Anisul Islam Noor :
The government claimed rate of growth in Gross Domestic Product (GDP) is not compatible with other socio-economic indicators.
Talking with The New Nation Professor Dr. Rashed Al Mahmud Titumir of the Department of Development Studies at the University of Dhaka said that the proposed budget for fiscal year (FY) 2019-20 lacks measures necessary to address the looming macroeconomic imbalances.
“Widespread imbalances in revenue, financial and external sectors and disproportionate burden on the income and welfare of the common people are creating challenges and sloppy condition for the economy with an impending crisis is looming large,” said Prof Titumir, who is also Chairperson of the think-tank, the Unnayan Onneshan.
Referring to the recent study of India’s GDP growth by its former chief economist Arvind Subramanian, which says India’s actual GDP growth rate is 2.5 percentage points lower than the official estimation, he said that if a similar study was conducted for Bangladesh, the GDP growth rate might be at the level of 6 per cent, which was the auto-pilot growth rate for Bangladesh.
Prof. Titumir cited that the ratio of private investment to GDP has stagnated, adding that the rate of poverty reduction has decreased, inequality and unemployment are rising alarmingly while real wage is declining.
“The rate at which import payment increases does not match with rate of export earnings, which is creating current account deficit. The amount of external loans is increasing but these are not being repaid now. When repayment will start, it will negatively affect the overall balance of payment, which may also slide the economy into a debt trap,” he said.
Referring to the heavy dependence of the tax structure on Value Added
Taxes (VAT), he said that the burden of this indirect tax is on the ordinary people while tax exemption and tax evasion for the upper classes have become the norm. “The ordinary taxpayers are working as the main sources of debt repayment and development,” added Prof Titumir.
Even though the general public carries the burden of taxation, they are not getting satisfactory public services, he pointed out, adding that the quality of education and health is highly substandard and other services like safe drinking water, sanitation, rural electricity and related public service facilities are far from being adequate.
Prof. Titumir also notes of a disturbing trend of deceleration in rate of reduction of poverty. According to the Bangladesh Bureau of Statistics (BBS), the reduction in poverty has slowed down to 1.2 percentage points during the period of 2010-2016 from 1.7 percentages points of the period of 2005-2010.
Referring to the income elasticity of poverty, which indicates the magnitude of the effect of per capita income growth in reducing the rate of poverty in percentage terms, he said that the country has experienced lowest rate of decline in poverty despite higher rate of growth in income among South Asian countries.
Pointing to the worsening unemployment rate, the Chairperson of the Unnayan Onneshan notes that large numbers of people are losing their income, which has implications for reduced standard of living. Currently, there are 1 lakh 29 thousand job vacancies for the job seekers in the industrial sectors against 20- 22 lakh job seeking people. The household income and expenditure survey (HIES) data shows that the rate of calorie intake has decreased by 5 per cent, making it 2210 kilo calorie in 2016 from 2318 kilo calorie in 2010.
Turning to inequality, Prof Titumir observed that the rate of income inequality is increasing at an alarming pace. In 2016, Gini coefficient has risen to 0.483 from 0.458 in 2010. In 2016, share of income of the poorest 10 per cent people has decreased to 1.01 per cent which was 2 per cent in 2010.
“Inequality has widened on the back of the gap between return on capital and return on labour on the one hand and the persistent primitive accumulation in different sectors of the economy on the other,” he added.
Pointing to dismal state of the increased default loan, Prof Titumir said that the tax money is paid by the ordinary people to resolve the fiasco of the banking sector that disproportionately benefits the wealthy and powerful groups.
Questioning the allocation pattern and about the quality provision of expenditure in the development sector, he observed that the state finances are being usurped by the clienteles.
He called for a vigilant look into the falling investment demand since any further decline in the private investment is assumed to significantly slow down the economy.
“Macroeconomic stimuli are required to ensure pro-poor growth through generating employment opportunities in the economy. Besides, an increased allocation of resources and implementation of development programmes in health and education sectors must be ensured, while the social safety net programmes have to be transformed into of a sustained system of social security”, he suggested.
The government claimed rate of growth in Gross Domestic Product (GDP) is not compatible with other socio-economic indicators.
Talking with The New Nation Professor Dr. Rashed Al Mahmud Titumir of the Department of Development Studies at the University of Dhaka said that the proposed budget for fiscal year (FY) 2019-20 lacks measures necessary to address the looming macroeconomic imbalances.
“Widespread imbalances in revenue, financial and external sectors and disproportionate burden on the income and welfare of the common people are creating challenges and sloppy condition for the economy with an impending crisis is looming large,” said Prof Titumir, who is also Chairperson of the think-tank, the Unnayan Onneshan.
Referring to the recent study of India’s GDP growth by its former chief economist Arvind Subramanian, which says India’s actual GDP growth rate is 2.5 percentage points lower than the official estimation, he said that if a similar study was conducted for Bangladesh, the GDP growth rate might be at the level of 6 per cent, which was the auto-pilot growth rate for Bangladesh.
Prof. Titumir cited that the ratio of private investment to GDP has stagnated, adding that the rate of poverty reduction has decreased, inequality and unemployment are rising alarmingly while real wage is declining.
“The rate at which import payment increases does not match with rate of export earnings, which is creating current account deficit. The amount of external loans is increasing but these are not being repaid now. When repayment will start, it will negatively affect the overall balance of payment, which may also slide the economy into a debt trap,” he said.
Referring to the heavy dependence of the tax structure on Value Added
Taxes (VAT), he said that the burden of this indirect tax is on the ordinary people while tax exemption and tax evasion for the upper classes have become the norm. “The ordinary taxpayers are working as the main sources of debt repayment and development,” added Prof Titumir.
Even though the general public carries the burden of taxation, they are not getting satisfactory public services, he pointed out, adding that the quality of education and health is highly substandard and other services like safe drinking water, sanitation, rural electricity and related public service facilities are far from being adequate.
Prof. Titumir also notes of a disturbing trend of deceleration in rate of reduction of poverty. According to the Bangladesh Bureau of Statistics (BBS), the reduction in poverty has slowed down to 1.2 percentage points during the period of 2010-2016 from 1.7 percentages points of the period of 2005-2010.
Referring to the income elasticity of poverty, which indicates the magnitude of the effect of per capita income growth in reducing the rate of poverty in percentage terms, he said that the country has experienced lowest rate of decline in poverty despite higher rate of growth in income among South Asian countries.
Pointing to the worsening unemployment rate, the Chairperson of the Unnayan Onneshan notes that large numbers of people are losing their income, which has implications for reduced standard of living. Currently, there are 1 lakh 29 thousand job vacancies for the job seekers in the industrial sectors against 20- 22 lakh job seeking people. The household income and expenditure survey (HIES) data shows that the rate of calorie intake has decreased by 5 per cent, making it 2210 kilo calorie in 2016 from 2318 kilo calorie in 2010.
Turning to inequality, Prof Titumir observed that the rate of income inequality is increasing at an alarming pace. In 2016, Gini coefficient has risen to 0.483 from 0.458 in 2010. In 2016, share of income of the poorest 10 per cent people has decreased to 1.01 per cent which was 2 per cent in 2010.
“Inequality has widened on the back of the gap between return on capital and return on labour on the one hand and the persistent primitive accumulation in different sectors of the economy on the other,” he added.
Pointing to dismal state of the increased default loan, Prof Titumir said that the tax money is paid by the ordinary people to resolve the fiasco of the banking sector that disproportionately benefits the wealthy and powerful groups.
Questioning the allocation pattern and about the quality provision of expenditure in the development sector, he observed that the state finances are being usurped by the clienteles.
He called for a vigilant look into the falling investment demand since any further decline in the private investment is assumed to significantly slow down the economy.
“Macroeconomic stimuli are required to ensure pro-poor growth through generating employment opportunities in the economy. Besides, an increased allocation of resources and implementation of development programmes in health and education sectors must be ensured, while the social safety net programmes have to be transformed into of a sustained system of social security”, he suggested.
