No alternative to subsidies
Sunday, 6 January 2008
A committee formed by the government recommended an automatic readjustment of domestic oil prices with international market prices. But opting for this course could be fraught with great dangers for the macro economy. Budget deficit sought to be reduced by such a move, will backfire and could lead to the worst case scenario of fast rising cost-push inflation.
Thus, the avoiding of such a development would be economically prudent. No one likes continuation of subsidies which create an additional pressure on the economy. But subsidies in some situations have been experienced to be a lesser evil. In the present context of Bangladesh, there is hardly any choice than continuing subsidies on fuel and food to prevent an all engulfing economic crisis.
Abdur Rahim
Uttara, Dhaka
Thus, the avoiding of such a development would be economically prudent. No one likes continuation of subsidies which create an additional pressure on the economy. But subsidies in some situations have been experienced to be a lesser evil. In the present context of Bangladesh, there is hardly any choice than continuing subsidies on fuel and food to prevent an all engulfing economic crisis.
Abdur Rahim
Uttara, Dhaka