Challenges for the economy

"Bangladesh touched a milestone attaining the status of a lower middle income country in 2015. For the first time in the history of the country, the Bangladesh economy crossed over 7 per cent growth rate in 2016 breaking the trap of 6 per cent growth stagnation for over one and a half decade. The growth rate of 7.28 per cent that was registered in the fiscal year (FY) 2016-17 meant that the economy has stepped into an elite group of developing countries that have been experiencing higher rate of growth. The per capita income in 2017 increased to US$ 1610 from US$ 1465 from the previous year". But all these achievements may not be as smooth as were in the past.
From excerpts of the keynote address delivered in the meeting of the Bangladesh Development Forum (BDF) held recently on 'Implementation of the 7th FYP and the SDGs: Challenges and Way Forward', we can possibly prioritise some of the constraints to our graduation process. Presented by Dr Shamsul Alam, Member, General Economics Division, we can possibly prepare a list of challenges looming large during implementation of the 7th Five Year Plan and the Sustainable Development Goals (SDGs). And while doing this, we will at times paraphrase.
RESOURCE MOBILISATION: The first and foremost challenge is posed by lower resource mobilisation toeing the traditional sources of funding. Arguably, these are insufficient to implement the SDGs. According to him, the government needs to find innovative ways of financing both from the public and the private sectors, development partners and ensure effective and efficient ways of utilisation. "Moreover, the implementation of the 7th Plan requires total investment of 34.4 per cent of GDP by 2020, of which the private sector is expected to provide 26.6 per cent. According to Bangladesh Delta Plan, investment only for climate change, environment and water-related projects accounts for 1.8 per cent of GDP by 2020. The resource gap is huge; public spending is only 0.8 per cent of GDP on water sector projects, which has been highly inadequate."
POPULATION MOMENTUM AND FOOD REQUIREMENT: The growth rate of population, estimated at 1.2 per cent per annum, appreciably lower than the past rates, conceals the reality that about 2 million people are added every year to the total of 160 million. By and large, Bangladesh's population has been growing rapidly, going from just over 108 million in 1990 to 160 million in 2016 - 52 million in 26 years or roughly 2 million each year. Population has been projected to grow to over 200 million by 2050. A large population together with high population growth requires a faster growth of agricultural production to ensure food and nutritional security. But the reality is that agricultural land has been shrinking at 1 per cent per year and the growth rate of the crop sector has been declining. The increase in agricultural production will inevitably put significant pressure on environment and resource availability for human development.
UNPLANNED URBANISATION: Bangladesh has been experiencing a rapid increase in urban population. In 1990, one-fifths of the population lived in urban areas, increasing to one-thirds in 2016 and it is expected to overtake the share of rural population in 2040. In fact, in future, poverty per se is going to prevail in urban areas with a distinct drift from rural areas. The rapid migration to urban areas and inadequate infrastructure and access to open space to meet the growing demand will be serious problems for the country.
NATURAL DISASTERS AND CLIMATE CHANGE: Even the common man in Bangladesh sees a change in climatic condition because of too much heat or cold, untimely arrival of natural hazards etc. Bangladesh experiences frequent natural disasters, the most recent being the two consecutive floods in the haor and other areas. These can lead to deaths, damage of the infrastructure and economic assets, and leave a negative impact on the livelihood of people, particularly of those living in poverty. "Bangladesh is considered one of the most climate vulnerable countries and 5th of the most hazard-prone countries of the world. Climate change will intensify natural hazards the country already faces."
UTILISATION OF RESOURCES: Both scarcity of resources and its utilisation continue to affect the journey to a sustainable growth. Availability of resources does not necessarily guarantee the success in SDGs. Dr Alam reckons that efficient and effective use of resources can be more instrumental than just having adequate resources. In this connection, it is important to assess what resources are needed, how these are used and for whom these should be used.
SKILL DEVELOPMENT AND QUALITY EDUCATION: It is estimated that around 13 million of 15-29 aged young population simply loiter not being in studies, employment and training. This suggests that a large number of young population remains unutilised thus constraining GDP growth and creating social problems. However, if they could be trained and provided with education and employment, the scenario will be totally different. This will have long-term consequences on per capita income, growth, poverty alleviation and healthcare. Further, improving quality of education in recent times poses a big concern.
COMPETITIVENESS: Despite placement of Bangladesh for the first time in the list of top 100 countries (99th out of 137) in the World Economic Forum's Global Competitiveness Report 2017, corruption is still the major obstacle for doing business in Bangladesh. Bangladesh has to keep up the momentum of on-going reforms to make smoother business climate reducing the transaction cost substantially. The realisation of One-stop Service Act-2017 will be a landmark step in attracting investment from abroad.
GOVERNANCE CHALLENGES: There is no alternative to improving governance in order for growth to be more sustainable and pro-poor. Yet Bangladesh has made notable progress in governance indicators; there is scope for much improvement. Governance issue is particularly critical in the use of public resources, service delivery of institutions, transports, law enforcement, judiciary, land administration, tax and customs as these are deemed corrupt service-providers in Bangladesh. Digitalisation can be an effective tool to address these governance challenges.
INEQUALITY AND REGIONAL DISPARITY: The declining share of the bottom 5 per cent income (the share of national income was 0.78 per cent in 2010 and 0.23 per cent in 2016) and increasing share of top 5 per cent income means that unless inequality issues are rightly addressed, the country will have to face the bitter experience of social unrest and marginalisation to a greater degree in the forthcoming days. Poverty is severely intense in some districts and disparity is widespread. Kurigram has a population with 70.8 per cent under upper poverty line, followed by Dinajpur with 64.3 per cent and Bandarban with 63.2 per cent, while the incidence of poverty in Narayanganj is just 2.6 per cent. The national average of people below poverty line is 22.37 per cent in 2017 according to the 7th FYP.

The writer is a former Professor of Economics at Jahangirnagar University.abdul.
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