Car extravagance amid crisis

Amid the Covid pandemic and the economic crisis too, officials are purchasing cars with the government’s interest-free loans. The government too is providing new vehicles

The country’s economy fell into a crisis during the Covid pandemic. Now the economic crisis induced by the Russia-Ukraine war prevails. The government has announced austerity measures to tackle the crisis. Yet amid this, vehicles are being purchased for government officials.

Government officials are provided with interest-free loans to purchase vehicles. They receive loans to buy flats too, and loans are subsidised by the government. These facilities were not suspended during the pandemic nor have these been suspended now. In fact, cars are now also being bought for deputy commissioners (DCs) and Upazila Nirbahi Officers (UNOs). A proposal has been submitted to the finance ministry regarding the purchase of cars for the vice chancellors of 14 universities. The proposal to purchase vehicles for the engineers and police also lies with the finance ministry.

The cost ceiling for cars has also been raised further recently. Instead of Tk 9.4 million (Tk 94 lakh), cars can now be purchased at the cost of Tk 14.5 million.

The government is facing a financial crisis. Subsidy funds in certain sectors are not being provided in time. Subsidy has been lifted from the energy sector. Subsidy has been slashed on fertiliser and prices increased twice. The price of electricity and water has been raised repeatedly. The commerce ministry’s proposal for duty concessions on essential items like sugar and edible oil has been rejected.

The finance ministry issues a circular in July announcing that the purchase of all types of vehicles for government offices under the operating and development budget in the 2023-24 fiscal will be halted. The circular stated that approval of the finance division would be required to replace cars over 10 years old.

The finance division issued two circulars, one in July 2020 and one in July 2022, concerning a halt on buying cars.

Economist Zahid Hossain, speaking to Prothom Alo, said that government service holders and the common people are of the same family. But the government service holders are being given more importance. He said, the government announced austerity measures in the budget. One of the two sectors to cut expenditure is in operating costs and the other is determining priorities in development expenditure. But it doesn’t look like costs have been curtailed much in travel, buildings, vehicles, entertainment, etc. There are also no signs of austerity in the case of development projects.

On 27 August this year the finance ministry gave its approval for the purchase of 261 new cars for DCs and UNOs at an expenditure of Tk 3.8 billion (Tk 380 crore). A total of 61 DCs of 64 districts will receive new cars. And 200 cars are being bought for the UNOs. Conditions are being relaxed and 2700cc cars are being bought for them, which are normally the entitlement of Grade 1 and 2 officers (secretaries and additional secretaries).

On 11 September, the University Grants Commission (UGC) sent a letter to the finance division asking for Tk 200 million (Tk 20 crore) in order to purchase cars for the vice chancellors of 14 universities. The upazila engineers of the Local Government Engineering Department (LGED) also asked for vehicles. They want 433 cars. The minutes of a meeting of the parliamentary standing committee for the planning ministry on 27 August states that the approval of the finance ministry has not been received for this and so the vehicles will be bought in phases from the revenue budget.

In September last year the police came up with a proposal to purchase vehicles and other equipment and machineries. A total of Tk 2.26 billion (Tk 226 crore) was sought for the purchase of cars. Former cabinet secretary Ali Imam Majumdar, speaking to Prothom Alo, said that vehicles are need for work. The cars that are our or order can be replaced. This is not the time to entitle more people anew for such privileges.

Among the government service holders, from joint secretary up to the senior officials would be entitled for official car facilities. From 2018, car facilities were provided from the deputy secretary level. Regulations were drawn up in 2017. These were later revised and it was stated that deputy secretaries would be entitled to cars after serving for three years.

According to the ‘Interest free car advance and transport service encashment policy 2011 regulations (revised)’, the officials received Tk 3 million (Tk 30 lakh) interest-free loans each to purchase cars. And the government provides another Tk 50,000 for maintenance, fuel and driver’s salary.

These facilities are being extended to the officers of joint secretary rank and above of the economic cadre, which has been now merged with the administration cadre, as well as those of the rank of joint secretary (drafting) and above (who receive the facility of cars for round-the-clock use). The government officers entitled to cars are supposed to be given the use of cars from the government transport pool. Instead, the government is providing interest-free car loans. According to the policy, the loans can be paid in 120 equal installments. The installments will be deducted from the salary every month.

According to sources in the public administration ministry, around 2300 officers have availed the interest-free loan to buy cars after it was introduced. In 2017-18 fiscal, 1234 officials avail the interest-free loan facility.  In the 2018-19 fiscal, this facility was availed by 847 officers. It seemed that most of the officers availed this facility. In 2019-20 fiscal over 200, in 2020-21, a total of 59 and in the 2022-23 fiscal, 21 officers bought cars with interest free loans.

There are allegations against many of the officials that even after buying the cars with the interest-free loans, are still using the ministry, department or corporation cars. There are allegations that they are using these cars instead of returning them to the car pool.

The public administration ministry has issued instructions several times for the cars to be returned to the pools. However, no one has bothered to do so. The last notice was issued on 8 December last year to send the cars back to the pool.

Based on the letter issued by the public administration ministry, various ministries have given letters to the organisations under them. A letter of the shipping ministry makes it evidence that they have not bothered to respond. This letter issued on 30 August this years, says that a request had been made on 4 January to submit details of the vehicles of the completed project to the ministry. No details have been received so far. The letter requested once again for the details to be sent.

Flats with subsidised interest loans

Government service holders are receiving Tk 3.5 million to Tk 7.5 million (Tk 35 lakh to Tk 75 lakh) house building loans at 4 per cent simple interest. The remaining interest is being subsidised by the government. This facility is being provided under ‘the house building loan from the banking system for government employees regulation 2018’. University teachers and members of the judicial service also receive these facilities.

These loans are provided through banks and institutions selected by the government. However, approval of the finance ministry’s finance division is required in the case of taking house building loans.

The concerned department of the finance ministry failed to provide the accurate figures of how many have availed this facility after the policy was introduced. However, an official said that when any one is provided with such a loans, the grant documents are uploaded on the website. A look through the website revealed that from August2020 till now, 4710 persons were granted these loans.

In March 2020, the first Covid patient in the country was detected. Restrictions were enforced. There were layoffs in the private sector. Salaries were slashed. Many firms could not pay festival allowances. Then in February 2022, the Russia-Ukraine war broke out. This pushed up the prices of commodities, including fuel, in the global market. With import costs going up, foreign exchange reserves began to fall.

Precisely two years ago, the foreign exchange reserves in the country were USD 48 billion (USD 4800 crore). On 13 September, the reserves stood at USD 27.63 billion (USD 27643 crore). According to the International Monetary Fund (IMF) formula, there reserves are actually USD 21.71 billion (USD 2171 crore). And the exchange rate of the dollar has shot up from Tk 86 to Tk 110. Foreign currency is being spent to import the cars being bought (Pragoti Industries only assembles cars). Yet the import of industrial raw materials, machinery, food products, etc is being hampered due to the shortage of dollars. By imposing all sorts of stringent measures and increasing taxes, in 2022-23 fiscal import expenditure could be reduced by 16 per cent.

The government has a shortage of taka too because of low revenue collection. In the 2022-23 fiscal, the National Board of Revenue (NBR) collected almost Tk 3,320 billion in revenue, which was 89 per cent of the target.

Speaking to Prothom Alo, professor of economics at Dhaka University, Selim Raihan, said there is a dollar crisis prevailing at present. Purchasing vehicles should not be a priority now. The question cannot arise of providing loans with subsidised interest to government employees to purchase cars, flats, etc. There is the question of the common people facing hardship. Selim Raihan said, the cars of the completed projects can be retrieved now and given to the entitled officers for use.