Bringing down the inflation to a rate projected for the upcoming fiscal year (FY) from the present higher levels would be the biggest challenge, economists said, terming the budgetary estimate 'not realistic'.
The national budget for FY 2023-24, which is set to be placed in parliament today (Thursday), is expected to target a lower inflation rate of 6.0 per cent aiming to facilitate desired economic growth, said an official at the Ministry of Finance.
The projected inflation figure is, however, much lower than the last 12-month average of 8.4 per cent to April 2023.
The rate is not realistic, rather an 'aspiration' of some economic numbers, an economist told the FE on Wednesday.
Actually, the government's efforts are neither working nor being implemented properly to curb inflation, said the economists.
Both the point-to-point and 12-month-average inflation rates are on the rise that have already surpassed the levels of more than a decade's history of the consumer price index (CPI) trend, they said.
The point-to-point inflation surged to 9.24 per cent in April 2023 compared to the consecutive month FY2023.
Economists wonder that as the average inflation has already crossed 8.0 per cent and the point-to-point inflation is going to touch the double-digit mark, how the government will bring it down within the 6.0-per-cent level.
It would be an unrealistic expectation for higher economic growth in the FY2024, they say.
Center for Policy Dialogue (CPD)'s Distinguished Fellow Dr Debapriya Bhattacharya said the numbers (target of inflation and others) in the budget are some "aspiration ones" of the government, not realistic.
When the global inflation as well as the domestic inflation is on a higher trajectory, it is really an unrealistic target to keep it within 6.0-per-cent level, he said.
"The country is struggling with massive inflationary pressure. Following this scenario, how can the government go for a huge expenditure target with massive borrowing and set economic growth target at 7.5 per cent?" Dr Debapriya questioned.
"Actually, it's a budget for upholding the IMF's prescription. And, its triggering size against a hard reality is for a promotion before the people ahead of the next general election," he said.
Economist Dr Selim Raihan of a local think-tank, SANEM, said the government has virtually failed to implement its monetary and fiscal policies properly.
"Sometimes, it has not gone for implementing its own policy. When the inflation in the international market is falling, how is it rising in the local market? It's very interesting," he said.
"I think the government is applying those tools at this moment which should have been applied earlier. So, the delayed execution of those steps has been failing to bring good results. All those delayed policies are affecting the overall economy and failing to tame the inflation," Dr Raihan said.
Meanwhile, the point-to-point inflation started surging since early FY2023 compared to the same period the last FY.
In March this year, the BBS recorded inflation at 9.33 per cent which was only 6.22 per cent in March last year, and in April this year, it estimated at 9.24 per cent compared to 6.29 per cent in the same month last year1.
According to the BBS, the 12-month average inflation in FY2022 was 6.15 per cent, which was 5.56 per cent in FY2021 and 5.65 per cent in FY2020.
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