Incentive package should have been more comprehensive

The government's incentive package is apparently good but not sufficient. Much more could have been done. 

We are facing a world-wide depression and its negative impact is felt in our production and service sectors.

Considering that, the stimulus package announced by the prime minister should have been more comprehensive.

I think much emphasis has been given to the industrial sector, especially the readymade garment sector, in the package. 

But apart from that, there are many sectors that have been seriously affected where workers are being sacked. No attention has been given to those sectors. 

A Tk20,000 crore fund will be formed from the package to provide working capital for the cottage, and small- and medium-scale industrial entrepreneurs. The entrepreneurs can take loans from the fund at four percent interest. 

However, my experience tells me the banks are not interested in providing loans to these entrepreneurs. 

In this regard, the Bangladesh Bank will have to intervene and monitor the disbursement so that banks are compelled to follow the government's guidelines.

Besides, big and influential businessmen will reap the benefits of the Tk30,000 crore fund for industries and service sectors, and the Tk12,750 crore export development fund.

There is apprehension that everyone will not be able to take the benefits of this fund. So, the government will have to pay attention to mitigate the sufferings of other businessmen and industrialists.

Another important thing to me is providing social security to workers of the affected factories and those in the informal sector.

There is no database of these workers, but even then, the government should identify them and bring them under the purview of social safety. 

Cash has to be given to all instead of lining them up, and distributing rice, lentil and potatoes. If cash is given to them, their purchasing capacity will increase, which will have a positive impact on the market.  

As a result, demand for various goods will be created. 

The government's stimulus package says nothing about the agriculture sector. Many farmers have been compelled to sell their produce at throw-away prices due to the lockdown.  

Dairy farmers and the poultry industry have also been facing big losses. The country will plunge into big danger if these affected farmers and businessmen are not pulled out and if they stop production. 

Thus, the government must consider this situation. 

Many expats have returned to the country after losing jobs overseas.  There is no guarantee that they can go abroad again and find jobs.  

But the government has not announced any incentive for them. It should have arranged low-interest loans for these people, which they can use for starting small businesses.

If that had happened, the returnees would have thought the government was in their favour and had stood by them.

Besides, monetary policy plays a big role during national financial disasters. The central bank has to give up old and bookish thinking, and take bold steps in such situations.

But the central bank has failed to do so. 

It can lower the statutory liquidity ratio. If it is lowered, cash-flow to commercial banks will increase, and the money can be used to increase investments. 

However, the Bangladesh bank has cut both the repo rate and the cash reserve ratio slightly. In the present economic context, that is not enough. 

The central bank will have to be bolder in this situation.

Dr Salehuddin Ahmed is the former Bangladesh Bank governor.