Budget fails to address poverty, health, unemployment issues

The proposed budget for fiscal 2021-22 has failed to address the issues of health, poverty, unemployment and for the Cottage, Micro, Small and Medium Enterprises (CMSMEs).

Even during such a pandemic time, the allocation in the health ministry was lowered whereas the allocation was needed to be increased to protect the public health and human lives during the severe time of Covid-19, speakers said on Saturday at a virtual discussion on budget organised by the Centre for Policy Dialogue (CPD).

The programme was also attended by minister, member of parliament, business chamber leaders, government high ups and labour leaders.

For instance, the proposed allocation to the health ministry is 0.9 per cent of the GDP and only 5.4 per cent of the total proposed budgetary outlay for the upcoming fiscal year. Total budget allocation for health has increased only by 12 per cent from Tk 29,247 crore in FY21 to Tk 32,731 in FY22, which was lower than the 14 per cent average annual increase in total budget allocation for health between FY11 and FY22.

“Given the magnitude of negative impact on various sectors due to Covid-19, we underscored the need for medium term strategy for economic recovery,” CPD Executive Director Fahmida Khatun said.

She said that although there was a section on reforms in the budget document, it only referred to what had been done so far. It did not spell out what concrete reforms would be undertaken to improve the efficiency in the economy.

“The unfinished reform agenda in many areas such as tax, customs duty, banking sector, health sector and social sector has constrained the achievement of budgetary targets and its ability to cope with adverse impacts of the pandemic,” she said.

“Along with reducing tax for enterprises, CPD suggests introducing a payroll tax cut, such as raising the tax-free limit of income tax for employees, to create more jobs in the time of crisis to stimulate consumption,” the economist added.

Moderating the session, CPD’s distinguished fellow Mustafizur Rahman said that the proposed budget was not so big to address the overall impact posed by the pandemic.

“The income of huge number of households came down due to the pandemic. But there is information scarcity to address the problems. More money is needed to address issues like public health, social protection, implementation of universal scheme,” he said.

As Bangladesh is going out of the least developed country bloc, there is need for more reforms and the tax-GDP ratio has to go up, he said. “Besides, we have to think about our children as well,” he added.

Planning Minister MA Mannan said that they were trying to strengthen the Bangladesh Bureau of Statistics for more data. “More financing is needed here for accurate data collection,” he said.

“Business communities have welcomed the budget. We are continuing discussion to work together. Many have called for reducing tax rate and it will be considered,” the minister said.

He found Bangladesh a “strange country” where buyers pay VAT but businesses do not collect it.

CPD Chairman Rehman Sobhan, Inter-Parliamentary Union President and Parliamentary Standing Committee on Ministry of Environment, Forest and Climate Change Chairman Saber Hossain Chowdhury, former minister for commerce Amir Khosru Mahmud Chowdhury, Policy Research Institute of Bangladesh Executive Director Dr Ahsan Habib Mansur, former Bangladesh Bank governor Salehuddin Ahmed, Federation of Bangladesh Chambers of Commerce & Industries President Md Jashim Uddin, Metropolitan Chamber of Commerce and Industry President Nihad Kabir, and National Association of Small and Cottage Industries of Bangladesh central executive committee President Mirza Nurul Ghani Shovon also spoke in the webinar.

“Increase in total budget allocation for health in FY22 followed a linear trend line, indicating that the rise was business-as-usual and nothing out of the ordinary, even though the healthcare sector is reeling from the shocks of COVID-19,” according to a study by the CPD.

The share of the health sector in ADP FY22 (7.7 per cent) has increased from 6.4 per cent in ADP FY21. However, given the pandemic situation, the increase remains below what is needed, the study said.

It includes only two continuing projects related to Covid-19 titled “COVID-19 emergency response and pandemic preparedness” and “COVID-19 response emergency assistance” co-financed by World Bank and Asian Development Bank.

No new project has been proposed to particularly address Covid-19, said the study of the private think tank. Also, no Covid-related project was found in the list of ‘Unapproved projects without allocation’, the CPD said.