Bangladesh’s growth journey threatened by inequality, low tax: Economists

Bangladesh has made progress historically denying odds and eventually allowing a class to exploit public resources but a redistributive mechanism to address disparity is largely absent, say some senior economists.

Regretting that a privileged business class has captured power, they warn the country’s growth story may falter unless the fortunate ones are adequately taxed to lift the poor and ensure social justice.

At a discussion on ‘Turning Points of the Economy’ on Saturday evening, the economists observed uneven market competition for emerging entrepreneurs and subalterns like farmers despite milestones Bangladesh attained in the farm sector, and through microcredit, garment exports and remittance earning.

“In the 21st century, the autonomous capitalist forces have sufficiently been powerful to bring about state capture. This class has actually captured state power, as we see 70-75 per cent members of parliament are acknowledged businessman,” Professor Rehman Sobhan told the session as part of Ajker (today’s) Agenda series organised by Power and Participation Research Centre (PPRC).

He also explained that the business class which was once partronised by the state has later benefitted from bank finance coming from millions of small depositors making a transfer of resources to big capitalists.

Binayak Sen, Research Director at Bangladesh Institute of Development Studies, expressed doubts about achieving higher economic growth in the post-Covid period, especially given the widening inequality and lower tax rate which, he thinks, is insufficient for meeting costs of better education, healthcare and human resources development.

"It’s virtually impossible for us to grow at 7-8 per cent consistently for 20 years without investing 50 per cent of GDP (gross domestic product) raising it from around 30 per cent,” he said adding that for increasing investment ratio, technological progress must to be accelerated and necessary institutions should be built.

The finance minister of late expressed concern at the low tax-GDP ratio, which, the economist said, might have come down to 8.0 per cent during the Covid-19 pandemic. “Where will you get the money for addressing inequality and how will you get the money without taxing the fortunate ones?”

Mentioning that there is a delink between policy process and people’s initiative, PPRC Executive Chairman Hossain Zillur Rahman insisted that the issues of quality of services and collective aspirations should be addressed by the state.

“Unfortunately, a rather uneven playing field is there, not only in the political arena but also in the economic arena,” he said.

Akhtar Mahmood, a former World Bank official, pointed out that Bangladesh has formed two important oragnisations – Bangladesh Economic Zone Authority (BEZA) for supporting businesses and Competition Commission for ensuring fair market play.

“BRZA is working well but the commission is not. This shows Bangladesh’s environment is business-friendly, not market-friendly,” he said.

Naila Kabeer, a Professor of London of School of Economics, expressed her views that the non-government organisations showed efficiency in service delivery contributing to Bangladesh’s development and poverty alleviation. “State has not been efficient but has more legitimacy which NGOs don’t have,” she said, emphasising the need for raising society’s capacity to think about the future.

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