The government should increase allocations for the health, education, social safety net and agriculture sectors in the national budget for the forthcoming 2021-2022 fiscal year to reduce poverty and social inequalities, and generate more employment opportunities, experts have recommended.
Speaking at a pre-budget webinar organised by the South Asian Network on Economic Modeling (Sanem) on Sunday, they also asked for initiating reform measures to enhance the budget implementation capacity of the relevant government functionaries.
Dr Sayema Haque Bidisha, research director of Sanem, presented the keynote paper entitled "Budget 2021-22: Reality and Expectations" at the virtual seminar.
She said the next budget would have to take into consideration both pre-Covid and post-Covid challenges.
The existing budget structure suffers from low revenue generation and slow implementation of annual development programme (ADP), Bidisha pointed out, adding, "Furthermore, in spite of the consistent high growth in GDP, the pace of employment generation has not been impressive and there has been low spending in human resource development."
Budget implementation remained at a critical juncture in the last couple of years, she mentioned.
"Development expenditure remained far behind the target. ADP implementation by some important ministries and divisions in the first 10 months of the fiscal year were disappointing.
"The economy is facing some new challenges in the wake of the creation of some three crore new poor in the country due to losses of income and employment. That is why the government should pay more attention to social safety net to help the poor maintain their livelihoods," she added.
Poverty rate has increased to 42%, up from 21.6% prior to the Covid-19 pandemic, but the government has no programme for the huge number of new poor in the current budget, Bidisha continued.
She suggested allocating Tk5,132.65 crore each month to maintain the livelihoods of the poor, including the new ones.
She also mentioned that about 17% of the current budget has been allocated for social safety net, but the amount stands at 11% when allocations for pension, interest rate and stipend for students are excluded.
Bidisha recommended that the government increase per capita allocation in social safety net programmes prioritising the new poor, especially those in urban areas. "Covid-19 situation is worse in urban areas, but these areas received less than 2% of the total allocation in the social safety net," she said.
Dr Bidisha urged the government to reform tax policies to increase public revenue and reduce inequalities.
She also pointed out that the tax to GDP ratio in Bangladesh has remained less than 10% for a few decades and the rate is one of the lowest in the world.
She went on to say 83% of the actual revenue target was met in the 2016-17 fiscal year (FY17), which fell to 75% in FY18 and 74% in FY19. The portion of the income tax remained below 35% of the total tax collection and the rate is going down, which widens inequalities in society.
She stressed addressing the problems of the poor and lower disbursement of the stimulus packages.
"Large firms utilised the government incentives, while CMSMEs were deprived."
Noting that CMSMEs are more affected by the Covid-19 pandemic and that the sector generates a larger part of industry employment, she suggested introducing more stimulus packages for CMSMEs and relaxing the disbursement procedure.
Dr Bidisha further added that the allocation for the health sector is 0.92% of the GDP in Bangladesh, while it averaged 3.48% in South Asian countries.
"General citizens have to pay about 74% of health costs from their pocket, which is significantly higher than the average of South Asian countries (64%) and least developed countries (49%)."
According to the keynote paper presented by Dr Bidisha, ADP utilisation by the health ministry was 72.3% last fiscal year – lowest in six years. The ministry spent only Tk3,049 crore in the first 10 month of this fiscal, which is only 25.5% of allocation.
The paper also found significantly low allocation in the education sector. It revealed that the budgetary allocation for education in the country is about 2% of the GDP, while the rate is 3.48% in South Asia and 3.54% in LDCs.
Dr Bidisha said ADP implementation by the Ministry of Primary and Mass Education dropped to 72.1% last fiscal, which was 95.6% in the previous year. The ministry utilised only 34% of ADP allocation in the first 10 months of the current fiscal year.
Quoting a previous research of the Sanem, she said about 21.2% of students have access to online education, while it is 14.8% in poor and 26.2% in non poor group.
"A huge fund is required for the health and education sectors to save people's lives from Covid-19 and minimise the gap in human resource capital. The government has allocated less resource in these sectors and the implementation status is also pathetic," she said, asking for increasing both allocation and implementation capacity.
Dr Selim Raihan, executive director of Sanem, said the budget documents should reflect the current state of the economy.
"The economy is facing several waves of the Covid-19 pandemic. We have imposed lockdowns, which reduced income and livelihoods. Several variants of Covid-19 have been identified. The economy is in complete uncertainty," he said and recommended the finance minister to take proper initiatives to manage these problems.
He also said higher allocations are not the only key to economic uplift. Implementation is also important, he added. "The health sector received a higher allocation in the current fiscal but the implementation is lower."
He asked for curbing corruption in the health ministry to implement the budget efficiently.
He also suggested developing a monitoring and evaluation system to boost the implementation of the budget.
He stressed on Covid-19 management related budget allocations to salvage the health sector by ensuring timely vaccination drives, border controls and building capacity of the medical workforce.
Referring to a lack of reliable data to combat the Covid-19 crises, he criticised the Bangladesh Bureau of Statistics for this, as the government agency failed to conduct any detailed study on the impact of Covid-19 on the economy.
Dr Raihan also urged policymakers to come out of the obsession of repeatedly using GDP. He said GDP growth rate is an important measure to assess economic advancement, but other socioeconomic indicators such as poverty, inequality and employment are also important in assessing the wellbeing of the nation.
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