‘Rationale behind increasing VAT will be made public in a few days’

Finance Adviser Salehuddin Ahmed has said the rationale behind increasing VAT on a broad swathe of goods will be made public in a few days, reiterating that the move will not have much impact on the prices of daily commodities.

However, he avoided questions regarding whether the decision would be reconsidered after a meeting related to government procurement on Tuesday.

The initiative to raise VAT was met with criticism from even Debapriya Bhattacharya, the chief of the economic white paper committee, and the National Citizens' Committee.

When the matter was drawn to his attention, Salehuddin said: “Let them say what they will. You will know in what context we made the decision in a few days.”

He also declined to comment on when dearness allowances would be given.

The Department of Agricultural Extension started selling different vegetables at cheap prices due to the high inflation rate over the past two months. But the Open Market Sales, or OMS, was stopped following the drop in vegetable prices.

 “We launched the special OMS as an emergency and it was pretty successful. The Ministry of Agriculture used a budget provided by the Ministry of Finance to arrange the OMS,” Salehuddin said.

He mentioned that the relaunching of the OMS would be considered if the need arises again.

 “The supply chain is still broken. It remains in place but the retailers don’t properly use it. This is not a supply crisis. But the prices of rice have dropped a bit.”

Salehuddin said several proposals to buy fertiliser were approved at the meeting.