Tk1,500cr new package comes to revitalise rural economy

The government has announced a fresh Tk1,500 crore package to increase the distribution of loans among the rural population, including cottage, small and medium industries, to mitigate the economic impact of the Covid-19 pandemic.

The amount has been allocated to eight government institutions from the national budget for the current fiscal year. These institutions will disburse the money directly or through NGOs as loans for the implementation of their various ongoing programmes.

Besides, the government from July this year will bring all the elderly, widows and deserted wives in 150 upazilas of the country under allowance. This scheme will cost Tk1,200 crore and start in July.

Typically, the number of beneficiaries under the social safety net is thus increased every year during the budget announcement. In the FY21 budget also all the elderly, widows and deserted wives in 100 upazilas have been brought under allowance.

Following the approval of Prime Minister Sheikh Hasina last week, the finance ministry on Sunday announced the two packages worth Tk2,700 crore, according to a press release.

With these latest two, the total number of coronavirus incentive packages now stands at 23, which involve a total cost of Tk1,24,053 crore or 4.44% of the country's gross domestic product (GDP).

Finance Minister AHM Mustafa Kamal said, "I believe the purpose for which the prime minister has announced these two new incentives will definitely be served. This will greatly benefit our backward people. It will also give more impetus to our economy."

A finance ministry official told The Business Standard that the Financial Institutions Division has started working on creating a Tk10,000 crore fund to increase the distribution of loans among micro, cottage and small entrepreneurs through microfinance institutions.

The Bangladesh Bank will provide the money.

"Apart from that, the Finance Division will disburse Tk1,500 crore from the budget in loans to eight NGO-related institutions. The institutions will expand their ongoing programmes with the money.

They will disburse the money in the same way as they have been lending, maintaining the same interest rate, term and collection method," the official said.

The finance ministry held several views-exchange meetings on the status of implementation of incentive packages announced by the government to address the coronavirus pandemic.

Proposals made in those meetings include increasing the scope of credit activities through various government and semi-government agencies related to cottage, small and medium enterprises besides banks to give impetus to the rural economy; taking up more initiatives for the development of women entrepreneurship; and undertaking initiatives to improve the living standard of marginalised rural people to continue the progress made in achieving poverty reduction targets.

The government has announced the two new packages in response to these proposals.

Out of Tk1,500 crore, Tk1,200 crore has been equally distributed to four agencies – SME Foundation, Social Development Foundation, Rural Poverty Alleviation Foundation, and Bangladesh Rural Development Board.

Besides, the Bangladesh Small and Cottage Industries Corporation (BSCIC) and the Small Farmers Development Foundation have been given Tk100 crore each, and Joyeeta Foundation and the Bangladesh NGO Foundation have been given Tk50 crore each.