A sudden increase or decrease in the prices of fuel oil is a major indicator of fiscal disharmony, said noted economist and distinguished Fellow of the Center for Policy Dialogue (CPD) Dr Debapriya Bhattacharya.
"Taxes have been imposed and again reduced without doing any comprehensive calculation. But slashing taxes will not stabilise the market," he said during a dialogue organised by the Economic Reporters Forum (ERF) at the forum's office in the city's Paltan on Tuesday.
"I have not heard these issues being discussed in the parliamentary standing committee of the Ministry of Finance. If the policy lacks credibility, the market will not accept it," he said, raising a question – who is taking these decisions?
"Some are saying that the prices [of commodity items] will decrease in the next two to three months, but I do not see any such signs in reality. This kind of statement rather creates more distrust in the market, making it more complicated," he said.
Regarding the overall economy of the country, he said, the country's economy is under pressure, but not in crisis. But if not dealt with and if there is an attitude of denial, it will turn into a structural problem, Debapriya said.
Debapriya Bhattacharya highlighted four fault lines of the country's economy: Increased public investment but less than expected rate of private investment; weakness of the financial sector, especially low level of revenue earnings; lack of growth rate of expenditure in education and health sectors compared to physical infrastructure considering GDP; and disparity in the allocation and distribution of social safety nets.
The biggest fault line, he said, is that public investment is increasing, but private investment is not [compared to GDP].
Comparing state investments being higher than private investments to an aeroplane running on one engine, he said, "When public investment is high, it creates a crowding out effect, which means private investment (including FDI) does not come in. A single-engine plane (only government investment) cannot go far."
"Why were some projects, which are actually prestige projects, taken up?" he said, indicating a plunder of funds that began in the 1980s.
Debapriya said the third phase of plundering is going on now. Individuals, groups and institutions are taking advantage of various overrated government projects. Before this, the second phase of plundering started in 2006 through the capital market.
"Not only has competition been removed from the field of electricity and energy, but the right to justice has also been taken away," he said, adding that injustice has been created in the economy.
Citing an example, he said that 2% of GDP has been allocated for Bangladesh's 20 development projects, while at the same time the total allocation for education and health is half of that (1%).
Debapriya raised the question of whether the country's biggest project (referring to the Rooppur nuclear power project) would be of any use, as well as its expenditure. "When we are spending $12 billion on this project, India is doing $3 billion."
"The Padma Bridge was built not with our own money, but with loans from internal sources. Otherwise, why the budget deficit? That's why spending on education and health sectors could not be increased, which is a trade-off. It means the shirt has been bought but not the trousers," he said.
ERF President Sharmeen Rinvy presided over the program, while General Secretary SM Rashidul Islam conducted it.