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Growth with minimal equitable sharing remains a key challenge

Sarwar Md. Saifullah Khaled | Published: October 30, 2019 20:37:40 | Updated: November 05, 2019 21:05:40


Economists and policy think-tanks have found a widening disparity in the country's economic growth with minimal equitable sharing of its benefits through proper redistribution of wealth. Also, a leading trade body, International Chamber of Commerce (ICC), Bangladesh, has identified two major challenges of Bangladesh's development drive -- maintaining economic growth and eradicating inequality.

In fact, what is required to address socioeconomic disparity and ensure sustainability of development is an inclusive growth. In the discussions and debates after placing of the annual budget, recommendations came for sharing benefits of growth, particularly national wealth, with people of lower strata, especially vulnerable groups. The government has widened the social safety net towards that end.

However, some economists and analysts maintained a different view of such dollops of aid to the poor -- a top-down development approach drawn from international donor agencies' prescription emphasising 'trickledown effect'. They insist that development has to be carried out targetting a minimum level of parity, by addressing growing income disparities in society. The nation's constitution, too, calls for fair redistribution of wealth among the people. These economists and analysts caution, there could be social unrest, should there be discontent among different segments of the population.

Many including some members of parliament are curious to understand how the level of disparity would be measured and what kind of instrument used to share benefits of growth and development. Gini coefficient is an established statistical method to measure inequality in a country. In its scale of 0-1, Bangladesh is shown at 0.48, which means high level of disparity.

However, emphasis was also laid on attaining the UN Sustainable Development Goals (SDGs) by 2030 as the government prepared a Tk 5.23-trillion budget for 2019-2020 fiscal year. There were calls for giving more importance to social service delivery to address inequality.

The country should ensure equitable distribution of benefits of growth, if it is to continue its economic growth. That means the government needs to ensure delivery of a variety of social services, apart from health and education, and support to the poor and vulnerable groups for improving their productive capacity and purchasing power is critical.

There is a lack of regulatory predictability that leads to regulatory uncertainty, often faced by businesses on various fronts. Economists say regulatory predictability matters in attracting investment. Such uncertainty, however, plagues medium-sized firms, adversely affecting the scope for employment growth. It is employment which is considered a major instrument for sharing benefits of development.

The regulatory system of Bangladesh needs massive reforms, although the country has made a slight improvement in ease of doing business index recently. Attaining the target of increasing investment and creating more jobs depends on how quickly the country can resolve these challenges. Because, experts suggest, increasing local and foreign investments and making the Economic Zones functional depend largely on regulatory environment.

For attaining the status of upper-middle-income country by 2031 and high-income-country status by 2041, Bangladesh will require huge investments in physical infrastructures and human capital. It also needs innovation to be supported by regulatory reforms in the areas like financial sector, business and infrastructure building.

The World Bank (WB), in a development update, has noted that private-sector investments in Bangladesh remain weak. To address several development challenges, initiatives are needed, particularly in diversifying exports and boosting private sector investment together with public investment.

The rise of non-performing loans (NPLs). is also a matter of concern as imprudent practice of loan rescheduling and writing off of loans increased stress on banks. To bring stability and discipline in the financial sector, the Bangladesh Bank's functional autonomy in regulatory affair is also important.

Sarwar Md. Saifullah Khaled is a former Economics Professor and Vice Principal of Cumilla Government Women's College.

sarwarmdskhaled@gmail.com

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