Tk 158,498cr for pay scale, polls pledges

The proposed budget for next fiscal year has set aside Tk 158,498 crore for partial implementation of new pay scale for government employees and as block allocation for projects to be developed in line with the BNP’s electoral pledges.

Of the sum, Tk 44,000 crore will go towards the new pay scale and Tk 114,498 crore for projects, according to the budget documents.

Although Finance Minister Amir Khosru Mahmud Chowdhury announced in his budget speech that the new pay scale will come into effect from July 1, he did not specify the method of implementation.

And no additional allocation has been made in the salary and allowances section of the budget document, as is usually the case.

Finance ministry officials said the allocation has been kept under the Net Public Service head.

In this head, the allocation has been increased by Tk 54,572 crore from this year’s revised allocation, bringing it to Tk 141,444 crore for the upcoming fiscal year.

Some Tk 44,000 crore has been allocated to implement the new pay scale. From this allocation, the government will provide the necessary funds for government officials and employees, pensioners and MPO-listed teachers and staff, according to the rate at which the pay scale is implemented.

The government committee on the Pay Commission is still working on the modus operandi. Decisions will be made after receiving their recommendations, said finance ministry officials.

It is likely that 50 percent of the basic salary will be implemented in the upcoming fiscal year, the remaining 50 percent in the following fiscal year and allowances in the third year.

As for the block allocation for unapproved projects, they said the new government did not get sufficient time to prepare projects in line with its electoral pledges.

As a result, one-third of the annual development programme has been kept in block allocations for new projects in sectors such as health and education.

“Time is needed to design suitable projects that would truly improve the quality of education and health. For this reason, the proposal for block allocations was made,” said one of the officials.

According to the economic code of the budget, Tk 114,498 crore has been allocated under capital expenditure for the upcoming fiscal year, out of Tk 300,000 crore for the ADP. Projects will be taken from this reserve fund in line with election pledges.

The Secondary and Higher Education Division will receive the highest allocation of Tk 50,302 crore, with Tk 11,500 crore kept as block allocation in its development budget.

The Health Services Division will get Tk 43,189 crore, with Tk 20,805 crore as block allocation.

The Local Government Division’s allocation is Tk 43,130 crore, with Tk 7,562 crore as block allocation.

The Ministry of Primary and Mass Education will receive Tk 42,145 crore, with Tk 16,299 crore as block allocation.

However, excessive block allocations could lead to a breach of budget discipline, according to analysts. At times, other ministries may exert pressure to spend from block allocations through influence.

But at the National Economic Council (NEC) meeting last month, where next fiscal year’s ADP was approved, two decisions were taken to ensure that funds from one sector are not spent in another.

Allocations can be reallocated among ongoing projects without changing the total allocation within the same ministry or division. However, funds cannot be transferred or reallocated from one ministry to another.

Inter-sectoral reallocations within the approved ADP will not be allowed.

In the upcoming fiscal year, the government is setting an expenditure target of Tk 938,000 crore, which is 19 percent higher than this fiscal year’s revised budget.

To achieve this, the revenue target has been set at Tk 695,000 crore, 90 percent of which will have to be borne by the National Board of Revenue.

Last fiscal year, the NBR collected Tk 369,528 crore. Based on current trends, officials estimate that the NBR revenue may reach Tk 400,000 crore this year. That means next year’s collection will have to increase by Tk 200,000 crore to hit the target.

Meeting this revenue target will be the biggest challenge for the finance minister in managing large expenditure expectations.

“In my opinion, the government needs to focus on institutional capacity instead of increasing allocations,” said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue.

For instance, large sums were allocated for the education and health sectors this year too, but they could not be spent.

Ensuring accountability and efficiency in the functioning of the institutions will be the litmus test, he said.

“The revenue mobilisation that has been targeted is undoubtedly very challenging. On the other hand, if this cannot be achieved, then the government’s dependence on borrowing will increase.”

To increase revenue collection, multiple measures must be taken: reducing tax evasion, strengthening the institutional capacity of the NBR, expanding the tax base, and digitalisation and interoperability of the system.

“Gradually, we must move toward paperless transactions, cashless transactions, using QR codes and similar tools. These are the directions we need to pursue.”

In the area of direct taxes, the number of taxpayers must be increased, he added.