Reducing social distancing effects on the Bangladesh economy

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In the last month or two, unparalleled to any past events, monetary and social impacts of the Covid-19 outbreak have grown to be the main topic of global discussion. The pandemic, started in Wuhan, China, has spread worldwide in three months. As yet, globally a lot more than  165,000 persons died, and almost 2.5 million persons are tested positive.

Testing kits are not widely available in lots of elements of the world including Bangladesh. So, these numbers could be just underestimations. The contagious nature of the condition demands us to keep 'physical distance' to lessen the speed of the spread. While scientists will work to discover a vaccine, stay-at-home may be the key prescription to lessen the spread.

However, having a casual economy as large as almost 80 per cent of the full total employment, the stay-at-home policy has multiple socioeconomic consequences. Hence, the country needs to plan reducing the undesireable effects of the policy, both for short and long run.

Prime Minister Sheikh Hasina announced a couple of financial stimulus packages worth almost Tk 1.0 trillion in every for paying salaries and allowances of staff and employees of export-oriented industries and support industries including small and medium businesses and farmers and vulnerable groups. The packages include support through increasing public expenditure, widening social back-up, and money supply increase. While this initiative by the government is quite welcome, there are substantial concerns about the stimulus package. The proposed packages mention support for small and medium businesses, the private sector, and the export-oriented services.

However, the programmes under the stimulus plan, which are said to be implemented in immediate, short, and long phases, do not mention the path to secure the essential daily needs for all individuals in the country. The stimulus packages will include financial support for that part of the population who you live below the poverty line, have grown to be unemployed or have lost their income source therefore of the existing lockdown and subsequent insufficient economic activities.

A significant difference between the developed world and Bangladesh may be the fraction of people employed in the informal sector. Since Bangladesh doesn't have welfare policies like unemployment benefits or universal healthcare policies, the united states needs to think of and design new welfare packages. Needless to say that lots of institutions inside formal employment sectors lack capacity to handle ramifications of lockdown for an extended period. Similarly, we need to purchase the excess burden via health costs and infrastructure to check Corvid-19 victims. Alternatively, we need to support persons for the economical losses that they can bear as a result of stay-at-home order.

Economic stimulus programmes have been historically being used during recessions and also have worked efficiently for most economies, including the USA, Germany, China, and Japan. Lately, bailout and stimulus benefit packages are provided by the governments as a policy response to tackle the Covid-19 situation in the influenced economies. In this line, the policies suggested below can reduce heterogeneous effects of Covid-19 preventive measures, like stay-at-home, on different groups with pre-existing monetary and social conditions.

The economy lacks data and technological infrastructure to create targeted policies. Latest available disaggregated data on occupation and employment of Bangladesh comes from population census 2011 and reveals the district and sub-district level differences. The scenario may have changed recently, but the growth rate has stayed the same. Still, we must accumulate data on migration, slum population, and people working at different supply chains of the big industries to target vulnerable population groups. The spatial variation in occupation and employment could be used to generate an index of the need to supply basic daily necessary products to those regions.

Short and long-term suggestions to design financial policies under 'stay-at-home' could be multifold. First, the federal government must find the most vulnerable sets of people/occupation based on the bottom data from the Population Census (2011) based on their occupation, employment, and demographics. If the groups in informal sectors who are highly dependable on face-to-face interactions can be determined, then the administration can support them by lump-sum targeted cash transfer depending on their initial conditions. This might not involve any new data collection considering that we already have knowledge of employment allocation from the last census.

Second, basic food and medicine must be subsidised to support needy families. Administrative support can be required to ban all sorts of stocking. Stocking will only worsen the situation. Third, some districts in Bangladesh extensively depend on expatriates. A fraction of the expatriate persons has returned and is returning plus they have lost their jobs due to the pandemic effect in the destination countries.

The administration not only must keep them under isolation to check for Covid-19, but also to aid them financially where required. The united states needs to plan a fall in remittances aswell.

The consequences of Covid-19 can last for years, since it has been globally predicted already. Some long-term suggestions is to use existing infrastructure supported by NGOs (non-governmental organisations) to provide cash transfer to persons as microcredit loans, creating employment in various sectors, such as for example delivery or construction industry workers, health associates, and caregivers. Some industries just like the readymade garments sector may suffer most, because of the low demand from buyer countries. The government needs to accumulate employment data from these sectors to observe how we should respond to the crisis in the short and long run.

There are plenty of other socioeconomic issues that may arise in this line with Covid-19. For example, additional stay-at-home by the households can put women at higher risk, through extra unpaid domestic labour or more contact with domestic violence. Finally, Bangladesh's education system may suffer as the country doesn't have well-planned decent online education infrastructure. They are important questions to take into account, along with a large problem of surviving under stay-at-home. As a country so reliant on internet sites, can we survive Covid-19 with social distancing? Why don't we be optimistic. With careful design of government policies, targeted financial support, and implementation, we will survive.
Source: https://thefinancialexpress.com.bd

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