The politicians are highly obsessed with the Gross Domestic Product (GDP) of the country. Despite the experts telling them repeatedly to keep away from the delusion of GDP, the politicians do not care about it as there is no better economic indicator than it for political speeches on economy. It is assumed that information related to the growth in GDP and per capita income is politically more beneficial.
If GDP is the most favourite indicator of politicians, what do they hate most? The answer is inflation. It is said that this indicator has the greatest impact on politics.
According to a research of the International Monetary Fund (IMF) in 2005, high inflation is deeply correlated to political instability. German economist Rudiger Dornbusch showed in a research that ministers in charge of the finance sector had been relieved of their post the most all over the world. There is a negative relation between their tenure and the inflation rate.
Now, let's talk about the common people, who are neither experts in economic affairs and nor involved in politics. Now that the current account deficit is US$ 18.7 billion – what do the common people have to do with it? Or what is the impact of the highest trade deficit or the record deficit in the balance of current income? These are complex calculations. There are examples of easy calculations as well. For example, what do the common people have to do with whether our forex reserve is US$ 46 billion or US$31 billion as per the IMF? Only one indicator really matters. The economic indicator which affects people the most is inflation.
If the per capita income increases overnight, there will be no impact on the common people. This per capita income remains only in the documents of the government, nowhere else
A 10 per cent inflation rate means people have to buy a product of 100 taka with Tk 110. It means they have to increase their income by Tk 10; otherwise, they will have to eat less as compared to before. It will demean their standard of life. Inflation means a direct impact on people’s income. That is why inflation is termed a silent destroyer as well as indirect tax.
The confusing indicator
Although the GDP growth and increase in per capita income are two favourite indicators of the politicians, these are the most confusing ones to common people.
GDP is the total monetary or market value of all the finished goods and services produced within a country’s border in a specific time period. It means the value of all the finished goods and services produced by local and foreigners, agencies and companies within a country’s border will be included. However, income of citizens of the country living and working abroad and foreign agencies and companies will not be included.
And per capita income is deducted by dividing the country’s total income by the total population. Per capita income does not reflect anyone’s personal income. Therefore, if the per capita income increases overnight, there will be no impact on the common people. This per capita income remains only in the documents of the government, nowhere else. As a result, when the minister talks about GDP growth or an increase in per capita income, people get confused not seeing that reflected in their income.
The government kept its words
In 2020, when the world was passing through an economic recession due to the Covid pandemic, Bangladesh surprised the whole world by declaring an eight per cent growth. The controversy over the country’s GDP is nothing new. However, it gained more momentum during the pandemic. People’s doubt over the figures of Bangladesh Bureau of Statistics (BBS) has also increased. Even there are questions regarding the assessment of inflation. The interesting fact is as the politicians are fond of GDP; it is presented in an inflated manner. Likewise, as the politicians do not like inflation, it gets deflated.
The problem is the impact of GDP is less felt while the impact of inflation, despite being deflated, is much more. It is more like the weather which has direct impact on people.
The finance minister has shown us a dream of a seven per cent growth in the 2022-23 financial year. The good news is that the GDP has already been attained within just one month of the new fiscal year. Now, there may be questions as to why the government is not counting the GDP attained in a month. How will the growth be attained then? The answer is quite simple. Here, the letter ‘G’ of GDP stands for gas, ‘D’ stands for diesel and ‘P’ for petrol. There are talks that the price of electricity may increase very soon as well. After that, we will be able to say the letter ‘P’ of GDP stands for power. And the price of gas has already been raised by the government a few days ago.
Will this new GDP escalate the inflation? However, the finance minister has estimated that the average inflation rate will be 5.6 per cent. Whatever the global situation is, no matter how much G (gas) D (diesel) P (power) increases, keeping inflation at 5.6 per cent is not a matter to them. Let’s see what happens.
Therefore, to those, who have read the report, may your rate of happiness in the coming days increase just like the price hike of fuel oil by 51 per cent; may your sorrows be reduced by 10 per cent, just like the decrease in the value of taka and may the joy of your mind become endless like the corruption of the country, which cannot be assessed by any percentage.
* The report has been rewritten in English by Ashish Basu