Budget should focus on increasing investment, says economist
Saturday, 8 May 2010
The upcoming national budget for the next fiscal year should focus on creating more investment-friendly environment in a bid to achieve the GDP growth target of over 6.5, said an economist.
"The investment would have to be increased to a great extent. Otherwise, the targeted GDP growth would be hard to achieve," said Dr Mustafa Kamal Mujeri, the Director General of Bangladesh Institute of Development Studies (BIDS).
In an exclusive interview with UNB, the BIDS director general said that investment in the country has remained stagnant at around 23-24 percent over the last few years, citing energy and power crisis as the main barrier.
The nagging energy and power crisis is affecting the country's economic activities, he observed and stressed the need for utmost priority in this sector in the upcoming budget.
Dr. Mujeri said that the government should take practical steps to overcome the barriers that create stagnation in investment.
He said the present situation in the energy and power sector was not created over a short period. Due attention was not given to this sector in the past.
"It won't be easy to overcome the situation… the government will have to go for short-, mid- and long-term solutions."
Asked about the estimated government subsidy in the next budget for the rental power plants, the BIDS director general said that the government would have to buy per unit electricity at a higher rate. So, they will have to subsidize.
"If the power tariff increases, the mid and low income people will be under pressure while in industry the cost of production will increase," he said adding that practical steps would have to be taken to supply power to the national grid in keeping with the demand.
On the upcoming budget of over Tk 1300 billion and the Annual Development Programme (ADP) of over Tk 380 billion already announced by Finance Minister AMA Muhith, he said these are ambitious in one sense, but there is also a need for such kind of increase.
"If we want to achieve GDP growth of 7-8 percent in future, the role of public sector should be more on education, health and agriculture… the size of the ADP should be bigger," Dr Mujeri said.
"The investment would have to be increased to a great extent. Otherwise, the targeted GDP growth would be hard to achieve," said Dr Mustafa Kamal Mujeri, the Director General of Bangladesh Institute of Development Studies (BIDS).
In an exclusive interview with UNB, the BIDS director general said that investment in the country has remained stagnant at around 23-24 percent over the last few years, citing energy and power crisis as the main barrier.
The nagging energy and power crisis is affecting the country's economic activities, he observed and stressed the need for utmost priority in this sector in the upcoming budget.
Dr. Mujeri said that the government should take practical steps to overcome the barriers that create stagnation in investment.
He said the present situation in the energy and power sector was not created over a short period. Due attention was not given to this sector in the past.
"It won't be easy to overcome the situation… the government will have to go for short-, mid- and long-term solutions."
Asked about the estimated government subsidy in the next budget for the rental power plants, the BIDS director general said that the government would have to buy per unit electricity at a higher rate. So, they will have to subsidize.
"If the power tariff increases, the mid and low income people will be under pressure while in industry the cost of production will increase," he said adding that practical steps would have to be taken to supply power to the national grid in keeping with the demand.
On the upcoming budget of over Tk 1300 billion and the Annual Development Programme (ADP) of over Tk 380 billion already announced by Finance Minister AMA Muhith, he said these are ambitious in one sense, but there is also a need for such kind of increase.
"If we want to achieve GDP growth of 7-8 percent in future, the role of public sector should be more on education, health and agriculture… the size of the ADP should be bigger," Dr Mujeri said.