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THE ECONOMIC SCENE IN BANGLADESH

Massive Problems Face the Country in Areas from Agriculture to Proliferation of Black Income

by A K N Ahmed
THE broad economic iaaues that are afflicting Bangladesh now seem to be
TAPERING OFF OF AGRICULTURE. Our food production has gone upto 17 million tons per year But It ts becoming Increasingly difficult to push this figure further up. Il ts well known that beyond a point agricultural production can increase only through Increases tn yield per acre and not through more acreage But yields on account of Green Revolution seem to have reached a plateau and technological breakthroughs are not forthcoming either tn our main cereals production or tn the shortage crops like pulse, oil seeds etc. If this trend continues and the population growth remains unabated the country will be nowhere near self sufficiency in the foreseeable future and dependence on food Imports will continue to be a drag on our economic growth Added to this, the exploitation of tenants and farm workers is Increasing the frustration of our people and the lack of political will to have tenurial reforms. Improve the record of rights, undp-take the consolidation of holdings, strict enforcement of the ceilings on Individual holdings, and provide irrigation and extension services etc are further aggravating the situation.
NON-COMPETITIVE PRIVATE SECTOR: Our private corporate sector has been har bouring several open and concealed inefficiencies — partly of its own making and partly extraneous. Many of these emerge from Insuf fident competition. Restrictive licensing per petuates this situation. Moreover, productivity of our industries and quality of their products are also very poor. In spile of extensive pro lection given in the form of easy credit, low tariffs and other subsidies they are unable to make themselves self sustaining, generate adequate surplus, at least officially, and Improve their products to face competition and enter export market.
LACK OF GROWTH OF SMALL INDUSTRIES: Small Industries as provider of employment and enabling larger number of people to share the fruits of economic growth and harnessing the entrepreneurial talents of our people, have not found a proper place in our economic planning. Consequently no determined steps have been taken to develop this sector as has been done in other countries like Japan and India. Institutions like BSIC or BASIC have been able to do precious little for this sector so far.
POOR PERFORMANCE OF PUBLIC SECTOR: The outmoded equipment, tn many cases their underutilised capacity, bureaucratic management, subservience to the various ministries, political appointments, flabby labour deployment and general inefficiencies are the hallmark of such enterprises. As infrastructure goods and services are generally produced In public sector — steel, power, oil refining, railways, communication, irrigation and fertilisers — the inefficiency of the public sector and that of Infrastructural turns to be
the same thing As the infrastructure industries have large forward and backward linkages. shortages in these products and services create shortages In many others.
POOR EXPORT PERFORMANCE: Export performance of Bangladesh Is very poor The annual level of exports is yet to reach >15 billion whereas the same for a small country like Sri Lanka exceeds • 3 billion Our export tar gets only remain unfulfilled Recent statistics indicate that there would be 8 3 per cent shortfall from export targets In 1991 92 (91 6 billion) Target for 1992 9 3 (• 2 8 billion) is unlikely to be achieved If determined push Is not given and some persons are not made accountable In future The export base of the country has not broadened during the last 20 years while share of the traditional Items in total exports have come down from 80 to 20 per cent of the total The country will not be able to Improve its performance In this sector unless we learn Io Identify and seize the op portunities offered to us by changing the de ma nd scene In the international market Our Readymade Garments export has of late done fairly well. But even here import content of these products continues to be high and the manufacturers are not taking any step to pen etrate into new market like Japan and to In crease our share 1n the existing market when Multi Fibre Agreement (MFA) comes to an end on successful conclusion of Uruguay round of talks Our Export Promotion Bureau is only engaged petty fife work without being able to provide dynamic leadership to our potential exporters.
PROLIFERATION OF BLACK INCOME: Black Income arises mainly through pursuit of illegal activities like taking graft in government of flees, selling spurious drugs, selling commodities and services at more than controlled prices or In greater quantities than permitted under the law or keeping back monies owed to the government (tax evasion). Black monies have now become a l-rge proportion of total national income and keep exerting undue pressures on resources, raising prices and distorting Income distribution and consumption pattern. Black money is also rendering monetary control by the central bank more and more Ineffective.
HYPER INFLATION 1N PROPERTY MARKET: The big problems for the earners of black money are to find channels for Investing their earnings. These can only be non-instltu tional assets like land, buildings. Jewellery and gold. This is one primary reason why the prices of these assets are sky rocketing in the country without any remote relation to the degree of inflation of prices of other commodities On the other side. 1n the face of a colossal increase In demand for low cost housing, government activities are concentrated on supplying only high cost land and housing diverting resources from more Important areas where they could be more profitably used
LOW QUALITY SOCIAL SERVICES. [Turing all these years per capita Income particularly of Ihoae 1n the lower rung of society has not Increased with whatever growth has taken place. Trickling down theory of growth has proved to be a failure Consequently millions of people have been kept outside the growth process and very little dent has been made In the poverty situation. Successive governments in the country have so far shown scant regard for any commitment to any programme of poverty removal. The result: the growth Is not trickling down either automatically or through any well-thoughtout and well administered programme. Ad hoc programme like funnelling credit to poor farmers through banks. IRDP have failed and have only been Instrumental In making affluent farmers more rich Grameen Bank alone has been somewhat a success In helping the poor in asset creation and making them financially self supporting. But Its operations are still covering only a small area of the country. We have been unable Io produce more and more people like Dr. Yunus to carry forward this movement to every nook and corner of the country to have any perceptible and visible change In the situation
POOR MUNICIPAL AND LOCAL GOVERNMENT: The public has more contacts with Municipal and local governments and It Is precisely the municipal government that has been nearly totally neglected 1n the country. The municipalities and local governments are mostly superseded and under official domination, even though al this level the basic Infrastructure of houses, roads, drainage.
garbage collection, waler supply, transport, electricity supply, schools etc. should be organised Such supersession of local elected bodies are also preventing the process of public education in rural self governance
GRAVE UNEMPLOYMENT. SITUATION: The problem pf unemployment ts assuming threatening proportion. Precise estimate of the level of unemployment is not available. But from all symptoms It seems to be very very high both tn urban and rural areas. Additionally, there is also considerable disguised unemployment in our agricultural population. While considering the problem, the dynamics of employment Is seldom understood correctly and many optical illusions prevail. Initial increase in jobs is taken to be the final increase. When employment programmes are run. when too many people are pushed Into the government service or the public enterprises when bans are placed on laying off of surplus workers or when organised bodies oppose mechanisation or computerisation. It is thought that employment is being generated or safeguarded II Is not realised that programmes per se do not create durable employment, only successful programmes do, that is. those which generate surpluses for £jgh back and for further employment The
t way to promote employment Is to allow the flabby employment to be removed, dimln Ish costs. Increase and plough back the profits, retrain the workers for new assignments and employ them and many more.
Another feature of the unemployment situation In our country is the large unemployment that co exists with a shortage of many critical Jobs This, among other things. Is the result of near total absence of manpower planning There are few estimates of what the labour market has In store for the next two. three, or five years. There Is also no coordination between Industry and the universities for training and placement and the colleges and universities are only churning out graduates who find no jobs In the market As of 1990 more than nine lakh students were studying In 837 colleges scattered all over Bangladesh. A huge amount of resources la wested In educating and financing the failure when pass rate Is not more than 30 per rent This could have been avoided If a proper method was devised for filtering the upward movement of students on the basis of merit and financial need The synchronisation between education and Jobs remains a question mark and this Is the cause of much frustration and anti-social activity
A former Governor of Bangladesh Bank and a former Ambassador to Japan. the writer has served In a number of high positions at home and abroad, making a name for himself as an expert on economic affairs, with special emphasis on banking. Recently, he spent nearly three months In Sri Lanka on the Invitation of the country's Presidential Commission to study Us financial structure and to suggest possible reforms. Mr Ahmed now resides In Washington DC. but visits Bangladesh from time to time.