An economist has said that the upcoming budget for 2013-14 should encourage investments in the private sector.
Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said this to bdnews24.com ahead of the budget session beginning on Jun 6.
He said there was no alternative to greater private investments to keep up of current GDP growth. “It is essential for increasing export revenue, employment and productivity.”
He said the growth rate in the current fiscal (2012-13) failed to meet the target because of a lack of private sector investment.
Bakht suggested the lifting of tax curbs on capital goods and at least a two percent tax cut on import of raw materials. “To increase investment in industries, the import of capital machinery must be made easier.”
“Simultaneously, the tax on importing raw materials can be brought down from 5 percent to 3 percent,” he added.
He said the government should be more cautious about allocations for the Padma bridge construction.
“This year will see a reduction in state revenue. There are no clear signs that it will pick up in the next year. And on top of that, there’s election ahead,” Bakht said.
He said that setting aside a huge sum for the Padma bridge in such a situation must not be allowed to hamper other sectors,” he said.
The economist cited BIDS research findings to show a 7 percent growth in the ‘current price’ and less than one percent growth in ‘real price’ for the current sector.
Overall growth would fall short of expectations under these conditions, he said.
Zaid Bakht, who is also a Director of the Sonali Bank, blamed a shrinking monetary policy, absence of an investment-friendly environment and over cautious banks (in case of giving loans) for this lack of optimism.
Already, state-sector banks have shown a reduction in capital, he said. Capital flow to them must be increased. This needs budgetary allocation.
If government-owned banks do not step up loan disbursement, money flow to the private sector would decrease, he said.
Source: Bd news24