‘Budget should pay special attention to five areas’

The Centre for Policy Dialogue’s executive director Fahmida Khatun feels that it will take anything between three to five years for the economy to return to its previous state after the damage created by coronavirus. That calls for planned initiatives from now, she said, speaking to Prothom Alo in an exclusive interview.

She feels planning should be of three categories – immediate, short term and mid-term. And there must also be detailed planning as to what preparations each ministry and department will undertake. Estimates of expenditure must be drawn up too.

“The significance of the coming budget is very different from previous budgets,” remarked the CPD executive director Fahmida Khatun, “because this is the first budget amid the coronavirus outbreak. The budget must pay attention to immediate and short-term aspects since the budget is just for one year.”

Despite being for just a year, she felt that the budget should contain guidelines about funding and resource mobilisation for the next few years.

The 2020-21 budget should pay special attention to five areas. These are health, social security, agriculture, employment and education, she said.

Concerning criticism about allocations for the health sector, Fahmida Khatun said these allocations were far too inadequate. “For quite a few years now, allocations for this sector have been just .9 per cent of the GDP and only 4.9 per cent of the budget,” she said, pointing out that there was a mid-term strategy paper regarding health sector allocation.

In the strategy paper for health sector funding from 2012 to 2031, it is said that by the year 2032, the health budget will be increased to 15 per cent of the budget. The seventh five-year plan is also a mid-term work strategy. This strategy speaks of increasing the allocation for the health sector 1.12 per cent. The seventh five-year plan ends in 2020, but the target has not been met.

The eighth five-year plan begins in 2021 which will be in effect up till 2025. “We hope that in light of coronavirus, this will have a much larger allocation for the health sector and that by 2025 the allocation in this sector will be increased to 5 per cent,” she said.

Due to the coronavirus pandemic, business is not likely to return to normal any time soon and there will be a shortfall in revenue collection too. So how will the funds for the budget be arranged?

Faced with this question, Fahmida Khatun replied that there will be the slowdown in economic activities, income will fall too, leading to a shortfall in revenue. The government will have no alternative but to increase expenditure in order to activate the economy.

“The government has a very important role to play when there is an economic recession,” said Fahmida Khatun, adding that the Bangladesh government too has come up with quite a few stimulus packages and relief programmes. “Around 80 per cent of the stimulus packages will go though the banks,” she said, “but the entire amount of relief will be from the government’s funds. If the prevalence of coronavirus is prolonged and damages increase, then the amount of relief will increase too. So the government will have to take up some well thought-out plans.”

Firstly, she said, the revenue sector must be expanded. Secondly, those whose tax is cut at source, must come under review at the year and if full taxes are collected from everyone, revenue will increase. Thirdly, the National Board of Revenue’s intelligence unit has all details of tax evasion and such. So revenue will also increase if taxes are collected from those evaders. Fourthly, there are many in Bangladesh who show they have less income but live extravagant lifestyles. If their expenditure can be pinpointed and their taxes determined accordingly, revenue collection will increase. Using Artificial Intelligence in supermarkets, private hospitals, private universities, etc, people’s expenditure can be determined. Fifthly, illegal flow of money overseas must be stopped.

Careful thought must be given to expenditure too, the CPD executive director said. New projects of lesser importance which have not been started or have just been started, can be stopped. Allocation for these can be cancelled in the ADP. Administrative costs can be cut. The government must tell all departments to slash expenditure by at least 50 per cent. The sole target should be to curtail expenditure in non-productive sector and increase expenditure in productive sectors.

She was of the opinion that less pressure should be placed on the banks since these institutions had been given responsibility of the stimulus packages.

She also said that proper advantage must be taken of the falling oil prices in the international market. Many international agencies had committed to foreign funding and this will help in budget funding.

Concerning the irregularities, mismanagement and corruption in the area of social security, even during coronavirus times, Fahmida Khatun pointed out to the vulnerability of the poor people during the coronavirus crisis. “They must be given social safety, but that means changes in social safety management. Firstly, the social safety net programme has long-standing shortcomings in beneficiary selection. Those who need assistance are overlooked and those who don’t require assistance are put on the list because of nepotism.”

She said using the national ID cards could resolve the problems of beneficiary selection to an extent. Those who had been overlooked, could enlist themselves. There must be provisions for them to call up over mobile phone and give their name to be listed. The list could be placed on the website of the concerned ministry. Digital financial services could be used to distribute the allowances. The services of local NGOs could be used in preparing lists of the ultra poor and also monitoring the distribution to ensure they receive the money. If there was a commitment, it would not be difficult to bring a halt to the mismanagement and corruption.

About unemployment and falling below the poverty line, the economist said employment could be generated by creating economic activities. Government investment must be increased in the productive sector. However, there was more employment in the private sector. The sooner the private sector started up their activities, the better, of course while maintaining the health regulations.

“One thing must be kept in mind about employment generation,” Fahmida Khatun pointed out, “Coronavirus has changed the nature and skills of our work and will change it further in the days ahead. Business will depend on a lot of digital systems and the people must be prepared.”

Harsh reality is that not everyone will get jobs, she said, explaining that the use of technology would mean a reduction in workforce. In that case, many will have to think of self-employment. That would entail training and capital. She said that microcredit on easy terms would have to be arranged. Since a lot of work could be done from home, internet access would have to be ensured for all. The government would have to increase investment in technology, she concluded.

This interview has been rewritten in English and in report form by Ayesha Kabir