Unnayan Onneshan projects lower GDP growth02 March 2014
UNB, Dhaka :
Unnayan Onneshan, an independent multidisciplinary think-tank, in its current issue of the Bangladesh Economic Update (MEU) revealed that fall in growth in collection of revenue, rising per capita debt burden and shrinking public sector investment may contract expansion of gross domestic product (GDP).
The observation came in the backdrop of reduction in investment and growth for the successive three years from those of the preceding ones.
In FY 2010-11, the GDP growth rate was 6.71 percent, which declined to 6.23 percent in FY 2011-12, and further fell to 6.03 percent in FY 2012-13.
The Unnayan Onneshan (UO) anticipates that the rate of growth in GDP in the current fiscal may fall below the decadal average of six percent and may reach as low as 5.65 percent.
It cautioned that the pressure in revenue collection is likely to add up to budget deficit, which is targeted at 4.6 per cent of GDP in FY 2013-14. In FY 2013-14, total public borrowing is targeted at Tk. 55032 crore, which is Tk. 3986 crore greater than the previous fiscal year.
The think tank pointed out that usually a major portion of government expenditure goes to interest payments on both the domestic and foreign sources which are non-development expenditure. In FY 2013-14, the total expenditure on interest payment assumed at Tk. 27743 crore which is 18.83 percent higher than that of FY 2012-13. Interest payment reduced the spending on social expenditure, it said.
Considering the business as usual scenario, the Unnayan Onneshan estimates that the gap between total revenue and expenditure might increase to Tk. 58170 crore in FY 2014-15 from Tk. 55032 crore in FY 2013-14.
"In FY 2013-2014 (up to January 2014), the collection of indirect tax is as high as 69 percent vis-à-vis a direct tax of only 31 percent of total collection of tax. While direct tax causes the rich to pay tax on their income, indirect tax exerts much pressure on the meagre income of the marginalised people in the country."
Additionally, actual ADP implementation has seen a large fall in recent time from Tk. 31089 crore in FY 2012-13 from Tk. 38020 crore in FY 2011-12. Moreover, the actual ADP implementation up to January 2014 is Tk. 16748.4 crore against the revised allocation of Tk. 54000 crore.
Referring to the per capita debt burden, the research organisation notes that the rising trend over the years which might cause per capita debt burden to increase to Tk. 3582.8 in FY 2013-14 from Tk. 3389.8 in FY 2012-13. In fiscal year 2011-12, per capita debt burden was Tk. 2982.2.The ever-rising public debt has been exerting a serious pressure on the macro-economic stability in the country, the organisation observes.
The organisation projected that if the present trend of borrowing continues, the borrowing by the government from domestic sources might increase to Tk. 36636 crore in FY 2013-14 against proposed target of Tk. 33964 crore, whereas in FY 2012-13, domestic borrowing was Tk. 32473 crore.