He said the siphoning off undisclosed money would decrease, if such money is injected into the formal economy.
The finance minister, responding to volley of questions from newsmen, assured that he would further review the proposed 2.0 per cent tax at source on mobile phone bills.
He, however, asserted that he would not bring any changes to the proposed hike in supplementary duty (SD) on the imported reconditioned vehicles.
He was addressing a post-budget press conference at the Osmani Memorial Hall auditorium. Among others, Planning Minister A K Khandker, Agriculture Minister Matia Chowdhury, Economic Affairs Adviser to the Prime Minister Dr. Mashiur Rahman, and Bangladesh Bank (BB) Governor Dr. Atiur Rahman also spoke on the occasion.
“The proposed budget has everything to ensure welfare of the common people. It’s a people’s budget,” Muhith told the briefing.
He said the budget has adequate allocations to upgrade rural infrastructure, facilitate education, flourish agriculture sector, expand coverage of rural electrification, alleviate poverty, and broaden the purview of social safety-net programmes.
Mr. Muhith said the facility has been proposed to bring the substantial amount of black money, which is between 42 and 82 per cent of the Gross Domestic Production (GDP), into the economy.
“The offer to white black money has been given to lure investment in the country,” Muhith said.
“The proposed facility will definitely discourage siphoning off of black money abroad.”
Furthermore, he said the government seeks integration of such a large amount of ill and untaxed money into the mainstream of the formal economy.
The Finance Bill 2012 has proposed a facility for voluntary disclosure of erstwhile undeclared income, without mentioning the source, with a provision of 10 per cent penalty for any given year in addition to payment of normal income tax in accordance with respective slabs applicable in each case.
In reply to another question, the finance minister said the outlay of the proposed budget is not big, and the projected budget deficit is not high. He said the budget for the next fiscal is not a big one, rather the ‘lowest in the region.’
“It (the total outlay of the proposed budget) is perhaps the lowest in the region, lower than Bhutan, the Maldives, Pakistan and Sri Lanka.”
Mr. Muhith in his fourth budget as the finance minister of the incumbent government proposed Tk 1,917.38 billion budget for the FY13, projecting an overall fiscal deficit of Tk 520.68 billion, which is equivalent to 5.0 per cent of the GDP, against the estimated 5.1 per cent in the outgoing fiscal.
The budget intends to finance the deficit largely through domestic borrowing – Tk 334.84 billion – including Tk 230 billion from the country’s banking system and Tk 104.84 billion non-bank borrowing. The net foreign borrowing for the FY13 has been projected at Tk 125.40 billion in the budget document.
“We have a mental set up of terming every budget as a big one, and criticising the deficit financing,” Muhith said.
He said 5.0 per cent budget deficit is not new for the country, as the similar portion of deficit has been present in almost every national budget since 1975.
Mr. Muhith, focusing on rural economy, said income disparity has decreased during the last five to seven years due to contribution of the social safety-net programmes.
The finance minister, answering a question, rejected to announce dearness allowance (DA) for civil servants right at the moment. He, however, assured of formation of a ‘permanent wage commission’ for the government staffs before the expiry of the incumbent government.
He said amount of subsidies for the upcoming fiscal year has not been reduced comparing to the outgoing fiscal, as Tk 350 billion has been earmarked in the proposed budget under the head of subsidy.
Mr. Muhith, responding to a question on nagging power shortage, said, “I cannot understand why you (media) don’t see the progress and achievement of the government in improving the power sector.”
He said the progress of the incumbent government in addressing the power situation is ‘phenomenal.’
The finance minister said the inflation would go down at projected 7.5 per cent in the next fiscal, as according to the forecasts of many organisations the world economy would be reshaped and better in the near future.
“We have made a number of budget estimations, on the basis of forecasts of a number of renowned organisations.”
He said ensuring the supply of different products, including food items, the inflationary trend would be checked within the targeted 7.5 per cent.
The finance minister said the share market is not behaving the way it should have been. But the government has undertaken a number of measures to stabilise the market.
“We are now planning to bring the market players for betterment of the capital market. As per the next plan, we will demutualise the stock exchanges by the next December.”
Planning Minister A K Khandker said the use of foreign fund in the Annual Development Programme (ADP) is meagre due mainly to lingering of foreign and multilateral lending agencies in the approval process. The situation would improve, if the formalities and process are done by the local offices of donor communities, he observed.
Economic Affairs Adviser to the Prime Minister Dr. Mashiur Rahman said the real inflation rate for the current fiscal year would be lower, if the growth in people’s income is taken into consideration.
Agriculture Minister Matia Chowdhury said farmers are shinning, as they are harvesting bumper crops and getting fair prices. She said the government will continue providing subsidy in agriculture sector to facilitate both the farmers and consumers.
BB Governor Atiur Rahman said the inflation will go down further in the next month on a point to point basis, as the monetary policy has so far succeeded in attaining its goal of containing inflation and tightening bank credit to unproductive sectors. He said care will be taken to make the fiscal measures complementary to the monetary policy.
National Board of Revenue (NBR) Chairman Nasir Uddin said the public exchequer will earn an extra amount of Tk 20 billion, following the hike in duty in cigarette in the proposed budget. He said the response of whitening undisclosed money through investment in the share market is not that encouraging.