The ongoing pandemic has pushed the national poverty rate to 42 per cent from 21.6 per cent and there was no specific programme for the new poor in the budget of FY2020-21, finds a study.
The South Asian Network on Economic Modeling (SANEM) released the study findings in a virtual pre-budget dialogue on “Budget 2021-22: Reality and Expectations” on Sunday.
It discussed the importance of the national budget in addressing the challenges of the ongoing pandemic.
SANEM executive director Selim Raihan, also professor of economics at Dhaka University, moderated the event, where the organisation’s research director Dr Sayema Haque Bidisha, also a Dhaka University professor of economics, presented the keynote paper.
The study also said that for bringing the new poor households over the poverty line, the government was required to transfer Tk 5,132.65 crore each month which is equivalent to 1.9 per cent of average monthly GDP. It also indicated that although the safety net allocation was around 16.8 per cent of the total budget in FY 2020-21, this figure is much lower if allocations for pension for retired government officers, savings certificate interest and secondary and higher education stipend excluded.
Sayema acknowledged that the budget for the next fiscal year would have to consider both pre-Covid as well as post-Covid challenges. She pointed out that the existing budget structure suffers from low revenue generation and slow implementation of ADP. Despite the consistently high growth in GDP, the pace of employment generation has not been impressive and there has been low spending in human resource development.
The presentation highlighted a declining trend in revenue collection in the recent budgets: 83 per cent of the actual revenue target was met in the fiscal year 2016-17 which decreased to 75 per cent in 2017-18 and 74 per cent in 2018-19. A closer analysis of the composition of the NBR tax revenue reveals that the proportion of income tax in the overall revenue has also declined over the past 5 years. In the fiscal year 2016-17, income tax made up 35.4 per cent of the total tax revenue while in 2021, it declined to only 31.5 per cent. The government’s Annual Development Programme implementation rate has also been staggeringly low in the current fiscal year. ADP implementation progress over July 2020-April 2021 has been below 50 per cent across several key ministries and divisions.
Although the agricultural sector has fared better than the other sectors during the pandemic, it must not be neglected in the formulation of the upcoming budget, the study also remarked.
According to the study, understanding the impact of the pandemic on PIE (Poverty, Inequality and Employment) remains an essential prerequisite. Poverty and inequality reduction and employment generation should be key priorities in the government’s efforts to initiate the recovery process and safeguard the economy.
