Budget of hope, life and livelihood

The Covid-19 crisis has not only just taken lives but also affected the economic ecosystem of the people in the country. During this pandemic, poor become poorer and a large scale of middle income became poor too.

The main reason behind the change of people’s drastic economic condition is thousands of people have become unemployed during this pandemic. Many have had salary cuts. Some studies suggest that the pandemic has dragged around 25 million (2.5 crore) more people below the poverty line.

Despite this economic woes, the upcoming national budget has no special allocation for the pandemic-hit poor. The government is only increasing the number of social safety net beneficiaries, leaving the new poor outside of the loop.

According to a recent survey conducted by the Centre for Policy Dialogue (CPD) and Oxfam Bangladesh, 61.57pc people had lost jobs in March and April last year due to the adverse economic impact of Covid-19. Moreover, the Bangladesh Institute of Development Studies (BIDS), a government research organization, found that 16.4 million people had fallen below the poverty line as the incomes of the working class in urban and rural areas dropped sharply due to the prolonged lockdown. 

Most of the new poor are unemployed due to the pandemic. The indicators of the country’s economy are also not in good condition. Also, there is no good news in revenue. Though the revenue collection by the NBR grew by 12.87 per cent in July-April period of FY21 compared with that in the same period of FY20, the revenue board is almost certain that the revenue receipt during the outgoing fiscal year (FY) will fall far short of the revised target because of the pandemic effect.

At such a difficult time, Finance Minister AHM Mustafa Kamal is going to present a budget of Tk 6,03,681 crore for the fiscal 2021-22 in Parliament on Thursday as the finance ministry has finalised a budget proposal.. This is Tk 35,681 crore more than the budget of the current financial year. The original budget for FY21 was Tk 5,68,000 crore, which was 17.90pc of the GDP. Later, the outlay had been reduced to Tk 5,38,983 crore

Due to the condition of the people’s economic condition, economists suggested that life and livelihood be given priority by further expanding the extent of the social safety net without going for a growth-oriented budget. Therefore, if necessary, they suggested borrowing more from foreign sources.

The government wants to revive the pandemic-hit economy by boosting business. That’s why the upcoming budget will facilitate tax waivers for the business communities to help them make-up their loss. The National Board of Revenues sources said that the rate of corporate tax upon the companies, whether they are listed in the share market or not, will be reduced by 2.5 per cent. The minimum tax (regardless of profit or loss) upon the companies with more than Tk30 million (three crore) annual turnover will be reduced to 0.25 per cent from the existing 0.50 per cent.

To increase money flow to the production-based companies, the government will charge 3 per cent advance VAT at the import level. These tax exemptions will be given to reduce the tax burden upon the business communities so that they can create new employment and invest more in business while surviving the impact of the coronavirus.

The proposed budget for the upcoming 2021-22 fiscal will boost business for new employment of the poor instead of aiding the marginalised people financially.

Generally speaking, people below poverty line are included in the social safety net. At present, there are 123 such social safety net programmes being implemented in Bangladesh. The upcoming budget would facilitate continuation of these programmes with an allocation of Tk 103,000 crore. The allocation would see an increase of Tk 8,000 crore from that of the current 2020-21 budget.

The budget for the next financial year is trying to provide relief to the common people in this coronavirus crisis. In order to keep the prices of most of the products produced and used in the country within reach, huge discounts are being given to the domestic industry. On the other hand, in order to encourage the production of some products including computers in the country, higher tariffs are being imposed on the import of those products. However, agricultural machinery and health care products are getting duty exemption. This can reduce the price of those products. An announcement has been made to impose additional tax on tobacco products including cigarettes.

According to sources, the prices of rice, pulses, sugar, salt, home-made paste, bread, soap, bottled water, fruit juice, spices and processed food items will not go up due to the new tax. The price of foreign toys will go up but the price of domestic toys will go down due to tax exemption and imposition of duty on imported similar products. Assembled motorcycles will be available in the country at a lower price than imported fully imported motorcycles.

So, after seeing the overall budget plan, economists and experts have said that this is a budget of hope and a budget for life and livelihood.