Budget offers no relief to new poor, unemployed: Sanem

Highlights:

• Budget is equivalent to 17.5% of GDP, not enough to fight pandemic
• no mention of 2.5 crore new poor
• no support for those who became unemployed
• health, education, social safety needed double allocations

The new budget does not offer any relief to those affected by Covid, and no exemption of VAT and duties levied on ordinary people, said South Asian Network on Economic Modeling (Sanem).

The reduction in corporate tax and tax holidays for local investments will benefit businessmen, but the budget lacks measures to support 2.5 crore new poor and the people who became jobless in the pandemic. The budget also does not have any proposal to reform the health sector, Sanem said.

On Thursday, Finance Minister AHM Mustafa Kamal placed the 50th budget in parliament after independence. He said it was a budget emphasising lives and livelihoods in navigating the country out of the pandemic, but SANEM disputed the statement.

In a post-budget press conference on Saturday, Prof Selim Raihan, of the Department of Economics, Dhaka University, and executive director of SANEM, said the budget reflected that the government did not have data on the realities on the ground.

The budget speaks of economic recovery, but social recovery has not been given due importance. The detrimental effects on education, health, social safety, poverty and discrimination have remained unaddressed.

The size of the budget is larger compared to the previous year, but the increase is negligible relative to the percentage of GDP. It is 17.5% of GDP, Selim said, adding that the figure was more or less the same 10 years ago.

There was a scope of increasing the budget size further as a percentage of GDP through double allocations to education, health and social safety net. But as usual the estimated yearly expenditures in these sectors are merely 1% of GDP separately.

This budget is not favourable for the country's graduation from the least developed country status, Sanem said.

Education has been in jeopardy because of the coronavirus, but the budget seems to have failed to bring the scenario under the spotlight, said the executive director of Sanem. A large section of students is being deprived of online education and several researches found out signs of a jump in the dropout rate and a rise in child marriage. But the budget does not declare any plan to help revive the sector.  

Covid pushed 2.5 crore people into poverty but the budget has no mention of them, Sanem said. The list of those who were poor even before the pandemic was flawed while there is no list of the new poor.

Prof Sayema Haque Bidisha, research director at Sanem, said the budget is business friendly and so it might be an effort to help the economy rebound. But the question is whether the measures to help businesses will benefit ordinary people, low-income people and the middle-class.

It is not clear if the tax exemptions will help small and medium enterprises and if those will help generate employment, she said.

The budget laid bare weaknesses in terms of policy, Sayema said, adding that Covid-19 called for reforms in health and education sectors.

"We saw incentives given for employment generation, e-learning and training of 10 lakh people in the IT sector. But these measures are not big enough to overcome challenges in the labour market."