CPD recommends that the government manage budget deficit through prudent reallocation and prioritisation of public expenditure
The Centre for Policy Dialogue (CPD) – a local think tank – has proposed around Tk30,000 crore direct cash transfer to around 1.9 crore households from vulnerable groups and marginalised communities to help them survive the Covid-19 crisis.
The package will be 1 percent of the Gross Domestic Product (GDP) and will cover around 7-7.5 crore daily- and weekly-paid labourers and self-employed people who have lost their sources of earning due to the nationwide shutdown over the highly contagious disease.
The financial support can be implemented by providing each four-member family with Tk8,000 per month for two months.
The research organisation proposed the package yesterday through a virtual briefing on "Covid-19: CPD's Initial Assessment of Public Policy Interventions and Proposals for Food and Income Security of the Marginalised".
Towfiqul Islam Khan, senior research fellow of the CPD, presented the keynote paper.
Towfiqul, in his paper, noted that the cash transfer will increase the people's purchasing power which will ultimately boost economic activities due to an increase in the aggregate demand.
The paper also said that various initiatives of the government during the present crisis are being hampered due to the lack of good governance.
The government should formulate a national committee as well as local-level committees involving local administration, local government representatives, local police and an appropriate number of NGO representatives and volunteer organisations to ensure proper mobilisation of the fund and controlling corruption.
Dr Fahmida Khatun, executive director of CPD, said the proposed cash incentive will help the poor survive the crisis as well as enable them to buy food and other essential goods.
She also said that about one percent of the GDP will be required to implement the package while some other countries have announced packages worth up to 15 percent of their GDPs.
Meanwhile, Dr Mustafizur Rahman, distinguished fellow of the CPD, said the compensation packages already declared by the government for different sectors should be universal so that needy people from any sector can access it.
Identifying the allocation of Tk250 crore for the health sector to fight the Covid-19 as very poor, he said the sector requires more money.
"Economic crisis will aggravate with increasing difficulties in the health sector. That is why, the government should lay more emphasis on the health sector," he said.
Responding to a question as to where the fund to implement the package will come from, Mustafizur said reducing the rate of repo, CRR and SLR may increase the flow of money. "It is possible to add another Tk12,000 crore [to the stimulus package] by reducing CRR by 1 percent."
However, it is very essential to prevent solvent people from accessing the package, he said, adding that good governance can check corruption.
Dr Khondaker Golam Moazzem, research director of the CPD, recommended the government to drop the interest rate with the Tk5,000-crore package declared for the agriculture sector.
Covid-19 has affected the sector very badly, with prices of agricultural products going down. "So, farmers should get more money at a concessional rate."
Recommendations for upcoming budget
In the meantime, Towfiqul Islam Khan came up with several proposals in his keynote paper for the government about the upcoming budget.
He suggested that the government manage the budget deficit through prudent reallocation and prioritisation of public expenditure.
"There must be renewed efforts towards better mobilisation of resources and raising efficacy of public expenditure," said Towfiqul, quoting the paper.
The government would face pressure from both the fiscal and the monetary sides to implement the budget in the next fiscal year, said the paper.
Towfiqul said the National Board of Revenue should prepare the budget proposals pursuing revenue mobilisation targets in a more realistic way.
The proposals for tax measures should be designed after considering both the urgency of mitigation and the subsequent economic recovery.
Primary focus should be on strengthening monitoring and enforcement mechanisms to effectively curb tax evasion and illicit financial flows, the paper mentioned.