Where will investment for growth come from?

This is the second budget during the prevalence of Covid-19. Our economy has been hit hard by the Covid outbreak. In the macroeconomic context, many of the sector-wise targets that we had, have not been fulfilled. The health sector is one of the major sectors where problems and risk remain.

So much is being said about the health sector, but allocation for this sector still remains 1 per cent of the GDP. This allocation will not meet the health sector requirements. On the other hand, the health sector also lags behind in implementing the allocations. Given these circumstances, the health sector will not be able to stand up to any big impact.

Many people have fallen anew into poverty due to health risks. Many people's incomes have decreased. Yet government investment is not increasing. And if investment does not increase, employment won't increase either.

The SME sector generates the most employment, yet basically the owners of the large industries received the government's stimulus funds. Allocations for the SME sector must be increased. Also, the stimulus has basically been provided through banks. Yet many small entrepreneurs do not have bank accounts. That is why their loans should be provided through NGOs. NGOs have countrywide networks. They also have good contact with small entrepreneurs. This can be effective in increasing employment. Yet a decision in this regard has just been going round in circles for the past year.

The GDP growth target has been projected at over 7 per cent, but it has not been said where the investment required for such growth will come from. Investment in the private sector, particularly, has been stuck at one spot for the last few years. This has gone down further due to Covid. How will there be growth without private sector investment? Just government investment is not enough. And over the past one year the pace of many government projects has slowed down. The growth projection doesn't tally with this reality.

There has been a deficit in revenue collection in the 2020-21 fiscal. The tax-GDP ratio hasn't increased. Government expenditure hasn't been satisfactory. Every year the Annual Development Programme implementation falls below target. It has been even lower than before this time. Industrial production has dropped too. Food inflation has increased. In this backdrop, the budget target will not be very conducive to economic recovery.

Unless revenue can be increased, it will not be possible for the government to provide any large amount of stimulus funds. And unless the overall tax system's competence and capacity is improved, it will not be possible to increase revenue collection. It will not be possible to meet demands at the rate at which tax is being collected at the moment. In no way will it be possible to meet demands, given the situation created by increased expenditure in the social safety network and health sector. So it is not clear on what basis the target of the macro-economy has been fixed.

The impact of Covid is still being felt. We don't know how long this will last, what new variants will emerge. So planning cannot be restricted to just one year, though the budget is prepared for one year. There should be a sort of mid-term projection.

* This commentary appeared in the online edition of Prothom Alo and has been rewritten in English by Ayesha Kabir