How do you evaluate the latest budget? Which aspects of the budget do you think needed improvement?
The ground reality has not been taken into account in the preparation of the proposed budget for the fiscal year 2021-22. There is no connection between growth and investment estimates.
To achieve the projected growth of 7.2 percent in the fiscal year of 2021-22, investment in the private sector needs to be increased by 10.8 percent. The budget does not outline how this is achievable in a reality marred by a global pandemic.
The budget did not include an assessment of the current situation. Poverty, labour market, economic recovery — these are the issues that have been ignored in this year's budget.
I do not think that ground reality has reached the policymakers, especially the reality of the new poverty statistics.
According to the survey of SANEM, two and a half to three and a half crore people have become poor again. But their plight did not come up in the budget. There is not even recognition of this situation. This is not a sign of good policy making.
If we do not properly assess the current situation and if there is no reflection of this assessment in the budget, then what would be our measures against the crisis? If we underestimate the crisis/problems, the solutions would be inappropriate. So our first reaction is that the assessment of Covid-19 in the budget has been improper and inappropriate.
I think that Covid-induced problems were undermined. A danger lies in underestimating this. The danger is slack on part of the policymakers. If policymakers are too comfortable in a time of great crisis, then they will not feel the urge to make proper decisions and later implement those decisions.
Who are the winners and the losers of the budget?
Nothing was seen in the budget for the poor. Many middle-income families are now breaking down their savings. There is not much in the budget for the cottage, micro, small and medium entrepreneurs. The list of winners has large industries sitting triumphantly at the top.
The poverty rate has increased exponentially. Although the exact rate is being debated, there is a growing consensus that poverty has increased. There is also a crisis/volatility in the labour market. So, for me, large businesses and industries are the definite winners here.
People are going to villages en masse. This has created pressure on the labour market of villages. There is a crisis, especially in the informal sector and service sector. In addition, SMEs suffered the most. But they are the ones that got the least attention from the government. They even faced many problems in getting help from the stimulus packages.
The allocation to health and education was expected to increase naturally in proportion to GDP. However, the proposed budget has failed in both directions. How well do you think the allocation in health, education and social security sectors fared?
Noting in the proposed budget for FY 2021-22 reflected the real picture of life and livelihood in the country. As a result, the allocation to health, education, and social security sectors are also very low.
The total expenditure is only 4% of GDP on these three crucial sectors. Education alone needs 2 to 4 percent spending. And in total, 8 to 12 percent of GDP should have been allocated to health, education, and social security.
The proposed total allocation for health is TK 32,731 crore, which is 5.42 percent of the total budget. Allocation to the health sector has decreased from the previous financial year (as part of the budget).
There is such neglect in the health sector even in the midst of the coronavirus epidemic. This is counterproductive and I don't quite understand it.
In the budget for FY 2021-22, the allocation for the education and technology sector has been proposed at Tk 94,875 crore, which is 15.71 percent of the total budget and 2.75 percent of GDP. In addition to that, allocation to the education sector has come down from earlier. There is talk of imposing 15% VAT on private universities again. This decision also does not seem reasonable.
There are also no knowledge-based instructions to restore education to normalcy. This time too, the budget allocated for education is just like in normal times, while the reduced allocation for the Ministry of Primary and Public Education has affected the overall education budget.
As a result, it will be difficult to deal with the damage caused to education by the ongoing pandemic. The fear that Bangladesh's education will lag behind in the context of the changing situation is also not unfounded. Though the budget has been announced, the government has the opportunity to increase the allocation for education in various ways. I hope the government will give great importance to education funding to deal with the great loss caused by COVID-19.
The finance minister has emphasised on economic recovery. Do you think this budget will help to recover the loss of the Covid-19?
When the government is talking about recovery, they basically mean economic recovery. But recovery should encompass more than just the economy; rather a social recovery should be given consideration to where poverty reduction, inequality, and injustice at all levels is addressed.
There should have been a roadmap to increase allocations to employment, poverty alleviation, and social infrastructure sectors as well. I doubt whether this allocation is in line with our development goals. And this time, the big reforms that were expected in the budget were not fulfilled at all.
The recovery roadmap is not clear-cut. There is a massive difference between the budget and expectations. Although the proposed tax exemption for the agricultural sector or hospital is positive, it is not clear how low-income people will benefit from it. The finance minister spoke of a business-friendly budget, but it was not clear how many small and medium-sized enterprises would be benefitted.
On the other hand, I lament the fact that the major reforms expected in the budget were not met. As in the first case, the Covid-19 context has been sidelined, and because the path to recovery is ambiguous, I am skeptical of its effectiveness.
How successful do you think the budget implementation will be?
The efforts made to solve the budget-related problems are on an adhoc basis. We have not seen any overall plan to solve the problem this time, like in the previous years.
The past 10 years' data say that only 75% of the budget announced in Bangladesh is implemented. I have not seen any plan on how to increase the implementation of the budget.
So, the difference between the proposed budget and actual spending would be massive. Moreover, the size of the budget is larger than the previous year, but this increase is very small in comparison with the percentage of GDP.
A good twist is the branding of "Made in Bangladesh" products to accelerate the establishment of mega industries and the production of import-substitute industrial goods in the country. If this properly works I think this a good idea indeed.
It is unfortunate that little realistic information is given by the government institutions. We have seen in other countries that government institutions were very proactive in providing data based on groundwork to the policymakers.
Bangladesh's government has a history of being slow to implement budgets, but this is likely to worsen as a direct consequence of the Covid situation. Again, I would say that this budget has nothing new to offer, and its implementation would be a failure as well.