Published in Prothom-Alo on Tuesday 14 July 2020
The country’s leading economist, chairman of the Centre for Policy Dialogue (CPD) and former caretaker government adviser, Professor Rehman Sobhan, recently spoke to Prothom Alo in an interview taken in the backdrop of the coronavirus pandemic. The eminent economist spoke on a wide variety of issues, including budget allocations for health, education, agriculture and other sectors, tackling coronavirus in the country, pandemic-induced changes in the world order and more. The interview is being published in two parts. Part I appears today.
The original constitution of 1972 stated that the state shall adopt effective measures to protect social security. That indicated public assistance, not relief, for whenever such a situation arose due to unemployment, illness or suffering by widows or orphans. You foresaw a situation of extreme want arising. The nation is now facing such a situation.
Many experts believe that there should be a constitutional rearrangement to protect social security. The issue is now in the fundamental state policy chapter and should be shifted to the fundamental rights chapter as Nelson Mandela and few other nations like Nepal have done. How do you look at the issue?
I agree. When we put that into the Constitution, Bangabandhu was the sort of leader who believed that if commitments were made in his election manifesto, he was obliged to fulfill it. That applied also to the Six Points. If he supported the inclusion of these principles in the Constitution, he would eventually have had to fulfill this obligation. Though it was not recognised as a fundamental right, he believed it was his fundamental obligation to honour his commitments under the constitution.To the extent that we in the Planning Commission felt that we were mandated to fulfill his agenda and to be guided by the constitution. We too would have been committed to eventually allocate resources and frame legislation to fulfill these rights.
The problem arises in some countries where the leadership does not feel obligated to honor the commitments made in the constitution which are not categorised as fundamental rights but are merely declaratory principles. Then, as they have done in India, you prepare legislation, or you go to the court and you ask them to actually declare this as a fundamental right. They did this in India with the right to food, with the right to education and with the right to employment. These were all made into fundamental rights which are protected by law and the government was obligated to meet them.
In our particular case today where the constitutional rights are legally enforceable as fundamental rights we can try to move the court to establish these rights. But it is not certain as to whether the government will take on the responsibility because it depends on whether they are ready to commit the resources to fulfill such obligations.
How do you look at the present situation where there is a huge budget deficit? Professor Wahiduddin Mahmud said that there should be minimum 4 percent of the GDP to protect vulnerable groups or those who are living under the poverty line, but we are facing a budget deficit of 6 percent of the GDP. How do you look at the issue and what measures should the government take?
I’m not very bothered by the issue of 6 percent budget deficit. Unfortunately, neither government, nor for that matter researchers including CPD have actually done any serious analysis on what is an acceptable budget deficit. The real problem with a budget deficit is that we should have the idle production capacity available in the country which can be used if we actually spend public money. Today we have a lot of unused capacity in the country, in the industrial sector, in the agricultural sector where we can stimulate production. If we allocate our resources from the budget to ensure that this capacity is used the negative effects of the budget deficit can always be neutralised.
In the present circumstances we can go quite far. Going up to 6 percent or so is not going to do us any harm provided it is productively used and it is used to make sure that we are enhancing production in the goods producing and service providing sectors of the economy whether it is health, education, or meeting social protection costs. I would not be too worried by this. What is important for the future is that all of us should do some serious assessments as to what is a tolerable level of budget deficit. At the moment, putting a figure of 4 percent or 5 percent as the World Bank and others like to do, remains just a rough guess. They have no real knowledge or awareness of what is the tolerable level of budget deficit.
While discussing Bangladesh issues recently, the Nobel laureate professor Abhijit Banarjee argued that to face the situation, money could be printed if necessary. In the Bangladesh context, do you think this has some rationale?
Budget deficit is one approach, printing money is another approach. Budget deficit uses the fiscal route for meeting our public expenditure needs. Printing money is another form of running a budget deficit whereby we spend more than we actually earn or save. Either route will depend on what the productive capacity of the economy can sustain. If again we use the printed money productively, this can also work for a period of time. It cannot be done indefinitely, but it can certainly be workable.
In a recent interview with Prothom Alo, economist Binayak Sen mentioned that in 14th century, when there was the plague in Europe, the concept of quarantine and lockdown was found to be very effective. But in 1830, when cholera broke out, the same method did not work.That is called the disciplinary power model. Now Bangladesh is facing a problem in enforcing lockdown. They shifted from lockdown to zoning, creating red, green and yellow zones but we see it is not functioning well. So how do you see the problem? Is there any model you may suggest?
I don’t think that comparing situations in different centuries is very meaningful because inthe 14th century, even in the 18th century, the population size in the areas where plague was experienced was very much smaller and the problem was, therefore, more manageable.The area in which people were actually living was also smaller and more manageable. The difference between 14th and 18th century would be that in the 18th century you had a bigger population and greater concentration of people living in urban areas so it would have been more difficult to enforce a lockdown. The same problem applies today where in Dhaka we have a population of more than 20 million and a country with a population of a 160 million.The ability to enforce quarantine is much more difficult for us. But then China and also Vietnam have shown us that you can actually enforce quarantine on large population. This requires a much more organised and disciplined government where you also need support from the population who are willing to observe rules.
We need to have two forces at work: (i) the willingness to observe rules. In Bangladesh, we have a poor record for observing rules or accepting discipline. (ii) the capacity of the government and the quality of governance to actually be able to enforce discipline. Unfortunately from what he have seen in lockdown or leave, our government is not very effective in enforcing discipline. If we can actually enforce discipline, then we can go for lockdown but everything depends on how rigorously the enforcement takes place. In Bangladesh, not just with lockdown or enforcing quarantine, in any sphere rules are weakly enforced because the rules are never universally applied. There will always be exception to some disciplinary rule. If you are a VIP or if you’re in a position to make some financial contribution, you can always escape discipline. Once that becomes part of the culture, then everyone will feel that in some way or the other, they can escape discipline. In such a situation where we need to apply quarantine, it will have to be uniformly applied, the rules set for its enforcement will have to be seriously enforced and we will have to have the administrative and law enforcement machinery to see that it can be properly enforced.
The obligation to meet the consumption needs of the people who have not got any accumulated food stocks or means of livelihood has to also be ensured during the period of quarantine. All this requires preparation, resources, but above all, it requires a high degree of disciplined governance.The Chinese delegation which recently visited us to advise on a Covid response clearly reminded us about our inability to observe or enforce rules.
How do you look at, in a broader perspective, the country’s healthcare system and its lapses and its weaknesses? There is the matter of the Covid test results and the hospitals are overwhelmed. How do you see the whole issue?
For many years investment from the side of the government in healthcare has been neglected. A larger percentage of expenditure on healthcare in relation to GDP is taking place in the private sector meaning to say that people are spending money from their pockets and being served by the private sector whether from top class hospitals like Square and Apollo or from low category healthcare, even from pharmacies and physicians. A responsible government needs to have a well-developed public healthcare system to meet the needs of people with limited resources.
We have neglected this sector.Not only have we neglected it through low budgetary allocation but calculations recently done at CPD show that in budget expenditures year after year, the health ministry had one of the weakest records in using its budget allocation.
The problem we now face is. the elite, not just private elite but the top elements in the government as well as the political establishment have all, more or less, abandoned the public health system. Everyone now goes for healthcare to private sources. The well-off will go to the better private hospitals. The top elite will travel abroad to Bangkok, Singapore, India and even to UK and the United States for their healthcare. What has essentially happened now is that the ruling class, if you want to use that term, have effectively abandoned the public health system. They have no idea what is happening in this sector.
Today we are only now discovering the state of healthcare because in the lockdown system no one can leave the country. As a result, Covid infected VIPs have access to only a limited number of public health care facilities today such as the CMH, which provide quality healthcare and this is hardly sufficient to meet the full demand. Now that more and more people from the elite class, including parliament members, people from the law enforcement, from the administration, including particularly people from the health sector, are getting infected and we are not having the means to treat them efficiently, so the weakness of the public care system is being more clearly recognised.
Today the public health care system has become part of the real life experience of our ruling class. Before that, no one had any occasion to be worried about what was happening in Dhaka Medical College. Once upon a time, many people from the elite would go to Dhaka Medical College or PG for treatment. Bangabandhu’s father was treated in our public health system when he fell seriously ill, where we had no option but to use the public system. Today we have effectively abandoned the public system to the lower income people. There is an excess demand for public care but inadequate investment is made to meet excess demand.
The medical personnel serving in the public system are quite insufficient. Many who are there are also spending their time serving in private hospitals so they are not in a position to give full attention to their patients. Today based on our experience, we need to take very concrete policy decisions on making major investments, while also ensuring quality governance of the health care system.
In the present budget it is not sufficient to increase the health budget, including for COVID related issues. The government needs to clearly spell out the outcome from these committed expenditures, within this financial year. This would indicate that at least another 10 public hospitals in different districts have now been improved to provide health care at the level of CMH and they will have the level of facilities for dealing with COVID as CMH. This will become a concrete target for the government who will commit resources necessary to meet the target. The government will have to commit the personnel, will ensure quality governance oversight in order to make this happen. They will make sure that every single healthcare giver will have adequate protective equipment, they will ensure that they can raise levels of testing to a level which is higher than even in our neighboring countries. All these goals should be made into concrete targets and every three months these should be evaluated as to whether these targets are being met. This is the way in which one should handle a budget commitment. As of now the government just promises to spend some money without giving any concrete assurances about what they are going to do with this money and what commitments they are going to make in order to raise the quality of healthcare.
Link to Second part of this two-part interview with Professor Rehman Sobhan.