For 15 years, the Awami League-led government has followed a policy of expansionary budgets, each more expansive than the last, as a way to signal the increased ambition and scope of the state and a burgeoning economy. It was a tendency that started with the Mohajote or Grand Alliance's very first budget in 2009, for the 2009-10 fiscal, under then-Finance Minister A.M.A. Muhith. It continued through his two stints till 2018, and then under his successor A.H.M. Mustapha Kamal as well.

The country's new finance minister, AH Mahmood Ali, installed after the latest election last January, has had a baptism of fire by comparison. He has come to helm an economy faced with much tougher conditions than his two predecessors had to, driven by both external and internal factors. Broadly, the challenge ahead of him lay in restoring macroeconomic stability. Specifically it included reducing inflation, and containing pressure on foreign currency reserves.

Against this background, Finance Minister Abul Hassan Mahmood Ali placed Tk 7,97,000 crore national budget for the 2024-25 fiscal in parliament on Thursday (June 6). The FY25 budget is 4.6 percent bigger than the current one, much lower than the year-on-year average spike of 11 percent seen in the last five years, which was similar over the last 15 years. The current fiscal's budget was 12.35 percent larger than the previous year's. Although not exactly contractionary, the budget reflected the tougher economic realities it is up against.

The economic growth target was set at more than 7 percent for the current fiscal, but the target for FY25 has been set at 6.75 percent. The government has also set an ambitious inflation target of 6.5 percent although it averaged more than 9 percent in the past two years as various measures on the part of the government and central bank failed to rein it in.

The proposed outlay aims to contain the budget deficit to 4.6 percent of GDP, a level last seen a decade ago. The deficit is likely to be Tk 2,56,000 crore.

The revenue collection goal Tk 5,41,000 crore in FY25, an 8.2 percent increase from the previous year. The National Board of Revenue will be tasked with raising Tk 4,80,000 crore of the amount.

The finance minister said it is expected that pursuing all the "prudent policy measures" will help achieve GDP growth of 6.75 percent in the next fiscal year and 7.25 percent in the medium term. He also said they are expecting that the inflation rate will come down to 6.5 percent in the next fiscal year as an outcome of the policy strategies that they have adopted.

This is the first national budget of Prime Minister Sheikh Hasina's government which took office for the fourth consecutive term after winning this year's general election.

In his maiden budget Ali said the GDP growth is maintaining its momentum because of the implementation of prudent and appropriate policy measures. The average growth rate between FY 2009-10 to 2022-23 was 6.71 percent, one of the highest among all countries in the world, he said.

The country achieved a record GDP growth rate of 7.88 percent in FY 2018-19 just a year before Covid-19 pandemic.

"Despite all adversities caused by Russia-Ukraine war and other global unrests, Bangladesh managed to achieve 7.10 percent, 5.78 percent and 5.82 percent (provisional) growth in 2021-22, 2022-23 and 2023-24 respectively which is a testament to the inherent strength of our economy," said the Minister.

To maintain this growth in future, he said, all reasonable supports will be continued to encourage both agricultural and industrial production.

Side by side, Ali said, proper implementation of important infrastructural projects and adoption of an appropriate action plan aimed at increasing export earnings and remittances will be helpful for achieving the desired GDP growth.

The minister said demand for loan and the interest rate will be determined based on the supply of credit and the relationship between bankers and customers. To control inflation, he said, various steps are being taken to make the monetary policy a successful one.

At the same time, Ali said, supportive policies are being implemented in the fiscal sector as well. "Government support like Family Card and OMS Programs are being strengthened to protect the common people from adversities arising from high inflation."

Vision for 'Smart Bangladesh'

Meanwhile, the vision of 'Smart Bangladesh' will be realised through the integration of cutting-edge technologies like artificial intelligence, Ali said. Presenting the national budget for the fiscal year 2024-2025 at Jatiya Sangsad, he emphasised four key pillars: Smart Citizens, Smart Economy, Smart Government, and Smart Society.

Minister Ali projected that under 'Smart Bangladesh', the country's per capita income would reach at least $12,500, with less than 3% of the population living below the poverty line, and extreme poverty eradicated.

In Smart Bangladesh, Inflation will be contained between 4-5%, and the budget deficit will remain below 5% of GDP. The revenue-GDP ratio is expected to exceed 20%, and investment will make up 40% of GDP, he said.

The vision also includes achieving 100% digital economy and literacy based on science and technology. "Healthcare will be accessible to all, and essential services will be delivered directly to citizens' doorsteps, including automated communication systems and sustainable urbanisation," Minister Ali explained.

He highlighted the creation of a paperless and cashless society, aiming for a just and equal community.

"Most importantly, we will establish a society based on justice and equality in Smart Bangladesh. The people of Bangladesh are intelligent, creative, and hardworking," he added.

The Finance Minister expressed confidence in enhancing the innovative capacity and creativity of the population through the proper use of technology. To this end, he detailed that short, medium, and long-term goals and action plans are being carefully formulated to build a discrimination-free, developed, and Smart Bangladesh.

The government has set the Annual Development Programme (ADP) outlay at Tk 2,65,000 crore for the next fiscal year (FY25) putting the highest allocation in the transport and communication sector, virtually unchanged from the outlay for the outgoing fiscal.

"For the upcoming FY 2024-25, the budget size has been estimated to be Tk 7,97,000 crore, which is 14.2 percent of the GDP. A total of Tk 5,32,000 crore is proposed to be allocated for other expenditures including operating expenditure and Tk 2,65,000 crore is proposed to be allocated for the Annual Development Program," said Finance Minister Abul Hassan Mahmood Ali while placing the budget for FY25 at Jatiya Sangsad Bhaban on Thursday.

Earlier on May 16, the National Economic Council (NEC) approved a Tk 2.65 lakh crore ADP for the next fiscal year (FY25), putting the highest allocation of Tk 70,687.75 crore (26.67 per cent) in the transport and communication sector.

The approval came from the meeting of the National Economic Council (NEC) with its Chairperson and Prime Minister Sheikh Hasina in the chair at the NEC Conference Room in the city's Sher-e-Bangla Nagar area.

Of the total ADP outlay of Tk 2,65,000 crore, Tk 1,65,000 crore will come from the local sources and Tk 1 lakh crore from foreign sources.

The original ADP size for the outgoing fiscal year (FY24) was Tk 2.63 lakh crore.

Apart from the original ADP outlay of Tk 2,65,000 crore, the NEC meeting also approved an allocation of Tk 13,288.91 crore for the autonomous bodies and corporations as their ADP for the next fiscal year (FY25).

Out of the amount, Tk 11,698.96 crore will come from local sources, while Tk 1,589.95 crore will come from foreign sources.

Considering the allocation against the autonomous bodies and corporations, the overall ADP size reached Tk 2,78,288.91 crore for the next fiscal year.

The fresh ADP features 1,321 projects, including 1,133 investment projects, 21 feasibility projects, 87 technical assistance projects, and some 80 projects, to be implemented by the autonomous bodies and corporations.

The new ADP includes some 1,225 fresh projects, 80 of those are PPP projects and 300 projects to be implemented from the climate change trust fund.

Considering some 22 more projects that are nearing completion, a record number of 356 projects would be completed by June 30 of this year, marking the end of the 2023-24 fiscal.

Ali said, "While allocating resources emphasis has been given resource allocation for the Annual Development Program for investment and development of physical infrastructure."

In addition, he said, "special importance has been given on compulsory education, health, science and technology for the development of human resource and knowledge-based society."

The proposed spending has been split into three divisions: Social infrastructure, physical infrastructure and common service sector. A total allocation of Tk 2,06,569 has been proposed for the social infrastructure, which is 25.92 percent of the total allocation. Physical infrastructure has received an allocation of 2,16,111 crore has been proposed, which is 21.12 percent of the total outlay. For the common service sector, an allocation of Tk 1,68,701 crore has been proposed.

Mentioning that there has been a significant depreciation of taka currency against US dollars following the rise in interest rates, the finance minister said the expenditure on interest payments may increase significantly in this context.

For debt payments, the proposed budget has allocated a total of Tk 1,13,500 crore, which accounts for 14.24 percent of the total allocation.

TIB terms budget provision for whitening black money 'unconstitutional and corruption-friendly'

Finance Minister Ali told the Parliament that in formulating the budget he has laid emphasis on taming inflation, adequate allocation for education and health services for all, food security, building smart Bangladesh, graduation from LDC status, facilitation of business process, climate change, expansion of investment and industry by encouraging private enterprises.

"Special priority has been given to important issues like ensuring youth employment by promoting vocational education and protecting the population lacking social security," Ali said.

The finance minister has themed his budget speech as a "March towards smart Bangladesh following the path of sustainable development".

There have been enough allocations for the development of skilled human resources as "smart citizens will be instrumental to building a prosperous and smart Bangladesh by 2041", a goal set by Prime Minister Sheikh Hasina.

Importance of agriculture to continue

The government has earmarked Tk 27,214 cr for agriculture in the proposed national budget for FY 2024-25, up In the fiscal year 2023-24, the budget was Tk 25,118 in this sector.

Finance Minister AH Mahmood Ali said innovations and policy strategies supportive of agricultural production have played a vital role in bringing about an 'agricultural revolution'. Wide-ranging initiatives have been undertaken, including the development of improved and resilient crop varieties, innovative farming technologies, rapid dissemination of adapted varieties and technologies, supply of agricultural inputs such as fertilisers and seeds at fair prices, expansion of irrigated areas, adoption of improved agricultural practices, and mechanisation of agriculture.

In tackling food crises, efforts have been made to increase crop production, leading to diversification of crops, production of more nutritious crops, and reduction of dependency on imports. Steps have been taken to promote market expansion initiatives, which have helped tackle the food crises.

As a result, despite climate change and global crises, the trend of the growth of agricultural production remains uninterrupted, which has ensured food security in the country and strengthened the economy.

"We are providing subsidies to encourage agricultural production which will remain in place in the near future. In addition to providing subsidies for fertilisers, mechanisation is being promoted to increase agricultural production. From 2010 to 2023, about 1.33 lakh agricultural machineries of various types have been supplied. Additionally, under the development assistance, the process of supplying 51,300 agricultural machineries to haor and coastal areas is underway," he said.

From 2009 to 2023, approximately an amount of Tk. 1.29 lakh crore has been allocated as development assistance. Furthermore, since the FY 2009-10, the government has been implementing the 'Agricultural Loan for Marginalised Farmers' scheme through Bangladesh Bank to provide timely, collateral-free, low-interest agricultural loans to the disadvantaged farming community.

Production of crops including rice, maize, potatoes, vegetables and fruits is on the increase as a result of the agri-oriented policies of the government. In FY 2008-09, the total production of food grains was 328.96 lakh metric tons.

By FY2022-23, this increased by approximately 42 percent to 467.03 lakh metric tons. During this period, maize production rose by 780 percent, potato production by 98 percent, and vegetable production by 675 percent.

Besides, the government has formulated 'Integrated Action Plan for Agricultural Sector Development' under which various adversities tolerant including the salinity-tolerant rice are being cultivated.

Emphasis on education

Finance Minister AH Mahmood Ali on Thursday proposed an allocation of Tk 94,710 crore for the education sector in the national budget of Bangladesh for the fiscal year 2024-2025, up from Tk 88,163 crore in the current fiscal.

In the proposed budget, Tk 38,819 crore has been proposed against the Primary and Mass Education sector in the national budget for FY 2024-25 while it was Tk 34,722 crore in this sector for FY 2023-24.

Besides, Tk 44,108 crore has been proposed against the Secondary and Higher Education Sector, which was Tk 42,839 crore in FY 2023-24 and Tk 11,783 crore against Technical and Madrasa Education Division in FY2024-25, which was Tk. 10,602 crore in FY 2023-24.

While speaking at the budget session, the finance minister said "A child's knowledge base is formed at the primary level of education. Therefore, the impact of primary education on national development is significant and it is one of the main steps to ensure sustainable development."

In view of this, new activities will be taken up for the development of this sector besides speeding up the ongoing activities for the development of primary education, he added.

He said 2,38,579 teachers have been recruited from 2009 to 2023 and 26,366 new posts of assistant teachers have been created to ensure the quality of education and to increase the teacher-student ratio.

As a result, the number of teachers increased from 1 for every 52 students in 2006 to 1 for every 33 students in 2022.

"The government is undertaking various initiatives for the expansion of education, including the construction and development of educational institutions, financial assistance to students and teachers in the form of scholarships and stipends, and implementing various programs for the development of meritorious students. Supportive policies and a conducive environment are being created for the expansion of education," said the finance minister.

Besides, a project is underway to establish 2,607 classrooms with multimedia facilities, 200 language cum ICT labs, and 1,000 science labs, and to supply ICT equipment in 200 government colleges across the country, he said.

Two projects titled "Higher Education Acceleration and Transformation" and "Improving Computer Software in Tertiary Education" have been recently approved at a total cost of Tk. 5,236 crore 37 lakh for the development of higher education in the country, which will play a significant role in improving inclusive and equitable higher education.

Meanwhile, the role of technical and vocational education in creating extensive employment opportunities is undeniable. Enrolment in vocational education has significantly increased over the past few years thanks to the dedicated efforts of our government.

In each of the 100 upazilas, there is an ongoing program to establish a total of 100 technical schools and colleges, of which 91 newly constructed TTCs have started educational programs.

The establishment of 4 women's polytechnic institutes is underway in Sylhet, Barishal, Rangpur, and Mymensingh divisions. The setting up of 4 engineering colleges in Chattogram, Rajshahi, Khulna and Rangpur divisions is in progress. Moreover, acquisition of land is in progress for the establishment of technical schools and colleges in 329 upazilas.

Power cut

The government has decided to cut 15 percent of allocation for the Ministry of Power, Energy and Mineral Resources in the proposed budget. The allocation will be Tk 30,317 crore, which was Tk 34,819 crore last fiscal. Among the two divisions of the ministry, Power Division mainly faced the allocation cut by Tk 4,595 crore while the Energy and Mineral Resources Division got Tk 93 crore more than the previous budget allocation. Accordingly, the allocation for the Power Division is Tk 29,230 crore and for the energy division Tk 1,087 crore.

In the budget speech, Finance Minister Mahmood Ali said the power generation capacity was only 4,942 MW in 2009, which has now increased to 30,277 MW including the captive and renewable energy.

"Currently, 27 power plants with a capacity of 9,144 MW are under construction," he said. He also disclosed plans to increase the power transmission lines to 24,000 circuit kilometres by modernising the grid, from the existing 15,246 circuit-km.

The government also proposed a special allocation of Tk 100 crore to encourage the development and use of renewable energy. Besides, another Tk 100 crore was proposed to allocate against the blue economy research.

Other notable sectors

The government has decided to raise the allocation for the health sector by Tk 3,356 crore in the proposed budget of fiscal year 2024-25. The finance minister proposed an allocation of Tk 41,407 crore to maintain the progress of the health sector, health education and family welfare. In the last fiscal, the budget allocation for this sector was Tk 38,051 crore.

The allocation for the Defence Ministry in the proposed budget for 2024-25 has been increased by Tk 282 crore from the 2023-24 fiscal. Of the proposed amount, Tk 40,082 crore has been allocated for defence services, Tk 1886 crore for other services and Tk 46 crore has been allocated for the Armed Forces Division.

Meanwhile the communication sector, including roads, bridges, railways, sea routes, and airways, saw its allocation cut. The government has proposed an allocation of Tk 80,498 crore for the communication sector in the budget for FY-2024-25, Tk 4,693 crore less than the previous year.

Exemption for freelancers

In the proposed 2024-25 financial year budget, Finance Minister Abul Hasan Mahmood Ali proposed income tax exemption for freelancers.

"As a supporter of building Smart Bangladesh, I propose to exempt from tax the income arising from any of the following business activities of a resident individual or a non-resident Bangladeshi natural person, for three years, on the condition that all business activities of such a person are cashless," he said.

He also proposed the same facilities for the following types of work:

a) AI based solution development b) Blockchain based solution development c) Robotics process outsourcing d) Software as a service e) Cyber security service f) Digital data analytics and data science g) Mobile application development service h) Software development and customization i) Software test lab service j) Web listing, website development and service k) IT assistance and software maintenance service l) Geographic Information Service m) Digital animation development n) Digital graphics design o) Digital data entry and processing p) E-learning platform and e-publication q) Call centre service r) Document conversion, imaging and digital archiving.

The finance minister also mentioned that the amount of ICT goods or services exported in 2006 was $21 million, which increased to $1.9 billion. The number of IT freelancers, at the same time, increased from 200 to 6.8 lakh.

Additional reporting and graphics by UNB