The downtrodden are in immediate need for cash, food support

July, the first month of the fiscal year, was a black month from both economic and health perspectives, with a drastic fall in exports and remittance incomes and a steep rise in Covid-19 deaths and infections, says a civil society organisation.

In addition, declines in general wage and consumption expenses, as evident in the latest figures released by the official statistical agency, point to a further rise in income- and consumption-inequalities against the backdrop of a rising trend in food inflation, it says in its latest analysis presented at a digital event on Sunday.

The Citizens' Platform for SDGs forecast a gloomy future for low-income people, given the present trend of the economy, which indicated a K-shaped recovery – big and formal sectors are doing well, while small informal sectors are lagging behind.

The last quarter of FY21 (the fiscal year 2020-21) was weak because of the second wave of the pandemic. This is going to have a significant influence on anchoring the development performance in FY22, Dr Debapriya Bhattacharya, convenor of the civic leaders' platform, said while making a power-point presentation on "Delivery of the National Budget 2021 in the Context of the Pandemic: Ensuring Interests of the Disadvantaged People."

Growth of the quantum index of industrial production (QIIP) of medium and large industries showed signs of recovery in FY21 compared to FY20. However, the growth has been uneven, disfavouring the small enterprises. Private investment as GDP percentage decreased to 21.25, which is the lowest in the last 5 years, he pointed out.

According to the latest data of Bangladesh Bureau of Statistics (BBS), the annual percentage change in Gross Capital Formation in FY21 (1.94%) was lower than that of FY20 (1.77%), giving a sign of deteriorating employment situation, which has been reflected in household consumption expenditure falling to 5.02% in FY21 from 5.23% in FY20 – a sign of deteriorating of poverty situation.  

The General Wage Rate Index registered a fall in FY21 for the first time in years which, the platform finds as further evidence of deteriorating employment and income situation.

Slower recovery of the MSME sector and informal activities are "pushing behind" the low-income group, it points out.

The figures speak about the loss of jobs among the people who are left behind, how much their income fell and how much their consumptions reduced. It will not only enhance poverty and inequality, but it will also create a malnourished future generation if additional food and cash supports are not delivered, Dr Debapriya said.

Apart from the informal sector, people in medium enterprises have also lost jobs, and these "pushed behind" people are being added to the "left behind" ones, which appears to be a major reason for future worries.

Added to this is the drastic fall in the number of people going abroad for work - from about 59,000 last year to less than a half so far this year, which indicates, as Debapriya remarks, the beginning of the end to "magic of remittance" seen throughout the pandemic time until July.

Though the latest monetary policy statement is right in its "cautious and accommodative" stance, the major shortcoming of the earlier MPSs had been systematic failure to achieve the private sector growth target (8.4 % against 14.8%), he said, pointing out that exclusive focus on reducing the lending rate (and spread) did not lead to higher uptake of private credit.  

Sluggishness in private credit growth continues to remain as one of the weakest sides of the economy from 2019, even before the pandemic, which dipped to a 5-year low now…food management is weak when food inflation is creeping and foreign finance declined, which are not good news for the downtrodden people, he said, stressing the immediate need for increased direct cash transfer and food support.

Analysing 30 Covid-19 related interventions carried out by the government between March 2020 and July 2022, Dr Debapriya, who is also a distinguished fellow of the Centre for Policy Dialogue (CPD), said of the schemes involving Tk1,28,194 crore, there are only 13 fiscal and 4 food support programmes for the low-income people accounting for less than 20.5% of the total allocation.

Some 13 "hybrid" stimulus packages based on subsidised interest accounted for nearly 80% of the money.

"Shares of announced stimulus packages [with expanded definition] in FY20, FY21 and FY22 are 2.8%, 1.71% and 0.11% of GDP respectively. Pandemic oriented ones were much smaller," says the analysis of the citizens' platform.

In the first FY20, the total share of direct cash and food support was just under 6%, which rose to 15.5% in FY21 (with no food support) and a little over 21% in FY22 (with marginal food support).

The much-needed cash and food support still remain marginal in the latest 5 post-budget packages of Tk3,200 crore announced in July, only 22% of the allocation, it said, calling for increased cash and food support with broader coverage of beneficiaries. 

He expressed his reservations in accepting farm mechanisation, rice procurement, and housing for the poor as Covid-related interventions, saying these all are regular programmes of the government.

People, who are already left behind, risk being left out in the vaccination as well, he said, emphasising the involvement of non-government organisations to ensure that low-income people are included in the drive. "The procurement cost of vaccine doses would be at best 0.5% of GDP and Bangladesh can afford it. It is not the question of money, it is a question of procurement and management."    

The economist expressed his doubts as to what extent the infections could be checked by measures like lockdown if mass vaccination is not ensured.

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said big businesses have managed to protect themselves from Covid-19 onslaughts, but small ones have suffered big losses.

The decomposition of growth in the last two years shows that there has been a K-shaped recovery and economic inequality has increased, he said, adding that the manufacturing sector's growth has plummeted. But poor people work more in such a sector.

It was the poor who were affected by the decline in the GDP size for FY20 in the BBS's final estimation, he also said.

Shaheen Anam, executive director at the Manusher Jonno Foundation, recommends taking steps to protect pandemic-affected children from risky labour, child marriage and moral decay.

Employers are hiring children to reduce costs as they get labour at lower prices. Again, poor families are forced to send their children to work. With schools closed, many are getting involved in antisocial activities. Child marriage is on the rise too. But, there is no initiative to protect them, he said.

Brac Vice-Chairperson Ahmed Mushtaque Raza Chowdhury said the rate of Covid-19 vaccination in the country is still very poor. Many people in char and haor areas still know nothing about vaccines.

Claiming the Covid testing rate in Bangladesh lowest among South Asian countries, he suggested ramping up tests. 

Ahmed also recommended strict application of health safety measures such as mask-wearing, using sanitisers until the vaccination rate reaches an acceptable level.

He also suggested forming a health commission to overhaul the country's health system in the long run and setting up a separate office to discipline the sector and allocating half of the health budget for primary healthcare.

Rasheda K Choudhury, a former adviser to a caretaker government, said Bangabandhu had promised to allocate 20% of the budget for education, which was never implemented.

This year's budget has been identified as a recovery budget, but a response and recovery plan for education chalked up towards the end of last year has not been implemented yet. There is no initiative in this budget too to execute it. The budget for education has been a conventional one again, she also said.

The educationist said that educational institutions have remained closed for more than 500 days. Efforts are being made to educate them through distance learning, but students in remote areas have been left out of it owing to poor internet speed, lack of digital devices and infrastructure crisis.

Asif Ibrahim, chairman of the Chattogram Stock Exchange, said there are more than 80 lakh small companies in the country, but most of them have not received any government incentives.

There is no work for months in all these companies. They cannot even sell products. Some small entrepreneurs try to sell products online, while many do not have the capacity to do so, he also said. 

He thinks that jobs of 1.30 crore people in these enterprises now are at risk.

Speaking on the occasion, Advocate Sultana Kamal, a member of the platform's core group, said there is no initiative in the budget to save the poor from the pandemic hit even though it had been more than a year since the country started its fight against Covid-19 before the budget for the current financial year was formulated.

TIB Executive Director Iftekharuzzaman said although there was supposed to be a supportive budget for everyone, this time the common people, especially the poor and marginalised, have been kept out of the budget.

There was no announcement in the budget on how much the government's resources would be spent with transparency, accountability, and good governance.