Experts have urged to increase allocation and operate cash transfer to disadvantaged communities noting that the Covid-19 situation has adversely affected members of these groups.
They also underscored the need for specific policies for vulnerable groups and the right direction to implement them.
Dr Debapriya Bhattacharya, Convenor of Citizen’s Platform for SDGs, Bangladesh and Distinguished Fellow, Centre for Policy Dialogue (CPD), on Sunday made the keynote presentation at a webinar on what should be there for the ‘disadvantaged people’.
The platform has proposed a number of fiscal budgetary framework, strategic priorities and state of Covid stimulus packages, keeping in the purview of the upcoming 2021-22 budget.
“Employment is being restored with low skills and low-income jobs, extensive under-employment, growing indebtedness and deepening inequality are increasing during the second wave. Budgetary targets are not realised on both resource and expenditure sides,” Dr Debapriya added.
Apparent stability of the macroeconomic situation is also needed in terms of low inflation, stable exchange rate, moderate fiscal deficit and current account surplus.
The socio-economic impact and the disproportionate impact on traditionally marginalised communities (‘left behind’) as well as on low income and low middle-income people (‘pushed behind’) will be more protracted than the immediate health emergencies.
He said current circumstances demand special attention to consumption protection of the poor/low-income people and employment promotion at MSME level. “To initiate the midterm approach of FY 2021-22, we need to press all four triggers – consumption, investment, government spending and net exports,” the economist said.
A minimum two-three year time frame to have a robust recovery strategy with core budget, integrating recovery efforts with structural transformation needs, targeted discretionary support to the “left behind” and “push behind” communities/citizens and use SDG as a framework for poverty frame and align with 8FYP (2021-25) is critically important.
Until March of FY 2021, revenue collection was 50 percent of the target with 7.3(+) percent growth and ADP expenditure was 42 percent of total allocation with 4.3(-) percent growth.
Financing budget deficit were seen due to low use of foreign concessional finance, high borrowing from the banking sector and costly borrowing through NSC needs to be retrained. Use of concessional foreign finance to be prioritised to improve ADP implementation as well as to keep budget deficit from increasing.
The disadvantaged population of the country bears the disproportionate adverse impact of such shortfall in public development programme. In 2020, we were concerned about resource availability (lack of fiscal space) to confront the pandemic. In 2021, we can say it is the inability to implement the public expenditure programmes which has become the binding constraint, he said.
“We also need to create an integrated database of potential recipients of government supports including social safety nets and to improve the quality of the public expenditures, involvement of stakeholders at different levels are required,” he added.
According to the keynote, in FY 2020, before July 2020, total Tk 77,278 crore (2.76% of GDP) stimulus was announced. In FY 2021, till May 2021, the amount was roughly Tk 47,715.50 crore (1.71% of GDP).
To have greater fiscal multiplier effect, Bangladesh needs to push resources to those having a high marginal propensity to consume (e.g., poorer households) and a high marginal propensity to invest (e.g., small entrepreneurs).
Substantive cash transfer to disadvantaged communities/citizens, liquidity flow to MSME, domestic market-oriented manufacturing diversification, post-harvest mechanisation of agriculture, IT-platform based high value service provision etc are some strategic priorities for the FY2021-22 budget.
In Covid related government support intervention, there were 14 fiscal support (including two food support) and this was less than 20.5% of total allocation. Eleven hybrid support (subsidy to interest rate) amounting a little above 79.5% of total allocation where 18 are new interventions and 7 were extension of the existing programme.
Hybrid support in FY 2020-21 includes additional Tk 10,000 crore in working capital loans to affected large industries and service sector. Some packages were announced in one fiscal year, but intended to disburse from following fiscal year fully or partly. The estimated net fiscal support (net fiscal support excludes fiscal support for agriculture sector and construction of home) is as low as 1.63 percent and 15.54 percent of total allocations in FY20 and FY21 respectively.
In terms of share of GDP, they are 0.04 percent and 0.19 percent respectively. Fiscal support was not only low in allocation but also slower in delivery. This overwhelming constraint cannot be addressed exclusively through strengthened administrative monitoring. This will need wide-ranging structural and institutional reforms.
Anisatul Fatema Yousuf, Coordinator of Citizen’s Platform for SDGs, Bangladesh; Advocate Sultana Kamal, Former Executive Director of Ain o Salish Kendra; Professor Mustafizur Rahman, Distinguished Fellow of CPD; ShaheenAnam, Executive Director of Manusher Jonno Foundation; Rasheda K Choudhury, Executive Director of Campaign for Popular Education (CAMPE); Dr Mushtaque Raza Chowdhury, Vice Chairperson of BRAC; Asif Ibrahim, Chairman of Business Initiative Leading Development (BUILD) & Syed Nasim Manzur, Chairman of Landmark Footwear Ltd and Founding Director of Apex Footwear Ltd, were also present at the event.