The Bangladesh Bank has reduced the repo rate and cash reserve ratio (CRR) in an effort to tackle the economic crisis amid the coronavirus pandemic.
This is undoubtedly a good initiative, but it has a "but" which is a big issue. The big questions now are who will directly benefit, and will there be any classifications?
Because, it is evident from analyses that the benefit of previous stimulus packages did not reach the actual affected organisations and industries. Others took away the benefits and thus, the government's stimulus packages were misused.
We need to act urgently now in the way some countries are doing, including the USA. We need to give benefits directly to small and medium industries that have been affected.
Many companies in different sectors, including the garment industry, may not have enough funds to pay their workers.
These countries are giving stimulus packages with a target. But banks' liquidity will increase due to reduction in repo rate and CRR by the central bank.
A matter of concern is whether the benefit will actually reach the companies that have been affected by the coronavirus pandemic. One needs a policy to overcome this problem, otherwise no government initiatives will be successful.
It has been seen in the past that most of the affected organisations were deprived of the benefits, and the cleverest people got them instead.
Such as, the interest rate on loans is being reduced. Some businessmen, some industries will cash in on it to get their loans rescheduled. But, what is needed here is to ensure that marginal farmers and marginal businessmen get the benefits of the interest rate reduction.
In reality, the last group will not be able to receive the benefit. Banks will not be willing to respond to their appeals. Instead, the big organisations will take all the benefits.
Alongside this, we also have to support affected organisations with fiscal benefits. Had I been the chairman of the National Board of Revenue (NBR) now, I would have paid attention to small and medium industries first. I would have analysed how they have been affected and then would try to persuade the finance minister to provide them with different tax benefits.
In such a national crisis, monitoring and fiscal incentives are to be implemented instantly. If NBR officials spend time in issuing SROs, affected businessmen and general consumers will have to suffer more. What I would like to say is that there is no use in calling doctors after the patent has died.
Perhaps revenue officials are thinking that a new budget will be presented in June, and it will be enough to give some fiscal benefits to the corona affected businesses then. Policy support is needed in the long term, but instant benefits are more import now.
I want to suggest a different approach to giving incentives to industrialists. Large companies have laundered thousands of crores of taka abroad through underinvoicing and overinvoicing. Many companies are not repaying loans that they have taken from banks, while some have halted the default loan recovery by filing writ petitions at court. In the same way, a large amount of government tax has been stuck.
It is time to pay attention to such matters. The government should now calculate whether big businesses are taking more than what they pay in return. I think it is unacceptable for governments to continue giving benefits to some businessmen without looking at their past misdeeds.
Muhammad Abdul Mazid: Former chairman, National Board of Revenue (NBR)