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Budget to disparately increase living cost of low-income people

Budget to disparately increase living cost of low-income people

Dhaka, June 23 – Center for Policy Dialogue (CPD) on Sunday said the proposed measures in the budget for 2019-20 fiscal year(FY) are likely to disproportionately increase the cost of living for low- and medium- income groups compared to the affluent section.
The private think-tank held its annual customary “CPD Budget Dialogue” at a city hotel yesterday.
The CPD in its analysis said, there was no special effort to rectify the longstanding structural marginalization of deprived sectors in the proposed budget of FY20.
Presenting the budget analysis, the executive director of the CPD DrFahmidaKhatun said, the infrastructure-oriented public finance-driven economic growth-centric approach of the government is now showing its limitation to establish an inclusive society.
About the allocation for a social safety net (SSN), CPD said it has been increased by 15.5 percent from BDT 64,404 crore in budget FY19 to BDT 74,367 crore in budget FY20. But in FY20 the SSN allocation excluding pension is only 1.8 percent of GDP which is much lower than the target of 2.3 percent of GDP outlined in the 7FYP.
The budget allocation for a number of safety net programs have fallen short of the targets set out in the National Social Security Strategy (NSSS), said CPD.
About the ADP, the think-tank said, revenue surplus as a share of financing ADP is increasing in terms of allocation but declining in terms of actual expenditure.
Out of 1,358 investment projects, 1,237 (91.1 percent) are at least 2 years old – almost double from FY19. The average age of these 1,237 projects is 4 years, said CPD ED Fahmida adding that the implementation rate has been lower than the average.
The think tank also said while the target of public investment has been met, the total investment is still lagging behind due to the low contribution of private investment.
Speaking on the occasion, Planning Minister Abdul Mannan said the Sheikh Hasina led government has targeted poverty and has taken a number of steps to remove poverty. “We are attacking poverty from different fronts including education, healthcare and access to electricity,” he said.
Mannan said the number of hardcore poor in the country is not more than 50-60 lakh. “Poverty is like permafrost in the country. It has been there for many years. We have attacked it. We have broken the edges. We are reaching the middle areas and heading towards the center. So now naturally, the rate with which we launch our attack is very slow.”
The Planning Minister said, for underserved groups of the budget, if specific proposals are placed in front of the government, then the government will take steps.
We are delivering the allocated money to the tables of project directors directly to cut the latency in implementing the project.
About the increasing income inequality and income disparity, Mannan said as the country is in the first upwards curve of the development process, the income inequality and disparity are bound to increase as per economic theory.
“But from the government, we do not like it and we want to flatten that curve of disparity as much as possible with our social safety net program.
Barrister RuminFarhana, an MP from BNP said, a budget depicts the character of a government and the budget for FY20 depicts the character of Awami League government which is pro-rich and have no interest in getting people out of poverty.
“Bangladesh now has the highest rate of the increase in the ultra-rich whereas, at the same time, it has over 2 crore ultra-poor. This differentiation in wealth is increasing day by day,” she said presenting data that from 2001 to 2010, the rate of decreasing poverty was 1.8 percent which in between 2010 and 2019 has reduced down to 1.2 percent.
“This budget has nothing for the poor or for poverty reduction in the country. It is a budget for the rich,” said Rumin Farhana.
Bangladesh is passing the time of reaping the benefit of demographic dividend. She said, as per the report of BBS, the number of unemployed people in the country is 4.82 crore. “Strangely this budget said by 2030, 3 crores more people will be brought under employment opportunity but didn’t say how,” she added.
The budget has a deficit of Tk 1,45,000 crore and out of this deficit Tk, 47,000 crore will be sourced from the banks. “Given the frail conditions of the banks, especially of the state-owned ones, Rumin said she doesn’t know how the government dares to source such large sum from the banks,” he said.
Speaking at the program, M Sayeduzzaman, the former finance minister said, most of the projects taken under the annual development program (ADP) have time overrun and cost overrun. The quality of implementation is also very poor for the budget.
He also echoed with other experts and said the budget is business-men friendly rather than being business friendly. “The cost of doing business and the ease of doing business are marking some negative trends which indicate that the country has become less business friendly.”
The budget also didn’t say much about inclusive financing for the poor. “I laud one thing about the budget that it allocated a Tk 100 crore fund for the aspiring young entrepreneurs.”
The former finance minister who is now a member of the board of trustees of CPD said, nothing has been said in the budget about the trade policy.
“The trade policy is extremely important now in the context of three things—the current external situation, especially the attitude of USA and Europe in going towards protectionism, the trade competitiveness coming from South and South-East Asia and the automation of RMG sector—the main export earner of Bangladesh— because of which employment in the sector in the gets new dimension.”
“Personally, I would have loved to see the budget spoke about these extremely important factors of the trade policy but unfortunately, in the budget, nothing had been spoken on these,” said Sayeduzzaman.
There are three deductions from the depositors, one is tax at source, another is an excise tax, and the last one is incidental charges that the banks cut twice a year, senior banker Nurul Amin said adding that these three charges hinder the growth of depositors.
About the increasing non-performing loan, Nurul Amin said the power mismatch between the board of directors of bank and the management of the bank, especially in the state-owned bank, is partially responsible for the bad debt. “In many cases, the bank board tries to influence the management in giving out loans.
CPD Chairman RehmanSobhan said while the budget discussion remains confined within the allocation and spending of budget, very little is actually being discussed about the actual outcome of the expenditure.
“Budgeting, as a tool of analysis of government’s performance is very old practice but I haven’t seen the successive governments here have actually put themselves under their own scanner to do a performance analysis through their own budgets.” – Staff Reporter