Austerity saves Tk 12,000cr

The government has saved about Tk 12,000 crore by embracing austerity in purchasing cars for its officials since the pandemic struck Bangladesh, a development that offers the scope to look into how to cut costs.   

Tk 7,322 crore was spent on buying vehicles for the officials in the fiscal year of 2019-20. This was down by Tk 1,145 crore from a year ago as the pandemic forced the government to cut down on non-essential expenditures amid a sharp drop in revenue generation.

The austerity measure continued in the following fiscal years as well.

After the budget for the last fiscal year was passed, the finance ministry banned vehicle purchases under both development and revenue expenditures.

However, in the second half of the fiscal year, it revised the circular, saying vehicles could be purchased if necessary and after taking permission from the ministry.

The allocation for the transport purchase was Tk 6,595 crore in the revised budget for 2020-21. Around Tk 1,000 crore was spent at the end of the last fiscal year, allowing the government to save around Tk 5,500 crore, officials of the finance ministry said. 

The government has allocated Tk 9,408 crore to procure vehicles in the current fiscal year. In July, the finance ministry said only half of the fund could be spent.

This means about Tk 12,000 crore has been saved in the sector since the Covid-19 pandemic hit the country in March last year.

Zaid Bakht, a former research director of the Bangladesh Institute of Development Studies, said Covid-19 had automatically reduced the expenses in the car purchase and fuel sectors.

"Even though the expenditure has gone down, the country continues to operate. So, the government has the opportunity to reduce the expenses further in the future," said Bakht, also a former member of the public expenditure review committee.

Usually, a portion of the allocation is spent for car purchases under the development budget. And at the end of a project, the vehicles are supposed to return to the transport pool of the government. But the officials continue to use them even after the completion of the project.

On the other hand, senior government officials starting from deputy secretaries are entitled to subsidised car loans. But even after purchasing a car using the credit facility, they still use the vehicles bought for a project.

This has prompted the government to recently introduce a new rule, saying deputy secretaries would be eligible for car loans after working in the position for three years.

This means they would continue using the cars potentially from the transport pool of the government. 

Economists say the public expenditure in the sector could be reduced further if the vehicles are used through proper management. When a new project begins, the old cars can be re-used.

State Minister for Planning Shamsul Alam said there was a project evaluation committee (PEC) under the planning ministry.

"The rationality and necessity of every item, including vehicles, should be evaluated during the meeting of the PEC because it is public money," he said, adding that he would discuss the issue with the planning minister.

An economist says reducing expenses is necessary, especially during the pandemic, as the government has been spending a considerable amount to fight the economic fallout induced by the crisis.

In order to vaccinate the entire population, the government will need around Tk 32,000 crore, according to an official estimate. Besides, the government has unveiled various stimulus packages.