Erosion of savings

The drop in both domestic savings and national savings, as the Bangladesh Bureau of Statistics (BBS) estimates, is certainly a cause for concern but hardly surprising. Fixed-income people---salaried and wage earners---have in most cases found their income where it was before or if increased at all, failed to match the raging inflation. A report carried in the FE on Sunday on the basis of the BBS findings released last week refers to increased spending by people in general. Well, people are not doing so voluntarily, they are forced to. Money has become cheaper so much so that even after squeezing their consumption, the majority of the people cannot maintain their living standard, let alone save. Within a tight or curtailed family budget, the low-income and lower-middle-income and even middle-income people are forced to forego not just some of their favourite consumer goods but also a few essential items deemed necessary for maintaining a sound body.

Thus the drop of gross domestic savings by 1.8 percentage points to 23.96 per cent of the gross domestic product (GDP) in the 2023-24 fiscal year from its previous year's 25.76 is not at all surprising. Even there is a clear explanation for the 1.53 percentage point decline in the gross national savings from 29.95 to 28.42 per cent. A turbulent year in terms of social, economic and industrial unrests at home coupled with dented global commerce due to wars in Ukraine, Palestine, Sudan and Syria, particularly the Houthi attacks on merchant ships in the Red Sea suffered the fallouts of all such negative developments. Recession in Europe and America was also responsible for marginal growth of RMG export to those two main destinations. Similarly, setbacks suffered by workers in migrating to some of the popular destinations did not help the cause. Thus the year's savings lost ground.

In this context, let it be recorded that the BBS has started coming up with more or less accurate data instead of the manufactured ones it did during the past regime. That is also a reason for the downward national income curve and its consequent impact on savings. Yet a most significant factor is missing from the calculation. It is the money the big sharks, cronies and beneficiaries of the past regime possessed or amassed but now left idle or stashed away. It should be a huge amount that is no more in circulation nor deposited to savings accounts. One of the reasons why economy suffers liquidity crisis is this idle or black money.

Notably, big businesses are still mostly controlled by the beneficiaries of the past regime. They are not cooperating with the government to bring down inflation. Instead, they follow their old ways of fleecing the consumers and depriving the growers or farmers at home of the reward the latter deserve for the sweat of their brow. It is a vicious ploy that an import-dependent market allows the big players to take recourse to for advancing their unethical advantages. Businesses do not run out of excuses to raise prices even when food grains or other items become cheaper worldwide. An unrelentingly surging inflation leaves no option for saving for the majority of people although they know instinctively the virtue of doing so bit by bit for the rainy season. So, the number one task for this government ought to be taking the inflationary bull by the horn.