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The Financial Express

A compassionate management of Covid-19 crisis is the key to economic recovery


-File photo -File photo

Covid-19 crisis has placed all the good achievements of the economy in jeopardy. All the economic indicators have been showing a downward trend. At this critical juncture, the Finance Minister (FM) has placed next fiscal year's budget. Acknowledging the crisis in the budget speech, he expressed his optimism to bounce back from the crisis with four-pronged policy stances: austerity, accommodative monetary policy, stimulus for industries, and support for the poor. For the recovery of the economy, implementation of these strategies is important. However, a big picture of reforms that are needed in different sectors to overcome the crisis was absent in the FM's budget speech. To be precise, a compassionate management of the covid crisis is needed to contain the crisis. I use the term, compassionate management,' here consciously, which is widely used in psychology, to explain the approach of the authority that takes empathy to the next level with an understanding of the emotions, stresses, weaknesses and strengths of the subject. The covid-19 crisis leaves a demoralizing impact on the  people causing  psychologicaland economic distresses. The crisis management-both health and economic crises-thus needs to be done in a compassionate way by addressing the people's health and economic woes in  a proper manner.

The Covid-19 crisis perceived to be concerned with health crisis; however, prevention measures against the  infection lead to an economic crisis. Therefore, it is better to look at "lives and livelihoods" in the same vein rather than pretending that there could be a trade-off between them. If people go out for livelihood it is highly likely that they might  be infected and thus risk their lives or if they confine themselves in a house, they will face the same risk.The discussion on health and economic crises should thus follow in tandem. The pandemic unfolds nakedly the weaknesses of our public health sector. The apprehension of the people arises not only from the present mismanagement (of thr pandemic), but also from the long legacy of mismanagement of the sector. Even though developed countries' health sector is in a dire state because their system could not afford the overflow of cases,but nobody blames them as long as they tried their best to provide basic health care facilities to their citizens. However, it is the minimum basics that our public health sector lacks. Public hospitals do not have the minimum number of ICU beds, oxygen supply system, diagnostics lab, necessary manpower-not only doctors, but also other support staffs, technologists etc., to name a few. It reveals that a coterie was behind this situation to serve their own interest, that is, to conduct their private health-related businesses. Worse yet, private sector is now not willing to support the government's effort to contain the crisis. As a result, many covid patients are dying because they are not getting due treatment in the hospitals. Private hospitals and clinics are not even providing treatment to non-covid patients. Taking such emotions and stresses of the people into consideration, what was at least needed was to start a big reforms initiative to revamp the public health care system and bringing private healthcare system under some sort of accountability. This kind of initiative at least will give people a ray of hope and encouragement to fight against covid crisis.

The health sector warranted a bigger budgetary allocation this year to combat covid pandemic with particular emphasis on the improvement of public health support system. A 23% increase is seen in the health sector budget (about 0.6% of GDP, which is still lower than the South Asia average  compared to last year with additional block allocation of 10,000 crore taka to meet incidental costs. This higher allocation is a welcome move; however, considering the haphazard situation in the public health sector, this allocation does not appear to be adequate. This typical allocation reveals the fact that the current health and finance administration could not realize or envision the need for a bigger allocation within  their capacity. This calls for an overhaul in the health administration to improve their expenditure absorption capacity and ensure efficient and proactive service delivery. What minimum we can expect is that the allocated money would be spent in line with a contingency plan of expenditures, and that plan would be disclosed to the people as part of compassionate management of the crisis.

An overhaul of the public health administration with efficient and proactive officials is needed. A judicious and efficient use of the budgetary allocations needs to be ensured by preventing leakages and wastages of public money. As part of reform, it could be made mandatory for all government employees to take health care services from the public hospitals under a health insurance system provided by the government. This type of measure might help improve the health care facilities. Simultaneously, it should be made mandatory for all the doctors in the public hospitals to continue their OPD services (practices) at the hospital premises with additional incentives, and impose a ban on private practices at other clinics. I can remember that honorable prime minister recently instructed to create a corner in each of the public hospitals so that doctors can see the patients, but it did not see the light of day as yet.

The second important part of compassionate management of crisis is to address peoples' economic woes that are caused by the pandemic. Two types of economic woes that have propelled people in economic distresses are: acuteness of poverty of the low-income people and shrinkage of production/sales of micro, small and medium enterprises. During 67-days' lockdown since March 25th, the government and private sectors have provided cash and in-kind support to the distressed people, but in an uncoordinated way. Later the government declared a one-time Tk. 2500 for each of the 50 lac poor families, though wrong targeting and faulty delivery mechanisms caused delay in transferring the money. It again proves that involving only local government is not enough to contain leakages, CSOs and NGOs need to be involved in making a leakage-proof delivery system. I can suggest that using BBS, a survey of the poor can be done along with census so that this below-poverty-line people can be given an identification. This approach might solve the long-standing weaknesses in cash or kind transfer mechanisms. Similarly, a large section of MSMEs are left out from the declared credit-based stimulus package, and therefore, an implementable stimulus modalities need to be sorted out. In the budget FY21, only a modest amount equivalent to 0.4% of GDP has been increased in the social safety net program. Some recent estimates show that the covid-19 crisis pushed about 20% of population newly into poverty. It is important to feed these new poor for a certain period, say for at least six months to bring them in employment/businesses before covid crisis is contained. Further zone-based lockdown or stricter lockdown in the face of recurrent waves of covid might justify this additional allocation to serve the poor in order to maintain their economic sustainability.

For greater allocation in the aforesaid sectors, the budget will see a greater deficit (6% of GDP or more) this year given that revenue earning will fall short of its target. It is now high time for the NBR to remain prepared with all of its arms and ammunitions to implement online VAT system and other tax reforms. The NBR needs to pursue dynamic tax collection policies as well as capacity enhancement initiatives. NBR should address poor staffing problem at the field level and organize tax fairs at the district level on a regular basis with constant motivational programs to increase awareness of tax payers. Judicious imposition of tax is needed by analyzing tax incidences. A gap is seen in this context. For example, this year a certain amount of tax has been imposed on mobile talk-time and internet usage undermining the digitalized transactions, networking and e-commerce and so on that are essential to fight against covid crisis. Apart from this, an increased wealth tax can be imposed to finance deficit accrued for supporting the poor. Except for ongoing mega infrastructure projects in the next fiscal, an austerity is needed in government expenditures and allocating funds for less priority projects. Austerity is another area that would be a part of compassionate management of crisis.

Finally, the government has made a downward projection of GDP growth at around 5% for this fiscal, however, anticipated an 8.2% GDP growth for the next fiscal year. A word of caution here is that a higher growth in the next fiscal year depends mainly on how quickly we can return to a semblance of normality. It is less likely to achieve the expected growth, however, rather than focusing on the growth numbers, I want to focus on the quality of growth that matters, and for which, the policy makers need to delved into compassionate management of covid-19 crisis.

The author is Senior Research Fellow at Bangladesh Institute of Development Studies (BIDS). He can be reached at monzur@bids.org.bd

 

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