A budget that fails to save lives and livelihood
He set off to save lives and livelihoods in his third budget as the finance minister and his second amid the global coronavirus pandemic, and along the way, went astray.
In the end, AHM Mustafa Kamal's proposed budget for fiscal 2021-22 came across as not of its time: in the throes of a public health crisis that is unravelling some of the progress made over the last 50 years.
Bangladesh has been a development marvel, one which global commentators are acknowledging left, right and centre -- of late. And the cornerstone of the success has been its poverty reduction flight path and a spiralling trend of social and human indicators.
But the global coronavirus pandemic, which gripped Bangladesh in March last year like the rest of the world, has created a sea of poor -- and it is this populace that Kamal, who projects himself as a man of the people, seemed to have passed over in his intellectual callisthenics while drawing up the outlay for the incoming fiscal year.
About 20.5 percent of the population was already living in poverty and the pandemic raised the ratio to 30 percent, according to the World Bank.
Some 1.60 crore of new poor was created by the pandemic, according to an estimate of the Centre for Policy Dialogue in April, while another survey around the same time by the Power and Participation Research Centre and the Brac Institute of Governance and Development showed that 2.45 crore fell into poverty even before the second wave of the pandemic hit.
It is quite a sizeable figure by all accounts, and yet in his budget speech in the parliament on Thursday, Kamal maintained "the poverty situation in Bangladesh did not worsen to a scale of catastrophe during the pandemic".
While he did state that the government was taking effective and conscious steps to address the potential impact of the recent second wave of coronavirus cases on the country's poverty situation, the absence of any details was glaring.
There was neither a big jump in allocation for social safety net allocation nor a separate fund for the new poor, as in this fiscal year -- when the government very much had the means to do more.
Social safety net schemes got Tk 107,610 crore in the upcoming fiscal year, which is up 12 percent year-on-year but lower than the average 17.7 percent growth of allocation between fiscals 2009-10 and 2020-21.
Fiscal 2021-22's safety net allocation is 3.1 percent of GDP, up from 3 percent this year. Paltry, by all measures.
Other than the ongoing safety net schemes, there has been a one-off transfer of Tk 2,500 to 35 lakh low-income households during the first wave of the pandemic last year. That transfer took place this year, too, ahead of Eid-ul-Fitr.
Pray, tell how much of a help is Tk 2,500 in this day and age to a family battling a loss of livelihood and savings? Not much.
And yet, the government is expecting the poverty rate would come down to 12.3 percent and the extreme poverty rate to 4.5 percent by 2023-2024, as Kamal indicated in his budget speech, which seemed divorced from the tribulations of people from the hinterlands.
Most of the new poor used to draw their livelihoods from the informal economy, which is the undeniable casualty of the draconian measures enforced whenever the test positivity rate went up.
The only way to ensure no further lockdowns are needed is by ramping up the vaccination programme, and here too Kamal's assured stride was not seen.
"We will be able to able to overcome the ongoing crisis of the second wave through mass vaccination," he said in his budget speech.
He mentions that there is a plan to vaccinate 80 percent of the people in phases. But, by when? The only clue he gives is: 25 lakh vaccines a month, meaning the country would continue to be under the shadow of Covid-19 for the foreseeable future.
In other words, he is not safeguarding the livelihood for the demographic into the near future.
Besides, save for the odd projects here and there to construct upazila complex buildings or village roads, there was nothing in the budget document to suggest he gave much thought to save or create jobs -- at present.
While his offers of tax holiday under the 'Made in Bangladesh' initiative and exemption of value-added tax at the local manufacturing stage for certain home and kitchen appliances and light engineering products are laudable, none of it would create jobs now -- which is the need of the hour.
Nor was there any incentive for businesses for retaining jobs, as was the case in much of the Western world.
By and large, Kamal came across as a neoconservative enthusiast, crossing his fingers and hoping the private sector would take care of the problem -- in return for the crumbs of tax cuts he threw its way.
However, history and Keynesian economics suggest it is by spending that one can get out of a recession.
The logic goes that in a recession, income declines because spending declines, and spending declines because income declines. It is a vicious circle that needs to be broken.
One option might be tax cuts to increase business spending, and another is to have government spending make up the slack.
Most recently, Japan was able to come out of its 20-year-long recession thanks to the massive spending needed to rebuild its coastal towns in the aftermath of the tsunami in 2011.
If ever there was a time to toss fiscal responsibility aside and implement a plan to "spend, spend, spend", this was it.
And given the deft macroeconomic management under the Awami League government, Bangladesh's conservative debt-GDP ratio and eagerness of development partners to come forward with funds, the government certainly has the wherewithal to go all out.
But Kamal held back and came up with a budget that was neither here nor there.
At around 17.5 percent of the GDP, the budget for fiscal 2021-22 was even lower than its South Asian neighbours, who are not in as comfortable a position as Bangladesh is from a fiscal viewpoint.
"Our focus will be on increasing consumption and investment to stimulate domestic demand," he said.
How is he going to increase consumption when he has kept the income tax structure unchanged in the incoming fiscal year?
The corporate tax cut of 2.5 percentage points, while a longstanding demand of the private sector, is unlikely to spur job creation of the scale needed.
In the absence of any improvement in the ease of doing business, it is unlikely that investment will spring to the level Kamal is expecting.
While he has come short on saving livelihoods, he has also disappointed on the saving lives front.
The health budget increased 12 percent year-on-year, which is lower than the allocation growth of 14 percent between fiscals 2010-11 and 2020-21.
In other words, in the thick of the pandemic, the government did not feel the need to raise its spending on this neglected but crucial sector.
This is particularly concerning given that the Indian variant, which poses a higher risk of hospitalisation and transmission, is very much in Bangladesh.
Were it to run amok as it did in the neighbouring country, whose health infrastructure is a notch above Bangladesh's, the country can be brought down to its knees.
Education was another sector Kamal earmarked as a priority sector in his speech. But once again, his actions failed to live up to his lofty proclamations.
Seeing that about 4 crore students would not be getting back to the classrooms anytime soon, the education budget needed to increase by more than the 8.7 percent he has managed for the incoming fiscal year.
Many still cannot attend the virtual lessons for want of equipment and are subsequently dropping off the system. And even if classes start physically, there need to be more sessions to give the same lesson to maintain the social distancing rule.
In short, massive investment is needed, but the government's expenditure on education as a percentage of GDP continues to hover around the 2 percent-mark for more than a decade now.
This is woeful for a country where about 45 percent of the population is below the age of 24.
And it is particularly unexpected in a budget that felt was designed for too far into the future and not for addressing the needs of the present.
"The main impetus of our economic activities is our people," he said.
Alas, he seems to have placed them on the curbside during his budget exercise.