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An alternative national budget for next fiscal year
Rashed Al Mahmud Titumir
The national budget for fiscal 2020-21 is being formulated at a time when the global coronavirus pandemic is leaving a long-lasting stain on the economy.
A shift from conventional budgetary system to a three-year resuscitation strategy for Bangladesh is the need of the hour to inhibit the contraction of the economy.
The medium-term macroeconomic framework, through coordinated fiscal and monetary policies, will have to centre on employment to control erosion and increase income.
The economy had been in distress before the strike of the pandemic with jobless growth, slowed-down poverty reduction, declining export-import and unfulfilled targets of revenue collection.
There has been a liquidity crisis in the banking system as the government grabbed the yearly target of borrowing in six months.
COVID-19 blatantly points out the state failure in the provision of universal basic needs such as food, health, social security, education, etc.
From those living hand-to-mouth to those in the lower-middle class, the citizens are facing an existential threat as they starve and remain out of jobs in the absence of a fully-fledged social security system.
A large population is also out of the minimum wage jurisdictions and is deprived of basic amenities as they are employed in informal sectors.
The existing social safety net programmes are inadequate and marred with leaks. The health and education sectors are fraught with negligence and decreasing budgetary allocations.
The pandemic has also laid out in the open the frailties of the real sectors -- agriculture, manufacturing and services.
STATE OF THE ECONOMY
The gross domestic product (GDP) is the combination of investment, consumption, government expenditure and net of export and import.
The growth in GDP will further plummet due to further weakening of these four indicators, stemming from the pandemic.
The share of private investment to GDP has been hovering around 23 per cent in the last few years. The downturn will be swollen by income reduction, lowering savings and hence dwindling investment sourced from savings.
The earning from remittance has declined due to the pandemic and almost three lakh workers returned from abroad.
Loss of jobs and reduction of remittance earnings will dampen consumer spending, in turn constricting the GDP since private consumption is 70 per cent of the GDP. The reduction in the inflow of remittance will also hurt the rural economy.
The earning from export too has shrunk. The real sectors -- agriculture, manufacturing and services -- are hit hard by the lockdown.
BUDGET PROPOSAL AND SECTOR-WISE ALLOCATION
A budgetary outlay of Tk 5.23 lakh crore was proposed for the current fiscal year based on an estimated GDP of Tk 28.9 lakh billion, with a GDP growth rate of 8.2 per cent.
The coronavirus has struck its blow after 7-8 months in the current fiscal year. The lion’s share of the expenditure, mainly of the annual development programme (ADP) and festival-centred consumption, is normally incurred in the last quarter. These were hit hard.
There are various forecasts on the GDP of the current year and the next year. The most optimistic estimate is assumed here for the current fiscal year -- a rate of economic growth by 5 per cent.
With such a rate of growth, the revised GDP for the present year will stand at Tk 27.4 lakh crore.
Similarly, with an optimistic real rate of GDP growth of 5 per cent for the forthcoming year, the nominal GDP for next year is estimated at Tk 29.6 lakh crore.
I would like to present the draft estimate of an alternative national budget worth Tk 7.68 lakh crore for the coming fiscal year.
As the economy slims down, investment, consumer spending and export will drop, and hence high government expenditure is required to stave off the plunge.
The prime focus is on the sectors relating to universal basic needs and on the retention and creation of employment, particularly because of erosion of income and unemployment, aggravated by pre-crisis high unemployment and underemployment due to jobless growth and shortages in skills.
Accordingly, the sectors relating to universal basic needs such as health, full-fledged universal social security education and food security are given priorities.
Simultaneously, the thrust is on the enhancement of domestic capabilities through diversification, productivity augmentation, technological catching up and increased competitiveness in agriculture, manufacturing and service sectors.
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