Finance Adviser Salehuddin Ahmed on Tuesday stated that the government is considering the introduction of dearness allowance (DA) for public servants in the upcoming national budget. If implemented, government employees could receive DA starting from the 2025–26 fiscal year in July. This measure is likely to increase government expenditure on salaries and allowances of the public servants. It is feared that introduction of DA will impact the market greatly.
It may be noted that the last major salary hike for government employees came in 2016, under the 8th national pay scale. Since then, civil servants have been receiving salaries with arrears. A newly recruited BCS cadre officer currently draws a basic salary of Tk 22,000, up from the previous Tk 11,000, with additional allowances for housing and medical expenses based on location. However, salary increases, especially in the form of dearness allowances, often have a ripple effect on inflation. Historically, such moves have contributed to the rise in prices of daily essentials. This concern is particularly valid now, as the government has already raised electricity and gas prices several times, further straining household budgets. The introduction of a dearness allowance may thus pose significant challenges to inflation control.
While public servants and their families—just a small fraction of the population—might enjoy improved living conditions, the vast majority of the 180 million people, many of whom are still struggling below or near the poverty line, will face intensified financial pressure. Following such announcements, there is often a noticeable surge in prices triggered by opportunistic traders, wholesalers, and millers who exploit the situation to earn large, unethical profits.
This unscrupulous behaviour by market syndicates exacerbates the volatility of essential commodity prices, often with little to no intervention by the authorities. Merely issuing warnings or making statements is not enough to curb this trend.
The government must take stringent action against the so-called "unholy syndicates" who exploit market conditions to their benefit, making life increasingly difficult for ordinary citizens. Without dismantling these cartels and enforcing price controls, inflation will remain unchecked.
Salary increases, especially in
the form of dearness allowances,
often have a ripple effect on inflation
In the current economic climate, where the incomes of ordinary people are not rising annually, and where every essential item seems to be beyond their purchasing power, the need for decisive government action cannot be overstated. Civil servants may crowd the shopping malls, but it is the poor and middle-class families who will suffer the most.
Persistently high inflation will ultimately increase the poverty rate, dragging many more into economic distress. Those barely managing to survive may fall further behind.
Therefore, before implementing any increase in public sector benefits like DA, for the public servants the government must first focus on controlling inflation and ensuring price stability. The highest levels of government must instruct deputy commissioners (DCs) to remain vigilant and proactive against market manipulators, especially in the immediate aftermath of any DA announcement.Dishonest actors in the market, through hoarding and artificial scarcity, continue to hold consumers hostage. For many middle- and lower-income families, managing daily expenses has become nearly impossible. Strong and visible enforcement—including mobile courts, price monitoring, and penalties for violators—must be carried out urgently. Market monitoring mechanisms need to be strengthened across the country, especially in response to the increasing cost of essentials. With international sanctions and supply disruptions compounding the problem, inflation has spiraled beyond the reach of most people.
Controlling inflation must now be the government’s top priority. Structural reforms are needed. This includes reducing dependency on imported goods, promoting consumption of local products, and prioritising agriculture to ensure food security.
At the same time, foreign reserves must be managed carefully, especially given the ongoing pressure on the exchange rate due to increased demand for US dollars. Although reserves are currently at a manageable level, volatility in global markets poses ongoing risks. To stabilise the market, the government should consider a mix of executive and policy measures—including withdrawal of VAT on select essential items and reduction of import duties where applicable.We hope the government will adopt comprehensive steps to bring down the prices of daily essentials to a tolerable level for ordinary citizens. Inflation control must precede any rollout of new allowances, no matter how well-intentioned, in order to safeguard the broader economic well-being of the nation.
