GDP will grow by 5.6-5.8pc in FY14
Four major economic sectors of the country in the first half of the current fiscal year incurred losses of Tk 49,017.92 crore, which is 4.7 per cent of the GDP of the last fiscal year, due to political violence, Centre for Policy Dialogue said on Saturday. The independent think-tank said transportation (rail and road), agriculture and agro-based industries, export-oriented clothing and textiles and tourism incurred the losses during 55 days of hartals and blockades from July 2013 to January 2014 enforced by the opposition political alliance during the run-up to the national polls held on January 5.
It also projected that the country’s economy would grow by 5.6 per cent-5.8 per cent in the current FY 2013-2014 as some key economic indicators including revenue collection, public expenditure, private sector investment, annual development programme implementation and control in inflation would fall behind the targets.
‘The gross domestic product in the FY 2014 will be between 5.6 per cent to 5.8 per cent as there will be no major supply-side disruption and uncertainty in the rest of fiscal year,’ CPD said in its analytical review of Bangladesh macroeconomic performance in the FY 2014 (second reading) released on Saturday.
According to the CPD estimates made by the think-tank analysing media reports, transportation (rail and road) incurred the highest amount of loss with Tk 16,688.65 crore followed by agriculture and agro-based industries with Tk 15,829 crore, readymade garment sector with Tk 13,750 crore and tourism sector with Tk 2,750 crore.
The local think-tank also said that it could not acquire enough data to calculate losses incurred by the small-scale domestic market-oriented industries and businesses though the sectors were hit hard.
Referring to its earlier studies, the CPD said that one per cent loss of the country’s capital assets leads to 0.9 per cent loss of GDP.
The CPD said that the budget for the FY 2014 needed to be revised due to a continued deterioration in performance of some of the major economic indicators including revenue earnings, ADP implementation, remittance inflow and foreign aid utilisation in the first half of the fiscal year.
In its review, the research organisation observed that the GDP acceleration, so critical to realising its ambition of becoming a middle income country, appeared to be lost in recent years.
CPD distinguished fellow Debapriya Bhattacharya at a briefing said considering the economic damages during the first half of the fiscal year, the CPD advised to adopt some policy measures including restructuring the fiscal framework, support to boro harvest and rural economy, compensatory measures for the affected sectors and ensuring policy predictability for attracting investment.
The briefing was organised at the CPD office in the city on the occasion of the release of the review report.
Debapriya said, ‘The government should prioritise the development projects which would accelerate the demand for investment in the economy.’
The government has also some advantages proceeding from positive trend in export earnings, balance of payment and stability in the international markets, but proper utilisation of these advantages will depend on political stability in the country, he said.
CPD executive director Mustafizur Rahman said, ‘The government should compensate small industries and rural economy-based sectors along with big export-oriented industries such as RMG to offset the losses they have incurred during political violence.’
The government should implement the scheme taking fund from alternative sources instead of bank borrowing to avoid additional pressure on the banking sector, he said.
The CPD projected a lower production of boro rice and suggested that the government should ensure continuous electricity supply during irrigation, adequate diesel and fertiliser supply in timely manner to ensure a positive growth in boro production.
It also said that ensuring adequate food stocks would be a challenge for the rest of the fiscal year as the stock declined to 9.51 lakh tonnes against the standard level of 10 lakh tonnes.
The National Board of Revenue will fall short of the revenue collection target by Tk 18,000-Tk 20,000 crore in the current fiscal year, the CPD forecasted.
It also predicted that the government would also not be able to spend its targeted expenditure in the FY 2014 due to low ADP implementation, lower foreign aid financing and failure in revenue mobilisation.
-With New Age input
