Alongside the COVID-19 pandemic crisis, we are going to enter a new fiscal year within next 4 weeks. Finance Minister AHM Mustafa Kamal will place the national budget before the parliament on June 11, for the 2020-21 fiscal year. During the last few years, the size of the budget and GDP growth has increased significantly, especially due to the huge development projects and the pursuit of Sustainable Development Goals (SDGs). But this year, due to the coronavirus scenario, the situation is completely different. The size of the next budget will hover around Tk 5.5 trillion and considering the current context, several factors should get importance in the upcoming budget.
As we are badly hit economically due to COVID-19 along with many of the countries of the world, we have to bear this impact for around next three years if the pandemic could be contained soon. Along with national income, the current budget will require a heavy dependence of foreign funds. Bangladesh might seek a record $4.5 billion in loans from foreign donors including new sources like; JICA and IsDB to cover the deficit in the national budget for 2020-21. But that might also fall short if not planned effectively.
Along with COVID-19, we are facing the climate change also. In an effort to strengthen its climate resilience, the Bangladesh government in 2018 approved Delta Plan 2100, an eight-decade program combining water and land management and development. The first phase requires about $38 billion by 2030 to implement 80 projects, including 65 tied to infrastructure.Now the program to protect the 37 million people who live in the delta is under severe challenge due to the coronavirus pandemic and then by the damage from recent Amphan.
Every year during cyclones, heavy storms and rainfalls, we find the rise in water level in the delta and coastal areas. The government invests heavily on building dams across the banks of the rivers. These are mostly made of sandbags and similarly vulnerable materials and we have to also repair those dams every year. Unfortunately, this has also become a major source of corruption also. The government should adopt a five-year plan, reflecting from this year’s budget, to build permanent dams at these volatile coastal and delta areas.
Considering the water level increase due to the greenhouse effect during the next 50 years, heights of these dams should be increase both outside and inside. These permanent dams will last for at least fifty years and will save both human lives and national assets. Moreover, the government should clearly make a policy about what distance people should maintain from the coastline for residential and commercial purpose.
The government should consider conserving the environment as well as rehabilitation of coastal people in this budget. The government is utilizing Vashanchor for Rohingya rehabilitation by creating all facilities like shelter, work, health and education facilities there. We can build many other similar facilities in many other available alluvial lands or islands.
We need to elevate the land level, considering the water level increase due to the greenhouse effect during the next 50 years, of these alluvial lands or islands with sands through dredging to protect the habitants from the rising water level during natural calamities. Then we need to create houses, jobs and ensure quality education and health facilities in those islands. We also need to ensure proper forestation and tree plantation in those islands. Moreover, among every five islands, we need to keep one completely for creation of mangrove like forest. This is a huge project but can be a sustainable and smart one considering the issues like overpopulation, protection of coastal people, disaster management and preservation of nature.
Ensuring food security is of utmost importance and that should be reflected in the budget also. Agricultural sector should receive top priority. The government should plan not only for production but also for smooth distribution of food products throughout the country. The farmers should receive stimulus as well as they must receive the right price for their crops. Eliminating corruption from this sector is a must in the current context. Arranging food for the low and middle income citizens should also receive importance.
Along with large projects, district wise small projects like; digging canals should be incorporated in this budget so that, the money flows to the low income people during this crisis period. This budget should put special focus on this type of programs.
The frantic state of our healthcare system in the face of the pandemic should be an eye-opener for the government and it requires to mobilize all necessary resources to this sector. We just hope that the government could realize the gravity of the situation and arrange for efficient allocations in the next ADP for health that are responsive to the emerging as well as regular needs. We might overcome the Covid-19 scenario someday but the overall health service is unworthy of a fast developing country like Bangladesh.
The poor allocation in the development budget for the health sector is largely due to its lack of capacity to utilize funds. The records in the relevant government body monitoring project implementation also revealed that until March, the health services division could spend only 37 per cent of the fund allocated for it in the current fiscal despite our poor healthcare system. Surely, generous budgetary allocations by themselves would not be enough if project implementation capacity is not drastically improved.
Currently, there is limited flexibility to reorder priorities within the revenue as well as the development budget components. Some additional funds may be allocated to certain sectors such as health and agriculture. Yet a number of innovative and redistributive fiscal measures could have been designed, such as allocation of the estimated savings, on account of fuel import at very low global price, to the health sector and redirecting huge subsidy given to the rental power plants towards expanding the safety net programs based on cash transfers to the newly unemployed citizens.
Due to Covid-19, almost all the citizens suffered financially but the utility bills like electricity and water has piled up through this holiday. Moreover, as people were inside their homes, the bills are more than the usual. Additionally, we are facing the crisis of ‘ghostly’ bills. Though the government has removed delay penalty till June, 2020 on electricity bills, an installment payment system for the next 12 months should be introduced immediately so that, the citizens can have a sigh of relief.
The government should not put extreme tax pressure on the individual citizens. The minimum taxable income level should be enhanced from BDT2.5 lakh to BDT4.0 lakh, while the minimum personal income tax should be lowered to 5.0 per cent, with the highest rate being 10.0 percent instead of 10.0 and 20.0 per cent respectively. From revenue perspectives, there is little rationale for decreasing the corporate tax rates, particularly for the commercial schedule banks. The pandemic-related adversities are not used as an excuse to provide discriminating and discretionary tax benefit to unearned and undeclared monies. Rather radical measures should be taken to expand the tax base and plug the illegal financial outflows.
At the same time, due to the sinking of the exports and remittance incomes, it would be a win-win strategy if the upcoming budget extends helpful supports to the domestic market-oriented productions and services with a view to having employment-oriented productivity growth. Moreover, financial policies should be there to grab the opportunities of shifting industrial investment of the developed countries due to COVID-19.For the industries, custom duties should be adjusted to facilitate further industrial growth and export source tax should be revised considering export shrinkage due to Covid-19 for the next fiscal year.
Providing the budget is not a problem this year, the minimal implementation is. Prime Minister Sheikh Hasina, with her farsighted and courageous leadership, has ensured drastic development of Bangladesh during the last decade. But still corruption at different levels is hurting our economy despite her strong statements against dishonest practices. If we can eliminate corruption at public works and departments, we will be able to economically sustain the current challenge and we hope that is ensured with utmost importance.
The writer is Chief Editor at Mohammadi News Agency (MNA), Editor at Kishore Bangla and Vice-Chairman, Democracy Research Center (DRC)