Centre for Policy Dialogue (CPD) on Sunday recommended that the government adjust diesel and kerosene prices with global rates in the upcoming budget for fiscal year 2017-18 for the sake of the poor.
“Since poor people are the main consumers of these petroleum products, living in areas that are not connected to the central grid, the government should adjust and reduce their prices,” said CPD Research Fellow Towfiqul Islam Khan on the think tank’s analysis on the state of the Bangladesh economy in 2016-17.
Speaking at a press conference about the current budget and presenting recommendations for the next one, Towfiq said reducing diesel and kerosene prices would not cut the government’s profits and would only benefit the poor.
They recommended depreciating the local currency to facilitate export and remittance sector, adjustment of interest rate of savings certificate with bank deposit, exercise of caution and vigilance in view of rising rice price and mandatory consideration of bank’s performance during recapitalisation.
The CPD recommended a set of reform agenda including in the financial sector, agriculture price regulation and public expenditure review.
Their recommendation was a three sector-wise commission to implement the reform agenda in the FY2017-18 budget, calling them Independent Financial Sector Reform Commission (IFRC), Agriculture Price Commission (APC) and Public Expenditure Review Commission (PERC).
The IFRC will work for the reform of financial sector, the APC to regulate price of agricultural products protecting farmers’ rights and the PERC will provide medium-term policy guidelines and formulate a concrete set of strategies to improve efficiency in budget delivery.
Towfiq said: “Planned size of the total budget increased over time but the actual implementation did not improve by any discernible margin.
“Budget implementation capacity needs to be enhanced, particularly in delivering ADP in a time-efficient and cost-effective manner.”
However, supporting the new Value Added Tax (VAT) act, which is scheduled to come into effect from July 1, the CPD recommended reducing VAT to 12% instead of the uniform 15% after a year or two of the implementation.
The think-tank recommended reducing the personal income tax rate from 10% to 7.5% in the upcoming budget, saying that it will help expand the domestic market.
Distinguished CPD fellow, Debapriya Bhattacharya said: “Prevailing economic situation in the country demands an expansionary budget. But the quality of financial indicators of budgets including revenue target, expenditure, budget deficit, financing budget deficit is a huge mismatch.”
He said without a pragmatic review of the budget the creation and announcement of a big budget will create a “fiscal illusion.”
“Public representative is absent in formulation of budget which is an impediment in formulating and implementing a budget and this makes it easy for a group of unscrupulous people to manipulate the budget allocation for their own benefits,” added Debapriya.
CPD Executive Director Fahmida Khatun presided over the presentation while CPD Research Fellow Towfiqul Islam Khan presented the key-note paper.
Distinguished fellows of CPD Debapriya Bhattacharya and Prof Mustafizur Rahman and CPD Research Director Khondaker Golam Moazzem also spoke at the event.