Mr.
Speaker,
1.
I
seek your kind permission to place the budget for the Fiscal Year 2002-03 and
the supplementary budget for FY 2001-02 for the consideration of this august
House. As the Finance Minister of Bangladesh, I will have the honour of
presenting the national budget before Parliament for the eighth time, including
this one. While presenting the budget on behalf of the present government, I
recall with profound respect Shaheed President Ziaur Rahman, who proclaimed
independence of Bangladesh. He was the far-sighted proponent and the initiator
of pluralistic democratic process, prudent innovator of rural-based development
and champion of national unity. Under his dynamic leadership, imbued with
Bangladeshi nationalism, we, irrespective of caste, creed and religion
established a pluralistic democratic polity in Bangladesh. To turn Bangladesh
into a self-respecting nation, we initiated the process of politics of
production and started massive economic programme to build a nation free from
poverty and hunger.
Mr.
Speaker,
2.
As
the country was on the move towards economic emancipation and rapid prosperity
under the leadership of President Ziaur Rahman, he had to embrace martyrdom at
the hands of conspirators. Twenty one years ago this day, I presented the
national budget for FY 1981-82 before this august House on behalf of the BNP
Government. I recall with profound grief that President Ziaur Rahman, on the eve
of his departure for Chittagong at 8 o'clock in the morning on 29 May 1981, gave
me his last guidelines on budget and mentioned that on his return from
Chittagong he would again discuss it with me and finalise it. But unfortunately,
that opportunity never came. The conspirators thought that by killing him they
would be able to thwart the nation's march towards democracy and economic
emancipation. But their evil design did not succeed. At that critical juncture
of the nation, Begum Khaleda Zia, responding to the wishes of the people came
forward to fill the void created in the leadership of the country. She took the
helm of Bangladesh Nationalist Party and transformed it into an embodiment of
the expectations of the people of this country at large with her extra-ordinary
abilities, courageous leadership and relentless hard work spanning over a
decade. Her unflinching and firm leadership in the protracted movement against
the autocratic forces provided immense inspiration to the nation. In recognition
of her unwavering and uncompromising role in the struggle for the restoration of
democracy, the people of Bangladesh gave their mandate in 1991 to BNP to run the
country. Under her successful leadership we were able to achieve enviable
success in establishing multi-party democracy and good
governance.
3.
But
the conspirators once again resurfaced and engineered a state of extreme anarchy
and chaos in the country flouting in an unprecedented manner all democratic
norms and practices. The tolerance we demonstrated at that time for the sake of
continuity of democratic practice would be appropriately evaluated in history.
In recognition of our sincere commitment to the nation, the people voted us to
power with a resounding two-thirds majority and once again reposed their
confidence in the leadership of Begum Khaleda Zia. We are committed to
materialise the dream cherished by our great leader Shaheed President Ziaur
Rahman in the light of his ideals and vision.
Mr.
Speaker,
4.
While
presenting the budget proposals before the House, I would like to highlight the
domestic and international context against which this budget has been prepared.
This millennium dawned in the midst of destabilising cataclysmic events that
sent the entire world economy reeling. Having achieved high rates of growth for
consecutive seven years, the global economic recession deepened this year. The
world economic growth came down to 1.2 percent. Both developed and developing
world experienced this decline in economic growth. Compared to the previous
year, the world trade this year has experienced a negative growth of 1 percent.
The terrorist attack in the United States on 11 September 2001 further
intensified the economic crisis. The world economic recession put the entire
world into utter dismay. But there is an emerging optimism. According to experts
the overall world economic growth will rise to 3.6 percent and that of the
developing world to 5 percent during the next year.
5.
Bangladesh
had three governments during the current fiscal year. The four party alliance
swept into power on 10 October, 2001 having had two-thirds majority through a
free, fair and impartial election held on 1 October, 2001 under the caretaker
government. I convey my sincere thanks and deep gratitude to the people of
Bangladesh who provided this huge and unprecedented mandate to our Government.
The new government had to take over the responsibility to manage an already
fragile and unstable economy in a situation characterised by political
instability throughout the world, global economic recession and the resultant
negative impact on the economy. The Awami League Government immediately before
relinquishing power, formulated a budget, which was largely motivated by
political considerations and devoid of reality. Indifference to economic and
structural reforms, sluggishness in revenue collection, absence of transparency
and vision in fiscal policies, overambitious public spending, lack of economic
prudence and a tendency towards spending on unproductive sectors and projects
represent the weaknesses of the Awami League Government in macro- economic
management.
Mr.
Speaker,
6.
The
budget deficit of the Government including that of the state-owned sector
gradually widened due to macro-economic mismanagement over the past few years.
The outstanding domestic debt climbed to a level, about three-times higher in
2000-2001, amounting to Tk. 38 thousand crore from Tk. 14 thousand crore in
1995-96. The Awami League Government took recourse to Suppliers’ Credit with
high interest rate as an alternative to declining foreign aid flow. The
accumulated liability of this credit stood at US$ 50 crore as of June 2001. 21
percent of the Revenue Budget was spent on interest payment only. The loss
incurred by the state-owned enterprises during the rule of Awami League
Government doubled and stood at Tk. 2700 crore. This is how, through economic
mismanagement, the future liability of the nation was pushed up to an alarmingly
high level. The BNP government in 1996 before their exit, left an external
reserve to the tune of US$ 224 crore which was sufficient to meet the import
bills for about 4 months at that time. In comparison, when the present
Government came to power, the foreign exchange reserve of the country stood at a
paltry US$ 109 crore which was not sufficient to meet the import bills even for
one and a half month. This alarmingly low level of foreign exchange reserve
created grave uncertainty and a crisis in the external sector of the
economy.
Mr.
Speaker,
7.
I
consider it relevant to quote here a comment on the fragility of the economic
situation of the country made by the World Bank in a study captioned "Public
Expenditure Review" which was presented in the meeting of the Bangladesh
Development Forum held in March in Paris this year. The study
says,
"In
contrast with the modest increase in revenues, total budgetary expenditures,
which averaged 13.4 percent of the GDP over 1990-91 to 1997-98, rose to 15.1
percent of GDP in FY 01, as the 2001 election approached. Bangladesh would need
to reduce its fiscal deficit by at least 2 percentage points of GDP to avoid
prejudicing growth and financial stability. The current consolidated deficit of
the public sector (about 8 percent of GDP) is unsustainable and has already
impacted the balance of payments and external reserve position”.
The Asian Development Bank made similar remarks in their "Country Economic Review".
Mr.
Speaker,
8.
The
macro-economic and structural reforms initiated by the BNP government during the
first half of the 1990s were ignored and stalled during the rule of Awami League
Government, which resulted in macro-economic imbalances. On conclusion of
Article-IV discussion held recently between Bangladesh Government and the IMF,
the Board of Directors of IMF, expressing their concern about the Bangladesh
economy, commented that:
" ...
following a strong performance until mid-1990s, the Bangladesh economy has
become increasingly fragile as a result of expansionary fiscal and monetary
policies and a loss of momentum in structural reforms”.
The IMF Board also expressed their concern at the external balance of the economy and stated that, “Given the deterioration of the external balance the authorities now have limited room for manoeuvre in responding to external shocks”. The development partners and economic analysts expressed uniform opinion on the fragile state of the economy that the present government had to inherit at the time of assuming power. But it is an irony that the Finance Minister of the Awami League Government boastfully mentioned in his last budget speech for FY 2001-2002 that attaining stability in macro-economic management was one of their major achievements. As they could not leave any proof in support of this statement, no one has accepted their claim; rather this has been internationally recognised as their failure.
Mr.
Speaker,
9.
I
would like to remind this august House that during the rule of BNP in the first
half of the 1990s, in all my budget speeches the subjects I used to emphasise
were: sustainable growth with macro-economic stability, macro-economic and
structural reforms, poverty alleviation, human resource development, creation of
employment opportunities, economic liberalisation and attainment of
self-reliance. These policies in economic management are reflections of the
election manifesto of BNP and the cherished goals of the present government. We
believe that the ultimate goal of our economic policies and strategies is to
reduce poverty. Achievement of this goal requires sustainable economic growth.
It is not possible to attain sustainable economic growth without good
governance, economic and structural reforms, human resource development and
economic liberalisation.
Mr.
Speaker,
10.
I
would like to inform this august House that it is our cherished goal to attain
gradual self-reliance through mobilisation of investible resources for economic
growth. We are committed to extricate ourselves from the grip of external
dependence. We are pledge-bound to free ourselves and our posterity from the
slur of being one of the poorest countries in the world. The aid-flow from the
developed to the developing world is shrinking gradually. Aid flows to the
developing countries in the 1990s, shrunk by more than 10 percent as compared to
the 1980s.
11.
In
December 1999, the Board of Directors of the IMF and the World Bank jointly
adopted a new programme for development assistance aimed at reduction of poverty
in the developing countries. Under this new programme, the aid-seeking countries
at their own initiative, will prepare a Poverty Reduction Strategy Paper (PRSP)
formulated on a broad-based participatory approach, which will be home-grown and
owned by the Government. This would provide the basis for financial assistance
by the aid-giving countries. The main thrusts of this strategy paper are:
establishment of macro-economic stability by reducing budget deficit,
formulation of medium term fiscal framework for three years, undertaking
economic and structural reforms, establishing good governance in all spheres,
liberalisation of the economy and directing the overall process of development
towards poverty reduction.
12.
By
now, about 40 countries have formulated interim PRSP which opened up windows for
financial assistance at a much concessional rate from IMF, the World Bank and
other donor agencies. The countries that gave priority to the main goal of
poverty reduction through appropriate policies and reforms succeeded in
mobilising greater volume of external assistance. The development partners
emphasised the need for preparation of our own PRSP and referred to the inaction
of the Awami League Government during the Bangladesh Development Forum meeting
held in Paris in March this year. Development Partners were however encouraged
by the programme announced by the present Government in the light of BNP's
election manifesto for economic reform and poverty
reduction.
Mr.
Speaker,
13.
At
the dawn of this millennium, with the goal of world economic growth and poverty
reduction, efforts are underway in the international arena to innovate new
programmes. To this end, in the 55th session of the UN General Assembly held in
December 2000, the United Nations Millennium Declaration was adopted. The
development goals set forth in this declaration include: reduction of the number
of the world's poor by half by 2015, providing at least primary education to all
the children, reduction of maternal and child mortality by three-fourths and
two-thirds respectively. Besides, sustainable development and environment
protection have also been highlighted in this declaration. The declaration went
on to state that consolidation of democracy, establishing rule of law and human
rights, ensuring good governance in all spheres are indispensable to achieve
this goal.
14.
As
a follow-up to the UN declaration, in March this year, an International
Conference on Financing for Development was held at Monterry in Mexico where
"Monterry Consensus" was adopted. While expressing solidarity with the
Millennium Development Goals, the Monterry Consensus further emphasised the
following:
I.
to
achieve the Millennium Development Goals, foreign assistance has to be increased
substantially;
II.
the
procedures for channelling development assistance by donor agencies have to be made more flexible and should be
consistent. In this regard, the development needs and objectives of the developing countries have to be
considered and their ownership has to be ensured;
III.
the
poverty reduction programme adopted in the light of development framework formulated by recipient countries at
their own initiative should be the
basis for providing development assistance, and
IV.
foreign
assistance will be increased for targeted poverty reduction
projects.
Mr.
Speaker,
15.
Along
side the above policies and promises of the development partners, Monterry
Consensus made special mention of the need for good governance for sustainable
economic development of developing countries. Sustainable economic development,
poverty reduction and creation of employment opportunities require sound
economic policies and solid democratic institutions responsive to the needs of
the people. In addition, domestic stability, peace and security, respect to
human rights, rule of law and gender equality are also
needed.
Mr.
Speaker,
16.
It
is our conviction that a happy and prosperous Bangladesh, free from poverty and
exploitation, can be built through implementation of the BNP's election
manifesto. Our manifesto includes all the elements for poverty reduction and
economic growth as enunciated by the international community at the dawn of this
millennium. The Hon'ble Prime Minister Begum Khaleda Zia in a message sent to
the meeting of Bangladesh Development Forum held in Paris declared that "In line
with BNP election manifesto, we are committed to reform the economy". I would
like to say without any hesitation that we will have to build our own destiny.
We shall devise our own economic development programme keeping in view the
interest of our country and the people. Our own vision, our needs and realities
will be the basis of our future programme. In my speech at the Monterry
Conference last March, I pronounced this policy in unequivocal
terms.
Mr.
Speaker,
17.
Within
a few weeks after the assumption of power by the present Government, the Hon'ble
Prime Minister Begum Khaleda Zia adopted a unique programme for first 100 days.
A constructive and reform oriented Plan of Action was initiated through this
programme to revitalise the economy including establishing rule of law.
Consistent with the interest of the country, the Government has already adopted
a broad-based programme which include:
I.
Enactment
of Public Safety (Special Regulation) (Repeal) Act;
II.
Operationalising
Ombudsman Act., 1980 and appointment of Ombudsman is under
process;
III.
Formation
of a Human Rights Commission and an independent Anti-Corruption Commission is
under process;
IV.
Necessary
actions for decentralisation of administration and strengthening of local
Government are at final stage;
V.
Separation
of judiciary from the executive is progressing;
VI.
Several
recommendations of the Public Administration Reforms Commission for
administrative reforms have been implemented and a programme of action is being
devised for gradual implementation of the remaining
recommendations;
VII. Government
is committed to establish rule of law in all spheres and maintain law and order.
To this end, a law has been enacted for quick disposal of cases relating to
violation of law and order.
Mr.
Speaker,
18.
The
BNP Government in its previous term achieved extra-ordinary success in
macro-economic management and structural reforms which has been acclaimed
world-wide. We adopted an economic recovery programme on priority basis
immediately after assumption of office for invigorating the shattered economy
inherited by us. These largely helped in warding off a major crisis. We took
effective steps to infuse further momentum in mobilisation of our domestic
resources and reduce politically motivated and unproductive public spending that
impede the process of attaining the goals of economic growth and poverty
reduction. To bring about industrial development and to augment the growth of
export, we, along with the efforts of having fair access to the world market,
introduced a programme for reduction of interest rate on loans for export
oriented industrial units and to provide cash incentives for exports in special
cases. In a number of countries abroad, banks and exchange houses have also been
set up with a range of incentives to increase the volume of remittance by the
Bangladeshi expatriates. Besides these, we have introduced Money Laundering
Prevention Act. 2002, to curb illegal transactions of foreign exchange. It is
because of these immediate steps the budget deficit stayed within reasonable
limits and the external reserve gradually rose to a reasonably satisfactory
level. The foreign exchange reserve now stands at about US$ 140 crore after
regular payment of net import liabilities amounting to about US$ 65 crore to the
Asian Clearing Union and settling all other international liabilities which have
fallen due. In a nutshell, we have already succeeded in establishing stability
and a sense of direction towards economic recovery.
Mr.
Speaker,
19.
The
IMF Board of Directors in their meeting in May this year has commended the
success of the present Government in economic management achieved over a span of
eight months only. The Public Information Notice of the IMF states, “They
commended the Government’s efforts to address the immediate economic weaknesses,
specially the steps taken to tighten budgetary discipline, improve the finances
of state-owned enterprises and increase the effectiveness of monetary operations
and polices".
Mr.
Speaker,
20.
Based
on the experience I gathered in economic management over the years, I firmly
believe that having averted the crisis we are now moving towards an economic
recovery which would be sustainable and stable. But this would require
appropriate medium term plan. Our Revenue/GDP ratio is around 9.8 percent and
Expenditure/GDP ratio is approximately 15 percent. Compared with other
countries, these ratios are very low. It would be difficult to achieve our
cherished goal of poverty reduction and growth unless these ratios are
substantially improved. In the next three years, if we could substantially raise
our Revenue/GDP ratio as well as the Expenditure/GDP ratio with priority for
productive development expenditure, we will be able to achieve a growth rate of
above 6 percent of GDP annually containing our budget deficit within reasonable
limit. If foreign assistance within the framework of interim PRSP is augmented
for achieving the Millennium Development Goals, it would be possible to raise
the Expenditure/GDP ratio further for accelerating the rate of
growth.
21.
The
international organisations such as the World Bank, IMF, ADB and relevant UN
agencies and our friendly countries have been playing significant role in the
economic development and poverty reduction efforts of Bangladesh. Their
contribution, particularly in the areas of technology transfer and human
resource development are indeed commendable. I firmly believe their valuable
support and cooperation will continue in the future in the implementation of our
growth and poverty reduction strategies being formulated on our own initiative
and in the interest of the country.
Mr.
Speaker,
22.
Now
I would like to dwell upon the recent trends of certain fundamental indicators
of the economy for FY 2001-02. It is observed from the estimation of GDP, that
substantial growth is evident in all sectors of the economy. As a result, the
real growth of overall GDP is likely to be about 4.8 percent. In the present
context, this rate of economic growth is indeed commendable compared to other
countries. It is hoped that this growth will be hovering around 6 percent in
2002-03 as a result of the reform programme being implemented by the present
government.
Mr.
Speaker,
23.
Expansionary
monetary and fiscal policies have been pursued over the past few years resulting
in the growth of broad money supply to the extent of 14 percent on an average.
To restore stability in the economy, the present Government is following a
rational monetary policy consistent with the needs of the time. As a result,
during the first nine months of the current fiscal, broad money supply increased
by only 7.1 percent. During the corresponding period of the previous fiscal year
such increase stood at 10.3 percent. Private sector credit continued to grow
even though the government did not pursue expansionary monetary policy.
Inflation remained under control as a result of prudent monetary and fiscal
policies. Calculated on the basis of the consumer price index available up to
February of the current fiscal year, the rate of inflation this year will stay
within the limit of 2.8 percent. Judged by any standards, this rate of inflation
is reasonable.
24.
The
present government after assumption of office last October, took a range of
pragmatic steps to contain the negative external impact and to infuse momentum
in the economy. Bank rate was reduced from 7 percent to 6 percent and interest
rate on export credit was reduced to 7 percent from 8-10 percent. The benefits
of these steps are becoming evident. The downward trend of export growth has
been arrested and it is now showing signs of improvement. This success is
attributable to the various steps taken by the Government to augment export
credit facilities and efforts to create new markets for
exports.
Mr.
Speaker,
25.
There
are signs of improvement in the Current Account balance, disproving all
apprehensions, as a result of appropriate measures undertaken by the Government.
In April 2002, overseas remittance from expatriate Bangladeshis stood at US$ 204
crore, 36 percent higher than that of the corresponding period of the previous
year. It is expected that by end June the volume of remittance will go up to
around US$ 240 crore. During the period from July 2001 to February 2002, net
increase in current transfers and service sector as well as reduction in the
deficit in the balance of trade has contributed to a surplus of US$ 21 crore in
the Current Account compared to a deficit of around US$ 60 crore during the
corresponding period of the previous fiscal year. During this period overall
Balance of Payments also shows positive signs.
Mr.
Speaker,
26.
Since
last October, we started work with new initiative to formulate a 3 year National
Strategy for Economic Growth and Poverty Reduction. The first draft of the
strategy paper has been prepared based on wider consultation involving a range
of organisations/groups irrespective of political affiliation right from
Upazilla to the national level. In the light of this strategy we will formulate
our Three-Year Rolling Investment Programme which would form the basis of our
future development planning. This document will be finalised involving people at
all levels, so that all can claim ownership of the strategy. This strategy will
be formulated to serve our own purpose, to achieve economic progress as
visualised by us and to emancipate the country from the clutches of poverty.
This strategy will be subsequently converted to PRSP, which will provide the
basis for holding dialogues with the development partners. Our strategy will
have four major action-paths. Firstly, policies will be adopted for pro-poor
economic growth that would augment the income of the poor and generate
employment opportunities. Secondly, human development of the poor will be given
priority which would mean extending adequate facilities for their health,
education and nutrition. Thirdly, a broad-based social safety net programme for
the poor will be implemented which will allow them to successfully face any
unanticipated income or consumption shocks. Fourthly, participatory governance
and empowerment of women will be promoted and appropriate institutions will be
developed to enhance the voice of the poor.
27.
Necessary
administrative and economic reforms will be implemented in phases to implement
this strategy. A three-year macro-economic framework will be developed for
achieving the purpose of this strategy. The budget deficit will be contained
within sustainable limit, domestic resource mobilisation will be augmented to
gradually achieve self-reliance and domestic borrowing by the Government will be
scaled down. Besides, wastage and misuse of resources will be curbed in all
spheres of the economy. Private sector will be promoted and made more robust.
Additionally, sectors supportive of poverty reduction and growth and sectors
relating to human resource development would receive increasing budgetary
allocation.
Mr.
Speaker,
28.
I
will now discuss the revised budget for FY 2001-02 and proposed budget for FY
2002-03. At the outset, I would like to mention that in order to make the budget
presentation appropriate and transparent, the receipts and expenditure of the
Railways, the Postal Department and the T&T Board have been shown in all the
budget documents on a gross basis. Previously net surplus or deficit as the case
might be, of these three organizations used to be projected after adjusting
total expenditure with total receipts. As a result, projection of receipt and
expenditure was not sufficiently transparent in spite of the fact that receipt
and expenditure of these organizations form part of the Consolidated Fund as
envisaged in the Constitution.
29.
In
the budget for FY 2001-02, prepared by the Awami League Government, total
revenue receipt was estimated at Tk. 28,456 crore. In the revised budget, the
estimate has been reduced to Tk. 27,670 crore. In the original budget of the
current fiscal revenue expenditure was estimated at Tk. 23,107. In the revised
budget this has been scaled down to Tk. 22,692 crore. It may be recalled that
over the past few years revised Revenue Budget estimate substantially exceeded
the original estimate and in the last fiscal year this increase was 5 percent
over the original. Considering the need to reduce the excessive fiscal deficit
estimated in the original budget prepared by the Awami League Government,
revenue expenditure has been cut by Tk. 415 crore in the revised
budget.
30.
A
highly ambitious and politically motivated annual development programme was
adopted by the previous Government without undertaking appropriate measures for
domestic resource mobilisation and taking recourse to heavy bank borrowing. Soon
after the assumption of power, the present Government prepared a realistic ADP
by pruning unnecessary, unproductive and politically-motivated projects. As a
result, the size of the revised ADP has been scaled down to Tk. 16,000 crore
axing Tk. 3,000 crore from the original ADP. Rationalisation of revenue and
development expenditures will enable us to reduce fiscal deficit from 5.5
percent as envisaged in the original budget to 4.4 percent of GDP in the revised
budget.
Mr.
Speaker,
31.
The
revenue receipt for the fiscal year 2002-03 has been estimated at Tk. 33,084
crore, which is 20 percent higher than the receipt estimated in the current
year's revised budget. As I have already mentioned, our Revenue/GDP ratio is
very low compared to other regional countries like Sri Lanka, India, Pakistan
and even Nepal. Gradually we have to augment mobilisation of our own resources
and to raise the Revenue/GDP ratio to the level of countries similar to us. We
all believe that there is enough potential and scope to increase our own
resources. It is possible to substantially increase our revenue by expanding the
tax-base without raising the tax rates by adoption and implementation of
appropriate fiscal policy consistent with the needs of the time and by
strengthening and infusing more dynamism in tax administration. I will propose
in the second part of my speech such a taxation policy. Measures will be taken
to achieve targets of non-tax revenue by rationalizing the existing rates. As a
percentage of GDP, our non-tax revenue is also extremely low. Hopefully, we will
succeed in mobilising the estimated tax and non-tax
revenue.
Mr.
Speaker,
32.
Revenue
expenditure for fiscal 2002-03 has been estimated at Tk. 23,972 crore, which is
5.6 percent higher than revised estimates of current fiscal year. It may be
recalled that during the last five fiscal years, revenue expenditure, on an
average, registered 8 percent annual growth. Given the potential of achieving higher
revenue targets in the next fiscal year and in the context of initiatives to
contain the recurrent expenditure, I propose an ADP of Tk. 19,200 crore for the
next fiscal year. This is 20 percent higher than the revised ADP for FY 2001-02.
In the proposed ADP, priority has been given to projects aimed at achieving
faster economic growth and poverty alleviation. In these priority sectors,
quality projects with focus on value for money have been undertaken with
enhanced allocations. About 55 percent of the Development Budget will be
financed from domestic resources and remaining 45 percent will be in the form of
external assistance. Total outlay of the budget for the next fiscal year is
estimated at Tk 44,854 crore which includes revenue expenditure, ADP, non-ADP
development expenditures, net capital outlay and net outlay on food account.
This is 13.6 percent higher than that of the revised estimates of the current
year. Despite higher allocation for ADP, next year's fiscal deficit as a
percentage of GDP will remain limited to 4 percent. Of this 4 percentage points,
share of external financing constitutes 2.1 percent and the rest 1.9 percent
will be financed from domestic borrowing. It may be recalled that over the past
few years, fiscal deficit had been about 6 percent of GDP; 3 percent of which
was met by domestic borrowing. Judged by any standard, the proposed fiscal
deficit, I believe, is sustainable.
Mr.
Speaker,
33.
Consistent
with the election pledge of BNP, top most priority has been given to education
sector in the budget for the next fiscal year. In the very first budget of the
present government, consisting of both revenue and development budgets, an
allocation of Tk. 6,710 crore has been proposed for this sector. In the revised
budget of this year, this allocation stands at Tk. 5,876 crore. The increase in
allocation for 2002-03, therefore, amounts to Tk. 834 crore which is 14.2
percent higher than the allocation in the revised budget for 2001-02. The
highest allocation of Tk. 1,898 crore from domestic resource has been given to
programmes supportive of poverty reduction in the education sector. This is 16
percent of the total domestic resources provided for in the ADP for 2002-03.
This Government attaches special importance to female education to bring about
gender equality. To enhance female education for empowerment of women and their
increasing participation in the development activities, we have introduced
female students’ stipend programme. At present about 45 lac girls in 465
upazillas at secondary level are receiving this stipend. This programme has
helped in reducing dropouts from schools and contributed significantly towards
increasing enrollment of female students. It has also helped in reducing child
marriage. In fulfillment of the election pledge, the present Government has
decided to extend the female students' stipend programme from class X to class
XII and to waive their tuition fees.
Mr.
Speaker,
34.
Since
July, 1993 a programme on Food for Education, financed by our own resources, was
introduced in 1255 unions which were poor, backward and lagging behind in child
education. The objectives of the programme were: to enhance the admission rate
of the school-going children in primary schools, to improve their regular
attendance, to retain the admitted students in schools and to prevent child
labour. It was an epoch making step of the then BNP Government which was
internationally acclaimed. Out of total allocation in ADP for 2002-03 in
Education sector, 58 percent has been earmarked for primary and mass education,
which is fundamental to poverty reduction and human resource development. We
have decided to introduce a new and extended programme from the next financial
year as allegations have been raised against misuse of the Food for Education
Programme. Under this programme, a poor family having one school-going child
will get Tk. 100 per month and a family having more than one school-going
children will get Tk. 125. To this end, the Government has taken up a massive
project captioned ''Stipend for Primary Education'' with its own resources. This
will be the largest single project of this kind in the history of Bangladesh. I
propose an allocation of Tk. 650 crore for this project. This would create scope
for all the poor children to go to school and will prevent drop-out also. To
meet the shortage of teachers in primary schools, I propose an allocation of Tk.
24 crore for next financial year to recruit 8,000 new primary school teachers.
In the International Children's Conference held in May this year during the 27th
special session of UN General Assembly, the Hon'ble Prime Minister Begum Khaleda
Zia announced, "You will find Bangladesh in the forefront of efforts to give our
children the best possible first start in life." The budget provision for
primary education reflects this commitment.
35.
The
new Government, immediately after assumption of office has given due importance
to technical and vocational education. Besides, the government has taken a
number of positive initiatives to improve the standard and quality of education.
A national expert committee has been constituted to identify possible areas of
reforms in education sector. A programme has been initiated to set up 6 language
centres at divisional head quarters for training in communicative English and
other languages like Arabic, French, Japanese, Chinese and German. Steps have
also been taken to popularise computer education at all levels. Pursuant to this
policy, 10,000 computers will be distributed amongst secondary schools. We have
attached increasing importance to improving quality of education along with
enhanced allocation for the education sector.
Mr.
Speaker,
36.
Pursuant
to the fundamental principles laid down in our constitution, we are committed to
ensure basic health services particularly for the poor and the distressed. This
sector will continue to remain a priority sector of the Government. In the
revised budget for 2001-02, total allocation for this sector amounts to Tk.
2,649 crore. For fiscal year 2002-03, I am proposing an allocation of Tk. 3,027
crore out of which Tk. 1,325 crore will form part of the Revenue Budget and the
remaining 1,702 crore will come from the development budget. The increase in
allocation in 2002-03 will be Tk. 378 crore, i.e. 14.26 percent higher than the
allocation in the revised budget. We have taken action for creation of 2000
posts of doctors and nurses to improve delivery of health
services.
37.
The
Awami League government adopted an integrated Health and Population Sector
Programme for health and family welfare sector under a programme approach. The Government of
Bangladesh and several donor agencies are funding this programme. Due to
inexperience and lack of far-sightedness of the previous Government about
certain important issues, this programme is now facing a number of obstacles in
its implementation. As a result, it could not deliver desired outputs. We have
initiated action for restructuring this programme in consultation with the
donors keeping in view the realities and needs of this
sector.
Mr.
Speaker,
38.
Economic
progress of any country is largely dependent on development of communication
system. We were successful in our efforts to mobilise external assistance for
construction of the Jamuna Bridge and the Hon'ble Prime Minister laid the
foundation of this bridge on 10 April, 1994. The construction of this bridge
brought about tremendous improvement in road communication. It has also opened
up avenues for economic development as the bridge provides for facilities for
railway communication, supply of gas and electricity as well as telephone links
through fibre optics connections between the eastern and north-western part of
the country. As a result, scope has been created for development of new
industries and factories in the resourceful north-western region of the country.
Government has already taken necessary steps for developing direct communication
network linking the capital city Dhaka with southern part of the country by
constructing a bridge over the river Padma. It is expected that the physical
construction of this bridge would start within next two years. On 22 December
2001 Hon'ble Prime Minister has inaugurated 918 metre long 5th China-Bangladesh
Friendship Bridge (Gabkhan Bridge) linking Barisal-Pirojpur highway. The
construction work of Bhairab Bridge over the river Meghna at Bhairab Bazaar
would be completed by September this year.
39.
I
propose an allocation of Tk 3,421 crore for the communication sector in
Development Budget for 2002-03. This represents about 18 percent of total
allocation for ADP. In addition, I propose to allocate Tk. 317 crore under
Revenue Budget for repair and maintenance. Infra-structural development
programme is capital-intensive in nature. For example, construction of one
kilometre of national and regional highway costs about Tk. 5 crore and 2.5 crore
respectively. Rapid development and maintenance of physical infrastructure is
not possible with the limited resources of the Government alone. The development
of infrastructure and its maintenance will gain momentum if the private sector
works in tandem with the Government. For this purpose, every year a number of
physical infrastructure projects would be listed in the ADP for implementation
under local and foreign private sector initiative. We would welcome private
entrepreneurs to come forward and invest in these earmarked projects. Steps will
be taken so that the private sector entrepreneurs can operate infrastructure
developed by them on commercial basis by charging the users of those facilities.
The private sector involvement in this sector will enable the government to
divert more resources to poverty reduction and social
sector.
Mr.
Speaker,
40.
We
recognize the valuable contribution made by our farmers and the agricultural
sector. Shaheed President Ziaur Rahman acknowledged the significant role of our
peasant community by adopting sheaf of
paddy as the election symbol of BNP since its inception. Sustainable
development of the rural economy, particularly improving the quality of life of
the rural poor, ensuring their food security and poverty reduction largely
depends on development of agricultural sector. We shall take appropriate
measures for raising productivity in the agricultural sector by providing
increased agricultural credit and appropriate inputs and simultaneously
introducing modern technology. Effective steps will be taken for increasing the
production of oil seeds, pulses, maize, vegetables and fruits through
diversification of agricultural production along with cultivation of more high
yielding variety of rice and wheat.
41.
Measures
will have to be taken for increasing the production of fish, meat, milk, eggs,
etc. along with the increase of crop production to meet the nutrition needs of
an ever-increasing population. The silent revolution that was initiated during
the previous BNP tenure in 1991-96, in the production of fish, poultry and dairy
products could not be sustained by its successor, the Awami League
government. As in the past, this
time also, we have taken special initiatives to strengthen the livestock
development programme to increase the income of the rural poor. This programme
will increase the production of milk and meat, contribute to export of hides and
skins thus increasing the income of the farmers and at the same time contribute
to increase in the national income.
Mr.
Speaker,
42.
We
are committed to do everything possible for the development of agriculture
sector despite our resource constraints. We have taken initiative to provide
soft term credit facilities at low interest to the entrepreneurs of agro-based
industries including fisheries and dairy. In the current fiscal year Tk. 100
crore was allocated for subsidy in agriculture in the Revenue Budget. We have
raised this allocation to Tk. 200 crore in the revised budget. Next year this
support would continue. I further propose to establish an ''Equity and
Entrepreneurship Development Fund'' with Tk. 300 crore to encourage setting up
of agro-based and computer software industries. In the current year’s budget
although a sum of Tk. 50 crore was
allocated for this purpose, it could not be utilised in the absence of
appropriate guidelines. In order to make effective use of this fund, appropriate
guidelines will be formulated. Although cash incentives were offered in the past
for export of many products, agricultural products were left out of the
incentive package. We have already decided to provide cash incentives for the
export of agricultural products also.
Mr.
Speaker,
43.
The
Awami League government carried out widespread propaganda that the country had
attained food autarky. Some relevant statistics however indicate exaggerations
in this claim. During Ershad's 9-year rule average annual import of food grains
was about 2 million tons. During 1991-96 BNP rule, import of food grain
decreased and annual average import amounted to slightly above 1.7 million tons.
During Awami League Government import of food grains again increased and average
annual import stood at 2.4 million tons. Had the country really achieved
self-sufficiency in food grains why did the volume of food grain import
increase?
Mr.
Speaker,
44.
In
the budget for fiscal year 2002-03 special priority has been given to sectors
and sub-sectors directly linked to poverty reduction. About 43 percent of ADP
allocations have been earmarked for poverty reduction generally in the budget
for 2002-03. Apart from this, an amout of Tk. 394 crore has been allocated for
Food for Works programme included in the ADP. For the first time a block
allocation of Tk. 150 crore has been kept in the ADP for 2002-03 for targeted
poverty reduction projects. Allocations have been substantially increased in the
Revenue Budget for programmes directly related to poverty reduction, such as,
TR, GR, VGF, VGD, Old Age Pension, allocation for Freedom Fighters and
distressed women as well as in projects relating to Food for Works and education
and health in the rural areas. Allocation in the Revenue Budget for 2002-03 has
been increased to Tk. 4,218 crore, which is 11 percent higher than that of the
current year.
Mr.
Speaker,
45.
A
National Water Resources Management Programme has been developed to make the
best and rational use of our water resources. 103 on-going projects are being
implemented in the country at a cost of Tk. 784 crore in FY 2001-2002 for flood
control, protection from river erosion, development of irrigation, protection of
arable land from salinity and land reclamation. I propose to allocate Tk. 1,054
crore in the Development and Revenue Budget of the Ministry of Water Resources
for FY 2002-03 to strengthen these programmes.
46.
The
construction of a number of power generation plants in the public sector with a
capacity of 1,229 MW power generation is under process. To meet the increasing
demand of power, another programme is underway to build 2,238 MW of electricity
in the private sector on Build-Own-Operate basis under the Private Power
Generation Policy. According to the projection of the Power System Master Plan,
a maximum of 6,071 MW electricity would be required in the year 2007.
Accordingly, the government is planning to build 18 power stations in phases. To
ensure power supply in the remote areas of the country outside the National
Power Grid, steps have been taken to build small-scale power generation plants.
Power Reforms Act is at the final stage of approval. Within the framework of
this Act, an Energy Regulatory Commission will be formed. The Commission will
have the responsibility to regulate gas and power generation and distribution
including granting licenses, tariff fixation, protection of interest of
consumers, etc. I propose to allocate Tk. 2,275 crore in the Development Budget
for fiscal year 2002-03 for speedy improvement of overall power situation in the
country.
Mr.
Speaker,
47.
Natural
Gas is one of the most important resources of our country. The Cabinet has
already approved the draft bill of the "Bangladesh Gas Act" for long term
development of the gas sector in a competitive environment, to encourage private
sector investment, to protect consumer's interest, to abolish monopoly and to
protect the environment. An expert evaluation is in progress to resolve the
controversies on our gas reserve and the appropriate economic use of gas.
Appropriate decision will be taken on the economic use of gas keeping in view
the interest of the country on the basis of findings of this expert evaluation.
A decision has been taken to spin-off Titas Gas Transmission and Distribution
Company into 3 separate companies to improve service delivery to consumers and
to prevent distribution loss. We have decided to rationalise in phases the price
of gas and petroleum products consistent with the international price. In the oil, gas and natural resources
sector, there was an allocation of Tk. 458 crore in the revised budget for FY
2001-02. I propose to raise this allocation to Tk. 580 crore in FY
2002-03.
Mr.
Speaker,
48.
The
present government has established the Ministry of Expatriate Welfare and
Foreign Employment soon after assuming power, attaching importance to the role
of expatriates in the economic development of the country. Incentives like
awarding of CIP (Commercially Important Person) status and Remitter Cards will
be given to the Bangladeshi expatriates who will make substantial contribution
to the foreign exchange earnings for the country. The present government
according to its election manifesto, has established a Ministry of Freedom
Fighters' Affairs soon after assuming power, in recognition of the role of the
freedom fighters in the great war of liberation. Several welfare activities have
been initiated by this ministry including preparation of correct list of freedom
fighters, enhancement of the allowances for insolvent freedom fighters,
increasing medical facilities etc.
Mr.
Speaker,
49.
Expansion
of forestry is imperative for ensuring ecological balance. While inaugurating
the tree plantation programme in July 1991, after assuming power the Hon’ble
Prime Minister urged the countrymen to plant a tree a person and to nurse the planted
tree. People responded to her call spontaneously and an unprecedented interest
was generated for plantation of trees throughout the country. Unfortunately,
this enthusiasm largely evaporated over the past five years. But the present
Government of four party alliance is determined to revamp this plantation
programme to a plantation movement to protect the balance of environment.
Besides, the government has enacted the Environment Protection (Amendment) Act.
2002, to prevent environmental disaster created as a consequence of widespread
use of poly-bags through banning of their production, marketing and use. I
propose to allocate Tk. 238 crore in the Development and Revenue Budget of FY
2002-03 to maintain ecological balance and successful implementation of
afforestation programme.
Mr.
Speaker,
50.
The
role and importance of the defence forces to protect the independence,
sovereignty and security of the country as well as for maintenance of law and
order cannot be over-emphasised. Not only in the defence of the country, the
members of the defence forces always stood by the people and provided their
services in times of natural calamities. Our defence forces have earned
considerable reputation by way of playing commendable role in the maintenance of
international peace and security, and at the same time by contributing foreign
exchange to the national exchequer for economic development. The present
government is committed to modernise and improve the efficiency of our defence
forces. I propose to allocate Tk. 3,938 crore for defence services for FY
2002-03. The net defence expenditure will be Tk. 3337 crore after adjusting Tk.
601 crore charged as pay and allowances and rent for transport and equipment of
the members working for the United Nations peace keeping
forces.
Mr.
Speaker,
51.
People
have voted us to power to live in peace in a society free from violence.
Pursuant to our election pledge, we have taken appropriate steps to modernise
police forces and infuse dynamism in them, despite our resource constraints. The
allocation for procurement of arms and ammunitions and vehicles for the police
forces has been raised in the budget for next year. The government has decided
to recruit about 6000 police personnel in 2002-03 to meet the need of increasing
population. Alongside the police forces, Ansar and VDP are also contributing
significantly in maintaining law and order and social development. A programme
is in place to provide training on basic discipline to 3 lac Ansars and training
on different trades to 1 lac Ansars in 2002-03. Bangladesh Rifle is making
significant contributions to curb smuggling, maintaining law and order and
preventing child and women trafficking. The number of battalions of Bangladesh
rifles will be increased in FY 2002-03.
Mr.
Speaker,
52.
The
present government has undertaken a number of initiatives for the welfare of the
backward and disadvantaged segment of the society. It is the responsibility of
the Government to create opportunities for the distressed, the disadvantaged,
the orphans, the retarded, the very-old, the widows, the deserted women and
other backward section of the people and ameliorate their condition so that they
are transformed into a productive workforce and integrated with the mainstream
of the society. The previous Awami League government undertook several
programmes to this end but the allocations to finance this programme were
inadequate. Currently about 4 lac 20 thousand beneficiaries covered under
old-age allowance programme are receiving allowance at the rate of Tk. 100 per
month. From July 2002 onwards, this allowance will be increased to Tk. 125 and
the number of beneficiaries will be raised to 6 lac. The number of widowed and
deserted women, receiving Tk. 100 per month per person is now 2 lac 10 thousand.
In FY 2002-03, the rate of allowance will be enhanced from Tk. 100 to Tk. 125
and the number of beneficiaries will be raised to 3 lac. Necessary provision has
been made for this purpose in the budget for the next
year.
53.
I
propose to introduce two new programmes namely Rehabilitation of Acid Burnt
Women and the Physically Retarded and Mitigating Risk from Natural Disasters. No
government in the past undertook such programmes. Necessary provision has been
made for these programmes in the budget for 2002-03.
Mr.
Speaker,
54.
The
government has taken a range of initiatives to involve the youth in the process
of national development and transform them into an efficient work force through
organised, disciplined and appropriate guidance. The Youth Development
Directorate under the Ministry of Youth and Sports is implementing a number of
programmes aimed at encouraging the youth in self-employment, by providing them
with soft-term loans and training in various trades. The Government is also
providing continued support for development of sports in order to create
interest and enthusiasm in the arena of sports.
Mr.
Speaker,
55.
Present
government gives priority to the development of information technology and the
telecommunication sector. The government has taken various steps to modernise
and develop this sector. A new law entitled Bangladesh Telecommunications Act,
2001 has been enacted to encourage domestic and foreign investment in this
sector. Under this law, Bangladesh Telecommunication Regulatory Commission (TRC)
has been set up. This Commission has been entrusted with the responsibilities to
regulate, coordinate and monitor the activities of the telecommunication
operators, protect the interests of the users and ensure fast expansion of
telecommunications services commensurate with the expectations of the
clientele.
56.
The
number of telephones provided by T&T Board is now 7 lac. A programme has
been finalised to provide 1.75 lac new connections in the year 2002-03. Besides,
64,800 analogue telephones will be digitalised. As a result, there will be no
analogue telephones in the district headquarters in the country. 59 upazilla
analogue exchanges have already been converted to digital exchange. Digital
exchange will start operating in additional 142 upazillas by June, 2003. After
assumption of power by the present government, NWD and ISD call charges have
been slashed by 40 percent just to make telephone service more affordable.
Moreover, the internet charge has been reduced by 50 percent. Action is being
taken to drastically reduce the charge for telephone connection. Allocation for
telecommunication sub-sector in the budget for 2001-02 was about Tk. 1,260
crore. I propose to increase the allocation to Tk. 1443 crore in FY
2002-03.
Mr.
Speaker,
57.
State-owned
enterprises are incurring colossal losses. The mismanagement in this sector
during the past regime reached an alarming level. The dismal state of this
sector is a matter of concern. One of the major causes of this miserable
condition is slow pace of privatisation. After assumption of power, the present
Government has formulated a suitable privatisation policy package to speed up
the process of privatisation. Government is sincere about the need to protect
the legitimate interest of officers, employees and the labourers while
implementing the privatisation programme. To this end, I propose an allocation
of Tk. 400 crore to ensure disbursement of severance benefits payable to the
concerned labourers, employees and officers. If necessary the allocation will be
further enhanced.
Mr.
Speaker,
58.
During
the past Awami League regime, the financial sector was in chaos. Inept handling
and indifference to continue financial sector reforms initiated earlier was
evident. In 1995, the amount of classified loans of the nationalized commercial
banks stood at Tk. 5,953 crore which soared to Tk. 12,227 crore in 2001.
Furthermore, about 27 percent of loans and advances disbursed by NCBs in 1997
has already become 'classified'. The present Government, in the meantime, put in
place several reform measures to restore discipline in the financial sector. A
high-powered committee will be formed to review the problems of classified loans
of NCBs and to find out solutions to this problem. The remit of the supervisory
authority of Bangladesh Bank over nationalised commercial banks will be
strengthened. To this end, necessary amendments in Bangladesh Bank Order,
Banking Company Act. and Bangladesh Banks’ (Nationalisation) Order will be made.
During the Awami League regime in 1996, the infamous securities scam took place
in the stock market. This resulted in a huge capital flight out of the country
and investors lost their confidence in the Stock Market. To revamp the Stock
Market, the Government has taken necessary initiatives to bring about
institutional reforms along with establishing transparency in stock trading so
that confidence of domestic and international investors in the Stock Market is
restored. Besides, shares of oil marketing companies including Padma Oil Company
as well as government shares in multinational companies will be off-loaded in
the Stock Market.
59.
An
important aspect of our foreign exchange policy is to pursue a realistic and
flexible exchange rate regime. In this area, further reforms, as deemed
appropriate, will be made in future. As a member of WTO, we believe in liberal
trade policy. To this end, extensive reforms have been made in import tariff
structure. Import policy has been made more open and liberal. As a result, the
economy will be more competitive and interest of the consumers will be
protected. The process of trade liberalisation will
continue.
Mr.
Speaker,
60.
In
the next fiscal year, budget monitoring and implementation process will be
strengthened. To achieve this, effective internal control mechanism would be
established at appropriate levels of the government. In implementing the
programmes announced in the budget, top most priority will be given on propriety
and quality of expenditures at all levels to ensure effective and best use of
scarce resources.
Mr.
Speaker,
61.
I
am extremely grateful to the Hon'ble Prime Minister Begum Khaleda Zia for the
valuable guidance she kindly extended to me in formulation of this budget. While
preparing the budget I met and exchanged views with my cabinet colleagues,
members of the Parliament, politicians, journalists, economists, representatives
of different institutions/ organisations/NGOs and professionals. I received
valuable opinion and recommendations from them and tried to accommodate their
views as much as possible in the budget. I thank all of them for their valuable
contribution in the preparation of this budget. I look forward to meeting them
again during the course of the next financial year to review the progress of
implementation of the budget.
Mr.
Speaker,
62.
Our
politics is for the people. We tried our best to reflect their hopes and
aspirations in this budget. In a country where about half of the population is
still below the poverty line, the struggle should be to wipe out poverty, to
make the poor smile and to achieve economic emancipation. To carry through this
struggle is not the responsibility of the party in power alone, it is the
responsibility of all irrespective of political affiliations. With your kind
permission, Mr. Speaker, I conclude the first part of my budget speech with a
fervent appeal to all to declare solidarity with us in this struggle and to take
active part in our march together to our desired
goal.