From 'basket case' to model economy: the story of Bangladesh

| Updated: January 03, 2023 20:51:23

From 'basket case' to model economy: the story of Bangladesh

A recent visit to Dhaka, the capital of Bangladesh, after a gap of nearly a decade, brought home to me the remarkable transformation this country has achieved. Dhaka was humming with activity, with some areas turned into extensive construction sites. The capital is expanding in all directions and new flyovers, bridges and commercial sites are emerging from an earth scape shrouded in dust and smog, not unlike some of the rapidly growing cities in India.

There are worries, of course. Bangladesh may have overtaken India in terms of per capita income - US$2,503.04 against India's $2,277.43 in 2021 - but its economy is vulnerable. Its Gross Domestic Product (GDP) is heavily dependent on just one industry - apparel - which constitutes 80 per cent of its total exports. Its very success as an exporter is also its weakness, subject to the vagaries of the international markets. Having been impacted by the disruptions caused by the pandemic in 2021 and 2022, there was a strong recovery earlier this year. But now the industry is reeling again due to rising fuel prices, declining demand in western markets and supply chain disruptions in the wake of the Ukraine war. Another major source of income, that is, remittances received from the 13 million Bangladesh expatriates, have fallen from $22 billion in 2021 to an estimated $21 billion this year. Despite these adverse headwinds, the Bangladesh economy has come a long way from when, in 1972, it was described by Henry Kissinger as an 'international basket case'.

What is striking are the notable gains made by the country in its ranking in the human development index. It is marginally ahead of India at 129 out of 191 countries. India is at 131. It is way ahead in gender equality. Its fertility is down to 1.99 today against 2.19 in 2013 and 6.95 in 1969, when it was part of Pakistan. Maternal mortality is down from 258 per thousand in 2010 to about 170. Female literacy in the age group 15 to 24 is 95.86 per cent compared to 86.93 per cent a decade ago, and, what is more striking is that it is 3 per cent more than males in the same age category. Female labour force participation is 46 per cent of the total, compared to 28 per cent in India, a figure that is declining. A large proportion of labour employed in the apparel sector is female - over 80 per cent - but you see many more women at work in hotels, restaurants and airports. Bangladesh's gains in gender equality and empowerment are a sharp contrast to other South Asian countries, including India.

There were reports of anti-government demonstrations in several parts of the country, triggered by rising prices, falling employment and a high-handed manner of handling protesters by the police. There were concerns that a combination of economic setbacks and loss of popular appeal of the Awami League government under Sheikh Hasina, may cause a return to power by the opposition Bangladesh Nationalist Party (BNP) during the general election next year. There are also concerns that to shore up her electoral chances, Sheikh Hasina may turn to elements of the erstwhile Jamaat-e-Islami Bangladesh, which has usually worked in tandem with the BNP, although it is banned as a political party, having sided with Pakistani forces during the 1971 liberation war.

India-Bangladesh ties have seen their best years during the current term of Sheikh Hasina as PM of Bangladesh since 2009. A number of transport connectivity projects have been undertaken, including the revival of rail and river routes that existed before the Partition in 1947, and even up to 1965, when the war with Pakistan led to a complete break. India now has practical transit through Bangladesh to its Northeast. Several of the Northeastern states are in a position to use Chittagong and Mongla ports in Bangladesh for import and export of goods. The Bangladesh route is being used to supply a range of goods from the Indian mainland to the Northeast.

India has also become a major supplier of power to Bangladesh. This is currently 1160 MW and is sought to be increased by another 1500 MW. Recently, Adani announced that he is building a 1600 MW coal-based power plant at Godda in Jharkhand with a dedicated transmission line to Bangladesh.

Bangladesh is India's largest trade partner in South Asia, accounting for $16.2 billion in exports and $2 billion in imports. The large trade deficit is a perennial talking point in Dhaka and I had to listen to a litany of complaints about India's non-tariff barriers (NTBs) against Bangladesh. However, it appears that both countries see mutual advantage in promoting their trade and economic relations since negotiations are about to commence on a bilateral Comprehensive Economic Partnership Agreement (CEPA).

A constant worry expressed was about the negative popular reaction in Bangladesh to a ratcheting up of communal sentiments in Indian political discourse.

I had occasion to visit the Liberation museum on the outskirts of the capital. The exhibits trace the history of Bangladesh from the ancient past, acknowledging its Hindu and Buddhist heritage. There is one whole gallery dedicated to the liberation war and it was unsettling to see images of the barbarities inflicted on men, women and children by the Pakistani forces. India's role in the war was fully acknowledged, in particular Indira Gandhi's contribution. The exhibits emphasise the secular character of the country. There is a library and research section where documents and photographs related to the war and personal records of individuals and families are actively sought, collated and studied.

There is a vast amount of documentary material in India relating to the war which could, and should be, shared with this remarkable museum. What it covers is also part of India's history. My offer to facilitate a couple of Bangladesh researchers to come to India for research in Indian archives and interactions with many former civil and military officials was received enthusiastically. It is in our interest to facilitate such exchanges.

Former Foreign Secretary and Senior Fellow, Centre for Policy Research (CPR). The piece is excerpted from


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