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Eminent economist Prof Mustafizur Rahman advocated for extending the social safety net programme in the form of cash support to help the marginalised group of people to face the crises created due to coronavirus pandemic.
He said a large number of people are out of the coverage of the stimulus packages announced by the government so far and these people have to be given financial security in this crisis moment.
Mr Rahman said the stimulus so far the government had announced gave importance to export-oriented industry and manufacturing sectors. They were given credit facilities in subsidised rates.
“People who are working in those enterprises will get support from those packages, because those are mainly given as working capital for paying their wages,” he explained.
But, he said, a big segment of people are left behind. There are some 14.0 million salaried people, another 10.0 million are day labourers and some 27.0 million are self-employed.
“The daily labourers are not covered by the stimulus, while self-employed people may get help from the Tk 200 billion package for small and medium enterprises. But the majority will remain out of the benefit from the incentive packages,” he said
“So strengthening social safety net is very important to support the marginalised section of people,” he noted.
Mentioning that the government has taken a step to increase the number of beneficiaries of the rural safety net programme, he added: “But to what degree the number of beneficiaries will be increased and whether that will cover all the needy people has to be distinctly analysed.”
Mr Rahman, a Distinguished Fellow at the Centre for Policy Dialogue (CPD), said people living in urban and peri-urban areas, where there are no VGD and VGF programs, have to be taken under the coverage of the social safety net schemes.
“I think, taking into consideration the income threshold or poverty line, people who are below that level have to be given the financial support,” he said.
The support can be given through cash transfer or food distribution. “But the experience of many countries says food distribution is more complicated while cash transfer is effective.”
He said once the cash comes to the market, it will have a multiplier effect and create demand in other sectors.
Mr Rahman, citing an example, said once a beneficiary buys rice with the money, it will go to the pocket of a rice seller. Later, the rice seller will buy other things with the money which will have a multiplier effect on the economy.
“The cash transfer is also easier and effective because of the expansion of the mobile financial system,” he said.
Through this way, the government can ensure emergency food security and the marginalised group who are out of the present package will be benefitted, he said.
Asked whether money transfer will intensify any inflationary pressure, he said: “Such a support will be needed for two to three months, not for an indefinite period. I think it will have no impact on price spiral.”
“What the government will have to ensure is: since the support is given in cash format, goods supply in the market has to be adequate; Otherwise, people’s purchasing power will be eroded,” he added.
Until last week the government had announced Tk 727.50 billion stimulus package. Today (Sunday) the government announced another package of Tk 50 billion from where the farmers will be given loans at 5.0 per cent rate of interest.