Citizens must be protected from uncontrolled inflation

Emeritus Professor at the Department of Development Studies, University of Dhaka Dr Atiur Rahman termed the proposed budget for the financial year 2024-25 realistic.

However, he thinks that the authorities have the scope to make these proposals more equitable.

The former governor of Bangladesh Bank further said that the proposed budget seems to be very sensitive in reality. At the same time, the proposed budget could have been more welfare-oriented in some areas.

He also said that the proposed budget of Bangladesh in 2019-20 was Tk568,000 crore, which increased to Tk761,000 crore in 2023-24. So during this period, the size of the budget increased at the rate of 7.6 percent.

"The size of the budget for the upcoming fiscal year 2024-25 has also increased compared to the current one. However, the rate of the increase is less than that of previous years. This year saw only a 4.6 percent increase in size."

"As a result, budget-makers who are sensitive to the reality are also moving towards the path of contraction and it is visible."

He thinks that the desire to keep the budget deficit at 4.5 percent as a part of keeping fiscal policy in coordination with monetary policy is quite acceptable in terms of reality.

However, he considers the growth target of 6.75 percent ambitious.

According to him, it will not be easy to reduce the inflation rate to 6.5 percent. "To achieve this goal, there is no alternative to further reducing the budget deficit, reducing the amount of credit from the banking sector."

The impact of these cuts on social sector allocations like education and health, allocations for agriculture, investment, and employment supporting sectors/programs/projects should be made as nominal as possible to be benefited, he thinks.

Regarding the allocation for social security programs, he said, "For almost a decade, 15-17 percent of our total budget has been allocated to social security programs. The rate of poverty and extreme poverty decreased dramatically under the influence of the policy."

"This year too, more than 17 percent of the budget has been allocated for social security programs. But here, I expected some growth in allocations to protect citizens from the uncontrolled inflation."

"Since inflation is around 10 percent, we feel that increasing the allocation for the social security program by at least 10 percent would have given the beneficiaries of the program enough strength to cope with inflation," he added.

Atiur Rahman: Economist, former governor of Bangladesh Bank and Emeritus Professor of Dhaka University.