Set 2021’s economic priorities in light of pandemic experiences

The year 2020 has been an unprecedented one for most of the countries of the world with Covid-19 costing lives and affecting economic activities severely.

As for Bangladesh, two months of general holiday to contain the spread of infection, along with a fall in demand at the local level have resulted in loss in employment and income for a large number of people. Besides, the spread of infection and slowing down of global economic activities have negatively affected export earnings and constrained the process of international migration.

In addition to direct economic impact, the long-term effect on human capital and skill formation of this pandemic can be quite substantial too, due particularly to the prevailing digital divide in education and skills training.

Despite such challenges, it is a matter of optimism that the country is on the path of economic recovery with positive trend in a number of key indicators.

However, with the second wave of infection affecting the economies, policy focus should be directed towards a well-balanced and sustainable recovery. While being at the end of 2020, the challenges to revive the economy are greater than before and for the coming year, it is imperative that we set our economic priorities in light of the experiences of Covid-19 along with our development goals.

The priority should be centred around generating employment opportunities to absorb the new entrants into the labour market and to recover the Covid-19 induced loss in employment and income.

Besides, strategy to incorporate the returnee migrants along with a large pool of potential migrants into the labour market should be in the agenda too.

In addition to the continued effort to revive private investment, given the uncertainties of global economy, we need to focus more on creating small scale employment opportunities.

Effective implementation of Covid-19 incentive packages, especially for the cottage, micro, and small enterprises (CSMEs), is the key towards this and proper monitoring of such packages as suggested by some of the economists could be an effective strategy in this connection.

Emphasis is also needed for the expansion of e-commerce based businesses and for small-scale start-ups.

Against the backdrop of the pandemic, it is crucial to re-design the poverty alleviation strategies while incorporating the new-poor to the existing social protection schemes.

To this end, in addition to increasing budgetary allocation to the core programmes, streamlining the existing schemes in light of the National Social Safety Net Strategy and strict monitoring of the programmes are extremely important. Given the fact that Covid-19 has strong implication on urban low-income dwellers, separate social protection programme targeting urban slums should be considered with due importance. 

With Covid-19 affecting earnings of millions, the importance of containing prices of daily essentials is more than before.

Establishing a well-functioning price commission comprising relevant stakeholders can be an effective strategy to this end. It can monitor prices of essentials, keep record of stocks of food grains, conduct research on future projection of commodities, and help keep the supply chain well-functioning.

One of the key challenges in the coming year would be procurement of required dosages of reliable and WHO-certified vaccines at the shortest possible time and to distribute those while maintaining efficacy and reliability.

In this connection, we must build our own physical infrastructure and train our health professionals for Covid-19 vaccination.

In a separate yet related note, Covid-19 has highlighted the urgency of having well-functioning health infrastructure. With one of the highest out-of-pocket health expenditure, increasing budgetary spending in health sector along with its efficient utilisation and service delivery should be the top priority at the moment.

There is no denying the fact that the development efforts of the country rely heavily on its labour force and with changed mode of production along with the challenges of automation and fourth industrial revolution, increased emphasis is needed for upskilling and reskilling the labour force.

In this regard, on one hand skills training programmes should be modernised with the growing needs of the local as well as global markets, while on the other hand, combined efforts are needed to address the mismatch of skills between the demand and supply sides of the labour market.

In this pandemic, an often overlooked yet highly important area is the growing gap in education, particularly between rural and urban areas and across income classes. The importance of investing in quality education for all segments of the population while dealing with the digital divide should always be among our top priorities.

Finally, it must be kept in mind that, institutional weaknesses remain the key challenge towards fulfilling the development objectives of the country. Regular and effective monitoring of public spending and establishing transparency and accountability are key towards dealing with such challenges.

In addition, major reforms in certain sectors like those of taxation and banking are urgently needed for attaining the broader objective of inclusive development.

The writer is a professor of economics at the University of Dhaka.