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In the name of
Allah. The Beneficent and Merciful
Mr. Speaker,
I seek your leave in accordance with
rule III 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 for the 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 I 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
sign of relief as the Parliament took this bold decision.
Bangladesh, illuminated 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 Vanished 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.
Mr. Speaker,
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.
Infact tills 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 pride 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.
Mr. Speaker,
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 ODP
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;
commercial 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. I 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 especially 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 Prime
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
econoimc development.
Mr. Speaker,
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. I 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
trough the process of reforms. Those who-lack this
flexibility or those who pretend to know everything like
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 man 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
excludilg 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 privatisation 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
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 out:
"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.
Mr. Speaker,
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 hyper-inflation 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 year. 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, 1991 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 uptoTaka 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
private 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 defaulters. First, Loan Court Act of 1991
has been suitably amended so that the same court can
enforce its decree. Secondly, Bankruptcy Act, 1997 has
been promulgated. This law is expected to facilitate
recovery 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 sector. These recommendations
are being examined and will be implemented shortly. A
commercial banking sector reform project 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 reorganising 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 Government 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 rumours, 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 with the assistance of Asian Development Bank.
15. Despite fluctuations in the share
market, small investors are showing keen interest in new
issues. The demand for initial offer far exceeds 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 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 measure 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 cft of natural gas will be supplied
on production-sharing basis. These two complies will
invest more than Tk. 1100 crore. The supply disruptions
from Bakhrabad and Feni 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
Haripur and one 100 MW power plant at Baghabari. Three
barge-mounted power plants of 100 MW each in the private
sector will be constructed at Khulna, Haripur 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
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 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 minimum 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 to 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 investments. 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 Gazipur 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 classrooms. 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 Tk. 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.
Mr. Speaker,
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
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 this 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, I propose to undertake on 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, asset less and old people who
are incapable of manual work-consulate the hardcore of the
ultra-poor. Especially 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. I would like to reiterate that
the Prime Minister Sheikh Hasina highest priority to
poverty alleviation and social justice 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, food grains 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 channelled
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 the 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 firm 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 for female workers
in Dhaka and other cities and rehabilitation of people
uprooted by erosion of rivers. 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-employment. 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.
Mr. Speaker,
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. I am 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 borrowings which 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 of Tk. 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
1996-97. For FY 1996-97 estimated revenue receipt is Tk.
19624 crore, revenue expenditure Tk. 14,544 crore and
revenue surplus Tk.5080 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. The main objectives of
food management system 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 1, 1996, Government had a
stock of 9.33 lakh ton of food grains. It is expected that
the stock will be 9.02 lakh tons on July 1, 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 historical 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 food grain production will lead to
inflation and rising pressure on foreign exchange reserve.
Agriculture is also directly responsible for the creation
of at least 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 the 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 riveirs. 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
infrastructure 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.539crore.
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
Parishad 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
proposed to beraised 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, I 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 I 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 team, 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.
Mr. Speaker,
43. Economic growth is an important
element in our development strategy. Growth and
development are not synonymous. The American statesman
Franklin Delano Roosevolt rightly observed, "The test
of our progress is not whether we add more to the
abundance of those who have 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 for 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 Palli Karma Shahayak
Foundation (PKSF). Furthermore, NGOswill have access, to
allocation of Tk.75 croreproposed to be carmarked in FY.
1997-98 for innovative programmes in housing and primary
education sectors.
Mr Speaker,
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 global 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 pledge-bound
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.
Mr. Speaker,
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.
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