Budget an economic illusion: CPD

Debapriya Bhattacharya, distinguished fellow of CPD, today termed the proposed budget for the FY 2017-18 as “economic illusion” saying that there is no clear indication between income and expenditure in it.

“There are huge discrepancies in some statistics - including the stats of employment and revenue - in the proposed budget. It is an economic illusion,” he said while addressing a press conference at a hotel in Dhaka this noon. 

The Gross Domestic Product (GDP) growth rate has been set at 7.4 percent in the fiscal and inflation will come down to 5.5 percent. “But we see there is a concern of going up the inflation rate than that of the outgoing year,” he said adding the low and middle income group will face a pressure.

Economist Dr Debapriya Bhattacharya, distinguished fellow Centre for Policy Dialogue (CPD), speaks at an analysis on the national budget for FY 2017-18 at a private television channel on Friday, June 2, 2017. Photo: Palash Khan/ STAR

Expressing dissatisfaction over several segments of the proposed budget, he said the 40 percent growth of revenue by a year is “impossible”.

He, however, said the GDP growth will not make enough sense if new jobs are not created to reduce unemployment.

“If jobs are not created and unemployment is not eradicated with the growth, the number of this growth will not make sense enough,” he said while presenting the budget analysis this morning, a day into Finance Minister AMA Muhith unveiled the proposed budget.

Job creation has also slowed down to about 4.7 lakh each year, same as the labour force, while unemployment rate remained almost unchanged at 4.2 percent in FY 2016, he said. 

To achieve the proposed GDP growth to 7.4 percent, Tk 6,000 crore additional amount of investment will be needed in private sector while Tk 50,000 crore additional amount of investment needed in government sector, he said.

“But the private investment as a share of GDP is expected to rise by 0.2 percentage points only,” he observed.

He also said it is questionable whether inflation will remain stable at 5.5 percent as expected in the budget.

The economist further said, “Gross foreign aid requirement will be around US$ 7.6 billion (US$ 4.5 billion in revised budget for FY17), which is an almost impossible target in view of only US$ 2 billion being received during July 2016- February 2017.”

While the finance minister has laid out an ambitious budget, his implementation plan remains absent, he added.