Budgeting for life and livelihoods

Over the past two years, many expected the budget to be crafted with three perspectives in mind: the economics of people’s lives and livelihoods; ethical aspect regarding the legalization of black money at a significantly reduced tax rate, without any questions or penalties; and the need to think outside the box of a conventional annual budget.

First, we urgently needed a budget for living and livelihoods as the Covid-19 pandemic raged. It was the need of the hour. Not only in Bangladesh, but countries around the world are also forced to formulate extraordinary budgets.

As foreign trade activities face serious turmoil due to disruptions caused by the pandemic and the ongoing Russian-Ukrainian war, countries are busy looking for ways to protect their own homes.

Good news for us has always been that we receive remittances abroad. Our expatriates send money home, but this money is not spent. The transferred money is stored in bank vaults and contributes to the banks’ excess liquidity.

House construction has stalled and festival sales during Eid and Pahela Baishakh have plummeted for two consecutive years. Although in recent times we have seen a return to buying and selling, circuits and transfers and online sales, they alone cannot stimulate economic recovery.


A national budget cannot be considered separately from a living and subsistence budget. The budget should show people’s life and livelihood pathways.

Usually, a national budget deals with all aspects of human life, but not all issues are focused enough. The next budget should have started this practice. It should have been designed as an emergency and recovery time budget. It shouldn’t look more like a status quo budget.

Over the past two years, some priority sectors have received additional allocations, but these could not be used properly and were not enough to revive an economy hard hit by the pandemic.

The stimulus packages announced by the government were well thought out and commendable. But the purpose of the intervention was not fully realized because the big companies could not use the money they received. Most of their loans are going bad now.

On the other hand, small businesses, which urgently needed money to survive and restart, did not have access to stimulus money because banks could not disburse all of the money due to procedural limitations.

Banks were not the right choice for the job as they do not have direct links to the small businesses scattered across the country which are more linked to microfinance institutions. These are the companies that needed the money the most.

A financial insurance system could be put in place to bring money to small entrepreneurs as quickly as possible. They are the engine of the economy.

They are not job seekers.

They are producers, consumers and employers. The economy will not survive if these informal sector enterprises cannot operate.

Some crowds in shopping malls and markets or full reservations in hotels in tourist areas do not represent the whole country. Some sections of people were pointing at the crowd and saying, “See, businesses are bouncing back. People spend. Our foreign exchange reserve is skyrocketing, GDP per capita has risen sharply, and so on.

But this is not the case. There have been inequalities in the economy and the pandemic has deepened them.

The next budget must address the question of livelihoods and abandon extravagant projects to spend more on social protection, health and education.

Many labour-intensive economic sectors are on the brink of ruin. The budget must identify and support them. Sectors that will save lives and jobs should be prioritized over projects that will take years to complete and bear fruit.

Whatever budget we have for education, it has all gone towards paying teachers’ salaries, distributing free books, buying chairs and tables, and constructing school buildings. No effective initiative to ensure the study of students, especially those from the villages, who lost two academic years during the pandemic. The price of this learning loss will be enormous.

Thus, allocating more to education in the budget will not help if students cannot learn and quality education is not provided. Recruiting several thousand doctors and paying them salaries would not improve health services if they were not properly trained and adequate facilities put in place.


It is crystal clear that the money is generated illegally through corruption and much of it is smuggled out of the country. This money must be integrated into the formal economy. But what and at what price?

You do not impose a fine on those who have raised money by illegal means, you do not seek their source of income and you invite them to legalize their unjust income through a subsidized tax rate, while genuine taxpayers are forced to pay 25-30%. It is an ethical deviation, which will demoralize and punish honest taxpayers and reward wrongdoers. What is even more alarming is that the holders of the money spend to increase their influence in the circle of power and destroy one by one our institutions.

If they are allowed to invest in sectors like housing and the stock market, it will cause price inflation and put other people’s money at risk. The regime also contradicts the state policy stipulated in the Constitution.

If the government still wants to include black money in the formal economy, it can allow it on the condition of paying applicable taxes and investing in labour-intensive and production-oriented industries.

Emerging economies must launch campaigns against black money every 15-20 years and allow undisclosed income to be legalized through strict rules and paying higher than usual taxes with fines.


Where will you get the money from when the economy stalls? If people lose income, they will not receive income tax. If sales fall, VAT receipts will be lower. If imports fall, customs duties will decrease, although in recent times there has been a substantial increase in customs duties on imported items, as the prices of imported items have increased globally. In such a situation, tax revenue will definitely drop and there is no point in shouting about it.

The government must be pragmatic when setting revenue targets for the National Board of Revenue. When the whole economy is in crisis, setting a high-flying revenue-generating goal will be unwise. The government should reduce recurrent non-development, luxury and rent-seeking spending.

The NBR has long suffered from the labor problem. Since the 1990s, it has spent around Tk 500 crore on digitization projects, but automation is advancing at a snail’s pace.

A quick switch to the online system remains the only answer to the BNR’s problem. This will help to overcome the labor shortage, eliminate tax evasion and fill the revenue gap to some extent. This remains the only option for the NBR as there is little room to impose new taxes in this post-pandemic and pre-election year.

The author is a retired secretary and former chairman of the National Board of Revenue

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