Expectations from budget
This year's national budget will be the second to be implemented amid the ongoing unprecedented economic and social crisis brought on by Covid-19.
One expectation is that the budget document will acknowledge the current context and realities.
The coronavirus pandemic has led to an unprecedented rise in the country's poverty rate within a short period. The economic crisis has also disrupted the labour market.
In this context, the social safety net programmes are more important than ever. However, even amid the pandemic, serious loopholes have been observed in these programmes.
There are allegations that a significant portion of the funds for the social safety net has gone into the hands of non-poor people due to errors in identifying the beneficiaries.
As a result, poor people and other targeted groups have remained deprived. While local administrative officials and government representatives prepare the list of beneficiaries, no mechanism is in place to ensure accountability and transparency in the whole process.
This faulty system results in a large section of the poor being left out of the purview of the social safety net or relief distribution programmes. Therefore, there is a need for strong coordination among ministries in this regard.
Also, all safety net programmes must be brought under one platform. While the allocation for these programmes needs to be doubled at the least, there is a need for ensuring coordination, accountability and transparency in the overall mechanism of allocation, distribution and management.
Various sectors in the economy and different sections of the population have been affected to different degrees during the pandemic. Despite that, there has hardly been any visible move by government agencies to assess such impacts.
However, the current context necessitates a better understanding of the economic and social impacts of Covid-19. Needless to mention that it is not possible to undertake the necessary policies and actions without updated data, information and a better understanding of the ground realities.
The South Asian Network on Economic Modeling's quarterly surveys on 500 firms from 15 manufacturing and service sectors since June 2020 reveal that most micro and small businesses, who play a crucial role in the supply chain in the economy, have been struggling to survive.
This resulted in a large disruption in the supply chain, which will continue to hinder economic recovery even though remittance and export earnings have been showing an upward trend.
Since more than 85 per cent of employment is in the informal sector, a large part of which are micro and small businesses, the overall economy will not recover unless these businesses are restored.
Micro and small businesses are also the lowest beneficiaries of the stimulus packages. Therefore, there is a need to place particular emphasis on these businesses in the budget for 2021-22 in order to establish a mechanism that would help them recover from the present condition.
There is now a discussion on the possibility of a second set of stimulus packages but at the same time, there is a need to review the experiences of the stimulus packages disbursed so far.
Valid concerns are there on the management and monitoring of the stimulus packages. There is also a need to take the necessary steps to make the stimulus packages more effective.
An important point related to the economic recovery is that unless the government can contain the ongoing health crisis through mass vaccination and enforcement of regulations, recovery will not be sustainable.
The national budget should prioritise the allocation of resources, mechanisms for coordination among relevant agencies, the necessary roadmap, and their execution.
As around 80 per cent of the country's total investment comes from the private sector, stimulating private investment is critical for economic recovery. While the official statistics on private investment amid Covid-19 are yet to come, the indicators related to private sector investment show a very alarming picture.
Depressing trends of imports and exports and the private sector credit growth are testimony to this picture. The budget for fiscal 2021-22 has the prime task to show ways of overcoming stagnation in private sector investment.
There are also expectations over whether the government will show any direction in undertaking some long-standing critical reforms in taxation, financial sector, health and education.
The health sector, no doubt, requires considerable overhauling. Although the sector's allocation increased significantly in the last budget, the health ministry's weak capacity resulted in much of the resources being unutilised. At the same time, the health sector has been alleged to be affected by corruption and numerous irregularities.
So, there should be steps in the budget on how the health ministry will spend resources more efficiently in the coming days.
The government alone cannot address the economic and social crisis induced by Covid-19. However, the government has to bring the private sector and its associations, NGOs, volunteer organisations, and people's representatives under coordinated initiatives.
The budget should specify a roadmap for the Covid-19 recovery plan and how different stakeholders could play their roles under the overall leadership of the government.
The writer is a professor of economics at Dhaka University, and executive director of South Asian Network on Economic Modeling. He can be reached at firstname.lastname@example.org.