A staggering 10.22 crore people are facing high economic and health risks in Bangladesh and about 74 per cent of the families have seen a reduction in income because of the coronavirus pandemic, according to a new study.
Brac, Data Sense and Unnayan Shamannay carried out the joint study. The study used researches from Brac, the Power and Participatory Research Centre (PPRC), the Brac Institute of Governance and Development (BIGD), the International Monetary Fund and others.
It also carried out a survey among 962 people in 25 districts between May 15 and May 18, said Brac in a press release.
Of the people facing economic and health risks, 5.36 crore are extreme poor, including the newly poor.
The number of people facing high economic risks stands at 4.73 crore and those facing high health risks total 3.63 crore, according to the survey.
Of those surveyed, at least one individual from 34.8 per cent of the families has lost jobs. The family income went down by an average of 74 per cent between May to May.
The findings of the survey were shared at a virtual discussion styled "COVID-19 and National Budget 2021: Rethinking Strategy for BoP Population".
"The upcoming budget should be about helping people remain alive. We have to be alive first and then comes our dream and potential," said Atiur Rahman, a former governor of the Bangladesh Bank.
Because of the pandemic's impact on the formal and informal sectors, unemployment and poverty are both rising, he said.
Poverty and vulnerability have increased for those at the bottom of the pyramid. To counter that, people's food security has to be ensured while addressing their health risks.
"They should be given both food and cash support. Cash support should be continued for the next few months."
The budget should be centred around health as the h sector is fragile and out of the pocket expenditure is very high, the former governor said.
The budget allocation for the health sector was less than 1 per cent of the GDP this fiscal year and this should be doubled to more than 2 per cent.
"The growth of the health budget should move upward for the next several years keeping in mind the universal health system and to take the allocation to 4 per cent."
Agriculture and the rural economy would be the saviour of the Bangladesh economy, Rahman said.
"The demand shortfall following the fall of export and remittance flow would largely be compensated if we can keep the agriculture and the rural economy dynamic."
Bangladesh spends 2.3 per cent of the budget for social protection but 35 per cent to 40 per cent of the amount goes for the pension of government employees. If the pension expenditure is excluded, it would be about 1.7 per cent, he said.
"This should be increased to 2 per cent this year and 3 per cent next year, excluding pension expenses."
The micro, small and medium enterprises (MSMEs) should be given support because if they remain inactive for a long time because of the lockdown, 60 per cent would be out of business, according to Rahman.
The government has announced a Tk 20,000 crore stimulus packages for the MSMEs.
Of the fund, Tk 10,000 crore would come in the form of refinance scheme from the central bank. "I think the whole Tk 20,000 crore should come in the form of refinance scheme."
A robust credit guarantee scheme should be launched in the next budget to encourage banks to lend to small and micro-entrepreneurs. Either the central bank or the Palli Karma-Sahayak Foundation can roll this out.
"If the budget is formulated taking into account the bottom of the pyramid and boosts local consumption and demand, we will be able to counter the increasing poverty and ensure social development," Rahman added.
Hossain Zillur Rahman, a former adviser to the caretaker government and chairperson of Brac, backed the calls to make the upcoming budget health- and poor-friendly.
The budget has to be implemented efficiently within the limited resources, he said.
"People also expect that the budget would give some relief from the uncertainty caused by the pandemic."
There has been a collapse in effectiveness in the health sector and the health ministry and institutional reform have to be a top agenda there.
"Otherwise, you will put the country in danger by increasing the allocation because the allocation would be wasted ultimately. We are already seeing the examples of waste," Hossain Zillur said.
The government agencies, the private sector, the social organisations, civil society organisations and all other stakeholders should be on board in the country's fight against the coronavirus.
But there has been a tendency to walk backwards, he said. Steps are being taken but there is no scope to check the reality. "Those who are formulating the budget should go for the reality check."
"The allocation should be proper. At the same time, the strategies should be proper," he added.
The government would have to think about the migrant workers who returned home because of the pandemic and those who were due to go abroad for jobs but have not been able to so, said Nazneen Ahmed, a senior research fellow of the Bangladesh Institute of Development Studies.
Similarly, some migrant workers are still residing in other countries but their income has been lost. They have families in Bangladesh who need support, she said.
The stimulus package for the agriculture sector at 4 per cent interest rate is still a burden for farmers. This rate may be reduced. The support should be disbursed fast.
The use of internet has gone up, so the budget should come up with a measure to cut the cost of using telecommunication technology for the people.
The budget should help expand access to smartphones, laptops, computers through incentives and tax measures. A fund can be set up to provide consumer loans to the people to this regard.
"The stimulus packages for the private sector should be designed by taking into account the people of the bottom of the pyramid, both entrepreneurs and employees," Ahmed added.
Health should get the most priority to give immediate relief to the people and ensure economic recovery, said Imran Matin, executive director of the BIGD.
Morbidity, or the amount of disease within a population, would affect the economic recovery more compared to the mortality rate.
"Even if the mortality rate is low in Bangladesh, the overall economic effect of the infection would be much higher the way infections are going up because morbidity would affect productivity."
If the infection rate does not come under control, it will lessen external trade and investor confidence, according to Matin.
"Even if we consider the economic recovery as a policy priority, the health dimension would have to be given huge importance," he added.
To mitigate the new economic divide, the country should introduce universal unemployment benefit scheme starting with extreme poor by fiscal 2020-21 and for other unemployed groups from fiscal 2021-22, said Ananya Raihan, chief executive officer of iSocial, during a presentation.
KAM Morshed, senior director of Brac, moderated the discussion.