The Financial Express

The era of new national planning in BD

| Updated: October 02, 2021 20:50:00

The era of new national planning in BD

Not long ago, pessimists and sceptics overlooked the development of Bangladesh merely as a fluke. Standing at the Golden Jubilee of independence of the country, the policy makers of Bangladesh can breathe a sigh of relief that it has put an end to the stigma of international basket case. Bangladesh is now following the path of the Asian Miracle proving the doubters wrong.  Since the inception of Human Development Report in 1990, the value of index of Bangladesh increased by 60.4 per cent from 0.394 to 0.632 in 2019. Accordingly, the index now positions Bangladesh as the medium human development category.

An arrow can go forward only after connecting it backward. Hence, let us retrospect first few tumultuous decades since the birth of the nation. After the catastrophic war resulting in huge destruction of country infrastructures, loss of millions of human lives, the father of the nation felt the urge to rebuild the country. Immediately after returning to the country on  January 10 1972, Bangabandhu issued an order on January 31  1972 to establish Bangladesh Planning Commission. The first Five Year Plan was prepared within one and a half year of the liberation of Bangladesh. In the words of Professor Nurul Islam, then Deputy Chairman of the Planning Commission and Member of General Economics Division (GED) "Bangladesh inherited a poor, undiversified economy, characterized by an under-developed infrastructure, stagnant agriculture, and a rapidly growing population. She had suffered from colonial exploitation and missed opportunities with debilitating effect on initiative and enterprise". To give it a perspective, Bangladesh where over 80 per cent population was living in poverty was only ahead of one country-- Burkina Faso at that time.

In the first five year plan, poverty reduction although no specific target was set, and reconstruction was the major objectives while Gross Domestic Product (GDP) growth was targeted to be 5.5 per cent per annum. Bangabandhu always believed in the promotion of self-reliance and the reduction of dependence on foreign aid. From that perspective he focused on prioritising agriculture and established Bangladesh Agricultural Research Council, Bangladesh Agricultural Research Institute, Bangladesh Rice Research Institute, Bangladesh Rural Development Board, Bangladesh Agricultural Research Council. Within three years, Bangladesh was poised to overcome the destruction caused by Pakistani army and their collaborators, expand her economy, witness the establishment of major institutions, accomplished reforms in agriculture particularly on setting green revolution but the demise of the great leader left the country in peril. The momentum of socio-economic development slowed down and the period of economic stagnation with political upheavals started. So, the political stability, necessary for sustained growth, faded away, and a situation of uncertainty loomed large. Fourteen years from 1975 to 1990 had been a period a missed opportunity for Bangladesh to thrive.

The scenario began to gradually change in the early 1990s and since 2009 the transformation got full momentum. From 2002 to 2010, no five year plans were existent, rather the government adopted donor-pushed poverty reduction strategy paper. It is indeed disrespect to the constitutional obligation of section 15 (C). The present government assumed the power with landslide victory under the visionary and pragmatic leadership of Sheikh Hasina in 2009 for the second time. Against the economic protectionism of leaders in the West, she envisaged Bangladesh to be a prosperous country that our father of the nation dreamt of in a generation. She believes in the will power of the people in the country-- with proper guidance and directions, they can be an immeasurable source of power. She initiated an Era of New National Planning, which started with Vision 2021. Vision 2021 articulates a transformed Bangladesh by 2021, towards establishing knowledge based society, the need for addressing climate change and promoting innovation under Digital Bangladesh. Bangladesh is now on the verge of achieving many of the targets set in the Vision 2021. For example, power generation capacity was targeted to reach 20000 MW by 2021, which is now above 25000 MW, with access to electricity about 99.5 per cent population and per capita consumption 560 KWH. The life expectancy now reached 72.8 against the target of 70.

Structural adjustment regime of the eighties, Washington Consensus of the nineties, the first decade of 21 centuries and its failure in onset of economic depression of 2008-09, rise of economic nationalism-- on the face of all these, Sheikh Hasina emphasised building of the economy following a planned path of growth with development of human capital and facilitating export led growth which gave a new Perspective for national planning. The long term vision is followed by medium term interval plan. Furthermore, the philosophical foundation of the plans had been derived from the five basic human needs. Poverty reduction, employment generation at home and abroad, human resources development and inclusive growth remain at the centre of discussion in the plan document. Additionally, to address the adverse impact of climate change, formulation of a long term plan was felt necessary. We termed this this whole perspective of formulating the plan as New National Planning Era. Five Year Plans (FYPs) from first to fifth are basically investment plans devoid of specific time-bound targets of any vision.

Historically, there was a mismatch between sectors defined by Ministry of Finance and Ministry of Planning. Inconsistency also exists in Public Financial Management (PFM) (planning, budgeting and accounting) and Public Investment Management (PIM) adopted by Ministry of Planning. Budget is prepared based on 14 sectors (including defence) while Annual Development Programme (ADP) followed 17 sectors-structure. Ministry of Finance is oriented towards expenditure management and accountability but ADP is more focused on projects. These result in overlapping, inconsistency and confusion in expenditure evaluation. This difficulty had been overcome by matching the sectors of Five Year Plan with that of budget document from the 7th Plan. Another characteristic of the New National Planning is Medium term plan, formulated by the Vision document. Thus Medium term goals are guided by long term objectives of the vision document. Additionally, five-year plan added new features called Result Based Monitoring (RBM) Framework which includes indicators based on sectors to measure performance of each sector. There is also a new tradition of medium term and final evaluation of plan with the chance of course correction by the government and the setting of development context for the new plan by the latter. Hence, Bangladesh has the paradigm shift in planning from investment to strategic one, making the plan as the living document. This helped accelerate the implementation process due to the fact that ministries are now more aware of their responsibilities and targets set for them because the budget has direct linkage to the plan. Projects have to be prepared based on the targets outlined in the plan. The result is evident. Bangladesh entered into an era of new economic development. Many accolades have been received by the honorable Prime Minister since then. Awards include UN MDG Award 2010, South South Global Health Award 2011, South South Award for Poverty Reduction 2013, FAO Diploma Award 2013, ICT Sustainable Development 2015, UN Environmetal Prize 2015, Planet 50-50 Champion 2016, Global Women Leadership Award 2018, International Achievement Award and Special Distinction Award for Leadership 2018, Vaccine Hero 2019 (GAVI), Champion for Skill Development 2019, UN Public Service Award 2020, SDGs Performance Success Award in 2021.The performance of each plan period is given below.

Bangladesh is now one of fastest growing economies in the world. During Covid-19, very few countries have been able to register positive growth. Bangladesh not only achieved positive growth, recorded top performance in Asia also. German international broadcaster Deutsche Welle dubbed Bangladesh as the rising economic star. Chinese President Xi Jinping delivered a message on the Golden Jubilee of independence by saying "Under Prime Minister Sheikh Hasina's leadership, Bangladesh has focused on reform and development and entered a fast lane of growth". The Diplomat magazine lauded Bangladesh for beating the odds while Wall Street Journal called Bangladesh as South Asia's Economic Bull Case spotlighting export boom over the last decade. One of the biggest successes of Bangladesh in MDG era was reduction of poverty, the achievement underpinned by the investment on the marginalised and the poor. According to the World Bank, 25 million people were lifted out of poverty in the last decade and half -an inspiring story of poverty reduction. Among the factors that contribute to this reduction was the development policy adopted by the government in macroeconomic management, investment in human capital resulting in higher life expectancy, lower fertility rate, reduced infant and maternal mortality and improved living standard. One of the significant roles by the government was heavy investment in girl's education. Now, net enrolment rate of girl in primary education reached 98 per cent, well above boys. An article in The New York Times suggested Biden Administration to look to Bangladesh for lessons in reducing child mortality. Bloomberg termed Bangladesh phenomenon as a standout success in South Asia, underscoring that the country can offer lessons to its neighbour. Indian leading newspapers also praise Bangladesh's advancement, particularly of robust economic performance in the last decade. The Times of India wrote Bangladesh has left India far behind in social and economic front in just ten years. Former chief economic advisor of India Arvind Subramanian hailed Bangladesh as the global paragon of economic development as the country's per capita GDP was half of Pakistan's three decades ago, and two thirds of India's one and half decade ago, surpassing the former and set to overtake the latter. Bangladesh's journey of development through uneven track over the 50 years to a take off stage had been solidified by multitude of factors-- stable macro and fiscal policy, remittance, women economic empowerment, supportive regulatory policy, readymade garments taking advantage of surplus labour, investment in social and physical infrastructure particularly maternal and child health, birth control, connectivity in rural areas. Majority of the narratives focus on the social dimensions and economic growth but few credited the rural connectivity that had happened over the few decades. For example, during the period 2009-2018, over 55000 kilometers of roads were constructed under Local Government Division and massive drive in establishing drinking water facility and sanitation helped achieve improved sanitation coverage to 99 per cent of the population.

Bangladesh economy underwent a gradual structural transformation from the dominance of agriculture to orientation of manufacturing based industries. Over the last 25 years, the service sector's contribution to GDP had been more or less stable while the share of agriculture declined from 60 per cent in the early years of independence to 13 per cent in recent years. Industry sector now constitutes 30 per cent which is expected to reach 40 per cent by the end of 2030. In the last decade, drastic change in Bangladesh development has been possible due to political stability and government's planned based development programs/projects. There were critical economic turning points throughout the 50-year journey. The first critical turning point was the setting of Desh Garments and Daewoo-- a Korean company-pioneering ready-made garment industry in late 1970s. The subsequent policy on the back to back Letter of Credit and duty drawback facilities in the mid-1980s solidified the rise of garment industry. With support of export earnings by RMGs, export remittance began to gradually increase since early 2000s. In 1999-2000, Bangladesh achieved self-sufficiency in food grains that became an important turning point. Since 1990, it took two decades to triple the size of GDP to 2009, whereas it took only one decade to do that in the last decade. Reform in power sector after 2010 helped trigger economy to grow at a rapid rate. Subsequent achievement in MDGs in 2015, lower middle income status by World Bank in 2015 and meeting all criteria to graduate from LDC status had profound implications for adopting New National Planning for a prosperous Bangladesh. These are important milestones that earned praise from global academicians and thinkers. Former chief economist of the World Bank and former adviser to the government of India Kaushik Basu credited political factor for success in economic growth, particularly the leadership of Prime Minister Sheikh Hasina. He also termed the growth model of Bangladesh as inclusive, and driven by grassroots-level human development. The third turning point was the early second decade of the 21st century with the formulation of the New National Planning System in Bangladesh.

Gregory Chen wrote an article in Devex-- an independent news organisation for global development, which articulates three lessons from Bangladesh for the developing world. The first one is economic transformation does not happen overnight. It takes a decade to make visible changes. The second lesson is interconnectedness between economic and human development. The last lesson involves investment in human, especially women. Bangladesh's attainment in women empowerment has been spectacular in the last decade. According to Global Gender Gap Report 2020, Bangladesh ranked 50 globally making it a unique case for the lower middle income country. Bangladesh has made remarkable progress in reducing the percentage of stunted children under-5 years by almost half from 60 per cent in 1996-97 to 28 per cent in 2019. The proportion of wasted children has gone down to 9.8 per cent in 2019 from 14 per cent in 2014. The proportion of underweight children under five years also reduced by half between 2007 (41 per cent) and 2019 (22.6 per cent). Globally, Bangladesh is the 7th ranked country in terms of women's political empowerment. Bangladesh has been ahead of its South Asian neighbours for the fifth time consecutively, indicating significantly better performance in promoting women empowerment. For attaining SDG5, the government has adopted several legal and policy actions to advocate the rights of women. Some of the key challenges of achieving gender equality in the country are -eradication of violence against women and inequalities in opportunities, prevention of child marriage and promoting financial empowerment of women. The Global Gender Gap report puts Bangladesh as the only country in the world where the number of years with a female head of state exceeds that with a male head of state (25.6 compared with 24.4).

The leader of Bangladesh does not seem to be complacent about what has been achieved in the last decade. It is just the beginning of Bangladesh's path to prosperity. The country now wants to become an upper middle country by 2031 and high income country by 2041, as underlined in the second Perspective Plan of Bangladesh (2021-2041). The country will be guided by this 20 year long plan with strategic goals on industrialisation with export-oriented manufacturing, paradigm shifts in agriculture, a service sector of the future providing the bridge for the transformation of the rural agrarian economy into a primarily industrial and digital economy, the urban transition, efficient energy and infrastructure, building a Bangladesh resilient to climate change, establishing Bangladesh as a knowledge hub country. A paradigm shift in the planning process has shown Bangladesh a new era of development. Building on the success in the last decade, Bangladesh will be moving to the dream path of father of the nation.

Essentially, there remain huge challenges in the sustainability of economic transformation, ease of doing business, improved regulation framework for attracting FDIs, institutional reforms, governance, climate change, and expanding fiscal space. New era of development in Bangladesh will be defined by transformative mega projects. Padma Bridge, Metro Rail, Karnaphuli tunnel are projected to be completed by 2023. So it can be assumed 2023 will be a landmark year for Bangladesh economy. These projects are capable only increasing GDP by one per cent. If other first track projects can be finished on time, double digit growth figure in few years will be a reality.


Dr Shamsul Alam is State Minister, Ministry of Planning.

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