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CHAPTER IV

DOMESTIC RESOURCES

4.1 Introduction

4.1.1 The Fifth Plan considers the generation of resources not as a static process, but as a dynamic one. Efficient utilisation of resources, which is one of the key themes of the Fifth Plan, will initiate a growth process which itself will produce additional resources. Part of this, in turn, will be mobilised for development through innovative financial instruments and strengthening of financial intermediation. These steps will also activate the national savings for development purposes. The Fifth Plan will make an all-out effort to mobilise people for development. Initiative of the people will bring into use even the non-monetised resources as evidenced by many rural development experiments in Bangladesh.

4.1.2 Given the expected level of foreign aid, about 78 per cent of the total Plan outlay will require to be financed from domestic resources (including remittances from abroad). Out of the Plan outlay of Tk.1,959.52 billion, only Tk.439.76 billion is expected to be foreign financed. The balance Tk.1,519.76 billion will need to be mobilised from domestic sources. Both the public and private savings will have to be increased substantially to finance the Fifth Plan. It will have to be ensured that resource mobilisation for the public sector does not impinge on the savings required for financing private investment. Much of the success of the Fifth Plan to mobilise domestic resources will depend on the proper use of fiscal and monetary measures. The Fifth Plan projects that about Tk.527.72 billion (35 per cent) of the domestic resources will be mobilised in the public sector and rest Tk.992.04 billion (65 per cent ) will be in the private sector. Therefore, the private sector is expected to play a major role in the domestic resource generation. In view of the recent dynamism of the private sector, especially expansion of investment and acceleration of growth in the export-oriented industries, it is expected that the private sector will be able to mobilise the required domestic resources as the financial deepening of the economy continues.

4.2 Review of Fourth Plan

4.2.1 A major objective of the Fourth Plan was to improve domestic resource mobilisation in both the public and private sectors. Because of strong reform measures, both tax and non-tax revenues exceeded their respective Plan projections. As a result, total revenue receipts during the Plan period was Tk.471.57 billion at 1989/90 prices exceeding the Plan projection of Tk.457.9 billion. However, current expenditure overshot its target by about 3.7 per cent so that revenue surplus barely exceeded the Plan expectation by 0.7 per cent. While there was a food budget deficit, it was offset by higher net capital receipts. As a result, domestic resource generation in the public sector exceeded the planned amount by more than 33 per cent.

4.3 Public Sector Development Expenditure During Fourth Plan Period

4.3.1 The Fourth Plan provided Tk.347 billion at 1989/90 prices for the public sector development outlay. Total development expenditure in the public sector during the Plan period was estimated at Tk.322.44 billion realising about 93 per cent of the target. Sector-wise distribution of development expenditure is presented in Table 4.1. Sectoral performance during the Fourth Plan has been discussed in details in the respective sectoral chapters as a prelude to the Fifth Plan. The table shows that there was under-spending in some sectors. In industry, actual development expenditure stood at Tk.5.03 billion as against Tk.16.84 billion earmarked for the sector. The shortfall was attributed to the government policy shift towards encouraging private sector investment in industry. Development expenditures in health, family welfare, labour and manpower and public administration sectors lagged behind the targets. There was, however, over-spending in rural development, transport and education. This was also due to policy shift of the government towards public investment for infrastructure development and for human resource development.

Table 4.1 Public Sector Performance During Fourth Plan (at 1989/90 prices)

( in billion Taka)

Sectors

Allocation

Realised

Expenditure

Realised Expenditure as Percentage of Allocation

Agriculture

23.26

18.82

80.91

Rural Development and Institution

16.50

17.93

108.67

Water Resources

38.29

26.73

69.81

Industry

16.84

5.03

29.87

Power

45.36

41.88

92.33

Oil, Gas and Natural Resources

23.98

15.32

63.89

Transport

46.53

51.26

110.17

Communication

6.52

12.13

186.04

Physical Planning and Water Supply

18.42

13.78

74.81

Education

26.58

29.05

109.29

Sports and Culture

1.46

1.51

103.42

Health

10.60

9.83

92.74

Family Welfare

15.98

15.16

94.87

Mass Media

1.23

1.19

96.75

Social Welfare, Women and Youth Development

2.35

2.02

85.96

Public Administration

2.01

0.71

35.32

Science, Technology and Research

0.54

0.49

90.74

Labour and Manpower

0.85

0.18

21.18

Sub-total

297.30

263.02

88.47

Others

49.70

59.42

119.56

Total

347.00

322.44

92.92

4.3.2 Operation of the Annual Development Programme (ADP) as a development tool is shown in Table 4.2. The size of the revised ADPs increased at an average rate of about 13.65 per cent between 1990/91 and 1994/95. This is attributed to intensive efforts for domestic resource mobilisation. The utilisation of ADP funds also showed significant improvement in terms of absorption of both local resources and project aid in the last two financial years.

 

Table 4.2 Utilisation of ADP Funds During Fourth Plan (at 1989/90 prices)

(in billion Taka)

Year

Revised ADP

Actual Expenditure

 

Total

Taka

Project Aid

Total

Taka

Project Aid

1990/91

56.95