GDP growth acceleration, new job creation and rapid poverty reduction have also been prioritised
Rapid recovery from Covid-19 fallout, GDP growth acceleration and job creation have taken centre stage in the government's draft Eighth Five-Year Plan for fiscal 2021-2025.
The government has estimated an outlay of Tk64,15,520 crore to reach the targets. Of the allocation, some Tk56,06,240 crore will come from domestic sources, while the remaining Tk8,09,280 crore will be drawn from external sources.
The draft Eighth Five-Year Plan, entitled "Promoting prosperity and fostering inclusiveness," was placed before the Local Consultative Group meeting held virtually on Monday with the country's global development partners.
Shamsul Alam, a member of the General Economics Division of the Planning Commission, presented the draft plan.
Shamsul Alam later told The Business Standard, "We have prepared a draft of the eighth plan. We will seek opinions from all stakeholders before placing it to the National Economic Council for approval."
The short-term unemployment resulting from Covid-19, including the retrenchment of overseas workers, will present an immense challenge in the very first year of the five-year plan. Job creation accordingly will be a top priority of the plan, according to the draft.
The pandemic also dramatically has reinforced the need for a universal healthcare system with a combination of public and private health insurance schemes. As such, the plan will emphasise the need for a complete overhaul of the healthcare system, which has revealed huge performance gaps in physical facilities, access to healthcare and availability of quality healthcare staff, it added.
The Eighth Five-Year Plan's main task is to begin the implementation of "Vision 2041" in a way that it brings Bangladesh closer to the goals of attaining upper middle income country status, attaining major SDG strategies and eliminating extreme poverty by fiscal 2031.
Against the backdrop of these factors, the 8th plan mainly aims at restoring human health, employment, income and economic activities from the effects of Covid-19.
Besides, GDP growth acceleration, new job creation and rapid poverty reduction have also been prioritised in the next five-year plan.
The plan has also identified six policy areas that appear to be effective in reducing inequality. They are: universal health coverage, universal access to quality education, early childhood development and nutrition interventions, cash transfers to poor families, rural infrastructure, especially roads and electrification, and progressive taxation.
Growth projection under the eight plan
The pre-Covid-19 growth path had called for GDP to grow from 8.13% in FY2019 to 8.19% in FY2020 and rise to 8.51% in FY2025, according to the draft plan.
With Covid-19 making inroads in the country, this projected growth path has been disrupted.
The most damage will occur in FY2020. GDP is projected to fall to 5.2% in FY2020, owing to adverse effects of the shutdown in the April-May period this year as well as impacts of the global downturn in terms of loss of apparel export earnings, the draft plan elaborated.
GDP is expected to recover in the second half of FY2021, supported by external demand recovery as well as recovery in domestic demand from the slowdown of the Covid-19 spread and the impact of the fiscal stimulus, it mentioned.
Three major challenges on employment front
First, employment growth has been much slower than GDP growth, implying that the employment elasticity of GDP is falling.
Second, employment in manufacturing and construction actually was contracted in 2013 and FY17, although value-added growth in these activities accelerated.
Third, the concentration of jobs in the informal services sector further increased, raising concerns about the shortage of decent jobs.
A major policy challenge that the eighth plan faces is how to ensure GDP growth acceleration, which will create more good jobs in the economy.
Investment under the 8th plan
Under the 8th Five Year Plan, total public investment target has been set at Tk1237,860 crore. Of the total, Tk803,060 crore will come from internal sources and Tk434,800 crore from external sources.
On the other hand, private investment amounting to Tk5177,660 crore is expected to come from local and foreign sources.
Revenue collection target set at over 14% of GDP
The revenue collection target in the new five-year plan has been fixed at 14.6% of GDP by FY25. The collection was 9.9% in FY19.
Public spending priorities
The health sector will also see more allocation in the next five-year plan as Covid-19 has exposed the fragile nature of the country's health system.
The government has set a target of taking health sector allocation to 2% of GDP by FY25 from 0.7% in FY19.
In the next five years, resources in education as a share of GDP are expected to reach 3% from 2.2% in FY19.