Revenue, investment, fair price for farmers key challenges: CPD

June 2, 2015

New Fiscal Year
Revenue, investment, fair price for farmers key challenges: CPD
Revenue growth, tapping more foreign assistances, sluggish exports in the US market, ensuring fair prices for farmers and accelerating private investment would be key challenges for the government in the new fiscal year. The Centre for Policy Dialogue has identified the challenges in its review report on the country’s economy it released at a programme in the capital on Monday.
Moderated by CPD executive director Mustafizur Rahman, the programme was attended by CPD distinguished fellow Debapriya Bhattacharya and research fellow Towfiqul Islam Khan, among others.
Towfiqul said the government had already faced challenges to handle the issues in the outgoing fiscal year despite low level of inflation, stable exchange rate, positive balance of payment and falling commodities prices in the global market.
He said the challenges were going to define the benchmark for the new fiscal year to be started from July.
Since 2012 private investment has stagnated. Scenario remained unchanged after credit to the private sector stood 13.6 per cent until March 2015.
The imports of capital machinery until that period was impressive, but the local think-tank alleged that illicit fund flew outside the country through the import of capital machinery.
Towfiqul said CPD’s rapid business environment assessment survey revealed that investment climate could further deteriorate because of corruption, inadequate infrastructure, inefficient government bureaucracy, government instability and limited access to financing.
The CPD assessed that the revenue-GDP ratio would decline for the third consecutive fiscal year including the outgoing one because of a weak fiscal framework.
It noted that additional Tk 59,000 crore revenue collection over the actual revenue target in the outgoing fiscal year should be sought by the government.
The government is facing daunting task to revamp revenue mobilisation by widening the existing tax net and finding new sources, it added.
The CPD observed that major competing countries performed better than Bangladesh in terms of increasing their apparel exports during July-March of the outgoing fiscal year.
It also observed that illegal migration from the country should be stopped for the sake of legal migration since remittance helped the country in many ways.
Fair price of rice has been illusive for the farmers in the outgoing fiscal year due to import of rice from neighbouring country India.
The CPD noted that the government slapped additional duty but the farmers could not avoid big losses.
The think-tank suggested massive changes in rice procurement policy and subsidy payment system in the coming fiscal year to protect the sector that still employs largest workforce.
It noted that lack of utilisation capacity for foreign resources might remain a weak area.
It said dependence on domestic financing increased while utilisation of foreign loans and grants remained weak. It is important to give adequate attention to the infrastructure project by the foreign assistance, said CPD officials.
They said the government was facing another challenge due to falling prices of commodities including fuel oil in the international market.
A major challenge in the new fiscal year would be to take advantage of the declining trend in the global commodity prices and opt for more growth-friendly expansionary policy, they said.

-Input from New Age

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