Economic evolution depending on fair distribution of bailout packages
April 18th, 2020 at 3:56 pm
Economic evolution depending on fair distribution of bailout packages

Md Mazadul Hoque

Two Indian-origin Nobel laureates in economics- Amartya Sen and Abhijit Vinayak Banerjee openly advised the government to reach the doorsteps of poverty-stricken people hit hard by COVID-19 pandemic with food and finance as soon as possible.

The people with no income have to be brought under the umbrella of government programmes shortly – they said, adding that any amount of local currency must be reached them through any channel to keep the economic wheels moving.

Their visionary comments recently appeared in an Indian Bengali daily.

The novel coronavirus has hit more than two hundred countries and areas. More than one and a half million people have died of the bug worldwide. People have been bound to stay a t home for months amid lockdowns. The world is now seeing economic slowdown at a fast pace that will require some years to be recovered. The South Asia region has been marked as hot-spot of COVID-19 by World Health Organization (WHO).

Bangladesh, among South Asian countries, is seemingly now in great troubles with nearly 170 million people since the death toll marked a steep rise. The government responded accordingly shutting non-essential offices.

Dhaka corona lockdwon

Most economic activities nationwide are stopped like that of in other countries. In this situation, wage earners, day laborers, transport crew, vendors, newspapers hawkers, beggars, rickshaw pullers, domestic help, construction workers among others have become jobless without getting prior notice. The shutdown is predicted to have negative effect on national growth.

With a view to feed people and cushion the economic shock, the government announced bailout packages worth nearly 12 billion dollars, which is 3.3 percent of GDP.

Already undertaken four strategic programs will be implemented in three phases until 2023-2024 fiscal year. The first phase will be implemented over the next three months of current fiscal year (2019-2020), the short phase the next fiscal year (2020-21), and the medium phase in the 2021-2022, 2022-2023 and 2023-2024 fiscal years.

A fund of 590 million dollars is being created to provide running capital to the agricultural sector. Besides, an allocation of 1,1 billion dollars is being kept as subsidy to the agricultural sector.

A total of 89.67 million dollars has been allocated for those people who have lost their jobs and 96.17 million dollars for social safety net programmes has been allocated for poverty-stricken people in 100 upazilas.

What should be noted that homeless people must get ready-made homes and for this purpose, 251.38 million dollars will be allotted. It can be said that the packages will definitely cover all key areas that really deserve in current situation.

Nevertheless, a bailout package worth 590 million dollars has been announced to pay wages and salaries of workers working in export-oriented industries. An amount of 2.3 billion dollars has been allotted to Small and Medium scale industries (SMEs).  Loan disbursement to SMEs sector and large scale industries through banking channel would be a challenges one.

Covid-19 economy

The corrupted defaulters might pursue again to avail the packages announced by government. A wise decision has to be taken while selecting borrowers.  I think Bangladesh Bank would be strict in this affairs. Its monitoring must be scaled up since a section of greedy business people are awaiting to enjoy the stimulus packages.      

It is clear that Bangladesh economy is set to lose growth momentum in the days to come for COVID-19 pandemic. International Monetary Fund (IMF) recently made grim projection about growth rate.

Bangladesh GDP growth would come down to 2 percent in the current fiscal year (2019-2020). Washington-based lender, World Bank (WB) had earlier projected a GDP growth rate of 7 percent for Bangladesh for the current fiscal year. 

If the projections made by IMF, WB prove genuine, it would be tough to go back to our golden period of economy. The economy now demands creating employment. The people must hold in hand any amount of cash money to lead their life.  The attention on wealthy people or business people has to be narrowed right now. The people, who are unable to manage meals for three times a day, have to be brought under support. Their number is high across the country. Launching of government ration cards in a wider range would help the needy people. If five (5) million new ration cards reach them soon, there will be seen no food crisis among them.

The homeless people are in dire of food to survive. In what way the helpless or zero income group people might be brought under the net of stimulus packages had been the matter of grave concern. 

Fair lists with true facts are needed.  There are no alternatives but to stand by the people with food and finance. I think stimulus packages containing huge budget would help our distressed people to see sunny days, if the packages are utilized in right way. Sorry to say why UP chairmen are getting involvement with corruption and irregularities. Their honesty needs to be ensured while distributing relief materials provided by government.

Recently, World Food Programme (WFP) Chief- Mr Beasley expressed grave concern on current situation. He said at least 30 million people could die of starvation worldwide due to COVID-19. Bangladesh is a country of over 16o million population where poverty- stricken people 20.5 percent and ultra poverty-stricken 10.5 percent -according to Bangladesh Bureau of Statistics (BBS). 

So, a total of 5 crore poor need food and finance on emergency basis. Otherwise, there is possibility to see huge number of deaths. However, 1.4 million public servants may be excluded and another 5.1 million employees in private sector might be included in the packages.

Private sector employees are worried about job loss because they rarely maintain service rules. Honorable prime minister has urged the rich ones to stand by the people having no works and income.

Income inequality in Bangladesh is widening day by day. So, The wealthy people have a role to perform their holy duties towards destitute people living in society.

If around 82,55,000 people having highest income make sure their presence in 87,223 villages in the country with relief materials, Bangladesh would never face worst situation. The stars linked with film industry, sports also might extend their helping hand. As a global economic recession is knocking at the door, we have to give our attention on agriculture sector. The farmers are being considered as real fighters. Shortly after liberation from Pakistani occupation in 1971, the father of the nation Bangabandhu Sheikh Mujibur Rahman only relied on the farmers to revive war-ravaged economy.  To conclude, fair distribution of government provided food, finance and subsidy among genuine people must be confirmed. Otherwise, stimulus packages would stand as a burden for the economy. 

Md Mazadul Hoque is a banker and analyst of economic affairs. E-mail: [email protected]