The government should go for a duty cut on fuel imports, adjusting public expenditure as per income, and increasing lending rate for ensuring macroeconomic stability in the next fiscal year, economist Dr Debapriya Bhattacharya said on Sunday.
"As there are narrow scopes for taking contractionary measures right now due to global economic situation, the authorities can consider lowering import duty on fuel as neighbouring India got the benefit by doing so," he said.
Though the proposed budget for the next fiscal year (FY2022-23) has focused on increasing income, there is hardly any initiative to prioritise the sectors of expenditure despite global forecasts for continuous hikes in food and fuel prices in 2023 and 2024, he said.
The economist was speaking at a media briefing titled "National Budget for FY 2022-23: What is there for Lagged behind People?" organised by Citizen's Platform for SDGs, Bangladesh at Brac Centre Inn in the city.
Presided over by the platform's member and Transparency International Bangladesh (TIB) executive director Dr Iftekharuzzaman, the platform's convenor and distinguished fellow of the Centre for Policy Dialogue (CPD) Dr Debapriya Bhattacharya presented the keynote paper at the programme.
Bangladesh Garment Workers Solidarity chair Taslima Akhter, Save the Children director (programme development and quality) Reefat Bin Sattar, Plan International Bangladesh director (Girls' Rights) Kashfia Feroz, and Avijan executive director Banani Biswas, among others, took part in the discussion.
In his presentation, Dr Bhattacharya said the import duty on different types of fuels like LNG and coal ranged from 25 per cent to 34 per cent which is quite higher considering the current situation of the economy.
He said India has reduced duties on fuel imports as soon as its prices hiked in the global market and it helped the neighbouring country tame inflation.
The main reason behind the soaring inflation in the country is mostly driven by hikes in prices in the global market of food, fertiliser and fuels that share more than 30 per cent of the country's total import payments, he said.
He added that though the government has taken some price adjustment measures for import-dependent industrial sectors, it will contribute marginally to ease inflationary pressure on the low- and middle-income population.
Referring to the volatility in US dollar exchange rate, the economist said: "We have earlier said that the 2.0 to 2.5 per cent incentives on remittance will create inefficiency in the economy because the incentives don't work amid difference in exchange rates in the public and private sector."
Realising the reality, the Bangladesh Bank has finally left the dollar price to floating market rate, he said, adding: "But still the central bank needs to increase supply in the market from time to time to stabilise the rate."
The CPD distinguished fellow said the lending rate should be increased as a response to the rise in inflation and exchange rate so that the banks and financial institutions can survive.
However, he mentioned that against the government's target of 15-16 per cent private sector credit growth, it increased by 11.3 per cent in June 2022 from 8.35 per cent in June 2021.
Meanwhile, Dr Bhattacharya emphasised on increased allocation for agriculture to ensure food security, enhance rural employment, and lessen rural poverty.
Besides, rigorous planning and policy implementation is needed to raise agricultural productivity to improve agro-wage that has declined in real terms.
He also stressed the need for increasing wages of workers in the manufacturing sector due to a fall in their real income amid rising inflation rate.
Referring to the government's view about the pandemic recovery process, he said the pandemic may be over in terms of health, but its socio-economic impact on low- and middle-income people is not over yet, rather intensified.
The pressure on these people has been further deepening due to the mounting inflation fuelled by Russia-Ukraine war and the recent flood situation, he added.
Speaking at the programme, TIB executive director Dr Zaman said, "The proposed budget is favourable for the businesses and administration of the government while we expected that it would take special measures to ease the hardship of lagging behind population."
Instead of its being people-friendly, the budget legitimised corruption and encouraged unethical practices as it proposed amnesty to the money launderers, he said.
Ms Akhter said the government has given many facilities to the industry owners but such privileges do not get translated into workers' welfare.
There is nothing in the proposed budget to decrease inflationary pressure on the working class who have been in distress since the pandemic started, she added.