Reality and budget 2021-22
The national budget for fiscal year 2021-22 has been introduced in the floor of the parliament. It will be examined, discussed, criticized and additions and alterations in it would be sought. In other words, this is not a document set in stone poised for superimposing on people and institutions.
Even well before the presentation of the budget, different stakeholders were invited by the budget makers to get their opinion with the aim of incorporating as much of their suggestions as possible in the budget document. Even now, nearly a month is available for MPs to recommend various suggestions and recommendations on behalf of the stakeholders and their own. In the end many of these will be accepted and finally approved when the budget will be officially endorsed in July.
Thus, it is only appropriate that different think tanks, individuals, media people, etc. should observe restraint while making sweeping observations on the next fiscal year’s budget as if this is already a done thing when it is not. Already, the usual banter has started that this budget has nothing for common people, poor people in particular. Charges have been levelled that it is a budget to further pamper the rich and resourceful whereas the pandemic hit middle and lower classes will be only worse off from it . There is a chorus already that the poverty situation will only deepen from adoption of this budget.
So, what the government should have done ? Let us not forget that budget making in a very highly populated country like Bangladesh is an extremely difficult exercise. There are so many priorities fighting for attention with hardly matching resources to respond adequately to all of them or most of them. Bangladesh is not a developed and rich country that can afford to repeatedly extend large scale assistance to the teeming number of the poor or distressed ones in the population, say, from the pandemic.
Bangladesh has just emerged from the status of a Least Developed Country (LDC) last year to a more honorable and justified level of a middle income country when the pandemic arrived in 2020. But the very notable thing about the present government or economic managers of the Bangladesh economy was that they were hardly humbled or overwhelmed by the pandemic. It goes to the great credit of the incumbent government of Bangladesh that they could steer Bangladesh so well economically that it could rise to join the ranks of the middle income and developing countries even in this pandemic hit time. Bangladesh’s handling of its economy in the pandemic period earned widespread appreciation without exception in the international community specially among international financial institutions.
The uninterrupted economic growth and poverty reduction activities met setbacks nearly everywhere in the world due to Corona virus. There is hardly any country which did not experience reverses in these areas. Bangladesh could not be so unique to completely remain unaffected by the pandemic. But it has its real positive achievements in coping with the pandemic and keeping its economy more than afloat in this very difficult time. Its macro economy amazingly has been robust in the corona afflicted period while Bangladesh has done much better than most countries in keeping its micro economic conditions also reasonably stable under the pandemic conditions.
Unfortunately, without looking at these positive aspects the critics have been almost merciless in their criticisms that the present government is acting only for the rich while ignoring the needs of the poor. In their mainly guess estimates, poverty rate which was prevailing at 20 per cent before the pandemic must have soared to 40 per cent by now after it. But their view is still only based on guesses not substantiated by objective surveys or evaluation.
Surprisingly, there is no kudos for proposing incentives in the budget for businesses, entrepreneurs, industries and services. If the critics had their way, they would rather channel far greater resources into social safety net programmesor ones to meet the sheer consumptive needs of the poor. But let us be realistic. A country like Bangladesh does nor have vast surpluses of resources to feed the poor aimlessly while receiving no returns from the same. Such a journey can be described as something like continuously putting in a bottomless basket only.
The best that can be done economically is to give maximum encouragement to ‘productive forces’ through the budgetary instruments. It is only the productive forces of businesses, industries, entrepreneurs and services that produce more and more wealth or resources. In the process, they also vitally create jobs and income and pave the way for more investments and cyclically more jobs and more income, plus revenues for the government. In contrast, spending greater on welfare, social sectors or social safety networks are largely like a one way street – all going down a chute and nothing of physical value emerging from the same. Ironically, the critics have been very severe on the government for deciding to incentivize the productive forces and not providing a great deal more on mundane consumption needs of the poor.
Any person with basic economic sense should see through the facts that policy initiatives that help more business investments and hence its spread effects like more employment and income should prove useful in the broader or overall economic sense than the ones that go to whet the impulses for sheer consumption. For example, any dole of grains or lentils to ques of perceived needy people do not fetch any returns. But any help to an entrepreneur to keep on running his enterprise or to expand it, will mean keeping of existing jobs and creation of new ones. Needless to say, this way assures more economic sustainability than meeting pleas for endless charity.It appears our budget makers have been rightly seized by this philosophy of helping the doers or makers of things and services than going for the cheap popularity of expanding the nets of alms and charity. As for doing nothing for the poor and middle classes, the critics are invited to read between the lines of the budget document to see, for example, reduction in VAT rates of many goods and services. The same will likely not only add to income of businesses but the VAT cuts will also likely to lead more to these goods and services becoming cheaper for the common ‘end consumers’. Many other measures to bring relief to common people can be spotted on reading the budget document carefully.