Unnayan Onneshan (UO), an independent multidisciplinary think-tank, says that the proposed budget for the fiscal year 2019-20 lacks the measures which are necessary to address macroeconomic imbalances in the country.
“Widespread imbalances in revenue, financial and external sectors, and disproportionate burden on the income and welfare of the common people are creating challenges and sloppy condition for the economy with an impending crisis which is looming large,” said the organisation in its assessment of the proposed national budget which was placed in Parliament on Thursday.
There is revenue imbalance with rising expenditure and falling income, which is leading to increased deficit. A significant gap between the targeted and collected revenues is making the economy prone to severe debt crisis since loans are getting unsustainably higher, UO observed.
“The rate at which import payment has been increased does not match the rate of export earnings, which is creating current account deficit. The amount of external loans is increasing but these are not being repaid. When repayment will start, it’ll negatively affect the overall balance of payment, which may also slide the economy into a debt trap,” the thank tank added.
Suggesting that the official figure of GDP growth rate is grossly overestimated and noting that the governments in many developing countries tend to engineer growth statistics to inflate the performance of the economy, the Unnayan Onneshan cited a recent study on India by its former chief economist Arvind Subramanian, which states that the country’s actual GDP growth rate is 2.5 percent lower than the official estimation.
“If a similar study is done in Bangladesh, GDP growth rate will be lower by 2.5 percent to the level of 5-6 percent, which is the auto-pilot growth rate for Bangladesh, given the consumption level maintained by remittance from migration to cities and abroad,” the organisation claimed.
Referring to the heavy dependence of the tax structure on Value Added Taxes (VAT), Unnayan Onneshan said the burden of this indirect tax is on the ordinary people while tax exemption and tax evasion for the upper classes have become the norm. “The ordinary taxpayers are working as the main sources of debt repayment and development, while the quality of education and health is highly substandard and other services like safe drinking water, sanitation, rural electricity and related public service facilities are far from being adequate in the country,” Unnayan Onneshan pointed out.
Referring to the worsening unemployment rate, it said a large number of people are losing their income which has implications for reduced standard of living. Currently, there are 1.29 lakh job vacancies in the industrial sector against 20-22 lakh job seeking people.
Turning to inequality, the Unnayan Onneshan observed that the rate of income inequality is increasing at an alarming pace.
“Macroeconomic stimuli are required to ensure pro-poor growth through generating employment opportunities in the economy. Besides, an increased allocation of resources and implementation of development programmes in health and education sectors must be ensured, while the social safety net programmes have to be transformed into of a sustained system of social security,” suggested the research organisation.
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