Inequality widening for govt’s actions

The government’s policies account for the widening inequality in the country as they are sending public resources to the hands of a small number of people, said noted economist Rehman Sobhan yesterday.

He went on to cite subsidies, tax exemptions and frequent loan rescheduling of habitual defaulters as cases of government’s bad policymaking or inaction that are fuelling the economic and social disparity in Bangladesh.

“These are all net transfers of resources going to a small number of people as a result of public policy,” Sobhan said at an event organised by the Centre for Policy Dialogue (CPD) at Lakeshore Hotel in Dhaka.

And what is worrying is that the government appears to be incapable of taking a call on arresting the widening inequality, he said, while citing the case of a business house from Chattogram that got loans amounting to Tk 15,000 crore to further his point.

“I doubt whether 500,000 people under any of the social safety net schemes receive this kind of allocation.”

Sobhan, who is the chairman of CPD, went on to call for more accountability from the government. The government on June 13 unveiled a Tk 523,190 crore budget for the next fiscal year, up 18 percent from this year’s.

“Very little discussion takes place on the actual outcome of expenditure. You are spending Tk 500,000 crore of public money. So what has been delivered? This is the central question all citizens should be asking.”

No one actually knows what has been achieved in terms of what was actually projected at the beginning a project, he added.

Citing the Kuznets curve, an economic theory, Planning Minister MA Mannan said inequality tends to rise in the early stages of development of an economy and then decrease.

“But we do not love it,” he said, adding that the government increased spending for social safety net schemes to address poverty and inequality.

The government is on the right track to reducing poverty, he said, adding that the total number of hardcore poor in Bangladesh would hardly be 60 to 70 lakh at present.

 “A lot of progress has been made in the last 10 years and perspectives vary between people at the grassroots and those who discuss things sitting in hotel, press club or in an office in Dhaka.”

The government is working to establish a market economy where the market forces determine the equilibrium, he added.

Amir Khasru Mahmud Chowdhury, a BNP leader and former commerce minister, however, said the market was not functioning.

“Oligarchy, crony capitalism is not the market,” he said, adding that the government has deprived citizens of their right to vote.

The leader of BNP, one of the major political parties, also questioned the GDP growth estimates put out by the government agency, Bangladesh Bureau of Statistics.

“The related indicators do not satisfy the high GDP growth. It is a bubble they have created,” he said, while mentioning the sluggishness in private investment, erosion of purchasing power and the lukewarm stock market to further his point.

Chowdhury also criticised the continued recapitalisation of state banks. 

“Let them die. Why do you recapitalise them with public funds,” he said.

The government has taken several measures to provide social security, said Awami League lawmaker Kazi Nabil Ahmed, adding that a Universal Pension Authority and health insurance for all are in the works.

Disparity is increasing but nothing is mentioned in the proposed budget, said Rumeen Farhana, a BNP lawmaker.

Bangladesh is ranked third in terms of growth in the number of rich and is ranked fifth in terms of the number of poor, she added. The number of people not in employment, education and training (NEET) is very high, said Barkat-e-Khuda, former supernumerary professor of the University of Dhaka’s economics department.

“And yet, adequate amount of funds were not earmarked for technical and vocational training,” he said, while recommending extending support to SMEs for the sake of job creation.

Economists, businesspeople, former and present bureaucrats and representatives of international agencies and foreign missions were present at the event.

The CPD in its analysis said emerging challenges in economic management have largely remained unaddressed in the proposed budget.

Institutional reforms and the issue of governance in the financial sector is also not reflected in the budget adequately, said CPD Executive Director Fahmida Khatun while presenting the think-tank’s analysis of the proposed budget for fiscal 2019-20 at the event.

Mustafizur Rahman, a distinguished fellow at the CPD, moderated the discussion.