The government had to allocate Tk 414.49 billion less fund than the demand placed by different ministries under the new annual development programme (ADP) for the upcoming fiscal year (FY) due to a possible resource constraint, insiders said on Saturday.
Since the COVID-19 pandemic has affected the economy as well as the revenue collection, they said, the government had to take a cautious approach in setting the development expenditure in the next financial year (FY).
The government on May 18 last approved the ADP for FY2021-22 with an allocation of Tk 2.25 trillion against a demand for a total of Tk 2.66 trillion by the ministries and agencies, the Planning Commission (PC) officials said.
"We've basically cut the demand from the internal resources due to a possible shortage in the internal resources," a senior PC official told the FE.
The government, however, has allocated as much from the external resources as desired by the ministries and agencies, he added.
According to the PC, it had allocated Tk 1.37 trillion from the internal resources against the demand of Tk 1.79 trillion by the ministries. On the other hand, it allocated Tk 880.24 billion from the external resources against a demand for Tk 879.37 billion.
"Since we got less fund than demand, we have allocated money as much as possible for all the 1,426 ongoing projects," another PC official told the FE.
"Had we received Tk 2.66 trillion from the finance ministry, we would have been able to provide all the 1,426 projects with more fund," he added, requesting for anonymity. "We had to allocate even Tk 1.0 million to Tk 10 million for some of the projects."
When asked, a finance ministry official said they would not be able to provide adequate fund in the FY 2021-22 ADP as revenue collection would again face setback due to the pandemic.
As the revenue collection fell short of the target, they had to provide less fund than the demand in the outgoing FY too, he added.
According to the National Board of Revenue (NBR), it received Tk 1.78 trillion worth of revenue during July-March period of the current fiscal year which is nearly half of the Tk 3.33 trillion target for the outgoing FY2021.
Since the revenue collection have been maintaining a lower trajectory due to the pandemic, the budget deficit could cross 6.0 per cent of the GDP at the end of this FY, said the finance ministry official.
"The pandemic is unlikely to go even in the upcoming FY2022. So, we maintained a cautious approach in the public expenditure for the next FY," the official added.
Meanwhile, the government allocated Tk 544.51 billion funds, one-fourth of the Tk 2.25 trillion ADP, to the 10 mega projects for the next FY2022.
Development experts and government officials said nearly 25 per cent fund allocations to the 10 mega projects would hamper execution of the remaining 1,416 projects in the ADP next FY.
Besides, it may hamper tackling the COVID impact amid the new priority areas which the government had overlooked, they added.
Former lead economist of the World Bank Bangladesh Office Dr Zahid Hussain told the FE that the higher fund allocation to mega projects would affect execution of the other projects due to the lower fund outlay in the ADP.
Since the COVID pandemic has placed the country before a new experience, the government should have allocated more funds to health, education, social protection and employment generation-relating schemes rather than higher fund to the mega projects like the previous years, he added.
Research Director of Centre for Policy Dialogue (CPD) Khandker Golam Moazzem said the government should have taken a more realistic approach in framing the new ADP amid the impact of the COVID pandemic.
The ADP should have been framed by giving special focus on health, job creation, social protection and education aiming to recover the losses from the pandemic, he added.
