Next budget must attend the COVID-19 economic fallout

Published: 00:00, Apr 13,2021

 
 

MILLIONS of people and hundreds of business enterprises, especially small and medium ones, have been seriously affected by the economic distress induced by the COVID-19 outbreak in the country since March 2020. While the government’s response to contain the COVID-19 infection through general holidays, largely ill-managed though, and to help the affected people and businesses has, as economists say, been inadequate, a further surge in the infection and mortality rate since early March this year has forced the government to go for fresh restrictions, enforced on April 5 and now extended to April 21. What comes as highly worrying is that a large number of people, who have either lost their jobs or experienced a substantial reduction in their income, are likely to bear the brunt of the fresh restrictions. It is in this context that economists at a pre-budget meeting with the finance ministry on Sunday asked the government to identify the people and businesses affected by the lingering COVID-19 outbreak and to extend incentives to them through special measures in the upcoming budget. They have also asked the government to reach the benefits of the stimulus packages worth Tk 1.24 lakh crore, announced in 2020, to the targeted people and businesses soon.

Since the COVID-19 outbreak, the poverty rate in the country has sharply increased. At the same time, many small and medium business enterprises have been shut down and many more are reported to have been struggling to remain in operation. Such a situation has been responsible for large scale layoffs. What is also worrying is that the government has not been able to reach the benefits of the stimulus packages equally to all the targeted people and businesses, with a pro-rich bias in the distribution of the fund under the packages being evident. The existing stimulus package of Tk 33,000 crore for large industries and services has, keeping to a Finance Division report, almost been distributed while some 60 per cent of the Tk 20,000 crore package for cottage, micro, small and medium enterprises has been disbursed until January 31. The government has also failed to make the large businesses refrain from worker layoffs, even though it warned them, especially the apparel sector, of consequences. Now with the fresh restrictions, the poor and low-income people are again faced with the difficulty to make their ends meet while most of them are yet to recover from the economic shock of the past year.

The government must, under the circumstances, take effective steps in the form of cash and food aid to help the poor and low-income people to get the desired benefit of the fresh restrictions. The government must also include specific allocations for the people and businesses most affected by the COVID-19 outbreak and enhance allocation for the social safety net programmes to cover more people in the upcoming budget. Moreover, the government must enhance the allocation for the health sector to ensure universal health care and attend to the existing irregularities in the sector.

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