analysis of budget 2011-12

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Analysis of budget 2011-2012

Md. Abdul Ali

Student ID: 1279Dept. of Finance and Banking

BBA Program1st Batch

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In general point of view a budget is a list of all planned expenses and

revenues, saving and spending. A budget is an important concept in the

economy of any country. Budget basically done for forecasting of the

revenues and expenditures that is construct a model of how expenses

should be done and what are the basic strategies to be followed. It alsohelps to compare the actual financial performance with the expected

performance. And government budget is a summary or plan of the

intended revenues and expenditures of that particular government.

Towards building a happy, prosperous and caring Bangladesh with this

title finance minister Abul Maal Abdul Muhith presented on 9th June 2011

in Jatiay Sangsad a taka 1,63,589 corer national budget for the fiscal year

2011-12 .

In this budget the expenditure basically has done depending on the

revenues and financing capabilities. The total amount of budget is made

for 1,63,589 corer where the revenue is calculated 1,23,323 cr thats why

there would be a deficit of 45,204 cr (considering the GDP rate). Here

major sources of revenues are considered; 16.6% revenue will be covered

from internal financing, 56.2% of total revenue from National Board of

Revenue (NBR) tax revenue, while 2.4% from non NBR tax revenue.

Besides this, 13.8% will be collected from non tax revenues. And the

deficit portion will be covered from foreign and domestic borrowing and

3.0% will also be covered from foreign donations.

Lets overlook the revenue portion at a glance:

Description Budget 2011-12 Revised 2010-11

Revenue and Foreign Grants Taka (corer) Taka (corer)

Revenues 1,18,385 95,187

Tax Revenue 95,785 79,052

NBR Tax Revenue 91,870 75,600

Non-NBR Tax Revenue 3,915 3,452

Non-Tax Revenue 22,600 16,135

Foreign Grants/1 4,938 4,224

Total 1,23,323 99,411

Source: Bangladesh budget 2011-12 at a glance (internet)

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From the above chart of revenues we can easily compare that this years

budget is quite larger than the previous year. Because in last year the total

sum of revenue was 99,411 cr taka, but in this year it is increased by

1,23,323 cr taka. Thats why the government had to increase the total tax

portion also.Last year the total sum of tax revenue was revised 79,052 cr taka but in

this year it counted as 95,785 cr taka. So it is increased by 16,733 cr taka.

Besides this the government also make list for collecting more NBR

(National Board of Revenue) tax than previous year also. Last year the

total NBR tax was 75,600 cr taka but this year it is almost 92,000 cr taka.

Non NBR tax is also increased by 463 cr taka this year.

Government has also taken some changes in the regulation of tax:

Government will never return back the income tax to the

government employees.

It is mandatory to submit the return of tax of the NGO firms.

No tax on the share business but tax on the profit of foreign share

transactions.

There would be tax on the profit of foreigner for the transaction of

shares in home.

There is reduction of tax from 10% to 5% on savings paper & the

wage earner bond, pension and family savings are included in tax. Individuals tax free income is enhance up to 1,80,000 taka where

last year it was up to 1,65,000 taka.

In case of women and old people (65+) the tax free income will be

2,00,000 taka instead of 1,80,000 taka.

For the disabled persons this tax free income is 2,50,000 taka.

There will be a 10% fertilizer charge on the asset of 2 corer or

more.

Tax over the source of share broker commission will be 0.10%.

There is reduction of tax over the source income of savings paperfrom 10% to 5%.

There are also few changes regarding the taxation policy. However the

government had to consider the peoples income and the inflation rate of

the country.

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Lets see the basic expenditures of the government for this fiscal year

(2011-12):

Expenditure Taka (corer)

Non-Development Expenditure 1,02,903

Non-Development Revenue Expenditure 87,851

of which

Domestic Interest 16,519

Foreign Interest 1,478

Non-Development Capital Expenditure/2 15,052

Net outlay for Food Account Operation 631

Loans and Advances (Net)/3 9,413

Structural Adjustment Expenditure 0

Development Expenditure 50,642

Development Programmes Financed from Revenue Budget/4 1,331

Non-ADP Project 2,035

Annual Development Programme 46,000

Non-ADP FFW and Transfer/5 1,276

Total Expenditure 1,63,589

Overall Deficit (Including Grants) -40,266

(In Percent of GDP) -4.4

Overall Deficit (Excluding Grants) -45,204

(In percent of GDP) -5.0


As the expenditures is high enough than the total revenues, thats why it

again become a deficit budget. Here most of part of expenditures will beoccurred in the non development revenue expenditures. It will total sum

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of taka 1,02,903 corer, where taka 50,642 corer will be expense for the

development expenditure purpose. So the deficit potion of 45,204 corer

taka will be financed from foreign and domestics borrowing including

short run and long run debt. Besides this there will be a non bank

borrowing with a taka 8251 corer.

Lets see the total financing scenario for the deficit budget (2011-12):

Financing Taka (corer)

Foreign Borrowing-Net 13,058

Foreign Borrowing 18,685

Amortization -5,627

Domestic Borrowing 27,208

Borrowing from Banking System 18,957

Long-Term Debt (Net) 17,878

Short-Term Debt (Net) 1,079

Non-Bank Borrowing (Net) 8,251

Others/6 2,251

Total Financing: 40,266

Memorandum Item: GDP 8,99,670

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Some noticeable things are happened in this budget. Major of these are:

There might be an opportunity to make the black money white by

investing in the government treasury.

The portion for agriculture and education will be enhanced if there

is any required.

Government employee must also pay income tax on their income.

However the budget is favored by most of the economists but the

economists have suggested that the proper implementation of this budget

is more important than development.

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analysis of budget 2011-12

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