The New Nation - Internet Edition

Staff Reporter

Shamunnay, a think tank, in its budget reaction yesterday termed the proposed outlay as "populist but reckless" and said it will further increase inflation and people's burden.

"The proposed budget has come at a time when people are suffering from high inflation, severe food and employment crises. But the government's plan to overcome the huge deficit indicates that it will only encourage inflation," Shamunnay chairman Dr Atiur Rahman said.

Dr Atiur made the remarks in a paper presented at a post-budget view-exchange meeting held at the Shamunnay conference room in the city.

The main features of the new budget included challenging revenue target, not fully compatible with PRS-2 and MDG targets, cut in development budget despite the highest-ever budget deficit, according to Dr Atiur.

He said the budget deficit is higher than development budget by Tk 4980 crore and borrowing from banking sources increased by 30 per cent from the last year's revised budget.

The economist voiced concern that private investment may fall following the budget as high amount of loan from banks may create a crowding out problem.

"If the crowding out problem is created, private investors will lose their interest for investment. And for the same reason, if the rate of interest increases production cost will be high which in turn will increase inflation. This might affect the people of low income group adversely," he noted. He was critical of the proposed budget for reduced allocation to several important sectors like electricity, energy, transport and communication.

Welcoming the government's plan to procure 32 lakh tons of rice, the

Shamunnay chairman said Bangladesh should target a procurement plan of 40-50 lakh tonnes of rice.

He proposed having a food stock of at least 15 lakh tonnes for the country's food security.