A quality budget is a must for sustaining the economic growth of the country, said Centre for Policy Dialogue (CPD) yesterday.
“The government GDP growth projection of 7.05% for this fiscal year is led by public investment, putting its sustainability at risk in future,” observed CPD at a press conference held at CIRDAP auditoriam in the city.
The upcoming national budget should focus on quality budget and employment generation-led growth for retaining over 7% growth, the think-tank told the press conference organised to present its budget recommendations for the fiscal year 2016-17.
“For a long time, we continue to talk about the quality budget. A gap between budgetary projection and implementation is increasingly growing, which has reached its peak this fiscal year, and because of this, budget loses its credibility,” said Debapriya Bhattacharya, distinguished fellow of CPD.
He continued: “Projection should be on revised budget but not on original budget to make it realistic.” According to the CPD, of the additional GDP growth projection, the government salary hike accounted for 80% and industry and agriculture 20%.
Presenting a keynote paper, CPD research fellow Towfiqul Islam Khan said: “The driving force of GDP growth projection is the public servant’s salary and allowance hike, weakening sustainability of economic growth.”
Actual revenue growth repeatedly missed its target due to lax implementation of rules, lack of tax compliance and weak governance, observed Khan.
He also stated that many planned reforms had fallen behind schedule due to negligence, inertia and failure to recognise the urgency of reforms.
Rejuvenation of private investment has again remained elusive while public investment performance was the weakest in recent years, he said.
“In view of the discussion above, the upcoming budget will need to raise the quality of budgetary and fiscal planning and put emphasis on the needed reforms,” said Khan.
He said current economic growth projections should be reviewed in view of composition of incremental GDP, which is unlikely to lead to high job creation.
According to the keynote paper, if the growth rates of FY2015 (6.55%) and FY2016 (7.05%) are compared, of the extra growth of 0.5 percentage points, 0.4 percentage points is expected to be contributed by the national pay scale revision. “This then draws attention to issues of both quality and sustainability of the GDP growth.”
“Pace of new employment generation also was unlikely to gain momentum in the backdrop of slowdown in private investment,” reads the key-note paper.
In a recent media report that during the last two years, between 2013 and 2015 (July-September), only 6 lakh jobs were added to the Bangladesh economy (annual average being only 3 lakh).
This is a drastic drop from the 13.8 lakh jobs that were created annually (on average) between 2003 and 2013, said the paper.
The nature of recent acceleration of GDP growth suggests that it is largely driven by rise in public salaries, it said.
“It is highly likely that such boost will last for one more year when the second adjustment is made in view of the newly approved government pay scale (allowances). It is crucial that such acceleration in economic growth is accompanied by enhanced private investment and more quality jobs for the large young labour force of the country,” said the paper.
CPD Executive Director Professor Mustafizur Rahman said: “Employment generation is important for quality growth, which will increase people living standard.”
He recommended the government for strengthening national statistical department for data revolution required for implementing SDGs.
CPD Additional Research Director Khondaker Golam Moazzem said private investment was not picking up in line with the rising public investment.
Thursday, April 25, 2024
