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A local think-tank on Thursday observed, as the current fiscal year comes to a close, that the performance of the economy this year is ‘relatively more productive’ than the last fiscal’s
GDP growth rate, according to a provisional estimate, improved to 5.5 per cent in the current fiscal from 5.26 per cent last year, pointed out the Centre for Policy Dialogue.
“Magnitude of the growth does not reveal the real condition of the country as growth is inequitable and urban-biased,” said Dr Debapriya Bhattacharya, executive director of the centre, while speaking at a press briefing on the state of the economy.
“It is a discriminatory growth that rewards urban and affluent people and harms the poor,” he added.
The economist opined that incremental growth was spearheaded by the manufacturing and service sectors, since 55 per cent of the total growth is due to them, while the contribution of agriculture was relatively low at 11 per cent.
Quoting the official data, Bhattacharya pointed out that domestic savings are almost stagnant at 18 per cent of the GDP, indicating the very low savings of poor and rural people.
“With cost push inflation, the poor are more affected, as the rural price hike, especially of food items, is higher than urban price increases,” he added. “As they have to spend more due to price hike, they have little to save.”
In this connection, Bhattacharya stressed the necessity of channelling more funds to the rural economy and effective delivery of incremental agricultural subsidy through budgetary measures in next fiscal year.
He also strongly argued for expansion of the social safety-net programme, separate savings schemes for small savers, pensioners and disadvantaged groups, and a new pay scale to state employees through budgetary measures.
The economist pointed out that grossly under-implemented development decisions along with creeping inflation, weak revenue generation and low utilisation of foreign aid has prevented the economy from growing more in the current fiscal.
He said that increasing the effective income tax base and fuller implementation of the development programme would be the key concerns in the coming days.
“So far, mostly the fixed income group has been under pressure of taxation while huge numbers of different professionals like lawyers, doctors, engineers, private tutors are not paying taxes properly,” Bhattacharya continued.
He said only two per cent of the labour force, amounting to around 10 lakh, are effective income tax-payers.
Bhattacharya said government should identify and list the names of the people who have purchased Mercedes Benz, Volvo, Lexus, BMW and other deluxe motor cars and luxurious apartments.
“If it can be done, income tax will increase significantly, and it is not the tax authority but the strong political will of the government that can do this,” he added.
Bhattacharya pointed out increasing GDP growth beyond six per cent, ensuring more equitable distribution of growth benefits and keeping inflation under control are major challenges for the future.
The economist said that as the incumbent government is about to complete three years of its tenure, pressure to make election-oriented and populist expenditures is also increasing.
“So it will be more difficult for the government in the near future to address the most important challenges and concerns of the economy,” he added.
   Among others, CPD research director Prof Mustafizur Rahman, research fellows Dr Ananya Raihan, Dr Uttam Kumar Deb, Dr Fahmida Khatun, and dialogue and communication head Anisatul Fatema Yousuf were present at the press briefing.