Hiking the diesel price by such a huge margin was not the right decision at all. It would have been better if the price was increased by 10 per cent. Managing the diesel price is tough. Because, diesel is used for power generation, operating buses and truckes, and at the same time it is used in transporting agricultural and other products. However, it is tough to sell diesel for different sectors separately. In that case, some sectors must be provided with the subsidy. And, subsidy paves way for corruption which needs to be curbed. Still I’m against hiking the prices of diesel and kerosene. I think hiking prices of these two products will have a negative effect on the people. The policymakers have to think about ways to keep the effect at lowest level so that it does not affect transport, power generation and agricultural production heavily.
Kerosene is a product for the most marginal and poor people of the society. That’s why hiking the price of kerosene was not a right decision at all. It should have been kept as it is. Bangabandhu Sheikh Mujibur Rahman never increased price of kerosene. The government of Sheikh Hasina also increased the price of all fuel but kerosene during the tenure of 1996-2001. It’s not right to expect revenue from this.
Authorities in Bangladesh tend to withhold many things instead of performing those on time. That’s why it had to double the salary of government employees in the 8th pay commission. The same happened with foreign currency exchange rate. In the past 10 years, taka has been devalued against the US Dollar by only 22 per cent whereas Indian Rupee has been devalued by 47 per cent. I’m talking about the calculation before the emergence of current chaotic situation. That means the prices of all types of fuel but Kerosene should have been increased earlier. As a result, when the price had to increase it had to done by a huge margin. If this adjustment had been done over the last three years, the government did not have to increase the price by such a huge margin at one go. But this was withhold thinking people would suffer. That’s why the political government had no other way but to increase the price by such a margin now.
I don’t think the price of fuel oil has been increased just to avail loan from the IMF (International Monetary Fund). I also don’t think any other country in the world is in such a dire strait like us regarding the tax-GDP ratio. That also had to be taken into account. That is also a reason for raising the price in such a manner. But BPC (Bangladesh Petroleum Corporation) has to be put under pressure to take 50 per cent of profit for the government.
People are now going to suffer for the inefficiency that has in revenue collection. I have been talking for a long time to stop money laundering. The situation is so bad now that even the high echelon of the government is also saying, probably money and wealth are being siphoned out of the country. That’s why import is rising so fast. Even the remittance income could not cover the deficit in dealings in 2021-22 financial year like the previous times. Money laundering is a huge problem. Around USD 6-7 billion is being laundered every year, says a calculation of Washington-based Global Financial Integrity (GFI).
There is a myth that Bangladesh is an import-based country; this actually happened because of the increase in import. In general, 35-38 per cent of the import is consumer products and unnecessary. This is also not correct that the strong value of taka suggests a strong economy. Recently deceased Japanese prime minister Shinjo Abe devalued Yen by a huge margin after taking power and the banks started paying interest to the people. As a result of this they have seen growth. We could take proper steps to curb import but this need to be strengthened.
Much has been told about the country’s foreign currency reserve. The reserve dropped to USD 1.7 billion in the second half of the ’90s. At that time the government of prime minister Sheikh Hasina stocked 1.5 million tonnes of rice. If the food is stocked in this way and necessary products for development activities continue to be imported, then excessive reserve is not necessary. That’s why it doesn’t matter if the reserve drops a little. Rather, what is required is to withdraw the 6 and 9 per cent interest rate. Otherwise, inflation will not decrease. It will not be possible to bring the inflation rate down by imposing prohibition on consumer products. First step to decrease inflation rate is to decrease supply of money. For that, it is required to increase the interest rate. This could lead to increase in savings, but the investment might decrease. As a result, the growth would be less than expected for 1-2 years. Every country has increased interest rate to decrease inflation rate.
Now, strong steps are required to take money laundering, tax evasion and loan defaulters at their lowest levels.
* The op-ed, originally published in the print and online editions of Prothom Alo has been rewritten into English by Shameem Reza