Govt support was scarce considering Covid fallout
The government support extended to ordinary people amid the ongoing coronavirus pandemic was insufficient to sustain their livelihoods and contribution to the overall economy, a noted economist said yesterday.
With the advent of Covid-19, the government rightly enforced complete economic shutdowns in a bid to control virus transmission, according to SR Osmani, a professor of development economics at the University of Ulster in the UK.
However, recurring lockdowns led to an economic downturn where many people lost their jobs.
"And although the government did offer some support, it was not enough to sustain their economic activities," Osmani said at a session of the Annual BIDS Conference on Development 2021 at Lakeshore Hotel in Dhaka.
Instead of ensuring continued direct support for regular people, the government decided to reopen the economy so that it could avoid providing the support for a prolonged period.
"It was a pre-matured reopening of the economy which affected the lives of people," he added.
The poor financial support of the government is reflected in its data.
For instance, some 20.3 per cent of the total government support package was protection oriented while 79.7 per cent was growth oriented as the government's intention was to generate economic activities rather than protect people.
Another way of looking at it is that the total package is 4 per cent of Bangladesh's gross domestic product with 3.16 per cent being growth oriented and the remaining 0.80 per cent being protection oriented.
The country's economy reopened in May 2020 amid a 20 per cent infection rate that was rising still.
"So, it is clear that direct protection was not considered for a prolonged period," Osmani said.
He went on to say that the support was growth oriented to such an extent that some 60 per cent of the poor and low-income groups who suffered severely due to the Covid-19 fallout did not receive any support from the public and private sectors.
In the immediate aftermath of the initial lockdown, the proportion of the crisis-hit new poor was found to be as high as 22.8 per cent.
The resumption of all economic activities only slightly reduced the rate to 21.7 per cent by the end of June.
The situation did not change even six months later because of the government strategies as the pre-mature reopening only prolonged the economic losses of a section of poorer people, that too amid soaring infection rates.
The infection rate in Bangladesh was 20 per cent at the end of July last year and although this is less than that of other South Asian countries at the time, the mortality rate could have been much higher.
"But this did not happen for some unknown reasons," Osmani said.
China and New Zealand showed the perfect examples of how a premature reopening of the economy came at the cost of peoples' well-being.
Still though, Bangladesh chose this strategy even though large scale mortality has repeatedly undermined the government's political legitimacy.
The current regime had an opportunity to restore democracy in that regard.
Some Scandinavian countries have termed the current government as authoritarian as it wins one election after another. This finally led US President Joe Biden to publicly insult the country by leaving it out of his recent democracy summit.
Asad Islam, a professor of Monash University, said although businesses are open, sales recovery is still below pre-coronavirus levels.
Recovery is lowest in female labour intensive sectors, Islam added.
In another presentation, Kazi Iqbal of the BIDS said about 6 per cent of the sample companies closed their businesses permanently and about 8 per cent of the sample workers lost their jobs, including those from both surviving and shuttered businesses.