Manage inflation through duty adjustment: CPD

In view of FY 2022-23 budget, the government should go for import duty adjustment and improvement of market management to address the adverse impacts of imported inflation, said the Centre for Policy Dialogue (CPD).

The CPD,  in its Independent Review of Bangladesh's Development (IRBD) report, titled "State of the Bangladesh Economy in FY21-22" also recommended the use of strategic food stocks, an open market system, and strengthening of social safety net programmes - particularly programmes for food distribution and cash transfer.

CPD Executive Director Dr Fahmida Khatun presented the paper at a press briefing in Dhaka on Sunday (5 June). 

"Inflationary pressure will hamper a sustainable and inclusive pandemic recovery, since the real purchasing power of many people will decline, causing further inequality," she said, adding that Bangladesh's economy is under pressure in view of the emergent challenges caused due to both external and domestic factors and proactive measures by the policymakers both in the immediate and medium terms are needed to overcome those.

Coordination between the monetary policy and fiscal policy is needed, particularly in view of the upcoming FY 2022-23 budget to keep the commodity prices under control, the CPD said.

"Policymakers will have to come out of growth obsession and focus on the quality of growth in terms of distribution of the benefits of growth more equally," it added. 

The CPD also recommended that the National Board of Revenue (NBR) should immediately consider removing the advance income tax (AIT), advance tax (AT), and regulatory duty (RD) on all imported essential food items and that the role of the Bangladesh Competition Commission needs to be strengthened, particularly in the case of the essential consumer goods market.

"Private sector corporations should consider a higher salary increment in 2022, given that a 5% increment of salary in the face of double-digit price hikes is compelling workers to seriously compromise their standard of living," the think tank said while recommending increasing the minimum wages in all industries so that workers earning minimum wages may at least afford basic food.

The volume of sale of essential commodities through the OMS should be increased and the distribution of these commodities must be managed effectively without any corruption, it further said.  

"The government should prepare for maintaining adequate food stock not only through better agricultural production, but also through importing food," the report said adding that there is a need for actual demand estimation of rice and other food items in the country.