Interim govt increased VAT 'inconsiderately': Debapriya
“No new development vision has been articulated. This government lacks a clear development agenda," says the head of the white paper committee
Highlights:
- Govt's VAT hike on certain products, services "inconsiderate," says Debapriya
- Warns energy situation in country likely to worsen
- Says government structure spending, including revenue and subsidy expenditures, remains unclear
- Warns of reform fatigue amid economic challenges
- Criticises the interim government for not presenting a clear economic manifesto, lack of transparency regarding development projects
The interim government has "inconsiderately" increased value-added tax (VAT) on certain products and services while raising indirect taxes instead of direct taxes, said economist Dr Debapriya Bhattacharya, who led the committee responsible for drafting a white paper on the country's economic situation.
Speaking at an event in Dhaka today (18 January), he remarked that the country's growth rate is gradually slowing down as data from the first quarter of the current fiscal year reflects this trend.
Keep updated, follow The Business Standard's Google news channel
He made these remarks during the inaugural session of a symposium, titled "White Paper and Beyond: Economic Management, Reforms, and the National Budget."
The symposium was organised by the White Paper Drafting Committee 2024 and implemented with the support of the Citizen Platform for SDGs at the China-Bangladesh Friendship Conference Centre in Sher-e-Bangla Nagar, Dhaka.
Debapriya further warned that the energy situation in the country is likely to worsen. The structure of government spending, including revenue and subsidy expenditures, remains unclear. Similarly, it is uncertain how much will be allocated to education and healthcare or who will benefit from these expenditures.
Currently, a confrontation has taken shape in our country, centred on election and reforms
The Aman paddy collection campaign has achieved little success. Corruption remains unchanged, and farmers are still not receiving fair prices, he added.
"Maintaining food reserves in government warehouses is crucial for controlling inflation, but the reserves are not increasing," said Debapriya.
Addressing the purpose of drafting the white paper, he stated that many people ask what happens after the white paper is published. "When we, the drafters, face this question, we feel a sense of helplessness because there is uncertainty.
"In such a situation, it seems important to highlight the analyses presented in the white paper, focusing on the upcoming medium-term plans and the next budget."
"Our goal is to ensure that the recommendations of the white paper are incorporated into policymaking," Debapriya added.
He further noted that while financial assessments are being conducted for managing government expenditures, there is no mechanism for effective monitoring. Initiatives have been taken in the banking and energy sectors, but these are ad hoc and uncoordinated.
"No new development vision has been articulated. This government lacks a clear development agenda. The pathways for achieving SDG implementation, graduation from LDC status, and reducing inequality remain undefined," said the eminent economist.
He also pointed out the lack of policies regarding the ongoing project cuts.
Reform fatigue amid economic challenges
The chief of the White Paper committee on the state of Bangladesh's economy cautioned that the pro-reform sentiment in Bangladesh may wane if the interim government does not accelerate its reform agenda.
"That means the people who are now in favour of reforms at one stage might step aside from the balanced reforms due to the economic insecurity," he said.
Outlining the importance of addressing growth trends, employment, poverty alleviation, and social security, Debapriya said, "Currently, a confrontation has taken shape in our country, centred on election and reforms."
He called for wide-ranging discussions on the upcoming budget, pointing to slowing growth, a lack of private sector investment, and employment challenges as pressing issues.
"Especially, the growth rate is slowing down, no investment in the personal sector and problem in employment is there," he said.
Debapriya criticised the interim government, led by Nobel Laureate Professor Muhammad Yunus, for not presenting a clear economic manifesto.
He argued that this lack of a cohesive policy framework made it difficult to evaluate the situation. While acknowledging isolated steps taken by the administration, he highlighted the absence of a comprehensive plan to build a balanced and inclusive economic system.
"We need clarity on how the government plans to address issues such as LDC graduation and provide mid-term support to those lagging behind," he said.
The economist also pointed out that the interim government operated under a budget formulated by the previous Awami League government.
"This government has not placed a revised budget, rendering all indicators linked to the previous one irrelevant," he observed.
Debapriya also criticised the lack of transparency regarding development projects.
"Without a published policy for scrutinising these projects, it becomes challenging to assess their impact and feasibility," he added.
The white paper committee, which drafted the document on the country's current economic situation, consisted of 11 experts. On 1 December last year, the committee submitted its report to the chief adviser of the interim government.
The report highlighted the previous government's economic mismanagement, chaos, corruption, and plundering.
