High rate of GDP growth, over 7 per cent for the third consecutive year, has failed to address chronic unemployment and growing inequality that, according economists, help the rich get richer and the poor get poorer.
On the basis of nine-month data, planning minister AHM Mustafa Kamal said on April 3 that the country’s GDP growth rate would reach to new height of 7.65 per cent in this fiscal surpassing previous best 7.28 per cent in 2016-17.
Trapped in 6 per cent growth for a decade, Bangladesh joined the rank of the ‘7 per cent growth club’ in 2015-16.
Economists are, however, sceptical about the high growth. They said that many economic indicators, including overall investment, rate of employment, export income and inflow remittance and non-performing loan in the banking sector did not match the government’s growth projection.
They said that the growth was not inclusive as it could not generate employment especially for the educated youths and helped the rich get richer at the cost of the poor who became poorer.
According to the household income and expenditure survey conducted by the Bangladesh Bureau of Statistic in 2016, Gini co-efficient, used to measure income inequality, increased to 0.483 at national level in 2016 from 0.458 in 2010.
Assets of top 5 per cent people grew to 27.9 per cent in 2016 from 24.6 per cent in 2010 and assets of bottom 5 per cent people fell to 0.23 per cent in 2016 from 0.78 per cent in 2010.
It is evident that the high growth could not check the growing income inequality in the country, said Centre for Policy Dialogue executive director Fahmida Khatun.
The widening inequality was attributed to the slower growth in agricultural sector employing almost half of the workforce against the higher growth in manufacturing and service sectors in the cities.
Former interim government adviser Mirza Azizul Islam observed that wealthier and skilled people were benefited from the economic growth while majority population became vulnerable to shocks like natural disasters, food price hike and growing medical expenses.
The number of poverty stricken people, now 24 per cent of the population, may increase once the benchmark of poverty – $1.5 daily income – goes up, he observed.
The economists, however, admitted that the income inequality was the main reason for widespread disparity in all spheres of society and distortion in consumption, politics, state-facilities and asset-accumulation.
They noted that the overall economy could not be benefitted amid the income inequality that ultimately created scopes for both political and social unrest.
Students across the country have waged a movement for reduction of quota in public service recruitment which, according to them, creates huge disparity in obtaining public jobs amid lacklustre trend of employment in recent years.
Such economic progress has already been described as ‘jobless growth’ that along with dearth in skilled workers has forced the country’s export oriented sectors including apparel sector to hire 200,000 foreigners mainly from India, who have remitted to home $5 billion out of their annual earnings in Bangladesh.
World Bank lead economist in Dhaka Zahid Hossain said that 4.2 per cent unemployment rate was a puzzle as the Bangladesh Bureau of Statistics definition of employment was rather loose.
The bureau even considers people working for only an hour in a week as employed, according to a finding by Centre for Policy Dialogue in its review of economy released on Tuesday.
Still the unemployed rate, according to the bureau, is over one fourth or 26.1 per cent of graduates.
Zahid Hossain noted that the growing number of unemployed youths had already posed a big challenge that could not be addressed with the ‘so-called’ high growth.
The country needs inclusive growth to check the unemployment and income inequality, he said.
The economists said that there should not be any compromise with the high economic growth for the sake of poverty alleviation that still regarded as a major problem.
They, however, admitted that the government must address problems in establishing good governance, private investment, banking sector and infrastructure, which according to them, worked as strong deterrent to efforts to check inequality.
Estimated private investment to increase only marginally to 23.3 per cent in the current fiscal against the backdrop of huge non-performing loan of over 80,000 crore or 10 per cent of the total loan portfolio, higher than that in India and Nepal, showed that the economic progress is skewed and not pro-poor, said the economists.
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