Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The collapse of the Sheikh Hasina regime and her hasty escape to India on August 5 last year were shocking in their speed but not surprising. She has been residing in New Delhi since the day she fled from Bangladesh. Also, on that day, one of India's geopolitical nightmares became a reality.
During her 15-year rule, India has enjoyed very close ties with her authoritarian regime. India greatly emboldened her to consolidate her repressive regime to achieve its objectives in Bangladesh. In fact, India's unqualified support for Hasina clearly demonstrates complicity.
India's over-investment in Hasina is not only very symptomatic of its hegemonic approach to its neighbours but also its lack of realisation that it is a poor country lacking economic strength to influence events in its neighbourhood, and geographic size alone cannot do the trick. About two-thirds of India's population has an annual income comparable to that of Sub-Saharan countries. In fact, India now has a strained relationship with all its neighbours except Bhutan.
Since August 8 last year, an interim government led by Nobel Laureate Muhammad Yunus has been in power in Dhaka. The government has been grappling with a host of challenges, from high inflation and unemployment to delays in implementing crucial reforms across the judiciary, political system, and economy. These challenges are primarily due to ongoing law and order issues, and there is a growing concern about the resurgence of the criminal syndicate run by ousted Hasina.
Many Bangladeshis view Hasina's downfall as a 'second liberation', a clear indication of the public's fervent desire for significant change. This sentiment was echoed by a student leader who described the revolution as a 'once in a lifetime opportunity' to bring about systemic change in the country's political system and culture. The public's appetite for change is palpable, and it is driving the current political momentum.
The deeper cause of the uprising was far broader than the removal of the job quota system in public service appointments. The discontent also extended to include failure to deal with untamed inflation and high and rising unemployment amid the Hasina regime's growing concentration of power and impunity. Yunus and his colleagues still have widespread support, but popular expectations are double-edged.
Bangladesh's democratic transition remains fragile, challenged by weak law enforcement and economic instability. Massive protest rallies and vigilante and reprisal attacks on the Hasina regime's supporters, including on collaborator newspapers and other media outlets along with collaborator journalists, signal a population that has learned the power of direct action. This amplifies the state's inability to address public grievances and the fact that the government is without full authority to effectively deal with collaborators of Hasina's criminal syndicate in the various branches of the government and the public and political arenas.
But even after eight months in power, there remains a mix of unease about the future and some optimism that Yunus can get the economy back on track while spearheading political reforms needed to rebuild a durable democratic system and prevent another dictator from emerging. It is a monumental challenge.
Historically, the military has played a significant role in Bangladesh's politics. The current situation, with its political instability, has raised concerns that the army may decide to take a more direct role in governance.
Also, the interim government so far has failed to effectively rebut a vigorous campaign of misinformation and disinformation originating from India on the plight of Hindus in Bangladesh, given that reprisal attacks on the Awami League (AL) (political arm of Hasina's criminal syndicate) supporters and the police also included many from the Hindu community who have traditionally been strong supporters of the AL. The fake news published in the Indian media on the plight of Hindus was aimed at inflaming anti-Muslim sentiment (which is the staple diet of the Hindu supremacist prime minister Narendra Modi and his party, BJP) in India and undermining Bangladesh's interim government.
India's supposedly secular constitution stands in complete contradiction to its treatment of minorities, especially Muslims. The ruling Hindu supremacist BJP oversees systemic marginalisation and discrimination against Indian Muslims who live under constant threat of violence. This hostility extends beyond online hate speech and manifests in real-life incidents. No government in Bangladesh ever highlighted this aspect of Hindutva India under the BJP rule, while India is falsely playing the Hindu card in Bangladesh, which has bipartisan support in India.
Till now, the political situation in Bangladesh remains fragile and fluid. Bangladesh is currently undergoing a period of political and economic reset under the leadership of Yunus following the ousting of Sheikh Hasina. Since August last year, the democratic process has taken the form of a series of reform commissions focusing on the constitution, election, public administration and anti-corruption, judiciary, police, media, industry and women's rights. An economic white paper committee was instituted to recommend institutional reforms needed to forestall the return of the authoritarian regime of the past.
While the economic white paper has delivered its first draft, other reports are coming out in a very slow motion, making it impossible to figure out the nature and the extent of reforms to take place and in what sequence these proposed reforms will be implemented. In resetting the political landscape, the Constitutional Reform Commission has proposed sweeping reforms to dismantle authoritarian legacies through bicameralism, term limits for the head of government, checks on executive power, and other reform measures to ensure long-term democratic stability. However, many are expressing concern that the interim government is being hemmed in by various political interests at home and abroad, and they are also worried that the pace of reforms has slowed down.
An election is expected to be held anytime between late 2025 and mid-2026, but strong voices are being raised to complete all reform programs before an election can take place, including a constituent assembly election to adopt the new constitution to precede before a general election to form a parliament. They also support the interim government headed by Yunus to continue for five years to complete the reform agenda. At this point, there appears to be significant support for this position than a hurried election which will likely bring the Bangladesh Nationalist Party (BNP) to power, a party widely considered to be the other side of the same coin with the AL being on one side.
People supporting the 5-year tenure of the Yunus administration also point out that the interim government derives its real legitimacy from the popular mass support accorded to it in the wake of a mass uprising which overthrew the repressive government run by Hasina's criminal syndicate under the political banner of the AL.
Hasina has left behind a terrible economic mess that the interim government needs to deal with. Also, the corrupt and crony economic system that flourished under the Hasina regime has caused significant structural damage to the economy, creating a formidable challenge for the interim government. Her massive corruption involving mega-projects also extends to one of the biggest bank robberies in the history of central banks around the world in 2016, where US$101 million was transferred to different countries by hacking the central bank system. She, her family members and cronies have also embezzled from the banking system and then transferred an estimated amount of US$150 billion out of the country.
Bangladesh has achieved, as claimed, an annual average growth rate of about 6.5 per cent over the last decade and a half. However, the growth rate has slowed down considerably since the onset of the Pandemic and the Russia-Ukraine conflict. The current macroeconomic crisis is manifested in slowing gross domestic product (GDP) growth, high inflation and unemployment, looming debt burden and a banking system in deep trouble. Multilateral and regional organisations such as the World Bank (WB), International Monetary Fund (IMF) and Asian Development Bank (ADB) all have downgraded Bangladesh's GDP growth rate for 2025 to 3.3 per cent, 3.76 per cent and 3.9 per cent, respectively. But they all provided a better growth forecast for 2026.
A large number of economic problems are systemic. Therefore, reforms are urgently needed to address systemic economic problems. Urgent actions needed include dealing with the problems facing the banking and finance sector, such as excessively high loan default rates, expanding the very low direct tax base, including increased compliance, and increasing economic openness to address the balance of payments and reserves problems as well as to attract foreign direct investment (FDI).
Many other economic issues also require attention. Poverty and unemployment are prevalent, along with a lack of attention to gender and environmental issues. About 40 per cent of the country's young population lacks reliable employment, and a balance-of-payments crisis looms large due to capital transfers out of the country made by the crony class, and this is directly related to high levels of political and bureaucratic corruption. However, the foreign reserves situation appears to be improving, but it is not yet at a sustainable level. The ready-made garments (RMG) industry made the country's fortune but has miserably failed to diversify beyond it, and the failure to diversify will prove very costly for the country's future.
Income inequality has steadily increased in Bangladesh, with the Gini coefficient, a measure of inequality, rising from 0.458 in 2010 to 0.50 in 2022. With rising income inequality coupled with stagnant to declining household income along with high levels of youth and graduate unemployment and very widespread underemployment clearly point out that whatever economic growth achieved so far, especially under the Hasina regime, cannot be considered as inclusive growth.
To escape poverty and squalor and to financially support families in Bangladesh, close to almost 10 million Bangladeshis are now living and working abroad. Annual remittances transferred to Bangladesh were $27 billion in 2024. The Bangladesh state has failed to provide employment at home for these people, rather encouraged and still encouraging people to seek employment in overseas countries. In their journey overseas to seek employment, quite often, these Bangladeshis land in countries with a serious lack of human rights with no labour rights or minimum wage guarantee.
The economic factor will ultimately be the key factor in the Yunus-led interim government's longevity. Now, to get the economy on a sustained growth trajectory, the interim administration must ensure political stability, law, and order, build enhanced state capacity, and improve governance. The government must provide a stable and predictable policy environment with a firm commitment to economic openness and growth. At the same time, the interim government must undertake required reform measures to attract investment, including FDI, with an emphasis on a fairer distribution of income unencumbered by the tentacles of bureaucracy, which need to be credibly put in check by political and legal institutions.