Budget must reduce inflationary pressure

Says Dr AB Mirza Azizul Islam

Staff Correspondent: Prominent economist and former advisor to the caretaker government AB Mirza Azizul Islam said that the national budget for the upcoming fiscal year 2024-25 is coming at a time when the country’s economy is plunged into many crises. Macro economy is under pressure, low reserves are sighing on the government’s neck, export earnings and remittances are not good news either. The situation is going to the dollar market. The biggest crisis in the economy now is high inflation. Bank and financial sector also suffering a lot. Apart from this, receiving loans and assistance from donor agencies is also not satisfactory. Due to the dollar crisis, the government is not able to import much of what it needs or pay the import bills. There is a drought in domestic and foreign investment, there is no new employment.
In the light of time, he also said that when this is the situation, the government has to think seven-five and work in front of the new budget. However, it remains to be seen which aspects the government will prioritize in the upcoming budget in the economic situation during the crisis. But I think the budget for FY 2024-25 should focus first on how to bring down high inflation.
Because in the last two-three years, the prices of all types of consumer goods, including the main staple food products, have increased so abnormally that it has become difficult for the common people of the country to get three meals a day.
Dr. Mirza Aziz said, according to the latest published report of BBS, food price inflation increased by 10.22 percent in April. Last March, the price inflation in food products was 9.87 percent. However, non-food inflation decreased by seven basis points to 9.74 percent in April compared to last March. The BBS also reported that the rate of inflation is higher in rural areas than in urban areas. In April, the general inflation rate in cities was 9.46 percent, while in rural areas it was 9.92 percent. Inflation rate in rural food sector is 10.25 percent and non-food sector is 9.60 percent. On the other hand, the general inflation rate in the city is 9.46 percent. In the city, the rate of inflation in the food sector was 10.19 percent and in the non-food sector was 9.01 percent. Inflation rate has increased in all sectors in rural compared to urban. But I believe the inflation data given by the BBS is higher than the actual inflation rate. So, the new budget needs to focus on how to reduce the burden of high inflation from the shoulders of the common man. The tax structure should be arranged in the next budget according to which the price of consumer goods will come down.
For the same reason, the former caretaker government’s finance adviser suggested giving more importance to social security in the next budget. He said that due to this high inflation, the level of suffering of the poor people who are receiving government assistance has also increased. At present the rate at which the poor class of people are getting allowances from the government is no longer pampering them. Therefore, the scope of social security programs needs to be greatly increased in the new budget. The poor and low-income people are crushed by the pressure of inflation. It is necessary to reduce the unnecessary government expenditure and increase the budget allocation for the social security sector.
Dr. Mirza Azizul Islam has also suggested employment creation initiatives in the 2024-25 budget. In this regard, he said, due to the dollar crisis, the import of industrial parts and raw materials has decreased. Industrialization is hindered to an extreme extent. As a result, new employment has stagnated. In addition, many industrial owners are laying off work due to the business downturn. As a result, unemployment rate is increasing. For this, the budget should focus on investment and employment. The amount of foreign investment is very less compared to our economic capacity. Also, the rate of private investment in the country is not good compared to the gross domestic product (GDP). Thus, we are falling into a kind of investment trap. Although the budget is small this time, employment should be given special importance. We have to see how we can encourage the private sector, give various incentives to increase employment. Apart from this, investment environment, infrastructure or financing difficulties must be removed.
This economist thinks that the government needs to give importance to banks, financial sector and stock market. In this regard, Mirza Azizul Islam said, the banking sector is now at the edge of the abyss. It can be said that the banking sector has been sustained by a kind of barrier. The banking sector has been in trouble for a long time due to various irregularities and looting. For this, the reform of the banking sector should also be looked into in the next budget. I will wait to see what steps the government takes to reform the banking and financial sector in the new budget.