# Inflation should be kept under control
# Amount of reserve should be increased
# Revenue incomes also have to rise
Food inflation rises to nearly 11pc: BBS report
Finance Minister Abul Hassan Mahmood Ali will place the national budget for 2024-2025 fiscal year on June 6. Although the amount of this year's budget is not known, according to the information given by the finance minister and the concerned officials of the ministry, the size will not be much bigger than before.
Before presenting the budget in the parliament, economists, businessmen and others concerned are analyzing various explanations. These analyses highlight the current challenges facing the country's economy. And suggestions are coming from economists and stakeholders on how to tackle these challenges.
However, there is a tension among the common people that the new budget actually increases the price of many things, but the government wants to keep inflation under control.
Analysts said there are three major economic challenges in the country’s economy. The first of these three challenges is to control inflation. If inflation is not controlled, the lives of common people will be severely negatively impacted. The second challenge of the economy is to increase the amount of reserve of Bangladesh Bank. Analysts believed that the reserves in the central bank are not enough. As a result, the situation in this reserve has to be improved. The third challenge is to increase revenue. Finance Minister Abul Hasan Mahmood Ali is also serious about increasing revenue. The government took this as a challenge. The concerned believed that the situation will improve if these three challenges can be tackled.
Just three days before the presentation of the new budget, the Bangladesh Bureau of Statistics (BBS) released the inflation report for May. The report also indicates pessimism instead of hope.
According to the BBS, food inflation rose to 10.76 percent in May which was 10.22 percent in the previous month. The BBS gave such information yesterday. According to the report, the overall inflation of the country increased to 9.89 percent in May which was 9.74 percent in April. Overall inflation has increased by 0.15 percent in a month. The overall inflation in the food sector was 10.76 percent in May, which was 10.22 percent in April. Non-food inflation was 9.19 percent in May, which was 9.34 percent in April. Inflation has also increased in rural areas. Inflation in rural areas rose to 9.99 percent in May from 9.92 percent in April. In rural areas, food inflation rose to 10.73 percent in May from 10.25 percent in April. In addition, inflation in the non-food sector was 9.31 percent in May, which was 9.60 percent in April. The average inflation rate from May 2023 to April 2024 was 9.73 percent which has exceeded the government's target of about 6 percent for the fiscal year. This is not good news for the government or the people.
Meanwhile, the question rises that what do ordinary people really want? They want income and expenditure to be balanced. But the problem in front of them now is that inflation is increasing day by day, but income is not increasing in that proportion. If the income had increased in tandem with inflation, they would not have any regrets about it.
Just before the presentation of the upcoming budget, the country's reverse crisis has become very visible. Economists, however, said that if foreign currency can be stopped coming to the country through hundi and brought it through legal means, the crisis over the reserve will be over, but are the concerned people serious about this?
Such questions have also arisen. On the one hand, the crisis is not decreasing due to the decreasing reserve in the country and on the other hand, the government's revenue is not at the desired level. But we have to depend on loans for allocation in various areas including development, subsidies. So far, Bangladesh's foreign debt has exceeded $100 billion. And the government now spends a large part of its income on loans and interest payments. In this situation, economists said that tax collection should be increased without imposing new taxes.
Everyone has to pay taxes in Bangladesh. Giving an example of how everyone pays tax, Dr Mohammad Helal Uddin, professor of economics at Dhaka University, told the media that the person who is begging sitting in Shahbagh, also has to pay an indirect tax when he buys a product. This type of tax is two-thirds of the tax in Bangladesh, which affects the poor more. He advised the government to give importance so that the tax burden does not fall on the common people. He also said that those who are in the top 10 percent of income in Bangladesh, four percent of GDP is supposed to collect tax from them. But we are getting one and a half to two percent. Then we are not able to collect direct taxes. We have to reduce the burden of indirect taxes and increase direct tax collection.
Selim Raihan, executive director of South Asian Network on Economic Modelling (SANEM), thinks inflation has been out of control for a long time. Foreign exchange reserves are constantly decreasing. The indicators of the economy, including growth, investment, employment, exports, remittance, are not in a very promising position. Therefore, there should be guidelines or effective measures to face these challenges in the new budget. So far, no steps have been taken to control inflation. Initiatives to control inflation through monetary policy, fiscal policy and market management have not been seen. A number of reforms need to be strengthened to restore macroeconomic stability. Major reforms are needed in the tax sector, banking sector, export diversification, reducing the cost of doing business, attracting foreign investment.
Chairman of the Parliamentary Standing Committee on Finance Ministry and former Planning Minister MA Mannan said that the strategy for implementing the budget is to maintain the flow of credit, not the burden of tax. We have to increase our income to maintain development. Suddenly, it is not possible with taxes.
ZH
