Bangabandhu’s successful economic reform

http://www.ourtimebd.com/beta/2020/03/17/bangabandhus-successful-economic-reform/

Published Time: March 17, 2020, 12:00 am Updated Time: March 16, 2020 at 5:10 pm

M S Siddiqui Bangabandhu took over the responsibility of the country just severally planned damaged by Army of brutal enemy. Before surrender, they have destroyed infrastructure and even burned the currency notes from volt of Central Bank. The bank had shortage of local currency and foreign currency reserve was also taken away.

In 1971, the total population was 75 million and annual growth rate between 2.5 and 3 percent. Majority of them were suffering from chronic malnutrition and more than half of the population were living below poverty line. About 10 million were dislocated during war of liberation. Their houses and properties are destroyed. They came back home empty handed. During the tenure of Bangabandhu, the pressure of rising inflation following the global oil crisis due to Arab-Israel war and as well as acute food shortage which he had to cope with so little resources in his hands. The agricultural production suffered due to flood and other natural calamity. Inflation, especially for essential consumer goods, ran between 300 and 400 percent. Moreover, country was badly affected from a severe cyclone that hit the area in 1970 and causes 250,000 deaths.

The industrial units are affected by war and shortage of raw materials and there was no foreign currency to import raw materials. The industrial sector was also going through transitional period of nationalization of heavy industries and abandoned industries of Pakistani owners. The situation was aggravated due to shortage of efficient administrator. Government official and hurriedly recruited fresh executive without any experience had to take responsibly of those industries.

Banglabandhu nationalized major banks and insurance companies, all jute mills, sugar mills and textile mills as all the Pakistani owners and managers left these enterprises often taking away with them all the money and technology. Bangabandhu rightly chose to go for state-led industrial growth.

Bangabandhu has medium and long-term plan to create an enabling environment for the private sector. These are visible in the first five-year plan and budget proposals. For example, in the budget for FY 1974-75, the upper limit for private investment was shifted from 25 lac ( 2.5 million) taka to 3 crores ( 30 million) taka, and there was provision for developing new industries by the private sector. Apart from these, 133 abandoned industrial unit was handed over to the private sector during this period. SMEs were encouraged in private sector but the new nation had few experienced entrepreneurs, managers, administrators, engineers, or technicians.

In the newly liberated country, Bangabandhu rightly chose to go for state-led industrial growth. The early results were rewarding. In the first year since independence, the jute mills were producing at 56 per cent of their capacities. The same ratio for textile mills, paper mills and fertilizer factories were 60 per cent, 69 per cent, and 62 per cent respectively. All these factories were doing better than what they were during the Pakistan period. In the agricultural sector, Bangabandhu took some prudent initiatives to ensure agricultural growth. Some of these initiatives are: rebuilding the war-ravaged agricultural infrastructure, ensuring supply of agricultural equipment on emergency basis free of cost or at concessional rates, ensuring adequate supply of seed though Bangladesh Agricultural Development Corporation. He had fixed minimum fair prices for agro-products, ration facilities for poor and marginal farmers etc.

He had exempted land tax upto 25 bigas of agricultural land and also fixed the ceiling on ownership upto 100 bigas. He has taken the decision of cancelling 1.0 million certificate cases for loan default against farmers filed during the Pakistan period.

Bangabandhu was also conscious about the complementarily role of agricultural and industrial sectors. For example, fertilizers are critically important agricultural inputs and so he prioritized establishment and operationalize fertilizer factories across the country. Bangabandhu wanted to develop both industrial and agricultural sector simultaneously. Agriculture was major profession of people and will remain as the main source of income for the majority of the people for many years to come. In addition, to the reduction of poverty, vibrant agriculture can also ensure the supply of raw materials for a burgeoning industrial sector.

Bangabandhu led from the front in rebuilding this devastated economy with war devastating communication and other infrastructure but took courageous step with limited domestic resources and some international humanitarian support.

One of the most challenges of his tenure is the reform in agricultural and industrial sector. He had to promulgate many laws and regulations to replace the regulatory atmosphere of Pakistani Private sector led economy to centralize economy. Banglabandhu had to set up a number of Corporations to run different categories of industries, Bank and Insurance companies. The initial responsibilities were given to bureaucrats to run these corporation. He had to create new cadre service namely BCS (industries). The recruitments and training of new recruit officers also took few years. The nationalization of heavy industries, Bank and insurance companies and training of efficient manager was the land mark success of his government.

He had to perform all these reform within only three and half years. Since early 90’s all the governments are gradually reducing role of public sector and giving the responsibilities to private sector but Bangladesh could not go to pre-1971 period of private sector lead economy. Interestingly, some public sector industries are playing a dominate role till date. The nationalized Banks are still having leading role in financial sector.

During the transition of economy, there were some opportunities some people and also difficulty for some people. The political opponents have also taken advantage of hardship of transition. Due to Banglabandhu’s able leader ship, the economy started moving forward despite many insurmountable challenges including war-ravaged physical and social infrastructures and development of many regulatory institutions. The backbone of economy has been created for success of present miracle rise of emerging Asian Tiger during tenure of present government of Sk Hasia.

The writer is a legal economist e-mail: mssiddiqui2035@gmail.com