The government is set to revise down this fiscal year's budget by 7.4 percent, with the non-development sector taking the hit mostly.

The revised budget, which will be disclosed in June, will be of Tk 315,400 crore, according to the finance ministry's documents.

The non-development budget will be truncated about 11 percent to Tk 204,700 crore, despite an increase in government expenditure caused by salary hike of public servants.

The development budget will not be cut; it will remain at Tk 110,700 crore.

However, for the Annual Development Programme the government will make available Tk 7,000 crore more of its own funds, while slashing the foreign fund component by the same amount.

Despite the cuts, the budget deficit will remain at 5 percent of GDP, as the optimistic revenue collection projection made originally will not be achieved.

In the revised budget, the overall revenue collection target has been cut 13.28 percent and set at Tk 210,504 crore. Of the amount, the revised target for the National Board of Revenue will be Tk 180,000 crore, down 11.39 percent from the initial target.

In the first six months of the fiscal year, the NBR's collection grew about 18 percent, which is still satisfactory when viewed in the historical context.

To meet the NBR's revenue collection target set at the beginning of the year, the growth rate should be 43.89 percent compared to the actual collection last year.

“Chasing a revenue growth target of more than 40 percent is absurd,” said a former NBR official.

When the budget was placed in June last year, many economists had said the revenue growth target would not be met as it was overly ambitious.

The non-NBR revenue will also be downsized to Tk 20,000 crore from the original amount of Tk 32,350 crore.

To meet the budget deficit, the government typically borrows from banks and savings instruments. But in the last few years, most of the borrowings were made by way of the relatively costlier option of savings instruments, even though the banks are sitting on excess liquidity.

The trend will continue in the current fiscal year, said a finance ministry official.

In the first seven months of fiscal 2016-17, the government's total non-bank borrowing including savings instrument stood at Tk 29,997 crore -- already surpassing the whole year's target of Tk 22,610 crore.

The target for borrowing from banks was Tk 38,938 crore but in the first seven months the government has not borrowed a single taka. Rather, it has repaid Tk 17,675 crore.