South Asian Network on Economic Modeling (Sanem) urged the government to increase allocation in health, education, social safety net and agriculture sector in the budget for the next fiscal year to reduce poverty and inequality and generate more employment.
The think tank asked for appropriate reforms in the field of both revenue generation and expenditure to make the budget more effective.
The recommendation came at a pre-budget webinar held on Sunday titled "Budget 2021-22: Reality and Expectations". Dr Sayema Haque Bidisha, research director of the Sanem, presented the keynote paper on the virtual event.
She said, "Implementation of budget, especially development spending is at a critical juncture in the current fiscal year. ADP implementation for some important ministries and divisions are disappointing."
"The economy is facing some new difficulties with some three crore new poor in the country due to loss of income and employment. That is why the government should impose more attention on the social safety net to help to maintain their livelihood," she added.
"Poverty rate increased to 42% of the population which was 21.6% prior to the Covid-19 pandemic. The government has no programme for the huge number of new poor in the current budget," Bidisha said.
She recommended an allocation of Tk5132.65 crore each month to maintain the livelihood of the poor people.
She also said, "About 17% of the current budget has been allocated for social safety net while the rate is 11% excluding the allocation for pension, interest rate, stipend for the students."
She recommended increasing per capita allocation excluding the calculation of these three sectors.
Dr Bidisha urged the government to ensure reforms in tax policies to increase public revenue and to reduce inequality. She said that tax GDP ratio in Bangladesh is less than 10% in few decades and the rate is lowest in South Asia and graduating LDCs.
She recommended addressing the problem of the poor implementation of the current budget and lower disbursement of the stimulus packages.
"The large firms utilised the stimulus of the government and it failed to reach to CMSMEs. CMSMEs are more affected by the Covid-19 pandemic and the sector generates a larger part of industry employment," she said and recommended introducing more stimulus for CMSMEs and relaxing the disbursement procedure.
Dr Selim Raihan, executive director of the 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 lockdown, which reduced income and livelihood. Several varieties of the Covid-19 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 that higher allocation is not the only key to develop the economy and implementation is also more important. "The health sector received a higher allocation in the current fiscal but the implementation is lower. There is a lot of corruption in the Ministry of Health," he added.