We dream of a welfare budget next
At the end of the 2019-2020 financial year, a deadly pandemic-Corona has brought extreme disaster to the economy of Bangladesh. Amid this unprecedented pandemic, the budget for 2020-2021 is going to be announced next month. It remains to be seen how effective and worthwhile the forthcoming budget will be at this moment. If it is a conventional budget, it will not benefit the country in this critical situation.
The recent tendency of the economy:
The pace at which Bangladesh's economy was moving forward was exemplary for many. But the Corona has turned the wheel of our economy. The World Bank says Bangladesh will achieve roughly 2-3 percent growth this year. Some say growth may turn to zero this year. However, there is no doubt that the rising unemployment will continue rising, poverty will rise, the condition of banks will deteriorate, people's income will decrease, overall expenditure will decrease, export income will decrease, import expenditure will decrease and overall GDP growth will fall.
It is to be noted that even before Corona, there were some signs of jobless growth, slowdown in poverty reduction, reduction in import-export and shortfall in revenue collection targets. In the first eight months of the current financial year, the government has borrowed more than Tk 56,000 crore from the banking sector, which has exceeded the total annual target.
This year's budget must be welfare oriented:
Covid-19 has completely paralyzed the rapid growth of our economy.
Seven-eight months after the end of the financial year, the contraction of the economy that started with the impact of COVID-19, this time the maximum growth of GDP could be 5 to 5.5 percent if we do not have to go to the long lockdown again after Eid. As far as we know, a draft budget proposal of Tk 6 lakh 8 thousand 744.9 crore has been presented for next year.
Bangabandhu's desire was to put a smile on the face of the miserable people of the society. It seems that the Corona outbreak has created an opportunity for the Prime Minister to think about the common people and to do something good for them.
Suggestions for upcoming budget:
1. A fragile face of the health sector has been exposed to the people.The allocation in the health sector has to be increased for logical reasons. In the proposed budget, an allocation of Tk 1 lakh 46.7 crore has been made for the health sector. It is 3.39 per cent of GDP and 13.08 per cent of the budget respectively.In the current financial year it was 0.7 and 4.9 percent respectively. An emergency fund should be set up, including the purchase of emergency medical supplies, so that the Covid 19 vaccine can be made available to the public for very cheap or free. Moreover, we need to think about making health insurance universal.
2. The education system of the country has to be streamlined. Education has to rely on technology and research. Tk. 1 lakh 25 thousand 981.3 crore has been allocated for education, technology and research this time. It is 4.25 per cent of GDP and 18.40 per cent of the budget which was 2.75 per cent of GDP and 15.2 per cent of the budget this year respectively.
In the field of education, technical education, hands-on education and training for the professionals should be ensured. Education for all but higher education and research must be limited to the deserving. We should export educated/trained workers so that remittance income can be multiplied several times.
3. Allocations to the social safety net need to be increased. Income-assistance, unemployment allowance, child support allowance, disability allowance, retirement allowance, housing assistance, health allowance must be ensured. Tk. 1 lakh 73 thousand 923.9 crore has been proposed which is 5.53 per cent of the estimated GDP and 21.35 per cent of the budget. In the last financial year, the amount was only 1.01 and 5.6 percent respectively.
I am proposing to increase this allocation from 6 to 7.5 percent of GDP. The implementation of this program needs to be ensured by creating a transparent database. In addition to food aid, cash assistance should be provided.
4. The country's food security is under threat due to corona. In that case, even an inch of the country's land should not be uncultivated. We have to consider whether it is possible to increase the scope of government rationing to two lakh. To ensure food safety, the allocation has been increased to Tk 44,463.99 crore. It is 1.5 percent of GDP and 5.69 percent of the budget. I am proposing to make this allocation 2.00 percent of GDP.
5. In the current budget, I am proposing to set aside a fund of Tk 1500 crore for micro and cottage industries from where it will be possible to take loans through various microfinance institutions. In this case, assistance can be taken from Government Sonali and Janata Bank, PalliKarmasahayak Foundation, Bangladesh NGO Foundation, PalliSanchay Bank, Amar Bari Amar Khamar Project, etc.
6. The allocation for industrial and economic services has been increased to Tk 21,639.14 crore. It is 0.73 percent of GDP and 2.61 percent of the budget. The allocation for the current financial year was 0.12 per cent of GDP and 0.6 per cent of the budget. We have to take initiative to spread the industry all over the country. Moreover, the backward linkage industry of the country needs to be taken care of very cordially. Diversification is essential in the export industry. Reliance on ready-made garments alone can put us in danger.
Industrial diversification, greening and revitalization of rural economy, integrated industrialization and infrastructure development are essential. Precautionary measures should be taken to reduce the default tendency of large industries and in the case of bank loans of large industries, it is necessary to think of reducing the single party exposure credit limit. Moreover, precautionary measures must be taken to prevent money laundering through industry, and government incentives must be used honestly and carefully.
7. The government should give priority to the implementation of projects that will create employment. Allocation should be kept low for various types of worthless foreign training, travel abroad, organizing seminars etc. The government needs to continue its various infrastructure development projects so that people can find employment there. Other development projects including development of rural roads should be kept. However, in all cases, the workers must follow the hygiene rules.
8.In this year's budget, it will be necessary to increase the expenditure in the transport sector to maintain the supply chain of various industrial and agricultural products and to provide public transport by reducing health risks. Keeping the supply chain in place is a challenge of the time. Even if the production of goods increases, there is no benefit if the product cannot reach the people properly.
9. Oil prices are lower this year. That is why the production cost of quick rental power plants will be lower. In that context, people will benefit if it is decided to keep their electricity bills low for the next one year.
10. It is important to increase the tax coverage. The tax-free income limit can be raised to 4 lakh. Corporate taxes must be reduced. However, the government should be strict in collecting taxes. Black money either flies or hides in the house. Black money can also be used for black work.
11. People are getting used to working from home. A lot of work will be done through the internet from now on. Taxes on computers, smart phones, internet and related products should be reduced.
11. There is a need to impose higher taxes on health hazards such as tobacco, cigarettes etc. Tariffs and surcharges on luxury items will have to be increased.
12. This year the government's revenue will be less. That is why the government has to be careful about spending. The cost of running a huge government operation is to reduce waste and extravagant spending. The government should help refrain from traveling abroad unnecessarily, using more cars and spending government resources.Government officials must arrange in-house training. It is important to develop their skills. It is necessary to speed up the work of the government, to speed up the overall work of the country by completing each work within a certain time, to ensure the reward for good deeds and punishment for bad ones.
13. In order to reduce income inequality, arrangements should be made to impose wealth tax on the affluent. Unconditionally black money should be brought back to the country and investment opportunities should be kept in certain sectors with high taxes. The government will be able to generate huge amount of tax revenue by creating a database of the large number of foreign nationals working in the country and creating a conducive working environment for them. Alternative approaches need to be taken to reduce the debt burden on domestic banks. Foreign loans can be taken at low interest.
14. By creating an environment of international standard investment in the country, we have to create a conducive environment to bring the investments of the countries that will leave China. The government has to take measures so that our workers can return abroad.
In general, in implementing the budget for the fiscal year 2020-21, the government has to be very careful in all areas. The reality is that the budget deficit will be much higher this time. However, since there is a possibility of reduction in income, we have to be very careful in spending. We want a humane budget for this year to balance the income and expenditure and provide food and safety to a large number of people.
Corona has taught us to be humane just as it has brought us crisis. Let us be humane, let us extend our hand with the help of human beings. We hope to have a humane budget, a welfare budget.
The writer is columnist and economics analyst, founder and CEO, Finpower