Impact of global political crisis
Staff Correspondent: Other import including industrial raw materials are less, strictness in development projects, withdrawal of duty on consumer goods are the main reasons.
The government has taken a policy decision to cut Tk 33,900 crore from the revenue target in the budget for the current financial year 2023-24. But the final stage can be a bit more or less. The finance department fears that the implementation of the budget, including subsidy and interest payments, will come under pressure. Revenue cuts are mainly due to the global crisis and the ongoing political turmoil surrounding the national elections adversely affecting the overall economy. However, there was no reduction in total revenue in the previous financial year. News from related sources.
It is known that the dollar is not matching for import. Due to this crisis, the import of other products including raw materials of industrial products is disrupted. Similarly, duties on edible oil and sugar have already been reduced to control rising inflation. This decision was taken to keep these two products within the purchasing power of common people. On the other hand, there is a lot of strict imposition on development projects due to poor performance. The import of luxury goods is also closed to maintain reserves.
According to sources, the target of total revenue in the current budget is Tk 5 lakh 3 thousand 900 crores.
The proposed cuts set the revised size of revenue at Tk 4 lakh 70 thousand crore. The decision to lower the revenue target was taken at the Monetary and Currency Exchange Rate Coordination Council meeting on Thursday.
If asked, the former caretaker government’s finance advisor AB Mirza Azizul Islam told Daily Industry that the target of expansionary revenue is not being achieved in the existing situation. However, it remains to be seen how much of the correction is feasible. Currently not investing. There is political uncertainty. It can’t be said what will happen after the election. In this case it will be difficult to achieve the revenue target.
According to sources, the target of revenue collection in these four months from July to October alone was Tk 1 lakh 16 thousand 295 crores. Against this, Tk 1 lakh 3 thousand 976 crore has been collected. In these four months, the collection is less than the target by Tk 12,319 crores. However, the total amount of collection is 14.36 percent more than the same period of last financial year. The achievement rate is 89.41 percent of the target. At this time, the rate of collection from customs is 88.61 percent, from VAT 92.37 percent and income tax is 86.68 percent.
However, the chairman of the National Board of Revenue (NBR) Abu Hena Rahmatul Munimgave the same impression a few days ago. He said that the revenue income at the local level is decreasing in the current financial year due to the decrease in the import of raw materials. In transition from this situation, effective steps are being taken to stop VAT evasion. He also said that imports have decreased by up to 30 per cent across sectors and products, which has affected revenue collection. However, it has been able to sustain growth of over 17 percent till November. Initiatives are being taken to stop the evasion to maintain the growth of VAT. For example, after installing the EFD machine, VAT is being collected at an average of Tk 50 thousand from each shop, which was Tk 4-5 thousand earlier. According to the sources, in the coordination council meeting, the finance department reviewed the progress and future of every indicator of the entire macro economy including the latest revenue expenditure, import, export, inflation, foreign exchange reserve, food production, GDP in the government.
It is said there, the government has stopped buying cars. But private car buying is not stopped. Meanwhile comes attention.
Besides, many programs have been taken under the shrinkingpolicy, including acquisition of all types of land. Due to which Tk 40,000 to Tk 50,000 crore will be saved in these sectors. This will reduce the pressure of revenue collection. Sources also said that it was said in the meeting that it will be difficult to collect large amount of revenue in the future. That is why the size of the next budget cannot be expansionary. The issue of decrease in import and export is discussed there.
According to the sources, a large part of the revenue income comes from the Annual Development Project (ADP). National elections will be held in the current financial year. As a result, due to political considerations, the size of ADP this year has been increased by Tk 35,434 crore compared to last fiscal year’s revised ADP to Tk 263,000 crore. But in the middle of the year several instructions were given from the finance department to implement the development project. In particular, it is asked to reduce allocation from slow projects to fast-paced projects, prioritize projects related to agriculture, agro-based industries, power generation, post-storm rehabilitation, cyclone-tide damage. Besides, if any money from the development sector is not spent, it is prohibited to transfer it to another sector (management). ADP of Tk 18000 crore is being cut now by imposing strictness on the subsidy. As a result, revenue collection will decrease at the end of the year.
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