ANALYSIS OF THE BUDGET FY2022-23

Transport and Communication Infrastructure

MBA 510 Macroeconomics | SECTION-2 | Spring 2023

Submitted by: Student ID:

Imran Howladar Shihab 2211823
Musarrat Tarannum Zaman 2231248
Fatima Sadia 211105
Md Shakhawat Hossain Patwary 2222254
Elijah Nathan Penheiro 2111034

Submitted to:

Dr. A K M Nazrul Islam

Associate Professor
School of Business and Entrepreneurship

Submission date: 8th May 2023

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Budget Analysis of FY 2022-23
Transport and Communication Infrastructure

The Transport Sector and Its Contribution to GDP

In Bangladesh, the GDP from transportation has consistently increased over time and is on the
rise. After rising from 2027.4 million BDT in 2021 to an outstanding 2142.90 million BDT in
2022, it demonstrated a good trend. Between 2013 and 2022, Bangladesh's average GDP from
transportation was a healthy 3171.88 million BDT. Additionally, the highest value ever recorded
was a staggering 9047.5 million BDT in 2015, demonstrating the important role the transport
sector plays in the economy of the nation. It is interesting to note that even at its lowest point in
2016, the GDP from Transport was 1580.3 million BDT, demonstrating the industry's durability
and potential for expansion.

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Budget Allocation in Transport Sector in FY 2022-23

Bangladesh has allocated approximately 27% of the total budget to the transport sector in FY 2022-
2023, which is significantly higher than the budget allocated to the other sectors. There is also a
significant increase in the education and technology sector, with approximately 16.6%, and the
least increase is in the social security and welfare sector, with 3.4%. A total amount of 2596.17
billion Taka has been allocated for FY 2022-2023, which is higher than the previous budget
allocation.

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 %ALLOCATION UNDER ADP
4th Qtr
9%
Others
Road, Transport
3rd Qtr and Highway
17%
Ministry of
Railway 1st Qtr
44%

Bridges
2nd Qtr Division
30%

In the proposed Annual Development Programme (ADP) for the next fiscal year (FY23), the
transport and communication sector will receive the highest allocation - up from 27.35 percent in
the current year to 34.8% in FY23.

Merits of This Budget Allocation of FY 2022-23

The budget allocation for the fiscal year 2022-23, with an emphasis on infrastructural development
within the transport sector, carries numerous potential merits:

 Improved connection: Investing in transport infrastructure can enhance connection within

the country, linking rural and urban areas, and easing the flow of commodities and people.
This can stimulate economic activities, trade, and tourism.
 Economic Growth: The allocation for infrastructural improvement in the transport sector
can encourage economic growth. It creates work possibilities during building and
operation, enhances productivity, and attracts investments, contributing to overall
economic development.
 Trade & Commerce: Enhancing transport infrastructure facilitates efficient transportation
of commodities, decreasing logistical costs, and enhancing supply chain management. This
encourages trade and commerce, both domestically and internationally, leading to
economic expansion.
 Regional Development: The focus on infrastructural development might lead to more
balanced regional development by enhancing accessibility to isolated places. It can help
minimize regional differences, promote inclusive growth, and facilitate socio-economic
development across the country.
 Public Transportation: The budget allocation may emphasize the construction of public
transportation systems. This can improve mobility, reduce congestion, lower pollution

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 levels, and enhance the quality of life for inhabitants by providing affordable and
dependable transit options.
 Road Safety: Allocating resources for road safety measures is vital for reducing accidents
and casualties. Investments in traffic management systems, road signage, education
programs, and infrastructural enhancements contribute to safer roads and increased public
safety.
 Long-term Planning: While the focus on infrastructural development is prominent, it is
crucial to acknowledge the necessity for comprehensive transport plans and regulations.
Allocating resources to policy formulation provides long-term sustainability, optimal
utilization of infrastructure, and alignment with national development goals.
 Sector Growth: The budget allocation supports the growth and modernization of the
transport sector. It can attract private investments, foster innovation, and technology
adoption, and boost the efficiency and effectiveness of transportation services.
Overall, the budget allocation for infrastructural development within the transport sector in FY
2022-23 can have good implications for connectivity, economic growth, commerce, regional
development, public transportation, road safety, long-term planning, and sectoral growth.

SDGs of The Transport Sector

The Sustainable Development Goals was first introduced by United Nations Member States in
2015 which lay out 17 goals for the world to achieve by 2030. The goals are broken down into
169 targets that are measurable by certain indicator framework. It has been introduced to end
poverty, reduce inequality, promote peace and prosperity, ensure sustainable communities and
make radical transformations across the world. Bangladesh aims to achieve its SDGs with
collaboration from its government, societies, communities and different stakeholders and
integrate it into its planning process and development strategies to track its progress and achieve
further growth in terms of social, environmental and economic aspects. While Bangladesh
integrates the SDGs into its planning processes and development, sustainable freight transport
would have to be considered which includes road, rail, water and air transportation. According to
Partnership on Sustainable, Low Carbon Transport (SLOCAT Partnership), without sustainable
transport, the 2030 Agenda for Sustainable Development and the Sustainable Development
Goals will not be achieved.

To be truly sustainable, the freight transport must address diverse environmental, economic, and
social considerations. The SDGs that are directly relevant to sustainable transport can be
identified as SDGs 3, 7, 9, & 11 are described below:

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SDG 3 Good health and well being
Target 3.6

It is directly related to transport sector and concerns deaths and injuries from road accidents and
air pollution. Deaths and injuries from road accidents have become shockingly a common
phenomenon in our country due to unsafe road conditions, lack of strict countermeasures and
sheer negligence from the drivers. The target aims to reduce the number of increased deaths and
injuries by half in 2030.

Target 3.9

The second target talks about reducing illnesses and deaths from air pollution which is closely
relevant to transport sector because the vehicles used to transport goods and passengers are not
environment friendly and they generate poisonous gases and fumes which are harmful for both
the people and the environment and causes respiratory diseases, lung cancer and heart diseases.
According to a recent report, Dhaka was ranked seventh in the list of cities with the worst air
quality worldwide.

SDG 7 Affordable and clean energy

Target 7.3
Bangladesh can strengthen its transportation and communication network by switching to
sustainable modes of transport that generates less greenhouse gas emissions, using cleaner fuel
and reducing sulfur level from diesel, switching to hybrid or electric vehicles or enhancing
capacity of rail and waterway transport to reduce the pressure on roads. Introduction of digital
systems in traffic management and control can ensure safe roads, collect online tax and other fee
collections.

SDG 9 Industry, Innovation and Infrastructure

Target 9.1
Developing quality, reliable, sustainable and resilient infrastructure, support economic
development and provide adequate road connectivity for rural communities.

Bangladesh’s road is dominating the sector in terms of transporting goods and passengers but it
is still noted to be in poor condition. It needs to build an efficient transportation infrastructure
across other modes of transport and make ongoing public investments in construction of new

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roads, renovation of old roads, improving rail and inland waterway transport, upgrading their
national highways into 4 lanes and widen other highways and to ensure easy access to roads and
give adequate road connectivity to the rural communities so that they are not deprived and can
get access to vital services such as healthcare, education and employment.

SDG 11: Sustainable Cities and Communities

Target 11.2
By 2030, access to safe, affordable, accessible and sustainable transport systems for all should be
provided, expand public transport with special attention to the needs of women, children, persons
with disabilities and older persons. There is a serious need to improve urban public transport in
Dhaka. This too, however, can have positive spillovers into the sector. For example, diverting
people from private to public modes of transportation can greatly reduce congestion and thus
facilitate the movement of goods in a more economical and eco-friendly way that generates less
Co2 emissions and greenhouse gases and makes transport more inclusive across all age groups
and gender which is affordable, convenient and safer mode of transport.

COVID-19 control measures on Bangladesh’s transportation system

and road safety
The government’s measure taken to deal with the COVID-19 crisis had both positive and
negatives outcomes which affected the transportation & communication sector.

 The government took global measures such as imposing lockdowns restricting personal
mobility and limited the use of public transportation in order to reduce the risk of
transmitting the virus. There were higher chances of spreading the virus through road
congestion and use of public transportation due to limited spaces available and inability
of physical distancing.

 Deaths and injuries from road accidents still took place and people continued to travel by
private transport because they were reluctant to use public or shared transport due to the
risk of spreading the virus. Even on lockdown days, careless driving, substandard roads,
badly managed cars, incompetent drivers violating traffic laws, and a lack of oversight
from the department of traffic were among the causes of injuries and death.

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  Transportation constraints to combat the epidemic led to losses across different modes of
transport across road, rail, air transport and inland waterway transport which further
exacerbated their sector’s finances and overall growth due to shortage of passengers.

 One of the positive outcomes from this COVID-19 restriction was it decreased traffic
collisions, road accidents by a smaller amount. Traffic restrictions and encouraging social
distancing lead to positive impacts on both human health and environment due to less air
pollution, better hygiene and health practices among the communities.

 There has been an incredible impact on people’s travel behavior keeping their health and
wellbeing into consideration during and after COVID. The demand for public
transportation decreased and high income group continued to travel by car whereas the
other group of people went for an active mode of transport such as walking and cycling
which increased their levels of physical activity and improved their overall health
significantly.

Relevance of the Perspective Plan 2041 and the 8 th Five Year Plan in
accordance to the manifesto
Bangladesh is a developing country and since it will be seeing progress and development the

infrastructure for the communication sectors of Bangladesh will be seeing a consistent boost of

budget allocations in order to complete the development objectives. As the Awami League

government has been in power of 14 years the country has seen major developments in the

infrastructure sector of Bangladesh.

Manifesto

For their 2018 manifesto the Awami League government mentioned about various plans and

objectives which they wish to complete during their tenure at the helm of the country for the next

5 years. The Awami League mentioned of the Dhaka Elevated East West Elevated Highway which

will be constructed with the joint venture of the Malaysian government. The Trans Asian Highway

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and Trans Asian Railway Bangladesh Bhutan India Nepal and Bangladesh China India Myanmar

Economic Cooperation (BCIM-EC) communication systems will be implemented, therefore citing

the export rate of the country will soon be increased due to the fact the other nations will be using

the country as a transit automatically creating a new wave of economic progression. The manifesto

also ensures that the government will be making Dhaka city easier to commute. The manifesto

also aims to make the communications sector a key part to the economic progression of the

country, hence the connectivity of the port cities and the capital will be enhanced with the first

priority being the Dhaka Chittagong Expressway. These were the key points for the activation of

the economic progression of Awami League.

Perspective Plan 2041

For the perspective plan 2041 the government initiated intermodal transport system. This means

the government is trying to strengthen the three modes of transportation Bangladesh utilizes. 1)

Water 2) Air 3) Land. This will be an efficient way for the country to be able to ease traffic over

the pressurizing over just one way of the transportation. In the Perspective plan the government

has mentioned the feasibility study of the Dhaka Chittagong expressway being completed. As well

as the introduction of a time saving electrical Urban Mass Transit or the Metro Rail Network in

Dhaka. The perspective plan also mentions the reformation of the Public Private Partnership (PPP)

strategy which will make the perspective plan 2041 to be more effective.

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8th 5 Year Plan

The government in the 8th 5-year plan mentioned all transport services to be provided

competitively with no barriers to entry and exit for the service providers. This encourages local

investment actively and helps the local economical growth. The 5-year plan also focuses on the

strong connectivity amongst the districts of Bangladesh. The highways will be planned to extended

to greater lanes accordingly to avoid the traffic congestions. The riverways will become more

effective mode of transport as the government will be willing to invest to make the riverways more

effective. As well as Dhaka will be seeing a major development progress so that the congestions

are eased out.

Limitations:

Ever since the war in Ukraine globally the effects are being seen. Bangladesh currently is going

through an inflation where most of the products and services are becoming highly costly.

Development costs have become expensive as well. Since this effect post covid the country is also

facing a shortage in the Foreign Exchange sector. As Bangladesh is scarce on most resources we

have become heavily reliant on imports hence exhausting our foreign exchange reserve. Most

projects have seen a halt as the government is focusing on the mega projects and being able to

complete them. Hence the transport sector has a few Mega Projects such as the metro rail and the

elevated expressway being completed but the other inter district infrastructure is seeing a slow

moving progress.

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Tariff Schedule (FY21-FY23)

H.S CODE DESCRIPTION OF GOODS CUSTOMS DUTY-2021 CUSTOMS DUTY-2022 CUSTOMS DUTY-2023
84073210 Two stroke engine for 3 wheeler/auto rickshaw 25 25 25
84073220 Four Stroke engine for 3 wheeler/auto rickshaw 25 25 25
84073290 Oth.Spark-Ignition 25 25 25
84073410 Bus or Truck engine with inbuilt CNG/LPG 10 10 10
84082039 Other diesel engine>=2600cc 25 25 25

The government of Bangladesh has implemented various tax reforms in recent years to increase
tax revenue from the transportation and communication sector. In the fiscal year 2021-2023, the
government has increased the tax rate for passenger-carrying vehicles by 20%. However, the
customs duty for most of the elements remained same over the years as per the above comparison
report.

Tariff Schedule FY21-FY23

80
25 25 25 25
70
60
50 25 25 25 25
40
30 10
25 25 25 25
20 10
10 10
0 0
Two stroke engine Four Stroke engine Oth.Spark-Ignition Bus or Truck engine Other diesel
for 3 wheeler/auto for 3 wheeler/auto with inbuilt engine>=2600cc
rickshaw rickshaw CNG/LPG
84073210 84073220 84073290 84073410 84082039

CUSTOMS DUTY-2021 CUSTOMS DUTY-2022 CUSTOMS DUTY-2023

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ADP Allocation in 8th FYP
The suggested ADP allocations in constant and current prices are displayed in the table. In
accordance with the plan and suggested finance plan transport investment requirements will be
significant due to the rising demand for transportation services and the requirement to update
transportation infrastructure in order to move toward a UMIC. Increased PPP investments in toll
roads, bridges, aircraft, and international shipping are required by the 8FYP funding strategy for
transport infrastructures. Cost recovery procedures will be enhanced by taking note of the
Chittagong Port Authority's excellent example, which generates significant profits. O&M can
greatly benefit from cost recovery via airports, inland water transport, road user fees, railroad
services as well as self-financing of investments.

8FYP ADP Allocations For Transport (Taka Billion Current

Prices)

102.5
24
FY2025 16.6
74.5
140.3
279.1
88.8
20
FY2024 13.8
62.1
115.4
233.8
78.1
17.2
FY2023 11.8
57.7
100
215
60
14.9
FY2022 10.3
50.1
75
190
55.5
12.1
FY2021 8.3
40.6
65.6
177.9
0 50 100 150 200 250 300

Bridges Division Posts and Telecommunications Division

Ministry of Civil Aviation and Tourism Ministry of Shipping
Ministry of Railways Road Transport and Highways Division

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Major Area of Concern

Dhaka Mass Rapid Transit Line-6

The Dhaka Mass Rapid Transit Line-6 or MRT-6, the country's first metro rail system, being built
at a cost of Tk 21,985 crore, may be ready for use next year. Test run of metro rail has already
started on almost half of the track. Almost 63.3 per cent of the project has been completed so far.

Dhaka Elevated Expressway

The Dhaka Elevated Expressway is a 19.63-kilometer, four-lane expressway that runs from
Kutubkhali on the Dhaka-Chittagong Highway to Kawla in the vicinity of Dhaka's Hazrat
Shahjalal International Airport as another initiative to reduce traffic congestion there. The project
began in 2020, and according to the authorities, it should be finished by 2023.

Matarbari Deep Sea Port

The Matarbari Deep Sea Port, also known as Matarbari Deep Seaport, is one of Bangladesh's
ongoing megaprojects. Reduced import and export costs would be made possible by the 18-meter-
deep port being built at Matarbari in the Maheshkhali Upazila of Chittagong. By December 2026,
construction on the project should be finished.

Dhaka Airport Third Terminal

The development of a third terminal is currently underway at Dhaka's Shahjalal International
Airport. Additionally, a separate station will connect the metro rail to the terminal. As a result,
visitors will be able to travel straight from the airport to their destination via Metrorail. The
terminal will be made public in 2023, according to the authorities.

In the table below, I have mentioned about eight mega projects, their cost, approval date and
closing date. Highest amount of allocation has been made for the transportation sector. But the
major area of concern is that these projects could not be completed within the stipulated time. As
a result, the project cost gets increased. Metro rail was planned to complete 2024 but now it has
been extended to 2025. Karnaphuli tunnel project duration was till 2020, but it is expected to
complete in 2023.

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Name of the project Project cost Approval date Closing date
Dhaka Metro Rail
219.85 billion Jul-12 2024
(MRT Line 6)
Padma Rail Link 392.46 billion Jul-18 2024
Matarbari Deep Sea Port 177.77 billion Nov-20 2026
Hazrat Shahjalal International Airport
213 billion Dec-19 2023
Terminal 3
Dhaka Elevated Expressway 89.4 billion Jan-20 Jun-23
Dhaka to Chittagong Express Railway 967.52 billion 2030
Karnaphuli Tunnel 103.74 billion Dec-16 Dec-22
Bangabondhu Railway Bridge Project 167.809 billion Nov-20 Aug-24

Limitations of the Report:

The budgetary allotment for transportation infrastructure development seems to be receiving more
attention in the fiscal year 2022–2023 than may be the case in previous years, potentially
neglecting the budgetary allotment for developing transportation plans and policies. As important
as it is for connectivity and economic development to invest in transportation infrastructure, it is
equally important to prioritize creating thorough transport plans and policies. This covers strategies
for managing the demand for transportation as well as sustainable transportation, public
transportation systems, and measures for road safety. It can be difficult to evaluate all projects
within a constrained timeline, but comparison with budgets from prior years can offer insightful
information. A deeper comprehension of the budget distribution and its effects can be gained by
speaking with specialists or official government sources.

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Suggestion that can be implemented for the next budget:
1.Road safety

2. Minimize Traffic congestion.

3. Increase Female Transport Facility.

4. Efficiency in road construction.

5. Need to increase the bus service facility for school going students.

6.Increasing the number of registered vehicle.

7.Strength Governance in Transportation sector.

8. Give Bangladesh Railways more managerial autonomy.

9 Reducing corruption by implementing proper law in transportation.

10. Increasing Public awareness by arranging seminar & workshop.

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References

1. Sustainable Transport: A Critical Driver to Achieve the Sustainable Development Goals,

SLOCAT Partnership (2019). www.slocat.net/vnr
2. Government of the People’s Republic of Bangladesh, Bangladesh Planning Commission,
National Sustainable Development Strategy 2010-21, page 75.
3. P. Apthorp and C.Ksoll, Sustainable Freight Transport-Access to Finance,
GIZ/SWITCH-Asia (2018), pg.9
4. 197 S. Mamun, “Human error behind 72% rail accidents in Bangladesh,” Dhaka Tribune
(2019). https://www.dhakatribune.com/bangladesh/2019/11/15/human-error-behind-72-
rail-accidents-in-bangladesh
5. Covid-19: Public transport services struggling for lack of passengers, Dhaka Tribune.
https://www.dhakatribune.com/bangladesh/2020/06/21/covid-19-public-transport-
services-struggling-for-lack-of-passengers. Accessed 20 July 2020.
6. Road safety matters, more so during COVID-19. Published on End Poverty in South
Asia. World Bank Blogs. https://blogs.world bank.org/endpovertyinsouthasia/road-
safety-matters-more-so-during-covid-19
7. Zafri NM, Khan A, Jamal S, Alam BM. Impacts of the COVID19 pandemic on active
travel mode choice in Bangladesh: a study from the perspective of sustainability and new
normal situation. Sustainability. 2021; 13:6975.
8. Perspective Plan of Bangladesh 2021-2041.
9. https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/b29661b6_927f_
4012_9f83_5ac47dbd6ebd/BG%20Press_Speech%202022-23%20English%20Final.pdf
10. https://cpd.org.bd/wp-content/uploads/2022/06/CPD-Budget-Analysis-FY2023-9-June-
2023.pdf
11. https://tradingeconomics.com/bangladesh/gdp-from-transport
12. http://plancomm.gov.bd/site/files/8ec347dc-4926-4802-a839-7569897e1a7a/8th-Five-
Year-Plan
13. https://businessinspection.com.bd/top-7-ongoing-mega-projects/
14. https://thefinancialexpress.com.bd/views/views/our-mega-development-projects-
1654097156

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15. Division, General Economic. “8th 5 Year Plan July 2020- June 2025.” Planning Ministry,
Dec. 2020,
plancomm.gov.bd/sites/default/files/files/plancomm.portal.gov.bd/files/68e32f08_13b8_4
192_ab9b_abd5a0a62a33/2021-02-03-17-04-ec95e78e452a813808a483b3b22e14a1.pdf.
16. Division, General Economics. “Making Vision 2041 a Reality PERSPECTIVE PLAN of
BANGLADESH 2021-2041.” Planning Ministry of Bangladesh, Mar. 2020,
plandiv.gov.bd/sites/default/files/files/plandiv.portal.gov.bd/files/79060938_fbce_4286_b
787_e8f41edfc615/PERSPECTIVE%20PLAN%20of%20BD%202021-2041.pdf.
17. “Election Manifesto of Awami League 2018.” Sdg.gov, 2018,
www.sdg.gov.bd/public/files/upload/5c324288063ba_2_Manifesto-2018en.pdf.

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