Saturday, November 25, 2017

CPD says cost of production may rise in FY2018

  • Staff Correspondent,
    Published: 2017-04-16 20:23:37 BdST


The next fiscal year may witness a rise in production cost that will in turn hurt private investment in Bangladesh, the Centre for Policy Dialogue or CPD has said.

Fears of rising costs played out in a presentation on budget recommendations by the CPD on Sunday.

The new VAT and Supplementary Duty Act, besides lowering exchange rates and costlier rice, the main consumer good, were to blame for the possible outcome in FY2018, according to the think tank.

The prices of electricity and gas, for which a two-tier hike has been planned earlier this year, also stand to contribute to rising production cost, it said.

The government should cut kerosene and diesel prices in an effort to provide some relief to investors and consumers.

Price relief will boost people’s disposal income.

“With declining remittance inflow and planned increase of indirect tax coverage, the consumers will also have lower disposable income,” the CPD said.

So the think-tank proposed cuts in the income tax rate for the lowest threshold, which can also help raise disposable income and boost domestic consumption.

Finance Minister Abul Maal Abdul Muhith has signalled a Tk 4.2 trillion budget for fiscal 2017-18, to be announced in June.

The 2009-10 budget by the Awami League government was below Tk 1 trillion. That rose to the current Tk 3.4 trillion.

The CPD said it is all for the government’s lean toward a big budget, but it was time to turn this ‘myth into reality’.

Even though the size of the national budget has increased over time, in expenditure and mobilising revenue, actual implantation was behind.

“For example, public expenditure remained stagnant at 13.5-14 percent of GDP.”