7.2pc GDP growth for next fiscal ‘over ambitious’

The government’s plan to keep 7.2 percent GDP (gross domestic product) growth target in the coming budget will be an ‘over ambitious’ given the external and internal situation, especially political uncertainty, said economists.They said the slower investment trend in the private sector and inadequate credit flow kept the economic growth at lower base in the outgoing budget.
“It’ll be overly ambitious if the government targets 7.2 percent GDP growth in the coming budget,” Executive Director of the Centre for Policy Dialogue (CPD) Prof Mustafizur Rahman told UNB on Saturday.
He said the base of the growth is low as the Bangladesh Bureau of Statistics (BBS) calculates 6 percent (6.03 pc) growth for the outgoing
budget against the target of 7.2 percent.
Prof Rahman also said there will be a need of 30 percent investment of the GDP to achieve such a higher target. “Otherwise, it’ll be very difficult…a big portion of investment should come from the private sector but credit growth is slow.”
Talking to UNB, Director General of the Bangladesh Institute of Development Studies (BIDS) Dr Mustafa K Mujeri said if the investment in the private sector does not increase, the growth will not be possible.
“We’ll have to remove the stagnation, and some massive changes are needed in the current system to achieve 7.2 percent GDP growth,” he said.
Responding to a question, Dr Mujeri said, “If we look at from with the development perspective, 7.2 percent GDP growth target is not ambitious; rather it’s lower than the expectation. But if we look at from with the real perspective, many may question whether the government will be able to take the steps needed to make that happen.”
He said investment mainly comes from the private sector but the private investment was very low in the outgoing fiscal.
Since the election is approaching, taking the growth-friendly policy will turn tough, said the BIDS DG. “We’ll have to come out from the present situation if we expect a 7.2 percent growth. Development isn’t possible if the prevailing situation goes on.”
He said the growth should have been much higher, but the government could not achieve the 7.2 percent in the outgoing fiscal.
Economist and chairman of Unnayan Onneshan Rashed Al Mahmud Titumir said historical economic growth trend shows that the growth is decreasing despite having potential to achieve higher growth. “But it didn’t happen due to policy mismatch.”
Asked whether government’s plan to set 7.2 percent GDP growth in the coming budget is justified, he said, “The GDP target should be closer to reality.”
Mahmud said focus should be given on infrastructure development. “If it happens, it’ll help remove supply-side constraints or bottlenecks, and this way the growth could be revived.”
He mentioned that there was no significant investment in the outgoing fiscal year.
Growth Trend: The country witnessed a rise in economic growth after the present government assumed office. During the previous BNP-Jamaat rule, the average growth was 5.7 percent.
Though the country saw a higher growth during the present tenure of the government, the government could only achieve the GDP growth target twice.
The GDP growth was 6.07 percent in 2009-2010 fiscal year, and it stood at 6.70 percent in the next fiscal year (2010-2011).
But the growth could not sustain as the growth was recorded 6.23 percent against the target of 7 percent in 2011-2012 and it will be, according to the BBS, 6.03 percent against the target of 7.2 percent in the outgoing fiscal (2012-13).
ADP Size: Meanwhile, the size of the budget and Annual Development Programme (ADP) has been double in the last four years. The National Economic Council (NEC) has already approved a huge Tk 73,984 crore ADP for the next fiscal year, prioritising more on communications, power and education sectors.
Asked whether the ADP size has been increased under political consideration ahead of the next polls, Dr Mujeri said in Bangladesh
the development expenditure is naturally much lower than what it should be.
“For a country like Bangladesh having over 15 crore people, the development expenditure should be increased. There’s no doubt about that. Even the public expenditure for development in the neighboring countries is much higher,” he said.
Responding to a question, Dr Mujeri said the government needs to take it into consideration that the expenditure is being spent rightly
maintaining quality. “We need to give priority to important projects and should ensure qualitative standard of implementation.”
He also said it will have to check whether the implementing agency has the capability of quality implementation of the projects because the capability is widely being depleted.
Practically, the government should look at quality implementation of ADP instead of increasing the size of ADP, he said.
“Question may be there how benefit will come by increasing the size of ADP. Benefit can’t be ensured by increasing the budget size.
Transparent and quality implementation of project is a must,” Dr Mujeri added.
Rashed Al Mahmud said the government needs to see where the spending is going (in terms of ADP). “Where is the money going? We’re financing budget deficit for consumption (like rental power plant) not financing investment,” he said. (Source:

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