To Stimulate or Not to Stimulate: Constitutionality of the Stimulus Package

Junayed Chowdhury & A.S.A Bari

In a very recent conversation, the four-year-old nephew of one of the authors of this Article
asked about the day when he would go back to school and, most importantly to him, when his
mother would resume office. It was obvious that he successfully summited to the peak of his
boredom. He could not even stand his working mother around him anymore. The far-reaching
effect of being “locked-down” at home for an indefinite period due to novel corona virus or COVID-
19 was clearly visible.
We, as habitats of this earth, had started to assume that we conquered Mother Nature.
We were under the impression that we were in control - in total control of everything - until this
COVID-19 appeared. It made us realize (not sure whether such realization is temporary or not)
that we, human, as a species, are still at the mercy and whim of nature. This is an unprecedented
situation for us. Terms like “globalization” and “social connections” are being replaced with
“isolation” and “social distancing”. COVID-19, a tiny microscopic virus, is running havoc all over
the globe. No country from the spectrum of so called “developed” to the least developed has been
spared. All related figures are changing rapidly. Records are being set to be broken within the
next day. Keeping up with those numbers has become a challenge too. The statistics we found
during our initial research for this Article have already become redundant before finalization of the
Article!
As the world economy enters recession, probably heading towards a worse situation than
the financial crisis of 2008, globally, more than a million people have been infected so far with
over fifty thousand people dead, and the numbers are rising with lightning speed. Many countries
took near draconian steps to lock down the economy and businesses and at present, one/third of
the world is in complete lockdown. The virus is ripping apart the economy and the health care
system and forcing the world economies to come up with stimulus packages to protect the people
and the industries.
The direct effect of COVID-19 on health sector and related policy is beyond the scope,
and also beyond the expertise, of the authors of this Article. The focus of this Article will be on
the specific issue of the stimulus package worth BDT 50 Billion (US$ 590 Million) for export-
oriented industries to pay off the three months’ wages of the employees and workers, declared
by the Honorable Prime Minister of the Government of Bangladesh on the eve of the
Independence Day, and its constitutionality. The benefits of the stimulus package will be available,
in the form of two-year term loan with a grace period of six months, to the export-oriented
industries meeting the following conditions: a) at least 80 percent of the manufactured
goods/products are exported, and b) salaries/wages of the employees and workers have been
paid up to February 2020. The eligible export-oriented industries will have to repay the principal
amount along with a one-time service charge, up to two percent of the principal amount, in 18
equal monthly instalments after the expiry of the six-month grace period.
Certainly, the declaration came as a “breath of fresh air” for the Bangladeshi business
community. As we know, 80% of exports in Bangladesh is from the RMG sector, and therefore,
the workers of this sector will be benefited from this stimulus package. No doubt that this declared
package will help the RMG sector sustain in this global crisis. The RMG sector of Bangladesh is
taking a huge hit as orders are being cancelled or held by the buyers which has affected about
1000 factories, resulting in a record loss of US$ 3 Billion. Over 4 million workers along with
backend support industries are likely to be seriously affected.
While we welcome the stimulus package and are grateful to the Honorable Prime Minister,
we also question whether the ambit of the stimulus package is too narrow or not. Undoubtedly,
export-oriented industries, particularly RMG and textile sectors, contribute substantially to the
forex reserve of the country. But, are they the only affected industries?
It is pertinent to mention that many in the transportation, hospitality, tourism, food industry
and Small and Medium Enterprises (SME) sectors shall be counting millions in losses and nearly
a million people may lose their jobs. The Bangladesh Tourism Board reported nearly half a million
dollars (BDT 4,000 crore) loss due to cancellation of tour packages, flights, hotel bookings etc. It
is estimated that the airlines industry in Bangladesh will incur a loss of revenue worth BDT 2.5
Billion in the month of March alone. Such loss is not only going to affect the business, but also
hinder the livelihoods of the employees, staffs, vendors, stakeholders and their family members
too. For example, Regent Airways, one of the private commercial airlines, asked all employees to
go on leave for three months without any pay. Biman Bangladesh Airlines, the national flag carrier,
has reduced salary of below sixth grade staff by 10 percent. We wonder in shock, unless these
employees have any healthy savings, how would they manage to put meals on the table during
this period?
Besides, retail fashion and clothing lines, who were heavily banking on the upcoming
festive occasions, namely, Bangla New Year and Eid-u- Fitr, are concerned that they would not
be anyway anywhere near the last years’ sales’ number of BDT 60 Billion for these two occasions.
The materials of BDT 1.2 Billion for the Bangla New Year have already been purchased before
the outbreak of the COVID-19. Other than the businesses, a large number of people, such as
weavers, traditional dyers and artisans, are dependent on this sector and, like employees of the
tourism sector, they are going to suffer too.
We also should not forget about the people involved in the informal sectors which,
according to Bangladesh Bureau of Statistics, constitute nearly 87 percent of the population. Most
of them have left Dhaka before the public holiday began on 26 th March and, are currently jobless
due to inactiveness of the economy.
Some of these affected industries have already closed their business operation by either
laying off or retrenching their employees. However, no stimulus packages and/or any financial
incentives have been declared by the Government for the workers of these industries/sectors.
Without prejudice to the benefits of the declared stimulus packages for export-oriented industries,
at this juncture, an important legal question arises and, that is whether the action taken by the
government exclusively for the exported oriented industries may infringe fundamental rights
enshrined in the Constitution of Bangladesh. Typically, the Courts around the world have
consistently shown reluctance to intervene through judicial deference in policy matters concerning
legislative and/or executive decisions in the field of economic regulation than in other areas where
fundamental human rights are involved. The American Supreme Court repeatedly upheld the
statutory classifications concerning the regulation of economic activities. It is not the function of
the Court to judge matters of economic policy and it must necessarily be left to the expert bodies
and the court will not interfere unless discrimination clearly emerges from the facts of a case. In
keeping pace with that, the Appellate Division of the Supreme Court of Bangladesh has also held
that legislative judgement relating to social and economic policy must not be interfered with unless
it is arbitrary and, the court will not interfere unless discrimination clearly emerges.
Within 50 years of independence, Bangladesh strives to become a “welfare state”, a
concept under which the state shall guarantee minimum level of welfare for the citizens and
assume responsibility to provide social security. The Constitution of Bangladesh recognizes the
importance of welfare of the people because the preamble calls for ensuring rule of law,
fundamental human rights and freedom, equality and justice, political, economic and social shall
be secured for all citizens. In addition, it requires that the State, subject to certain restrictions,
permit enjoyment of lawful profession or occupation, and to conduct any lawful or business; and
the right to enjoy his/her property. Article 27 of the Constitution provides that all are equal before
the law and are entitled to the equal protection of law. In interpreting Article 27, the Appellate
Division of the Supreme Court of Bangladesh has opined in numerous cases that the right under
Article 27 does not guarantee absolute equality, but it requires that persons under like
circumstances and conditions shall be treated alike and no discrimination shall be made in
conferment of any privileges. This concept of liberal equality – often termed formal equality – has
been traditionally paraphrased by the maxim, “Treat like cases alike”. Such equality, it is claimed,
is the essence of fair and just treatment, both by the state and by other persons in the society. No
individual or class of individuals should be treated worse than others by the state, where they are
not in breach of the general law or otherwise threatening the freedom of wellbeing of others or
the society as a whole. Nor should any individual or class of individuals be treated more favourably
than others by the state, unless some higher benefit to other or to the society as a whole is served
in doing so. In accordance with these principles, the stimulus being granted to a certain sector,
namely the export-oriented industries, and treating them favourably in comparison to others
greatly hinders the right of being treated equally.
But here comes a caveat and the defenders of this stimulus would argue that it has always
been recognized that the classification of persons or things is not inconsistent with the equality
doctrine. A counter argument to such a position could be that any classification by the state cannot
be arbitrary or whimsical, but has to be reasonable and, must bear a fair and substantial relation
to the object of the state’s action. As put by one of the finest legal minds of Bangladesh, Mr.
Mahmudul Islam (former Attorney General of Bangladesh and Senior Advocate), in his book titled
“Constitutional Law of Bangladesh”, 3rd Edition at page 149-150, to pass the test of
constitutionality, the classification must satisfy two requirements: (a) the classification must be
logically correct, which means it must be founded upon some intelligible differentia which
distinguishes the person grouped together from others left out of the group; and (b) the differentia
must have a rational relation or nexus to the object sought to be achieved.
No doubt that the objective of the declared stimulus package is a noble one with the
possibility of bringing profound impact on the lives of some people in these testing times. But it
appears to be narrowly focused on bailing out export-oriented industries only. The package’s
exclusion of industries and ventures other than those engaged in export-oriented business is not
based upon any “intelligible differentia“ and, exclusion of those affected industries may make the
stimulus package susceptible to challenges for breach of fundamental rights pursuant to Article
27 of the Constitution. Though workers of the export-oriented industries are a distinct group, it
has become abundantly clear that similar to the export-oriented sectors, other industries, such as
tourism, hospitality, airlines, transportation, restaurants, self-employed persons such as those
drivers/riders who are engaged in ride sharing activities and daily wage earners shall also be
adversely affected by the shutdown.
The constitutional legitimacy of the stimulus package can be seen through another prism.
The current stimulus package may encroach upon an employee’s “right to work”, which is a
concept embodied in the International Covenant on Economic, Social and Cultural Rights
(ICESCR). Bangladesh ratified ICESCR on 5th October 1998. As per Article 6(1) of ICESCR,
Bangladesh must recognize and take appropriate steps to safeguard the right to work, which
includes “the right of everyone to the opportunity to gain his living by work which he freely chooses
or accepts”. The steps for safeguarding such right is further explained in Article 6(2) as including
“policies and techniques to achieve steady economic, social and cultural development and full
and productive employment under conditions safeguarding fundamental political and economic
freedoms to the individual”. The question here is whether the current stimulus package violates
the legitimate expectation of Bangladeshi citizens’ “right to work” when sectors or businesses that
are not part of the stimulus package would shut down due to lack of finance or funding. The phrase
“legitimate expectation” has been defined by courts as something less than a right which may
nevertheless be protected by the principles of natural justice. So the argument is whether the
ratification of ICESCR by Bangladesh creates a legitimate expectation among the workers or
employees from other sectors that are left out of the stimulus package to have a “right to work”
as stated in ICESCR. Given that Bangladesh is a dualist country which has not yet passed an Act
to incorporate the Articles of ICESCR as part of its laws, how reasonable will such a demand be?
In one Australian case, the High Court of Australia looked into the issue of legitimate
expectation in the context of multilateral international treaty signed by Australia that was not made
part of Australian laws through an Act of the Australian Parliament. The Convention on the Rights
of the Child was ratified by Australia, but it had not been incorporated into the statute. It was held
that lack of such incorporation into local laws did not mean that the Convention had no significance
in Australian law. The court reasoned that the Parliament of Australia is under an obligation to
consider international law and by ratifying the Convention, the Australian government gave a
solemn undertaking to the world at large that it would act in accordance with the Convention. The
court further held that the assumption of an obligation to pay heed to the Convention gave rise to
legitimate expectation in the minds of those who were affected by the administrative decisions
touching upon the rights stated in such Convention. This same Australian case is occasionally
relied upon in New Zealand as can be seen in the case of New Zealand Maori Council v Attorney
General (1996) where an expectation was found based on the treaty of Waitangi. In the New
Zealand case of Tavita v Minister of Immigration (1994) it was stated dicta that ratified but
unincorporated treaty obligations are mandatory relevant considerations and must be taken into
account. This bold approach can further be seen in the case of Ye v Minister of Immigration where
the Tavita approach was approved by two judges. The attitude of the courts of New Zealand
shows that they are willing to give due diligence to the obligations of the international treaties. It
goes on to further show that international treaties obligations can be followed by the courts even
if they are not incorporated into the domestic law.
Judged from this angle, it seems that Bangladesh’s ratification of ICESCR may give rise
to legitimate expectations among the workers or employees from other sectors that are left out of
the stimulus package to have a “right to work”, and the present stimulus package, being so
narrowly articulated, denies the workers or employees from that right.
But as attractive as the arguments above may sound, the fact remains that to stimulate or
not to stimulate a business or sector is a matter within the realms of executive policy decision in
which the judiciary generally does not enter. But like any other executive action, policy making
also has its limit and when that limit is crossed, such decision becomes justiciable by the courts.
So any and every policy decision of the government cannot be relegated to the executive realms
on the basis of “political choice” or on the ground of “resource allocation”, and every policy
decision must meet the requirements of the rule of law.
Furthermore, it is necessary to remind ourselves that doctrines of responsible government
and the rule of law are part of the fabric upon which the written words of the Constitution are
superimposed. The principles of rule of law are not merely a formal concept, but a core value and
it may be said to be the foundation of government and the assumptions that underlie the political
process that makes our government work in peace. From that standpoint, just like the judiciary,
the executive power is also limited by the boundaries of the separation of powers and its actions
will have to be seen through the lenses of the national court‘s most fundamental constitutional
responsibility, which is its duty of declaring what the national law is, and of holding the executive
to its terms.
In SMT. PUTTAMMA V. STATE OF KARNATAKA & ANR AIR 2009 Kart 93 while deciding
on an issue as to whether granting a subsidy to a particular sector of farmers while excluding
others violated the fundamental right of being treated equally and thus should be reviewed, the
Karnataka High Court held in the negative. The tests relied on by the Court were derived from
previous decisions of the High Court and Supreme Court of India which can be summarized to
say that The right to equality does not forbid classification or differentiation upon reasonable
grounds of distinction and the varying needs of different classes of persons require different
treatment. Classification is allowed if it is founded on an intelligible differentia and the differentia
must have a rational relation to the object sought to be achieved by the statute in question. As
such, the Court will not interfere in the matter of providing subsidy as it is essentially a matter of
policy and the Courts would refrain from a policy decision unless such is arbitrary, illegal or ex
facie bad in law.
The position is far from being as straightforward as the judgment makes it look. The
justiciability of policy decisions has been attracting arguments and counter-arguments both from
an academic and judicial standpoint. Lord Bingham of Cornhill observed in R. (Gentle) v Prime
Minister [2008] A.C. 1356, para.8, “there are issues which judicial tribunals have traditionally been
very reluctant to entertain because they recognise their limitations as suitable bodies to resolve
them. This is not to say that if the claimants have a legal right the courts cannot decide it’.” The
decisions of the English Courts suggests that the Government needs to consider relevant factors
before making a policy decision an example of this can be found in R. (on the application of KE)
v Bristol City Council [2018] EWHC 2103 (Admin); R. (on the application of KS) v Haringey LBC
[2018] EWHC 587 (Admin); [2018] A.C.D. 51, where it was held that housing authority was under
an obligation to consider whether its housing allocations policy contained a discretion to award
additional priority to those who would not normally fall within the categories of most urgent housing
need. It has been held in R. (on the application of Medway Council) v Secretary of State for
Transport, Local Government and the Regions [2002] EWHC 2516; [2003] J.P.L. 583 that the
courts will no longer avoid adjudicating on the legality of a decision merely because it relates to
nationally important policy pursued by a Minister accountable to Parliament.
Judicial review goes some way to answering the age-old question of “who guards the
guards?” by ensuring that public authorities responsible for ensuring accountability of government
do so within the boundaries of their lawful powers. Just because the granting of the stimulus
package is a policy decision made by the Government in itself will not take it out of the circle of
Judicial Scrutiny.

Based on the above discussion, if the government fails to take into account pleas of
various industries, SMEs and individuals in dire condition without rational and reasonable
justification, it may open itself up to possible challenges for violation of fundamental rights
enshrined in the Constitution and Bangladesh’s obligations under ICESCR. As we walk to the
path to a middle-income country, we are developing strong political commitment to become a
welfare state and as such, it is necessary that assessment of welfare is targeted, rationalized and
upholds fundamental rights guaranteed under the Constitution.
Even though discussion on the size of the stimulus package has the merit to be a lone Formatted: Not Highlight
subject of a separate article altogether, we could not control the temptation of referring to the fact
that the current stimulus package is relatively small compared to the incentives taken by other
countries in this time of crisis. It is reported that Indonesia has announced a stimulus package of
US$12 Billion, while Malaysia and Vietnam have announced packages of US$4.8 Billion and
US$1.16 Billion respectively to counter the pandemic crisis. Even Pakistan, who often looks up
to us as a role model of development and economic growth, has declared a package of US$ 7.1
Billion, which is equal to 2.6% of the total GDP of Pakistan. In stark contrast, our stimulus package
of mere US$ 590 Million is only 0.2% of our total GDP. While it is true that Bangladesh is not the
biggest economy in South Asia, yet, it is one of the fastest-growing economies in the world. The
government of Bangladesh may take measures of increasing the amount of the stimulus package
to meet the legitimate expectations of the employees and workers from non-export-oriented
sectors.
We understand that being a developing nation, we have budget constraint. But, are not
we the nation who is building the Padma Bridge by our own fund, when World Bank rejected the
finance, opened the door for Rohingya refugees when our rich neighbors were hesitating, and is
constantly fighting against all odds and has made a miraculous journey from “bottomless basket”
to “New Asian Tiger”? Our parting request to the government will be – please let’s not classify
among ourselves. If we can fund the construction of Padma Bride, and feed more than one million
refugees at the same time, then surely, we can provide some sort of support to those who are
affected but are not part of the current stimulus package. Please take the leap in meeting the
legitimate expectations of the citizens, and surely, the entire nation will jump in through whatever
means they have.

Junayed Chowdhury, Advocate, Supreme Court and Managing Partner, Vertex Chambers
A.S.A Bari, Advocate, Supreme Court and Managing Partner, A.S & Associates