Budget Speech 2002-03
Part I

Bismillah-hir-Rahmanir Rahim

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.

 

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