GDP growth may down by revenue fall, low govt investment

Fall in revenue earnings and low public sector investment may hamper gross domestic product (GDP) growth in the current fiscal year 2013-14, said a local think tank Saturday.

The annual GDP growth may fall below the decadal average of six per cent and may reach as low as 5.65 per cent, The Unnayan Onneshan, an independent multidisciplinary think-tank, in its current issue of the Bangladesh Economic Update, said, the Financial Express.

The UO cautions that the pressure in revenue collection is likely to add up to budget deficit, which is targeted at 4.6 per cent of GDP in FY 2013-14.

Unnayan-OnneshanIn FY 2013-14, total public borrowing is targeted at Tk. 550.32 billion, which is Tk. 39.86 billion higher than the previous fiscal year.

The think tank points out that usually a major portion of government expenditure goes to interest payments on both the domestic and foreign sources which are non-development expenditure.

In FY 2013-14, the total expenditure on interest payment assumed at Tk. 277.43 billion which is 18.83 per cent higher than that of FY 2012-13. Interest payment reduced the spending on social expenditure, the UO adds.

Considering the business as usual scenario, the Unnayan Onneshan estimates that the gap between total revenue and expenditure might increase to Tk. 581.70 billion in FY 2014-15 from Tk. 550.32 billion  in FY 2013-14.

Referring to structural rigidities of the economy, the UO suggests that the government should revise its tax structure (regressive tax structure) and institutional arrangements with a view to collecting as much direct tax as possible, which may set the government to reduce the burden of indirect tax incurred by the marginalised section in the country.

Referring to the per capita debt burden, the research organisation notes that the rising trend over the years might cause per capita debt burden to increase to Tk. 3582.8 in FY 2013-14 from Tk. 3389.8 in FY 2012-13.

The organisation projects that if the present trend of borrowing continues, the borrowing by the government from domestic sources might increase to Tk. 366.36 billion in FY 2013-14 against proposed target of Tk. 339.64 billion , whereas in FY 2012-13, domestic borrowing was Tk. 324.73 billion.