At present, economic recession is the most talked about phenomenon in global arena and revitalizing the economy is the common concern for the nations irrespective of wealthy or poor. Everyone from G-20 to each problem trodden poor nation are taking various initiatives as of their ability. Bangladesh too also has taken some significant measures to save the economy from the adverse impact of economic meltdown.
Very recently, finance minister Abul Maal Abdul Muhith announced a stimulus package of 34.24 billion Taka, which will be effective as blanket coverage of power, agriculture and export sectors to help the national economy from the impact of the fallouts of global crisis.
While unveiling the package, the finance minister mentioned that financial, fiscal and policy measures required for overcoming the crisis would be taken in the next budget as well.
The package analysis unveiled that agriculture sector of the country highly emphasized with 43 percent of allocation; power sector is second in line with 18 percent and agriculture loan (recapitalization), export and social security in terms of food stand with 15, 13 and 11 percent respectively.
It must be told, the segregation of allocation in the package is the reflection of political-economy of the government, though this is an arrangement for only the pre-budget quarter. It could be said again that government emphasized on agriculture and rural people, who are the major player of the economy of Bangladesh.
As number is concerned in the package, out of the total amount, Taka 4.50 billion will be spent on supporting three export sectors as the government raised cash incentive to 10 per cent from 7.5 per cent for jute and jute goods, to 17.5 per cent from 15 per cent for leather and leather goods and to 12.5 per cent from 10 per cent for frozen foods.
In this package that would be adjusted with the current budget, an amount of Taka 15 billion has been allotted for additional farm subsidy and Taka 6 billion for power sector. Taka 5 billion will be channeled to agricultural loan recapitalization facility and Taka 3.74 billion to social safety net.
On the other hand, finance minister mentioned while unveiling the package that necessary policy support and administrative reforms have also been planned alongside financial and fiscal incentives under the stimulus package. Meanwhile, in the stimulus package it is also indicated that emergency support and a set of medium- and long-term measures are the key components.
After announcing the stimulus package, renowned economists and political observers commented that this was an important initiative but the government needed contingency measures along with fresh initiatives for development of an ‘inward-looking’ market to deal with the global recession.
Majority of the economists welcomed the government’s emphasis on the agriculture sector and stressed the need for effective and transparent use of the public money assigned for providing protection to industries and sectors that have really been adversely affected by the current global financial crisis.
Political observers said that this initiative would make the people especially the rural people a bit more empowered to protect them for the wave of economic recession.
As Bangladesh is a country with a vast population in rural area and the rural economy is thus far the place of maximum employment and livelihood, this sector must be looked after in proper manner and of course the government looked at this with due mindfulness.
The package is also reflecting the pre-poll promise of Awami League, the party in power. In many comments on media the initiative praised with due caution. Observers said the government must ensure that cash incentives are not misused.
At the same time, Bangladesh should concentrate on the domestic market to withstand the effects of such a global recession, which may be prolonged, observers added.
In conclusion it could be said that Bangladesh has a pattern of survival technique to protect from global or regional economic adverse wave as its own. It was observed in last century when Indonesia, Malaysia, Thailand and many other emerging economies were shattered by currency crisis. At that time Bangladesh was standing still by the cooperation of unique agriculture based economy. So, it could also be told now that government initiatives emphasizing rural structure would be the key to protect nation from global economic recession.
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