Mahmudul Hoque Moni
The budget session of the 11th Parliament will begin on June 10, 2020, in Bangladesh. Due to the ongoing coronavirus pandemic, the eighth budget session called by the Head of the State will be in some ways – abnormal. Journalists will not be allowed inside and a limited number of Member of the Parliaments will be allowed to admit and participate after being tested for Covid-19. Nevertheless, all sectors of the economy, people from all walks of the society and local and international agencies will have an eye on this budget session.
In this blog, I will highlight some major issues and challenges that this budget session concerns. For several obvious reasons, these are challenging and desperate times for all of us. First, Covid-19 has already infected about 7 million people worldwide and claimed about half a million lives. The humankind is going through an unprecedented health crisis, so is Bangladesh. Second, the International Monetary Fund (IMF) already declared that the world is going to face the worst recession since the Great Depression. All economic indicators are down, businesses are shut, and most importantly we do not know when things may get normal. Third, millions of people have lost jobs, entered new poverty and vulnerability, and face an uncertain future.
In these desperate times, this budget must address some issues with desperate creative measures.
Redistribution of Resources
The Government must wisely and desperately redistribute its resources. Evidently the health sector demands the highest allocation along with protection measures for the poor and vulnerable. The public health sector, especially government health facilities should receive sufficient resources to get equipped with both human and technical resources to fight the rest of the pandemic. The Finance Minister has already given hints that the allocation for cash and in-kind transfers and social security measures will be strengthened with a view to supporting the poor and people-in-need. That has to be supported by creating public works and temporary jobs for the marginalized poor people both in urban and rural areas. This social security measures must include both insurance and assistance.
An increased amount of resources should also be allocated in the Education sector as thousands of pre-schooling facilities have counted heavily economic loss, kindergarten schools may need technical supports to bring back the students. Informal institutions and NGOs who provide health-education and education services to poor people should receive an increased amount of resources. Most of the educational institutions, especially the public universities would need financial support from the government to build up sustainable digital platforms to provide online support to the students.
In this consideration, allocation from the rest of the sectors including defence, human resource development and public administration can be reduced.
Boosting the businesses
The businesses in all sectors have suffered, no doubt. As noted American political scientist Thomas Ferguson in his latest webinar presentation with the Institute of New Economic Thinking shared that the global economic crisis started with a demand crisis caused by the shutdowns which finally now turned to a supply crisis. The governments around the world will have to take measures that the businesses can operate with sufficient sale and movement of customers. Apart from the financial incentives, the government will have to ask businesses to ensure safety for workers and buyers. The budget allocation needs to target to build institutions that can ensure these measures to boost the businesses.
The government will have to create an efficient taxation structure that allows businesses to reopen with minimum effort, but no one should be evaded from any taxation. We need to remember that the mobilization of the resource is the key, and the precondition is to collect sufficient resources to mobilize. That is why the incentive should more go towards the people who can increase the demand for the products and services. Reducing the lowest slab of income tax can be one of the effective ways to do that.
Collecting more resources from outside
As rightly pointed out by the Centre for Policy Dialogue (CPD), the Government need to curtail less important development projects’ funds and reallocate, and in doing so, creating employment should be the priority.
The Government must plan to desperately accumulate as much as resources possible from the outside. It can be done in two ways – one, to receive cheap loans, grants, and investments from outside sources, and two, to incentivize the export sectors to ensure financial inflow.
Finally, both lives and livelihoods to be saved
A recent survey revealed that extreme poverty may rise up to 60% while million household can enter new poverty due to the pandemic. The budget must take desperate measures not only to help these people survive but also providing support to sustain their livelihoods.
Assuming that the vaccine for coronavirus may be available later in the fiscal year, these desperate measures may cause a decrease in annual growth but we need to remember that the Government is a welfare institution and it must strive to ensure the welfare of its rightful citizens. It will help recover the market economy in the coming years.