New perspective line: Avoiding MI trap, attaining developed country status

Keeping in view the long-term development objectives of the Vision 2041, the government has prepared a new perspective plan for the next 20 years. The National Economic Council (NEC) approved  on Tuesday 'Perspective Plan of Bangladesh: 2021-2041'. The draft of the country's second perspective plan was prepared by the General Economics Division (GED) of Bangladesh Planning Commission.' It is continuation of the current perspective plan titled 'Perspective Plan of Bangladesh: 2010-2021' which aims to 'Making Vision 2021 a Reality.'

The new perspective plan covers a 20-year period while the current one covers 10 years. The new document tries to accommodate long-term development goals of the country. 

A perspective plan is not a fully worked-out plan. It basically sets a 'perspective' for the short-term detailed plans. The short-term plans are designed to lead to some certain long-term outcomes. 

Idea of perspective plan goes back to late 70s in the country. It was in 1979 when the planning commission prepared a concept paper titled 'Preliminary Thoughts on a Perspective Plan of Bangladesh, 1980-2000.' Another paper titled 'Thoughts about Perspective Plan' was issued in 1983. Later in 1995, a document named 'Participatory Perspective Plan of Bangladesh (1995-2010)' was prepared. It, however, didn't get approval of the government.

No short-term or long-term planning document is a legally-binding document. Though the government approves the planning documents, usually in the National Economic Council (NEC), these are not approved in parliament or cabinet. The documents of the planning commission have generally no financial role and are considered as policy guide-map for the government. These documents serve as a comprehensive guideline of overall development works in the country. These reflect the country's vision and ambition, indicate the destiny of the people after a certain period of time. Nevertheless, these documents function as a critical instrument to measure the success and failure of development initiatives over the years.  Projections and targets of the documents are used as performance benchmarks for different areas. 

The new perspective plan puts stress on good governance and pluralistic democracy. The outgoing 10-year perspective plan also focused on promoting democratic institutions and institutional foundation of governance. The new plan gives renewed emphasis on good governance and democratisation coupled with decentralisation and capacity building. These are four institutional pillars of Vision 2041.

The perspective plan acknowledges that sustainability of development largely depends on good governance and pluralistic democracy in the long run. Generally, pluralist democracy is defined as 'a form of democracy where governments make decisions as a consequence of the interaction between groups and organisations who have different ideas and contrasting arguments.' Perspective plan mentions that it is "an interactive process working through multiple sources of power such as democratic institutions, interest groups and people's representatives with the government protecting and promoting diversity."

The new 20-year perspective plan has two main objectives as envisaged in Vision 2041. These are: (a) turning Bangladesh into a developed country; and (b) making the country poverty-free. To meet the objectives by 2041, a series of measures have to be taken by the government and these are outlined in the perspective plan.

ZERO POVERTY: Zero poverty means there will be no extreme poverty. The plan has set two 10-year targets in this regard. According to the targets, extreme poverty rate of the country will be reduced to zero by 2031 while moderate rate of poverty will be cut down to 9.90 per cent. As zero extreme poverty will continue, moderate poverty rate will be further reduced below 5.0 per cent by 2041. Acknowledging that zero poverty is a quite ambitious goal, the document argues that 'setting an ambitious goal is the starting point of a long journey that will require steadfast resolve to stay the course while making hard political and economic choices along the way.'

The document uses poverty rates of FY20 as benchmark when extreme and moderate poverty rates are approximated at 9.60 per cent and 18.0 per cent respectively. The actual rates are yet to be calculated. Bangladesh Bureau of Statistics (BBS) has not conducted Household Income and Expenditure Survey (HIES) since 2016. In 2016, extreme and poverty rates of the country were 12.90 per cent and 24.30 per cent. Nevertheless, taking cue from the HIES-2016, BBS itself estimated rates of poverty in the years after 2016 using growth elasticity model. Thus moderate poverty rate or head count poverty based on upper poverty line was estimated at 21.80 per cent in FY18 while the poverty rate as per lower poverty line or extreme poverty rate was 11.30 per cent in 2018. Poverty in Bangladesh is declining steadily and the progress seems sustainable.  

Nevertheless, income inequality is a matter of concern as reflected in the perspective plan. It argues that the 'rising inequality and associated underlying inequalities in access to human and physical capital will have to be arrested and reversed.' Unlike poverty estimation, there is no estimate of income inequality since 2016. HIES-2016 showed that income inequality in terms of Gini Co-efficient increased to 0.483 in 2016 from 0.458 in 2010.

New perspective plan, however, is in favour of calculating Palma Ratio instead of Gini Co-efficient to determine the level of income inequality in the country. Accordingly, it sets the targets of inequality in 2031 and 2041. The Palma ratio compares the income share of the top 10.0 per cent and that of the bottom 40.0 per cent as middle 50.0 per cent (households between the fifth and the ninth decile) have a relatively stable share of national income.  Sustainable Development Goals (SDGs) adopt the Palma ratio to estimate the income inequality across the country.

DEVELOPED COUNTRY: Attaining the status of developed county by 2041 by avoiding the middle-income trap is another core objective of the perspective plan. It sets the target that per capital income will reach US$12,500 by 2041. By mentioning developed country it actually means high-income country as there is no convention for the designation of 'developed' and 'developing' countries in the United Nations system or any other international body. The World Bank classifies the countries in four groups: (i) Lower-income, (ii) Lower middle-income, (iii) Upper middle-income and (iv) High-income. The classification is mainly determined by per capita Gross National Income (GNI) calculated at current US$ using the Atlas method.  Currently threshold for the high-income country is $12,735.

Bangladesh graduated to a lower middle-income country from lower-income status in 2015. Before crossing the high-income threshold, it has to cross the upper-middle income threshold by 2031, as projected in the perspective plan when per capita income should be at least $5,500 with GDP (gross domestic product) growth rate at 8.90 per cent. 

However, the term 'developed country' is widely used to describe a country 'highly industrialised' coupled with higher ranking in Human Development Index (HDI). It must also have a technologically advanced infrastructure and its economy is highly developed reflected in high economic growth and high per capita income.

For Bangladesh, attaining the status of a developed country is essentially associated with zero poverty. Consistent higher growth is the key tool to reach the status.

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