A powerful vested group is influencing the government to make policies in its favour, the Centre for Policy Dialogue said yesterday.
The current government made a political pledge of bringing about a change, but that change has been restrained by those who are beneficiaries of corruption, wastage and mismanagement, said the independent think tank.
“The ruling class said it would show zero tolerance to corruption. But we do not see reflection of that in the state machinery,” CPD Distinguished Fellow Debapriya Bhattacharya said at a media briefing at the CIRDAP Auditorium in the capital.
The CPD arranged the briefing to share its assessment on “First 100 days of the current government” that took office in January.
“We have seen a lack of efforts, enthusiasm and initiative in the first 100 days. But we expected a leap forward,” he said, referring to reforms in various areas and implementation of the electoral pledges.
Debapriya said when a government comes to power, it takes new initiatives in line with its electoral pledges. Yet nothing mentionable could be seen after the current government took office.
“Rather, the initiatives we have seen give mixed signals,” he said, citing various privileges, including tax cuts, given to exporters and different businesses.
The measures that this government has taken so far will not have any major positive impact on the investment climate.
“It seems that an entrenched vested group is framing policies, taking the government in its grip. Inconsistency is seen between the development outlook and policy formulation...”
The election manifesto of the ruling Awami League is well thought-out, well-written and well-structured, and it pledges a change. And the government has to take the responsibility for implementing the pledges. Otherwise, the manifesto will remain a fantasy, he mentioned.
In its analysis, the CPD said the government reduced sharply withholding tax on export earnings to 0.25 percent from 0.6 percent, which will result in an annual revenue loss of about Tk 1,150 crore.
The think tank mentioned that the ratio of non-performing loans (NPLs) to the GDP has been on the rise. And the Bangladesh Bank’s recent relaxation of the rules on bank loans will simply encourage more people to become defaulters.
CPD Executive Director Fahmida Khatun said the government is giving various benefits to defaulters in a bid to reduce NPLs in the banking system. But this will encourage defaulters.
“It appears that we are moving from the best practices to bad practices. We are taking an opposite course,” said Fahmida, adding that the measures taken by the government to reduce NPLs will not help improve the health of the banking sector.
DOUBTS OVER GROWTH ESTIMATE
In its analysis, the CPD focused on various sectors of the economy, which is predicted to hit 8 percent growth mark this fiscal year, the highest ever since the country’s independence.
The think tank questioned the growth estimate of 8.13 percent, made by Bangladesh Bureau of Statistics (BBS), citing incoherence in various indicators of the economy.
It said the growth estimate has been done based on only five months’ data on industrial production and six months’ data on the financial sector. Data on crop production was almost absent when the GDP estimate was made.
Referring to leather and leather products, the CPD said the official data showed that the sector’s production has grown by 32.5 percent. But its export performance portrays a different picture.
Shipment of leather and leather products slumped 16 percent from July to November this fiscal year, it pointed out.
The tax-GDP ratio fell in the first quarter of the current fiscal year while the private sector credit growth slowed down till February this year, it said.
“Such incoherent evidence between GDP estimates and proxy indicators suggest that there is a need to test the robustness of the growth estimate so as to have credible policy guidance,” CPD Senior Research Fellow Towfiqul Islam Khan said while presenting the CPD review.
The think tank demanded that the government make public all the data that have been used to estimate the GDP growth.
“We want full disclosure of all the data based on which the growth estimate has been made. We want proper estimation of the economic growth so that policies can be framed and implemented properly,” Debapriya said.
“We want that estimate to be proper, fair and transparent so that we can evaluate properly.”
CPD Distinguished Fellow Prof Mustafizur Rahman said inequality is increasing in the society and it should be addressed to ensure higher economic growth.
CPD Research Director Khondaker Golam Moazzem said capital market cannot be expanded without ensuring good governance.
The CPD recommended reforms in various areas, including the banking sector, tax administration and capital market.