth of service sectors into consideration. Air conditioned Bus service and Air conditioned Launch service, procurement provider, cultural entertainment organiser with the participation of foreign artists and satellite cable operator have been proposed to be brought under the purview of VAT. However, the taxpayers of such goods and services will pay turnover tax at the rate of 4 percent whose turnover is less than Taka fifteen lakh a year.
40. At present, in case of imported goods, import duty is not included in the assessable value for supplementary duty. But the local manufacturers pay supplementary duty on the sum which includes the import duty. This result in higher tax incidence on the local manufactured goods than on the imported ones. It is necessary to remove this prevailing inconsistency and to enforce identical tax treatment both for the locally manufactured and imported goods. In view of this, it has been proposed to assess supplementary duty on the sum of assessable value and customs duty for imported goods This measure will ensure legitimate protection for local industries.
41. Presently, businesses whose yearly turnover is less than 15 lac Taka pay turnover tax at the rate of only 2 percent. But the taxpayers whose turnover is 15 lakh Taka or more pay VAT at the rate of 15 percent. On the one hand this encourages declaration of incorrect turnover and the manufacturers of the same type of product encounter uneven competition due to the gap of rates between turnover tax and VAT, on the other. Considering this, 1 propose that the rate of turnover tax be increased from 2 percent to 4 percent.
42. Business units that enjoy cottage industry-benefit under VAT system are exempt from tax liability but the manufacturers of the same type of products are liable to pay either Value Added Tax at the rate of 15 percent or turnover tax, as the case may be With a view to rationalising the tax imposition, it has been proposed that the manufacturers of PVC pipe, metal container, the body and chassis of motorised vehicles, soap, electrical bulb, battery and wires & cables will no more be entitled to cottage industry benefit. Manufacturers of these products will, however, be entitled to turnover tax facility, if otherwise eligible.
43. With a view to extending and strengthening the scope of the Value Added Tax, the existing exemptions need to be curtailed in phases. This measure is essential in order to bring those who do not pay tax to the same footing of those who pay In view of this the withdrawal of exemptions from slippers made of rubber and plastic, nails, non-agricultural insecticides and germicide has been proposed.
44. At present. The tax payers are required to maintain a number of forms and registers in order to comply with the legal provision of the Value Added Tax. As a result many tax payers need to maintain a number of registers in addition to their own. Representatives of industry and commerce have long been demanding for an alternative method of keeping accounts Accepting their demand, from now onwards, the "Established VAT registered persons" will be permitted to use their commercial documents as alternatives to VAT registers. This measure will meet one of the long cherished demands of businessmen and industrialists.
45. In cases where vehicles and goods are seized for violation of certain legal provision of the Value Added Tax Act, hence forth, the seized goods and vehicles will be released on interim basis against bank guarantee immediately after the seizure so that the goods and vehicle remain in the owner’s custody and the case may be quickly disposed off on the basis of the documents available. The normal period for submission of VAT return is one month But considering the business nature of the construction firms, hundred percent export oriented industry, C & F agents, consultancy and supervisory firms, procurement provider, cultural entertainment organiser in participation with foreign artists, Ijaradars, the period of submission of VAT return will be six months basis; for shipping agents, brick and indenting firms the period will be three months basis The declared price of the registered person will be deemed to have been accepted if the same is not contested by the concerned VAT authority within ten days of declaration or of application Turnover enlisted persons will declare their yearly turnover in a prescribed manner to the respective office Efforts to make the Value Added Tax system more dynamic, transparent and trade-friendly will be pursued on a continuous basis
46 In addition to adjustments of duty and tax rates steps are being taken to reorganise National Board of Revenue. Customs and Value Added Tax Commissionerates to strengthen our revenue mobilisation efforts The reorganisation proposals include placement of a separate Commissioner each for budget preparation and monitoring in the three wings of NBR, computerisation program at the National Board of Revenue, supervision of exports and export related imports in Dhaka and Chittagong Custom House, upgradation of Benapole Land Customs Station into a full fledged Custom House, and the office of the Controller of Customs Valuation and creation of a separate Customs, Excise, and VAT Commissionarate at Sylhet divisional Head quarters In reorganising the NBR and its departments we were careful not to increase the size of the government and we have asked for the minimum essential new posts As a result of the proposed reorganisation it is hoped that our revenue collection efforts will be strengthened and the public will be able to receive quick decisions
Honourable Speaker.
47 1 have placed the major tax proposals for FY 1997-98 before the Parliament Now 1 would like to state the overall revenue implications of these proposals Because of the adjustments of personal income tax tiers, extension of graduated tax rate based assessments to non-residents, reduction of company tax rates for banks, insurance companies and financial institutions and other measures there will be a revenue loss of Taka 50 crore Due to the expansion of self assessment scheme, introduction of self assessment scheme for private limited companies and expansion of the tax base there will be a revenue gain of Taka 32 crore Implementation of customs duty reduction’ proposals is expected to result in a revenue loss of Taka 250 crore and there would be gain of Taka 100 crore from customs duty enhancement proposals Net outcome of customs duty related proposals would be loss of revenue of Taka 150 crore Proposed infrastructure surcharge is expected to yield an additional Taka 350 crore Revenue will increase by Taka 130 crore due to rationalisation of supplementary duty Additional Taka 70 crore would be realised through expansion of VAT, removal of VAT exemptions, and procedural reforms Taking into account the growth of the economy, normal inflation, and growth of unports on the basis of prevailing tax rates, it is estimated that revenue collection in FY 1997-98 will increase by Taka 1360 crore over that of FY 1996-97 target and reach Taka 14,400 crore Net increase in revenue due to the proposed tax measures will be Taka 382 crore Revenue will increase by another Taka 218 crore because of administrative reorganisation, intensive monitoring and supervision, and procedural improvements It is thus expected that in FY 1997-98, the total collection of revenue from different duties and taxes under the National Board of Revenue will be Taka 15,000 crore which is Taka 1960 crore higher than FY 1996-97 targets.
Honourable Speaker.
48 In the past three decades tremendous changes have taken place in the world economy. During this period some East Asian Economies joined the league of the developed nations The spectacular growth in these countries did not only bring about prosperity in the life of their citizen but has also shaken the foundations of the present development thinking Un4er the present development paradigm capital and natural resources are the two major driving forces behind economic development. These countries defied the scarcity of natural resources and capital as the major impediments to economic development. Development of human resources turned out to be the key factor behind the double digit growth in these countries. Classrooms rather than the industries and fields were proven to be the stepping stone to development in these countries. With the globalisation of entrepreneuship a formidable obstacle to the development efforts of the developing countries has been removed. With the expansion of international trade, reduction in transportation costs, and improvements in telecommunications, an entrepreneur in Europe or the United States can engage a small supplier anywhere in the world to produce goods in his behalf. He can assist the producer by providing necessary capital, raw materials and marketing support Therefore, by developing its human resources, a country can easily overcome other obstacles to development.
49. In the new development thinking the role of the government in economic development has also been re-evaluated. The role of government in activating the "invisible hand" of the market economy has turned out to be of critical importance Joseph Stiglitz, a renowned economist, while evaluating the development performance of the East Asian countries has recently written that "Their governments helped to guide and create markets rather than completely supplanting or surrendering to them". We have tried to use some of these recent development thinking in preparing our budget Therefore, in allocating resources, we have assigned high priority to development of human resources and physical infrastructure In realising revenue we have emphasized competition, development of markets and removal of discrimination. We have intervened in the market only to address its imperfection and designed policies in a way so that benefits exceed their costs
Honourable Speaker,
50. Following statesman Adlai Stevenson I would like to say "That which unites us as citizen is far greater than which divides us as political parties." Despite differences in our political views there can be no disagreement as to our goals as a nation. There is hardly such a homogeneous nation like the Bengalees from the point of view of language, history and heritage We want to be liberated from the curse of poverty. We want to achieve fast economic growth and ensure social equity and leave behind for our future generation a healthy and clean environment. We want to develop our human resources through spread of education and health care and strengthen the foundation of the rule of law We want to eliminate corruption, terrorism, plunder, and politics of conspiracy from the soil of Bangladesh We want to explore and participate in the tremendous progress in knowledge and science tn today's world. We know that these goals can not be achieved by any government alone. All men and women belonging to this generation, irrespective of then political affiliation must face this challenge It is as clear as broad daylight that we can reach our destiny only through consensus People in this country do not want politics of vengeance They want politics of co-operation and consensus Realising this Prime Minister Sheikh Hasina gave the call for politics of consensus. It is not desirable to limit consensus to formation of the government or to confine it within the boundaries of this Parliament Let this consensus be reflected in all our national efforts, in our dreams and endeavour and our daily activities With this expectation I place the budget for the year 1997-98 for the consideration of this august House
Khoda Hafez
Joy Bangla, Long Live Bangladesh