A prolonged pandemic has certainly taken a huge toll on businesses and the economy, a reality that is all too evident.
And as the Covid-19 pandemic situation is far from easing, the government faces a formidable challenge today in getting the economy back on a recovery trail.
As Finance Minister AHM Mustafa Kamal places a Tk603,681-crore proposed national budget for the 2021-22 financial year in parliament on Thursday afternoon, he must be knowing very well that a budget is much more than just a figure.
Figure-wise the proposed amount is Tk35,681 crore more than what has been the passing fiscal’s budget volume. But the businessman-turned finance minister must be crossing fingers on how to finance this budget, with the government’s revenue collection apparatus going through a tough time in meeting higher revenue targets during the relentless pandemic.
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Thursday’s budget placement, the third in the current tenure of Prime Minister Sheikh Hasina’s government, comes at a challenging time when businesses are seeking tax relief, the poor are looking for jobs and the new poor are in need of succour.
Against such a background, Kamal will be walking a thin line today in striking a balance between the diverse needs and aspirations of various groups and at the same time managing some sort of arrangements about deficit financing.
The government has already made it clear that the overarching philosophical theme of the FY2021-22 national budget will be “saving lives and livelihoods.” But how it translates its theme into reality is what people will be eager to see in the coming financial year.
Overcoming the government machinery’s capacity shortcomings in implementing the budget and annual development programs continues to remain a big challenge amidst corona-induced hard times.
Challenges of employment generation, new poor
With numerous studies showing that many people have lost their jobs due to Covid-19-induced job cuts in different sectors, the government’s proposed budget for FY2021-22 is expected to have a thrust on employment generation and creation of an enabling environment, where the private sector can make quick recoveries and absorb an unemployed workforce.
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Bangladesh’s economy was growing fast with 8% GDP growth prior to the pandemic hitting hard. The country’s per capita income has well surpassed those of other regional economies, i.e. India and Pakistan notably. However, a prolonged Covid-19 situation has had its toll on people’s lives, badly affecting their livelihoods – relegating many of the poor, who had managed to graduate up the threshold, back into below the poverty level.
The upcoming budget is expected to expand social safety net coverage and extend crucial food and cash aid to the poor and vulnerable groups.
Experts, however, cautioned against inefficiency and graft in targeting and listing the actual beneficiaries for such safety net programs. Failing to make proper lists, the government, in the outgoing fiscal, provided cash aid to some 3.5 million poor though it had an initial plan to render assistance to five million poor.
Priority to health, education, energy and mega projects
The government’s proposed budget outlay will have a sizeable chunk earmarked for the health and education sectors and understandably so, given the current pandemic realities. If there is one lesson the pandemic has taught us the hard way, it is that investment in the health sector is worth more than anything else.
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Over the last one and a half years, students and teachers as well as educational institutions have learnt the hard way that developing infrastructure, internet and other software to facilitate remote education is so very crucial. Those who could manage to do so went ahead compared to their peers – who were on the wrong side of the digital divide. This year’s budget must be attaching one of the top priorities to education and the IT backbone.
The government is also attaching much importance to financing the energy sector as well as some of the key mega projects in the budget proposal. Its allocation of nearly a fourth of Tk225,000 crore planned ADP (annual development program) to these mega projects clearly demonstrates the government’s political will to complete the projects prior to the next general election.
But again a slow pace of work and failure to spend development money allocated for the outgoing fiscal casts doubts on how the FY2021-22 budget can accelerate work on the mega projects.
Easing tax burden
In discussions leading up to Thursday’s budget placement, the country’s business community has made it loud and clear that it wants an easing of the tax burden, particularly during these pandemic times. They have called for revisions to the tax collection system to ease the tax burden on enterprises that are already struggling due to the Covid-19 pandemic.
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In fact, a reflection of this is expected to be seen in the finance minister’s budget proposal. And many consider it possible to generate more revenues for the government without putting much of an extra tax burden on businesses. What they suggest is a sincere effort on the government’s part to bring tax-evading businesses under its purview and not squeeze further the ones who have already proven to be good taxpayers.
