It has been claimed that the country has achieved GDP growth
in the mark of 7% for the first time in history. This claim is not based on
facts. In 2005-6 there was GDP growth of 6.7% and as a continuity of the said
upward trend, the country achieved GDP growth of 7.06% in FY 2006-07. At that
time a good number of economic activities including cattle herds, poultry,
fingerlings, pisciculture, mineral water and Internet cable services were not
included in GDP calculation. These items were included based on changed base
period in 2009. Had these been included in 2006-07 the GDP growth rate could
have been higher than 7.06%. It may be mentioned that the trend of 6% GDP
growth began during our regime.
Different newspaper sources reveal that the BBS has
published this estimate hastily. It is the usual practice with BBS to publish
provisional estimate of GDP after receiving full account for three quarters
(July to March). Such accounts are available at the end of April. It seems this
haste has an ulterior purpose. The present govt. imposes pressure on BBS to
publish data according to its liking. This is nothing new for those who are
informed about the practice of the present govt. 7% increase in GDP could have been
good news for the people of the country. But to our utter dismay we see that
current macro-economic variables do not generate such optimism. Salaries and
allowances of the govt. servants have almost been doubled during the current
fiscal year. Naturally this had its bearing on GDP estimation. This is a
one-time hike. The govt. servants pay and allowances’ will not certainly be
increased to this extent every year.
Public Administration and Defense accounted for an
expenditure of Tk 506,741 million during FY 2014-15 it has increased to Tk
701,031 million. One can discern the impact of salary and allowances’ hike on
the increase of GDP growth. Similar impact has been felt on the education and
health sectors. It is to be noted that mere increase in salary and allowance or
related increases in expenditure does not enhance the real welfare of the people.
The variables that impinge on GDP growth are not satisfactory. GDP growth means
increase in the production of goods and services. The increase in the
production of goods and services naturally leads to increase in the collection
of different types of revenue. Revenue collection targets have not been
achieved during the current fiscal year. The Finance Minister himself has
criticized the NBR for failure in achieving revenue targets. As revenue
collection fails to keep correspondence with GDP growth, it justifiably raises
a question mark on more than 7% GDP growth.
There is a co-relation between the rate of increase in
investment and the rate of growth. As investment increases, import of
industrial raw materials and capital machineries also increases and the demand
for loanable funds also increases in the private sector. Compared to
July-February period of last fiscal year, the import of industrial raw
materials and machineries shows a reduced trend during the same period in the
current fiscal. Against this backdrop increase in GDP growth rate seems
unrealistic.
Without increase in private sector investment we cannot
expect robust economic growth in a country like ours. Investment in the public
sector leads to corruption and waste in many cases. Absence of democratic
rights and rule of law in general under the present regime has created an
atmosphere of uncertainty and lack of confidence. Such an atmosphere is not
conducive to private investment. This is also reflected even in the data given
by the govt.
Private investment as a percentage of GDP has gone down from
22.07% in the last fiscal to 21.78% during the current fiscal. This
negative trend in GDP growth is not consistent with the claim of increase in
GDP growth rate. For the realization of GDP growth claim a leap forward in
private sector investment is needed. However, nothing like that has happened.
There is rather a deterioration.
There is no good news about agricultural growth in the
provisional estimates of BBS. Agriculture grew by 3.33% during the last fiscal.
In the current fiscal this sector grew by only 2.6%. The agriculture sector has
been experiencing declining growth rate since fiscal year 2009-10. Agricultural
growth is an indicator of growing prosperity of the vast peasant masses. In
view of this, a declining growth rate of agricultural sector is no good news
for the vast majority of the populace. Disguised unemployment will also
increase. This trend will also lead to disparate income distribution.
On the other hand it is estimated that the industrial sector
will grow by 10.10%. There was 9.67% growth in this sector during the last
fiscal year. 53% of the GDP is generated in the service sector. This year’s
growth in this sector is .90% higher than that of the previous year which was
6.7%. An analysis of the quantum Index of Median and large industries shows a
declining trend. This quantum index was the highest at 285.50 in June 2015 and
later on in the months of July, August, September, October and November it was
respectively 253.67, 265.62, 238.70, 235.04 and 253.24. Under the circumstances
obtained, it is difficult to understand how the manufacturing sector registered
such a growth.
Another related index is allocation of industrial term-loan
and its recovery which had already shown a declining trend. During the 1st
quarter of the fiscal year 2015-2016, industrial term loan declined by 0.86 %
compared to the same period in the previous fiscal and stood at Tk 12699.68
crores. Recovery of term industrial loan in the 1st quarter of the current
fiscal has gone down by 5.47% compared to the same period in the previous
fiscal year.
The monetary policy (July – December, 2015) set a target of
15% credit growth while in reality only 9.93% has been achieved. All these
facts lead to the conclusion that there is a recession in private sector
investment. Banks are over-loaded with idle money. When there
is a sluggishness in private sector investment, the banking sector
is being stripped off its resources and subjected to abysmal mismanagement.
The expansion of the service-sector is being retarded by
slow pace. Transportation maintenance, communication and financial institutions
are exposed to a challenge of expansion. Since FY 2011-12 these sectors have
been experiencing downward trend in growth.
In the light of incremental capital output ratio (ICOR), for
a 7% growth Bangladesh needs to invest 30.5% of GDP. But investment has
remained static at 28% of GDP. With this amount of investment it is hardly
possible to achieve 7 % growth in GDP. There is hardly any congenial
environment for private investment in the country. Corruption, increasing cost
of doing business, political uncertainty and deficit in rule of law continue to
discourage investment in the private sector. Despite reduction of oil prices by
a huge margin on the international market, oil-prices have not been slashed
down. This phenomenon has thrown the private sector in a competitive adversity.
Lack of congenial investment climate in the private sector has created an
incentive for capital flight. We get indication about this from Swiss Bank,
Global Integrity Report and Panama Papers. Huge amounts of Bangladeshi capital
have already been taken away to Canada, Malaysia, the UAE and many other
countries. Capital flight has made the national economy anemic.
The govt. has adopted a strategy of compensating private
investment deficit by state investment. The success or failure of state
investment is reflected in the implementation of the Annual Development Plan
(ADP). During the first three quarters (July - March) only 41 % of the ADP has
been implemented. The five major components of state investment are: Roads and
Highways, Bridges, Health, Education and Social Safety Net, all these sectors
have demonstrated poor implementation rate. During the first nine months of the
current fiscal, ADP implementation rate in Health and Education sectors is 35%
and 45% respectively. In the Bridges Division only 28% has been achieved.
Declining allocation rates in the health, education and social safety and
welfare sectors is markedly discernible. If the declining rate of allocation in
the social sector continues then the trend of social development will be
thwarted. Sluggishness of private investment and failure in achieving ADP
targets logically makes the claim of higher ADP growth questionable.
Remittance income is also declining. Remittance not only
contributes to the consumption component of the GDP, it also contributes to the
improvement of living standard of the families of migrants and enhances growth
in investment in different economic activities. During the first eight months
of the current fiscal remittance inflow has been 9.77 billion. This amount is
lower by 1.52% of the same period of the previous fiscal year. Last but not the
least, during February this fiscal, remittance inflow was lower by 4% of
February of the previous fiscal.
‘GINI – Coefficient’ is a measure of inequality in income
distribution. If this coefficient comes closer to 0.5 it rings a warning bell
for the country. The household income and expenditure survey also indicates
that income distribution is becoming more and more inegalitarian. In the
villages and towns the experience is similar. The situation in the capital city
is even worse. The gini-coefficient in the rural areas has risen to 0.44 in
2010 from 0.28 in 1991. In the urban areas the same coefficient has risen to
0.45 from 0.33 in the same period.
The share of the poor in national income was 6.52 % in
1991-92 which declined to 5.22% in 2010. The share of the income of the lower
middle class has gone down to 9.10% from 10.89% during the same period. The
middle class got a reduced pie of 13.32% compared to 15.53% during the same
period. To our utter dismay we see that the top 10% enjoyed a gain of 35.84%
compared to 29.23% during the same period. The figures show that income
distribution has been unfavorable to lower middle and middle classes and has
pulled up the rich and wealthy.
The trend of poverty reduction is gradually slowing down.
According to govt. figures 48.9% of Bangladesh population was poor in the year
2000. During the following 5 years, poverty rate reduced by 8.9 % and stood 40%
in 2005. This means during our regime poverty reduction rate per annum was 1.78%.
In 2010, 31.5% of the population was below the poverty line. During 2005-10
poverty reduction rate slightly declined. During this period poverty reduced by
8.5% point. During 2010-14 poverty reduced by only 5.9% point. That is the
reduction rate per annum has been 1.48%.
Unemployment has been on the increase. The labor force
survey 2015 (July- September) reveals that 26 lacs 31 thousand persons are
unemployed. The number of increase in unemployed persons among the young and
the educated has been increasing unabatedly. Amongst the unemployed 31% or 8
lac 10 thousand are HSC or Degree passed. The age range of the unemployed is
between 15 and 29 years. This means we are not getting enough benefit of a demographic
dividend.
According to BBS data per capita income has increased to
$1466 in the current fiscal year compared to $1316 in the previous fiscal. Per
capita income is not a good enough indicator of the welfare of the common
masses. We should also know what the level of income distribution is. We have
already noted that income inequality is on the rise in Bangladesh. More
importantly, due to change in base period, per capita income suddenly jumped by
$121 in 2009 during the rule of the present Awami League govt. However,
this is somewhat of a statistical stunt. In reality, the common people have not
experienced any change in their life and living, this is why there is no room for
being confused by statistical jugglery.
The present Awami League govt. is misleading the people in
the name of development while denying democratic rights to them. People are
denied right to franchise, freedom of speech, fundamental and sovereign rights.
Rule of law has been shelved. There is practically no security of life and no
guarantee of natural death. The high-ups of the govt. gives precedence to
development rather than democracy, it tantamounts to breach of social contacts
and putting people in chains. Unabated plunder is going on in the name of
development. A powerful oligarchy has developed.
We call upon the people not to be confused by statistical
gimmicks. You better know how well you are in the light of the odds of your
life.
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