Debapriya Bhattacharya sees more anxiety than progress after six months of BNP government

Economist Debapriya Bhattacharya has said he sees more “anxiety and concern” than progress after six months of the BNP government, which has returned to power after 19 years in the election in February.

Assessing business and trade, power and energy, and various economic indicators, Debapriya said there was little reason for either excitement or optimism.

“We are not saying there has been no improvement or that there is no stability anywhere. But we are not seeing the degree of dynamism and progress that is needed,” he said.

Speaking at a dialogue at the Centre for Policy Dialogue (CPD) office in Dhaka on Monday, the CPD distinguished fellow presented a review of 31 economic indicators for the government's first six months.

Of these, 19 had deteriorated while only 12 had improved, according to the review.

Even the indicators showing improvement offered little cause for optimism, he said. Higher foreign exchange reserves and capital machinery imports, for instance, needed to be viewed in context.

“Is the increase in our foreign exchange reserves a sign of health or a sign of anaemia?” he asked, arguing that weak investment meant lower imports, which, in turn, helped reserves rise.

Although capital goods imports and letters of credit showed some improvement, he said foreign borrowing, prospects for future capital goods imports, and private-sector credit had all deteriorated significantly.

He described the manufacturing sector as being in an “alarming” state, noting that private-sector credit growth had fallen to an all-time low of 4.5 percent.

“When you look at private-sector credit, capital goods imports, foreign investment and the industrial production index together, calling the manufacturing sector stagnant at this point would be an understatement,” he said.

He said the energy crisis linked to wars in West Asia could be contributing to the situation, adding that 62,000 people had lost jobs in industrial areas of Savar, Ashulia and Gazipur in the first seven months of this year.

CPD estimates suggest the government would need 42 percent growth to achieve its revenue target of nearly Tk 700 billion in the ongoing fiscal year. The highest growth recorded in tax revenue was 17 percent in 2011.

Debapriya likened the target to asking a child to grow from three feet to six feet in a year.

He said the CPD estimates the revenue shortfall could reach nearly Tk 150 billion in fiscal 2026-27.

Describing the government, comprising ministers, state ministers, advisors to the prime minister and special assistants of various ranks, as a “two-and-a-half-storey government”, Debapriya said Prime Minister Tarique Rahman remained more popular than his government.

He said the key challenge was whether the prime minister could use his personal popularity to show political courage, keep members of his party on the right track and ensure bureaucrats remained in their proper place.

He gave the six-month-old government a “B” grade out of 100, saying: “I would like to give it an A, but it is being pulled towards a B.”

Under the commonly used SSC and HSC grading system, 70-79 percent is considered an A, while 50-59 percent falls within the B range.