Focus of budget to control inflation

Industry Desk: Two leading economists of the country, while shedding lights on the next budget for FY23, said controlling inflationary pressure is now the main challenge of the economy and the government should cite controlling inflation as the main policy in the next budget.
Distinguished fellow of the Centre for Policy Dialogue (CPD) Professor Dr Mustafizur Rahman and the Research Director of the Policy Research Institute (PRI) Dr MA Razzaque also focused on keeping the inflationary pressure within the tolerance level of common people.
Finance Minister AHM Mustafa Kamal is set to place the next national budget for FY23 at Jatiya Sangsad on June 9.
Prof Mustafizur said people of the country are now under inflationary pressure and it should be kept at a tolerant level as much as possible to give the commoners relief.
“For this, expenditures in the social safety nets should be increased side byside the poor section of people should get protection. The government is providing poor people rice with Tk 10 per kilogram (KG) alongside cash support. Under the circumstances, such kind of food support and cash support should be increased more,” he added.
To expand the coverage of the social safety net programmes, the pressure on subsidies will increase, he said, adding: “Since, the common people are now under inflationary pressure, allocations against subsidies should be increased. In doing this, the government should accept the higher budget deficits.”

Hailing the government’s move to reduce tax and VAT on import of essentialitems alongside discouraging import of luxurious items to control inflation, the eminent economist noted that the central bank should continue its efforts to keep the market of foreign currency stable.

“The current level of foreign currency reserve in no way creates any apprehension. So, the selling of US dollars should continue as per the demand so that there is no crisis,” he said terming the devaluation of Tk against US dollar as a timely move.

Considering the current inflationary pressure on common people mostly due tothe global economic situation, Dr Mustafizur proposed for raising the ceilingof the individual tax payers as the tax free income ceiling was raised by Tk 50,000 in the last fiscal year to Tk three lakh.

He said the people having annual income between Tk three lakh to Tk four lakh now have to tax at five percent and this tax ceiling should be raised to Tk six lakh to reduce their pressure.

The CPD distinguished fellow also proposed for increasing the institutional capacity of the National Board of Revenue (NBR) as well as strengthening its efforts to check tax evasion and infusing dynamism into the pricing sale system.

Considering the present circumstances, the renowned economist suggested forpaying more attention to the revenue budget instead of the development budget as expenditure in the import-based projects should be checked. The government is also moving to that direction, he added.

He said the government should not undertake any fresh import-based project which will help minimizing pressure on the foreign currency reserves.

In order to deal properly with the challenges of LDC graduation, Dr
Mustafizur said that the next budget should focus on the initiatives to enhance the skills of the exporters to make them more competitive.

He also proposed for giving highest allocation in the education and health sectors in the next budget side by side enhancing budget implementation capacity of the government.