BUILD, a leading think tank said in order to give a clear signal to the global community and the local and foreign investors, the government should immediately prepare a COVID-19 Recovery Plan and a well-planned Exit Policy to meet the economic growth target projected in the proposed budget for 2020-21 fiscal.
It also said the supply distortion may have some inflationary effects as the government has already ordered for printing of money worth Tk 30,000 crore.
"If printed money does not boost production the increased velocity of money may press inflation upward. The main goal is boosting aggregate demand and output. The government should mobilize the other means such as savings from the lower oil prices, suspension of non-priority ADP projects, contain unnecessary expenditure and so forth. The inflation was 5.6% as of March 2020, targeted inflation rate for FY 2020-2021 has been set as 5.4%," the BUILD said in its budget reaction.
In regard to create more employment in the CMSME sector, it needs proper policy attention by the government. Government has allocated BDT 2000 crore through PKSF, other micro credit organization can play a big role for supporting cottage and micro entrepreneurs.
They deserve massive support than that of small and medium enterprises as a significant number of these types of enterprises have been facing closure because of lockdown. They should be given collateral-free loan at least up to at least BDT 2 lac, while India has already given Rs 3 lacs collateral free loan. BUILD recommended for a Credit Guarantee Scheme for small entrepreneurs.
The country's apparel exporters are facing sustenance challenges, continuation of 1% incentives may not be enough for them. Tax at source should remain as it is in the last year to 0.25%. There is a need for detailed discussion with the concerned entrepreneurs to set a fool proof strategy. Export of leather and plastic also have been facing decline, but some sectors such as furniture, agro-processing, non-leather footwear and some non-traditional sector have showing positive trends. A number of non-traditional items such as toys, float glass, ships, boat, floating structures and solar module need proper attention as they are included in the export basket. Green Transformation Fund, EDF, cash incentive, proper support from DEDO also needs to be extended at this critical juncture to sustain export growth.
“The four main focused areas of the government, such as; health, education, agriculture and employment is very rightly chosen, all the announced policies and allocated budget for these areas needs to be spent and managed very ethically and practically in order to maintain its required growth path and achieve the projected targets,” the BUILD said.
-edited-rmc//