18 June 2019 02:58 AM

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P.K.BALACHANDRAN | 13 AUGUST, 2018

Economic Issues At The Root Of Turmoil In Bangladesh

The issues underlying the stir remain and might re-surface


COLOMBO: Peace has returned to Bangladesh after ten days of a student agitation which was brutally quelled by the police and club wielding thugs of the ruling Awami League.

But the issues underlying the stir remain and might re-surface in other forms as the country heads towards parliamentary elections likely to be held between October 31 and December 31, this year. And the roots of the trouble could be traced to economic issues. Bangladesh has been experiencing an impressive 7.5 % GDP growth, but the growth has benefited only the rich. It has not given the expected returns to the upwardly mobile middle classes in the urban and rural areas.

The recent agitation was but a manifestation of a deeper malaise, namely, growing frustration among the middle classes which are facing economic difficulties. Poor investment in the public services, income-less or job-less economic growth, and widening disparities between the rich and the middle classes are worrying the urban middle class and the upwardly mobile rural middle class, says political commentator Afsan Chowdhury.

Remittances from abroad, coupled with expanding educational facilities and growth in agricultural production, have stirred ambitions among rural youth which are crying for attention, Chowdhury adds.

The death of students Dia and Rajib could not be described merely as a “road accident.” It was the result of the unbridled and unplanned growth of the transport sector and the neglect of the country’s roads, both reflecting unconcern for the welfare of the common man, opines economist Hossain Zillur Rahman in an article in The Daily Star.

“We have endured the road anarchy, sometimes in anger, but mostly in silence. Our concerns and agonies have mattered little to those who matter,” Rahman says.

Politicization of Every Issue

The other issue is the instant politicization of the agitation. While taking stringent measures to curb reckless driving, the Sheikh Hasina government accused the opposition Bangladesh Nationalist Party (BNP) of fuelling the riots by sending in young men with bags full of stones to throw at the police in order to invite retaliation and gain world attention.

The government accused renowned photographer cum rights activist, Shahidul Alam, of using Al Jazeera to spread panic by spreading “rumors”. He was arrested and allegedly tortured also.

There were allegations of foreign and foreign funded NGOs backing the agitation to destabilize the country and bring about regime change. Rumors about the government’s wanting to postpone the parliamentary elections using the unrest as an excuse were floated by the Western media. The West and its media are none too happy with the Hasina government’s increasing acceptance of Chinese investment in strategically important mega infrastructural projects.

Routinizing Repression

But government also has been intolerant towards the opposition. Repression appears to have become routine under the Awami League regime.

According to Al Jazeera, since February this year, over 3,000 members of the opposition BNP have been put behind bars. The BNP alleges that over 500 of its supporters have been killed and nearly 750 "abducted" by the police and thrown into jail since 2014. The party claims around 150 of its missing workers have either been killed in extrajudicial encounters or have been forced to disappear.

The German think-tank Bertelsmann Foundation released a report that said that Bangladesh is now under autocratic rule. Bangladesh has been put in a list of 13 countries "where the political situation has become significantly worse." The Bangladesh rights group Ain o Salish Kendra alleges that 519 people have “disappeared” since 2010, while over 300 people are still missing.

However, observers of Bangladesh point out that repression of opponents is not peculiar to the Awami League or to Prime Minister Shiekh Hasina, but characterizes all regimes irrespective of the party involved.

Economic Issues

Street unrest has a deeper economic cause, irrespective of the issue which may have triggered it, says Afasan Chowdhury. And the Dhaka-based think tank, Center for Policy Dialogue (CPD), has a report which identifies the politically relevant economic issues.

Analyzing the state of the Bangladesh economy in the fiscal year 2017-2018, the CPD says that accelerated GDP growth (7.5%) has not been translated into desired outcomes. Employment elasticity of growth has declined significantly. Moreover, employment has not led to adequate income for decent living. Thus, benefits of high growth have not reached all citizens of the country equally, the CPD observes.

Dr. Debapriya Bhattacharya, distinguished fellow of CPD, told the media recently that female workers and rural workers are facing a decline in their real monthly income while the unemployment rate among the youth with higher education is increasing. According to a CPD report, more than a third of the total youth labor force with higher education remains unemployed.

Bhattacharya said that the banking sector is plagued by financial scams, non-performing loans, inefficiency, and slack monitoring and supervision. Money laundering happens through banking sector, the unstable capital market and high import payments, he pointed out.

The budget for Financial Year 2019 should raise the tax-free income ceiling to Tk 3 lakhs (US$ 3530) to give respite to the lower middle income households, he said. The CPD report recommended reducing the personal income tax rate for the first slab to 7.5 per cent from the prevailing rate of 10 per cent.

Bangladesh’s fiscal framework continues to be weak with a mismatch between targets and actual accomplishments. Revenue mobilization for the Financial Year 2018 has lagged behind the target.

The external sector has come under pressure in the face of high import payments, which had resulted in a large current account deficit. Inflationary pressure has been building gradually in recent months, mainly due to higher food inflation. This may lead to income erosion of the poor.

The capital market has been volatile with very few new investments, the CPD report points out.

Recipe For Balanced Growth

The CPD has recommended certain urgent measures to ensure balanced growth. It has sought: (i) consolidation of macroeconomic stability; (ii) reduction of inequality in terms of consumption, income and asset; and (iii) creation of decent jobs.

The report further says: “While the importance of higher economic growth cannot be over stated, the emphasis should be more on how to distribute the benefits of growth across regions and marginalized communities.”

“There is a need for a detailed and realistic revenue collection plan. Such a plan should include broadening tax base, curtailment of tax evasion and tax avoidance, and checking illicit financial flows from the country.”

“The issue of over capitalization of projects, particularly the large ones, is also necessary to save resources. Allocations for the social sectors should not be compromised while emphasizing physical infrastructure.”

Given the rising inequality in the rural areas and high food inflation, the CPD reiterates the need for guidelines to ensure food security and an structure for farmers.

It also calls for labor-intensive, domestic market-oriented and local resource-based manufacturing and agro-based industry for the sake of creating more decent jobs with decent incomes.

Given the weaknesses in the external sector in terms of remittances and exports, the recommended polices become very pertinent in the context of the coming elections, CPD report says.

Democracy vs Economic Issues

Commentator Afsan Chowdhury says that issues relating to democracy are typically the concern of the urban intelligentsia and the Western-oriented folk. The urban and rural hoi polloi,who form the bulk of the Bangladeshi electorate, are guided more by their economic concerns, he claims. Hence the importance of economic issues for the coming elections, he adds.
 

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