Strict restrictions have been imposed since 1 July. This has hit the low income workers the hardest. But there are hardly any visible steps from the government to address the matter.
In comparison to the other sectors, it is people from the service sector that are most affected. We had proposed to the government to pay Tk 2000 monthly to the unemployed families as temporary financial assistance. The government did not do so. They are just continuing in the conventional manner of providing assistance to the old poor by means of the social safety net. Nothing has been done for the new poor. These include people who survive on their daily earnings, hawkers, construction workers, hotel and restaurant workers. If 10 million (1 crore) families were paid Tk 2000 each for 12 months, that would amount to Tk 240 billion (Tk 24,000 crore), just 0.7 per cent of the national revenue. Yet the government did not agree to do so.
Coronavirus cases and deaths are on a steady rise. This is a matter of serious concern. Unless the situation improves, the restrictions will be extended. How will the economy survive?
The infection of the virus is steadily increasing and that is a matter of serious concern. Eid-ul-Azha is ahead. When the holiday is declared, the workers will flock to their villages. There will be streams of people all around. And if there are livestock markets, there will be another wave of the virus. During last Eid, a curfew had been imposed in Saudi Arabia to prevent public gatherings. Whether the infection of the virus will increase or decrease, depends on whether we can take such a stringent measure or not. Public health experts have already suggested curfew.
Qurbani or the sacrifice of animals during Eid, generates business in Bangladesh. Thousands of people are dependent on this. Livestock farmers will be in deep trouble if they can’t sell their animals. Then again, if the livestock ‘haats’ throng with people, the infections will spread. How to overcome this dilemma?
The bigger picture must be taken into account. Cows are sold around the year here. During Eid the livestock farmers may make a bit more money. But beef costs Tk 560 per kg anyway during normal times. So if there are lower sales during Eid, that doesn’t mean the livestock farmers will be ruined. If they contract coronavirus in their efforts to make a profit, that will be much more harmful. Rather than increasing the health risks, if buyers like us donate that money to the poor, that will be good for all concerned.
You had spoken about creating a fund for the new poor, but the government policymakers did not pay heed. What is to be done now?
Special assistance is required for those who are suffering from a lack of income because of the restrictions. When the budget was prepared, perhaps they thought the restrictions would not be imposed for so long. But we are headed towards extended restrictions and this will not be the last of the restrictions because we are unable to administer the vaccines. The government should deliver rice, dal (lentils), salt, oil and other essentials to the ultra-poor.
The finance minister doesn’t see any new poor.
He doesn’t see them, but we do. The media is pointing towards them every day. The government says there are no new poor, but we say there are. There is no point in denying this. They must show evidence. If the government does not trust the non-government surveys, why did they not carry out their own survey? They could have assigned BIDS to the task. It is not completely true that the new poor haven’t appeared in government records. A recent household survey of BBS had data on the decrease of people’s income.
According to news reports, remittance and foreign exchange reserves are increasing. At the same time it is also reported that migrant workers are losing their jobs because of coronavirus. How do you see this contradiction?
There is certainly a contradiction. We know that earnings rise when the economy is strong. But there is an economic slump in all countries during these coronavirus times. Migrant workers have been returning and very few new workers are going overseas on employment. The remittance coming from abroad must be viewed from a different angle. One of the major reasons of the increase in foreign exchange is that people from Bangladesh have stopped traveling abroad for medical reasons, education and tourism. Around 800,000 people would go to India alone on health grounds every year. This figure was around 1.1 million to 1.2 million to Thailand and Singapore combined. Around 30,000 to 35,000 students would go abroad to study every year. So around 8 billion to 10 billion dollars are being saved on all that in a year. This is a boost to the government’s reserves.
When things normalise, travel, medical treatment and education expenses will be back as before and there will be an 8 billion to 10 billion drop in foreign exchange reserves. People would siphon off money to buy houses and flats in ‘Begumpara’ and ‘second homes’, but coronavirus has held that up too.
The government is providing expatriates with a 2 per cent incentive when they send money back home. Has this increased money being sent through banking channels?
I see this as a waste. The government is dumping Tk 30 billion to Tk 40 billion (Tk 3000 crore to Tk 4000 crore) into the water. Those who will send money through the banking channels, will do so without the incentive. And those who will use the ‘hundi’ system, will do so regardless of any incentive.
Every year there is a debate over whitening black money. There are protests from various quarters. But the government is keeping up the practice, claiming that it brings the money into the mainstream economy. What is your opinion?
This money was in the mainstream anyway. Money has no colour. No one kept their money buried under the ground. The bank has lent that money to someone. Whitening back money is an injustice to the honest taxpayer. He gives an accurate account of his income and pays 25 per cent in taxes. And the one who has cheated, gets away with a 10 per cent tax. That is not fair. The main reason that Tk 210 billion ( Tk 21,000 crore) in black money was whitened this year is that unprecedented incentives are being offered, where there is no need to reveal the source of funds and the tax rate is the lowest. Also, there was less scope to siphon money overseas.
The names of many Bangladesh bank officials, including a former deputy governor, were involved with PK Halder’s money laundering scam. If the central bank’s officials themselves are involved in money laundering, how can this money laundering be prevented?
In every country, the central bank is placed in high regard as an institution. In our country too, Bangladesh Bank has an elevated position. The governors of the bank have not only been professionally sound, but also socially respected persons. This bank runs and controls the financial management of the country. It is unfortunate that a number of persons from this institution have been involved in criminal activities. It won’t do for Bangladesh Bank to conduct an internal or departmental inquiry. External respected persons should investigate the allegations that have arisen. This inquiry must be conducted at a state level and the findings must be made public. This is necessary in order to ensure that no one repeats such misdeeds in future. Unless exemplary punishment is ensured for such activities, such incidents will simply be repeated and on a much larger scale.
Even during coronavirus times, the government has determined growth at 7.2 per cent. But how is the overall state of the economy?
The government makes no mention of the fact that there is a standstill in the economy. But the government’s narrative does not match with reality. There is no use of talking about growth without vaccines. If 50 to 60 per cent of the people could be vaccinated, the coronavirus fear could abate. If the economy is doing so good, why is there no investment? In the private sector, loans have been falling steadily to just 7 per cent at present. In normal times this is 14 per cent to 16 per cent. It apparently seems that no loans have been given or taken outside of the stimulus packages. The interests rates are at an all time low in the country’s history, yet loans have hit rock bottom. If the business environment is good and there is security, interests rates are not a factor. There is no scope for investment and that is why people are turning to the share market or are buying homes. But unless the share market is not reigned in, there may be another crash as in 1996 and 2011. That is not expected in any way.
The price of rice and other items is on a rise. On the other hand, people’s incomes are dropping. The price of all items in the global market has increased by 20 to 50 per cent this year. The price of food, industrial raw material, fuel oil and everything is on a rise. Such a situation is dangerous for a developing country like Bangladesh. This can easily lead to inflation. We can already see inflation growing in big economies like the US and India. Under such circumstances, it is important for Bangladesh to step up its monitoring of currency management and, if necessary, take measures to decrease liquidity.
Thank you too
* This interview appeared in the print and online edition of Prothom Alo and has been rewritten for the English edition by Ayesha Kabir