Publish: 06 Jun 2021, 09:46 pm
The budget that was placed in
Parliament last Thursday (June 3) has no clear guidelines for the middle-class
people. But one of the driving forces of the country's economy is the middle
and lower-middle class. They pay taxes, creating demand in the domestic market.
The Covid-19 pandemic has abridged the income of this class of people as many of them have lost their job. Many are in debt to pay for medical care. They have no alternative source of income other than fixed income. Those who are still struggling to survive also have an uncertain time ahead. There is nothing about them in this year's budget.
Before announcing the budget, Finance Minister AHM Mustafa Kamal said in an interview, "I am budgeting with people from all walks of life in mind. It will be a budget to save people's lives. It is also a budget to protect people's livelihood. I am preparing the budget for the fiscal year 2021-22 by adopting a strategy keeping everyone in mind. 'But the budget did not reflect that. The middle class has been largely ignored.
Although the middle class suffers the most during this pandemic as they have limited income sources. There is an issue of rising costs. Excluding the cost of rent, children's education, medicine, gas and electricity bills, they spend the rest of the money on daily necessities. That is, how much they will spend in any sector is determined from the beginning of the month. If a middle-class family has to buy the rest of the goods after the 25th of the month, then the loan continues throughout the year. If the cost of education for a child goes up in a month or the cost of medicine goes up, then you have to spend a little less on food that month. Because the income is fixed, the calculation has to be done on the cost of food. If the house rent increases, the quality of food decreases a little from the next month, until the salary increases. This is the condition of the middle class.
The budget reflects positive initiatives for businessmen and industrial entrepreneurs. Expenditure on the social security sector has also been increased for the poor and the extremely poor. A budget of Tk 1 lakh 7 thousand 614 crores has been proposed for social security. So far, 88 lakh poor and helpless people have been getting help in social security. Another 14 lakh beneficiaries will be added to this budget. Although the increase in allowances of freedom fighters and tax exemptions for women has been hailed as positive, there is no good news for the middle class. There is no special initiative for those whose income has decreased. After the budget, the middle class will naturally suffer. If the price of goods and services increases, everyone has to pay for it.
There is no effective program in the budget for job creation or employment-oriented or those who have become poorer due to the Covid-19 outbreak. No steps have been taken to ensure human resource development and livelihood. It is being said those increasing opportunities for business and industry will increase employment. Everyone will get this benefit. But no clear idea was found about the recruitment process in the vacant posts of other autonomous organizations and the recruitment process of regular manpower, including the recruitment in the government service which was closed during this pandemic.
The budget for the unemployed is to provide a one-time cash payment of TK 2,500 directly to the ‘poor families listed as suddenly affected by unemployment and loss of income across the country due to the epidemic’. However, there are doubts as to how much compensation will be given to the affected families in this short allocation.
Besides, no concessions were made in the budget for individual taxpayers. As before, if the income is more than 3 lakh per year, the minimum tax is Tk 5,000. Inflation was not taken into account in this case. Still, the middle class submitted the highest return. The middle class is the class that pays the most taxes, but the benefits are less than others.
The hindrance to investing in the stock market is still there. To the middle class, Sanchyapatra (savings papers) were therefore considered a safe investment. But the new budget has imposed an obligation on Taxpayer Identification Numbers (TINs) to buy Sanchayapatra above Tk 200,000 and open a postal savings account. Many middle-class people run their daily expenses on the profit of Sanchayapatra. They have no other source of income. They will definitely be in trouble as TIN has been made mandatory for these savings papers.
With the introduction of an extended health insurance program this year, 80,000 families have been brought under insurance of Tk 50,000 every year. But, it is also only for those who are below the poverty line. The middle class did not fall under it. However, many middle-class families are in financial crisis after getting corona treatment.
A joint study by the Health Economics Unit (HEU) of the Ministry of Health and the Economics Department of Dhaka University earlier this year found that a single treatment in a private hospital could cost up to Tk 5,09,000. If the middle class was guaranteed health insurance, they would receive financial assistance for medical treatment.
There is no specific initiative on how to get the students out of the stalemate that has been going on in education for almost a year and a half. Although the educational institutions are closed during the pandemic situation, most of the institutions are regularly collecting the salaries and fees from the students. Parents who are frustrated with their children are feeling extra pressure to pay these salaries and allowances. The government had earlier said that the salary fee of the educational institution would be adjusted. But it did not work. Although the private educational institutions collect regular salaries and fees from the students, they are not paying the teachers on time. The teachers are in dire financial straits. These issues also need proper monitoring.
Economists say the government recruitment process needs to be kept afloat to invest in educated manpower as well as business and industrial investment. This will provide employment opportunities for at least some families. In the last one year, many middle-class people have become indebted. Small traders have lost capital. It also needs to think about how to protect them from this crisis.
Basically the middle class, they have lost income and gone below the poverty line. So, the expectation that the economy would go further depending on middle-class development is stumbling a lot in this year's budget. In such a situation, the big question is how much the government will be able to take up the strategy of economic recovery instead of the typical policy.