Intention of stimulus packages was good but the implementation has been unsatisfactory so far

Since the first wave of the Covid-19 pandemic, SANEM has been doing surveys on business firms. What we noticed back then is that business industries were trying to recover losses and restore the business. 

But the recovery process was not a strong one, rather the recovery was weak to moderate. Also, the frequency of recovering was not constant for all the firms. 

Whereas a few large sectors had received stimulus packages from the government, the micro and small enterprises mostly missed out on this opportunity. As a result, large enterprises were recovering fast, medium-scale enterprises were in a mixed situation and the small-scale and micro enterprises were seriously lagging behind. 

We must understand that this economic recovery is not something uniformed. But after the second wave of Covid-19, this recovery process was again interrupted and got weaker. As it has slowed down, many firms are now struggling to survive.

This April, SANEM conducted a survey on 500 firms. Only 55% of the businesses have recovered the loss but the remaining 45% has fallen way behind. 

I did not find this number encouraging. In that survey, when we asked about their future business prospects, they portrayed a bleak picture because of this ongoing uncertainty in the world economy. 

We noticed that credit expansion in banking and the private sector is very low at this moment. So, none of the firms are aiming for business expansion. Rather, they are more engaged in restoring the economic condition. Hence, the recovery we are talking about is not about expansion; it is about restoring the pre-covid condition.

However, last year, the scenario was different. In comparison to the first and second wave, we noticed the gap in expectation. When the stimulus packages were announced, small-scale and micro businesses had an expectation that they would recover from this crisis with help from the government. 

But reality did not meet their expectation and disrupted the business, slowed down recovery and smashed their confidence - resulting in the drastic drop in recovery growth.

Usually, as a recovery we understand economic recovery. But it is not entirely true. Recovery has two components – economic and social. So, when we talk about economic recovery, we must include social recovery as well because these are very well-connected. 

The ongoing pandemic has increased poverty and disrupted the labour market. Unfortunately, we are in denial about this social economic failure. As long as we do not balance these two factors of recovery, inequality will exist and it will slow down the process. 

There is no doubt that the intention of stimulus packages was good but the implementation has been unsatisfactory so far. It is because a huge portion of our economy is occupied by small-scale and micro enterprises but they were ignored in the stimulus packages. 

Targeting poverty and the labour market, the government did not undertake any strong policy. The policy making process, its implementation and inadequacy of policies has a lot to do with this situation. Also, the fragility of our health sector and inadequacy of vaccines has accelerated it. 

To get over this situation, I believe we need proper government support. We cannot just copy any prototype and run it in our country. Our challenges and country context must be taken into consideration before planning something. 

We have policies on paper but very often we see the implementation. We cannot blame business firms as they are constantly trying to cope with this moment of crisis. So the government needs to correct the policies.

Addressing poverty, labour market disruption and the new poor in our society, we must undertake social protection programmes. We must involve local people's representatives, NGOs and stakeholders if needed. 

Until there is a balance between economic and social recovery, we will keep suffering. Even though we have different stimulus packages, its design and implementation are not monitored properly. 

We must redesign it too. And, last but not the least, assuring vaccination programs for the masses should be ensured.

Dr Selim Raihan

The author is a professor at the Department of Economics, Dhaka University.