Proposed budget needs to tackle the middle-class crunch

Time and time again, Bangladeshis have proven they have the guts and grit to face overwhelming odds, and come out victorious. However, the people – especially the poor and middle income segments – are now grappling with unprecedented circumstances.

Just when we were barely recovering from the Covid crisis, the Russia-Ukraine war brought down a flurry of problems for Bangladesh. The war continues to push global inflation up, which in turn is causing the prices of essential commodities to rise in both home and abroad.

The proposed budget for FY23 – placed by Finance Minister AHM Mustafa Kamal in Parliament on June 9 – has been lauded by the local businesses and industries for providing much needed policy and tax support to our economic lifelines.

However, many have voiced their concerns saying that the proposed budget could be friendlier to the poor and middle class citizens. BBS data shows that Bangladesh’s population is over 160 million, and about 40 million people or 25 per cent belong to the middle-class segment.

An article, published by the online iteration of this daily on Sunday, quoted distinguished fellow of CPD Dr Debapriya Bhattacharya saying that the proposed budget did not offer incentives for the middle-income people, instead, it offered amnesty for money launderers, which means there are no political representatives to speak for these segments.

Dr Bhattacharya echoed a concern that is widespread – the budget did not provide much support to the poor and middle class, rather offered benefits to money launderers and disappointed honest taxpayers.

An analysis of the proposed budget makes it seem that the country’s middle class is now politically unrepresentative, socially unguarded and a target of neglect. In his budget proposal, the finance minister reduced the corporate tax rate, but kept the tax-free income limit at Tk 3 lakh without providing benefits to the middle class, although the ceiling should be at least Tk 5 lakh.

These aspects of the proposed budget make it seem that it is working mostly for the benefit of a certain class of people.

However, let's be reasonable, it will be extremely difficult for Bangladesh to achieve the SDG goals or tackle the challenges of LDC graduation without a proper policy support for people from all corners of the society – and yes, that includes the middle class and marginalised.

The lives of the middle class segment have been more or less comfortable in Bangladesh, but rarely are they easy.

Supporting robust industrial complexes across the country is essential, but the government should also ensure that a vast segment of the population retains their economic capacity to buy the products being produced.

The proposed budget for FY23 must include more policy and tax support for the marginalised, poor and middle-class people – who have been bearing the brunt of one crisis after another.

The opening and integration of markets has led to the emergence of a rapidly growing and forward-looking middle-class in Bangladesh over the last three decades. This budding middle class enjoys high morale and spirit, big expectations, and rising sense of a bright future.

So, as opposed to the fading middle-class in the west, Bangladesh’s middle-class is on the rise, growing in numbers and capturing an increasing share of total income in the country. Proper policy support is crucial for safeguarding this segment’s economic strength.

It is the government’s duty to put policies and initiatives in place to combat the vulnerabilities of poor and middle-class segments.

These policies should promote upward social mobility such as quality education, and provide safety nets that protect the vulnerable segments from economic risks.