Bangladesh transformation & turmoil - I
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Wednesday, March 28, 2001
Bangladesh: transformation & turmoil - I
By Muchkund Dubey
IN A report I had prepared at the end of 1972 for the United Nations, on
technical assistance requirements of the fledgling state of Bangladesh, I
had predicted that it was among the few developing countries which had the
best chance of transforming its feudal society and colonial economy. This
prognosis was predicated on its cultural and linguistic homogeneity, the
resilience of its people, displayed over centuries, to man-made and natural
disasters, and their having come through the baptism of one of the most
heroic wars of liberation fought in modern times. It has taken a good 30
years and several upheavals for this prognosis to start coming true. A
silent transformation is under way in Bangladesh.
Some of the social indicators have registered dramatic improvements. The
literacy rate has reached 62 per cent which is higher than that of Nepal and
Pakistan and the same as that of India. There has been spectacular progress
in increasing adult literacy which India has found a tough nut to crack. The
population growth rate has come down to 1.7 per cent as compared to over 3
per cent in Pakistan and a little below 2 per cent in India.
Bangladesh has the largest and most effectively functioning civil society
organisations anywhere in the Third World. Organisations such as the Grameen
Bank, the Bangladesh Rural Advancement Centre (BRAC) and the Gano Swasthya
Kendra have become international names. The Grameen Bank's micro-credit
operation has entered the lexicon of development literature and has been
replicated in numerous countries. The BRAC covers millions of people under
its activities. And the Kendra played a pioneering role in the formulation
of the WHO's recommendations on essential drugs.
Bangladesh provides an excellent example of democratic decentralisation in
South Asia. Since the restoration of democracy in 1991, there has been no
suspension of local bodies and no hiatus in elections to them. The district
and village self-government institutions became the indispensable ally of
the Central Government in coping with the unprecedented flood of 1999. The
relief operation involved the import of 4.9 million tonnes of grain and the
distribution of 4.6 million cards under the Voluntary Group Feeding
Programme (VGF). Not a single starvation death was reported due to the
failure of entitlement. Thanks to the network of representative bodies at
the local level, the VGF cards reached those really in need and the
distribution was by and large corruption-free.
The post-flood management of agricultural production was so efficient that
the next year's food output reached the record level of 23.4 million tonnes,
a substantial increase over the figure of 21.31 million tonnes in 1998-99.
This was achieved mainly by large scale provisioning of inputs and a quantum
jump in the availability of credit to the flood-affected farmers,
particularly small and marginal.
During the last few years, Bangladesh has put in place elaborate and
well-targetted social security schemes. A stipend of Taka 150 is provided to
old farmers, widows and deserted women. At least 10 women are covered under
this scheme in each village. Girl children are given stipend to go to school
and similar stipends are provided up to class 10 to both boys and girls for
not dropping out.
In the economic field, the country has achieved food self- sufficiency and
an average per annum rate of growth of 5 per cent in GNP during the 1990s.
This has been possible mainly because of the excellent performance of the
agricultural sector. There has been a sustained increase in grain production
over the last four years. The state has played a crucial role in bringing
this about mainly by propagating high yielding seeds, providing subsidised
inputs and through massive injection of agricultural credits. The annual
grain deficit in Bangladesh was seldom above 2 million to 2.5 million
tonnes. However, this seemingly small deficit imposed an onerous burden on
the economy. This deficit has now been wiped out.
The saving/GDP ratio in the 1990s was 14.2 per cent. This is still well
below the 26 per cent for India and above 40 per cent for China. But it
represents a qualitative improvement over the less than 5 per cent during
the initial years after the liberation. At that time tax revenues were
almost non-existent, except customs duties, and foreign assistance used to
finance over 90 per cent of development expenditure.
The export structure has been totally transformed during the last 6-7 years.
In 1991, three products - jute, tea and fertilizers - accounted for 86 per
cent of total exports. Today two-thirds of the export earnings come from
readymade garments. The total exports in value terms have more than doubled
between 1991-1996. Since then there has been a further increase of 50 per
cent. Export earnings have grown at the rate of 12 per cent per annum during
the decade. Foreign exchange reserves have been maintained at around $2
billions during the last few years. They do not provide a highly comfortable
cushion, but are sufficient to meet two months' import requirements. The
debt servicing ratio at 15 per cent is considerably lower than that of
India. This is mainly due to Bangladesh's eligibility as a least developed
country for concessional foreign assistance.
Bangladesh started liberalising its economy from the late 1980s. The average
tariff has come down from 42 per cent in 1990 to 17 per cent now, as
compared to the level of 25 per cent prevailing in India. The highest tariff
rate has come down from 400 per cent to 50 per cent, for, non-tariff
barriers have been practically eliminated. There is a new surge of
entrepreneurship visible in Bangladesh. Production and export capacities are
being sought to be developed in new areas, particularly in small scale and
village industries. Efforts are being made through induction of technology
to reduce costs and improve quality to be competitive internationally.
Unfortunately, the most natural and easily accessible market, India, still
remains by and large closed to Bangladesh. India is following a
shortsighted, niggardly and over-cautious incremental approach towards
opening up its market to imports from Bangladesh. A Bangladesh request to
grant duty free access on a non-reciprocal basis for a list of 25 product
groups has been under consideration for more than two years now, though the
Prime Minister conceded the request in principle during his visit to
Bangladesh in May 1999. While India is hesitating, a consensus is fast
emerging in the international community to grant non- reciprocal duty free
access to all manufactured and semi- manufactured exports from the least
developed countries. This is likely to be one of the main offers of the
developed countries in the upcoming WTO round of negotiations.
This is also despite the fact that among external suppliers, India has been
the biggest beneficiary of the Bangladesh's policy of trade liberalisation.
India's exports to Bangladesh have increased eight-fold since 1975. If
informal trade is taken into account, India's total exports to Bangladesh
now amount to over $3 billions. Very few in India know or recognise that
Bangladesh is India's 8th largest export market and the third largest if
informal trade is included.
One of the most remarkable achievements of the Bangladesh Government has
been the peace accord reached with the tribal populations of the Chittagong
Hill Tract. Though the accord remains controversial domestically, as is
bound to be the case with any agreement on such a complex and contentious
issue, there is no doubt that it has brought long awaited peace to the
region and has cemented national unity and cohesion. The Prime Minister,
Sheikh Hasina, has displayed extraordinary courage and rare foresight. This
is one of the few examples of a leadership in the Third World - and the only
one in South Asia in recent years - coming to terms with the aspirations of
ethnic minorities in an amicable manner.
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