Set a rational 5 pc GDP growth target
Abu Saazad: Economists have underscored the need for setting a realistic gross domestic product (GDP) growth target for the fiscal 2020-21 that may be achievable.
The government sets 8.2 percent GDP growth target in the proposed budget which is unrealistic because the attainment of such status is not possible to consider the present perspective of the country, said the economists.
The proposed budget sets irrational budgetary target especially the higher budget deficit, ambitious revenue collection target and loan depended dependent budget which is not adequate to attain such higher GDP growth target for the fiscal 2020-21.
They recommended for setting a realistic GDP growth target that may be achievable.
On Thursday (June 11), the finance minister placed a proposed national budget worth Tk 568,000 crore for FY2020-21 providing emphasis on health, social safety net and agriculture.The budget deficit is Tk 1.90 trillion which is 6 percent of country’s GDP.
Of the total deficit, Tk 80,017 crore will be financed from external sources, while Tk 1,09,983 crore from domestic sources of which Tk 84,983 crore will come from the banking sector and Tk 25,000 crore from savings certificates and other non-bank sources, the finance minister said in his speech.
The revenue collection target has been set Tk 378,000 crore. Of the amount, the NBR asked to realise a revenue collection target worth Tk 330,000 crore, followed by the non-NBR revenue collection target for Tk 15,000 croreand the non-tax revenue collection target is Tk 33,000 crore. Besides, Tk 4,013 crore will come from foreign grants.
Talking to Daily Industry, Executive Director of the Policy Research Institute Ahsan H Mansur said, 8.2 percent GDP (gross domestic product) growth target is absurd.
On the other hand, former adviser to the caretaker government DR AB Mirza Azizul Islam said, the GDP growth projection is not realistic.
The 8.2 percent GDP projection is controversial with reality, he said. He raised questioned on the achievement of such higher target.
The economist said,industrial production has lost pace, and export-import have hit the bottom in the last three months of the pandemic, while the National Board of Revenue (NBR) lag far behind than the target of achieving revenue collection.
Maximum 4 to 5 percent GDP growth may be achieved in the FY 2020-21. This is not possible to attain such huge growth target to consider the ongoing situation.
Commenting on the higher banking borrowing target, Islam said, the excessive borrowing from the banking sector would squeeze the investment climate in private sector.
The higher borrowing target from the banking sectorwould ultimately worsen the investment in the private sector, and for this, the private stakeholders would unable to receive adequate fund for boosting their existing business.
However, the economists recommended the GDP growth target should fix the highest 5 to 5.5 percent which may be achievable.
This type of high target is unrealistic. Actually, everybody is in deep concern for transforming the novel coronavirus and nobody knows when the situation will be normal.
Exports and imports have already witnessed the sluggish trend since the beginning of the year and it is uncertain how long this situation will prevail.
Commenting on the big budget, he said, the government declares unrealistic budget. “If you want to know about the huge amount of money deficit and the government’s plan to meet it, I will say that the pace of revenue collection was not good from the beginning of the financial year and the situation became more worsen for the negative impact of the novel coronavirus outbreak. Without any reform of NBR, the government imposed 30 to 35 percent higher revenue collection target which is not realistic”, he added.
All the upcoming targets related with the money collection from internal resources is not justified, he mentioned.
Such kind of irrational target is not possible at all. The budget should have a clear direction of revenue collection, but every year, the government imposed unrealistic revenue collection target, and for this, the NBR always fails to achieve its revenue collection target, he said.
Riding on the unrealistic revenue collection target and loan dependent budget, the government should rethink the matter of GDP growth target. The authorities concerned should fix a rational GDP growth target for FY 2020-21 that may be achievable.