Through budget, government is sowing seeds of a welfare state: Adviser Titumir

You have completed three months with the government. Before this, your domain was the classroom. As a professor at Dhaka University, you used to engage in theoretical discussions with students on development studies. You also conducted many 'post-mortems' on various issues. Three months ago, you were also writing extensively for newspapers about politics, development, and economics. Comparing your previous life with the last three months, do you find any difference in your mindset?

Yes, I do find a difference. For instance, the name of your show should have been changed from 'Zero Sum Game' to 'Positive Sum Game' because we are seeing visible changes. Previously, we challenged dominant narratives, questioned the growth rate, pointed out rising poverty, highlighted the lack of discipline in the banking sector, and argued that the economy was severely damaged. We have inherited these challenges, but what is noteworthy now is that we are taking every possible step towards recovery.

Everyone is keen on the upcoming budget — the first budget of the new government. As you mentioned, "change", it is called a budget of change. What is its main thought, goal, and objective? Development, building a welfare state, or recovery?

We have tried to convey one central message: the Honourable Prime Minister has expressed his desire to build a democratic, humane, and welfare-oriented state, and every step has been taken with that goal in mind. 

The budget formulation began after we assumed office, but we have been working towards that objective from day one. You may recall that in the very first cabinet meeting, considering the farmers of Bangladesh, agricultural loans up to Tk1 lakh were waived along with interest. This applies not only to farmers but also to farm owners and fishermen.

Furthermore, as widely reported in the media, prolonged inflation is pushing the lower-middle class into poverty. This is very unfortunate. To address this, we believe development must be measured through women, which is why we have introduced the family card.

Additionally, to protect the majority of our population from future uncertainties, such as the Middle East crisis, we are moving towards a social safety net. Through the budget, we are initiating preliminary work towards building a welfare state.

You are saying you are beginning the preliminary work of building a welfare state.

Yes, we want to build a universal, life-cycle-based social safety net so that people do not fall below the poverty line. People should not struggle for basic consumption; we have observed, particularly through media reports, that many are struggling to afford even three meals a day. 

To prevent this, we are introducing a universal, life-cycle-based social safety net, covering all stages, from expectant mothers and newborns to schoolchildren, adolescents, youth, and the elderly. We have also included comprehensive provisions for persons with disabilities and widows.

Will the budget include a strategy to reduce the debt burden?

Yes, absolutely. Otherwise, how will we survive?

As you mentioned, there are ambitious plans in place. But there are also immense challenges. The proposed budget is Tk9.03 trillion, with revenue growth projected at 42%, which is unprecedented in Bangladesh's history. Does the state have the capacity to achieve these targets?

Our vision is aligned with the people's aspirations. These issues were part of our manifesto, and people have trusted that our promises are pragmatic. We need a massive leap from the situation the previous administration left behind. Health expenditure does not increase; people currently pay 72% to 79% out of pocket. Only 1.5% of GDP is spent on education—this is not acceptable.

Health expenditure is even lower at 0.75%. You are proposing 5% of GDP for education and 5% for health. Where will this money come from?

Revenue comes in two ways. First, if the economy becomes more vibrant, tax revenue can increase without raising tax rates. Second, by stopping tax avoidance and evasion. 

We are aiming for a major transformation in the revenue system. Private sector credit growth is currently very low. We have inherited a situation at the lowest point, a low-level equilibrium trap.

Previously, due to a patronage culture, specific groups received tax exemptions, causing revenue to fall sharply. Inflation has risen due to oligarchic practices in tendering and imports. Weak governance led to stagnation in private investment, factory closures, and unpaid wages.

However, history shows we can overcome crises. After the 1971 war and during the oil crisis, President Ziaur Rahman utilised the Middle Eastern labour market, which helped build today's remittance economy. Remittances are growing again. In energy and investment, we are focusing on five areas: energy mix (renewables and nuclear), price adjustments, reducing import dependency, policy predictability, and increasing reserves.

As you mentioned, there are problems with investment, including institutional weaknesses, unpredictable policies, and macroeconomic uncertainty.

In the budget, we will introduce a five-year tax framework to ensure policy stability. For industrial diversification, we are prioritising agriculture, agro-processing, and reducing disparities in exports. Our priority sectors include agro-products, electronics and ICT, leather, light engineering, and pharmaceuticals.

We aim to democratise the economy so that human potential is fully realised. We speak of three dividends: the demographic dividend, the longevity dividend for the elderly, and an economy for all, which can only emerge in a democratic environment.

But if institutions are not functioning properly, will this plan succeed? Some say the "hardware and software" of the previous regime's alleged kleptocracy still exists. Where are we on the path to reform?

We are the eighth largest country by population but 34th by economic size. To resolve this contradiction, we must move towards a trillion-dollar economy. This requires investment and transparency. Tax collection harassment must end, and the system must be digitised to ensure accountability. 

From next year, taxpayers will know exactly how their taxes are spent. Reform means transparency and accountability. The executive, judiciary, and parliament must function independently within their respective domains.

We are not implementing a traditional Five-Year Plan; we are developing a Five-Year Strategic Framework for Reform, with a target of becoming a one-trillion-dollar economy by 2034.

Will people's real income double as well?

Yes. Our model is: investment leads to production, production leads to employment, and employment increases revenue without raising tax rates. We are also working on capital market reform and developing the "creative" or orange economy for artisans, athletes, and artists.

There are reports that $260 billion were laundered through corruption. Is it possible to recover this?

We are working on recovery through practical and effective measures. With properly appointed agents, recovery could exceed the commonly cited 1% estimate.

We are also addressing high inflation and debt burdens. Efforts are underway to stabilise the macroeconomy, the exchange rate is stabilising, and reserves are increasing. Inflation is targeted at 7.5% for the next fiscal year.

Which is your top priority — good politics or good economics? The previous government often argued that democracy was less important than development, which ultimately proved misleading.

That is a false dichotomy. We believe economic democratisation is essential, which will ultimately produce a democratic dividend. Politically, we are moving away from zero-sum thinking towards inclusivity. Media freedom has been ensured. We have offered the post of Deputy Speaker to the opposition and want their participation in constitutional reforms, as the opposition is part of the state.

Finally, do you wish to ever return to the classroom?

I am now with the people. I have visited 28 districts. Wisdom comes from the people; they find their own solutions to crises, whether in the Barind region or the haor areas. Being among the people greatly enriches understanding.