An Analysis of Planning Strategy in Bangladesh

Author(s): A. M. A. Rahim
Source: Asian Survey, Vol. 15, No. 5 (May, 1975), pp. 383-393
Published by: University of California Press
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 AN ANALYSIS OF PLANNING
STRATEGY IN BANGLADESH

A. M.A. Rahim*

ON DECEMBER 16, 1971, the quartercenturypartnership

between thetwowidelyseparatedregionsofPakistanwas severedand a new
country, Bangladesh,was borncomprising the regionsformerly knownas
East Pakistan.The singlemostimportantfactorunderlying the birthof
Bangladeshwas theeconomicand politicalexploitation ofEast Pakistanby
WestPakistan.
The newgovernment gave greatimportance to economicpolicies,and
toplanningin particular. A PlanningCommission, witha DeputyChairman
havingthestatusof a Ministerand withthreeothermembershavingthe
statusof StateMinisters, was set up to designthe Five-YearPlan for the
countryand also to deviseeconomicpolicy.Eminenteconomistswho had
criticized
theinefficiency and exploitationofPakistan'sdevelopment strategy
wereincludedin theCommission. The investing of highrankand statusto
theCommission bearstestimony to theimportance thatthegovernment at-
tachedto issuesof economicmanagement in the new republic.
The PlanningCommission broughtouttheFirstFive-YearPlan (1973-
78) within therecordtimeofa yearand a halfaftertheliberationofBangla-
desh.It is indeedunusualfora countryto preparea five-year nationalde-
velopment planwithinsucha shorttime.In thecase ofBangladesh,thiswas
particularly impressive sincein 1971 it had neitheradequateplanningma-
chinery norcomprehensive and reliabledata on all aspectsoftheeconomy.'
The purposeofthispaperis notto identify minorgaps in thePlan but
to comment on thebroadstrategy of development thattheBangladeshPlan-
ningCommission initiated.In recenttimes,theCommission has comeunder
increasingcriticismforinitiating policieswhichare believedto be unsound

*The authoris EconomicAdviser,Bangladesh Bank. The opinionsexpressedin this

articleare in the author'spersonal capacity and do not necessarilyreflectthe position
of the Bangladesh Bank. A preliminaryversionof this paper appeared in Bangladesh
Bank Bulletin,Vol. X, 1974.The authoris gratefulto Dr. A. H. M. NuruddinChowdhury
forhis useful commentson an earlier versionof the paper. He also deeply appreciates
the assistanceof Mr. Taheruddinin preparationof the paper.
'There was onlya small Planning Departmentheaded by a seniorcivil servant.

383

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384 PLANNINGSTRATEGYIN BANGLADESH
in thecontextof objectiveconditionsin Bangladesh.This paperendeavors
to examineand appraisetheplanningdecisionswhichdetermined thecourse
oftheeconomyof Bangladeshduringtheperiodsinceliberation.The con-
tentionis thatplanningeffortsin Bangladeshhave beennaiveand have not
beenable to overcome thetheoretical and classroomapproach.Certainmea-
suresemanating fromdoctrinaire predilectionshave been graftedontothe
economy whichhavenopossibility ofviabilityand workas disturbing factors
in thesystem.
Theconstitutionalgoal ofplanningin Bangladeshis toestablisha demo-
craticsocialiststate.The logical implicationof this new orientation is to
emphasizedeliberate changesin thedistribution of real incomeas theprin-
cipal policyobjective.The purposeis to assurea minimumreal incometo
all peopleand to raise the same progressively untilthe rangebetweenthe
minimum and maximumis reducedto the desiredextent.Bangladeshwas
also constitutionally
committed to retainingthemulti-party system,justici-
able fundamental rights,independence of thejudiciaryand all otherram-
ificationsofdemocracy. In pursuanceofthelong-term goal ofsocialism,the
existingbig andmediumindustries and publicsectoragencieswerenational-
ized. Afterliberation,ten new corporationswere set up.2
To displacethemiddlemen, a Consumers SuppliesCorporation initially
coveringmorethan4000 unionswas established.It was stipulatedthatthe
Government wouldprocurefoodgrain fromsurplusfarmers andsurplusareas
and distribute
it in thedeficitruralareas as well as in theurbanareas. To
extendGovernment operationin the fieldof distribution, a Warehousing
Corporationwas set up and the Departments of Movement,Storageand
Transportationwerestrengthened. The TradingCorporation of Bangladesh
was setup forthepurposeofundertaking importsand exports.The Trading
Corporationwas initiallyresponsible forabout80% oftotalimports.Addi-
theJuteExportCorporation,
tionally, JuteMarketingCorporation and Jute
PriceStabilization Corporationhavebeenstrengthened to stabilizetheprice
ofjuteand also to monopolizethejutepricebargainingprocesswithforeign
buyers.Since therewerefewtrainedcivil servantsavailable,personsfrom
theprivatesectorwererecruited to managemanyof thecorporations. In a
fewcases,officerswhohad beendismissedor retiredbythePakistangovern-
mentwererecalled.
The strategy of theplannershas been to extendthe scope and sphere
of stateparticipation in everypossibleway withthe assumptionthatthe
profitor surpluswhichhithertoenrichedtheprivatesectorcould now be

2Theseare: BangladeshJuteIndustriesCorporation;Bangladesh Textile Industries

Corporation;Bangladesh Engineering& ShipbuildingCorporation; Bangladesh Paper
and Board Corporation;Bangladesh Sugar Mills Corporation; Bangladesh Steel Mills
Corporation;Bangladesh Mineral & Natural Oil Corporation; Bangladesh Tanneries
Corporation;Bangladesh Food and Allied Industries Corporation; and Bangladesh
Fertilizer,Chemical and Pharmaceutical Corporation.
8A. M. A. Rahim,"Planning in Bangladesh,"Proceedingsof Economic Conference,
BangladeshEconomicAssociation,1974.

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 A. M. A. RAHIM 385
forthe benefitof all.3 In the process,fundamental
used forreinvestment
changeswereeffected:

i) byscaringprivate capitalwithsocialintoleranceandthespectreofin-
stantsocialism;
ii) bydiminishing theoverallroleoftheprivate theimposi-
sectorthrough
tionofverylowquantitative limitsoninvestment;
iii) by creating government monopolies forhandlingimportand export
trade;
iv) by abolitionof competitiveinputand outputpricingthrough fixing
floorceiling;
v) bychanging therelativepricesthrough pricerise;
an inflationary
vi) bytheGovernment takingovermanyproductive unitsand
industrial
thechannels ofdistribution;
vii) byimposition andextension ofcontrolsall around;and
viii) bygovernment acquisitionofthesourcesofindustrial andcommercial
finance.

Planningin Bangladeshhas been characterized by fuzzinessand lack

of commitment to a certainclear courseof action.Since liberation,aggre-
gate pricesrose threetimesand the price of rice, the staplefood of the
Bangalees,rose in someplacesby almosttentimesfromthepre-liberation
level.4Unemployment has been on theincreaseand thebottom30%oof the
populationwho neithercontribute nor benefitfromnationalproductivity
tendedto grow.It is indeedthepoorestclass whoseconditionbecamecus-
mulatively worseuntila vastnumberofthemstarvedto deathin thefamine
thatsweptthroughBangladeshin thefall of 1974.
Does socialismin Bangladeshimplyplanningby marketmechanism or
by direction?One can relyon one or theotherbutthereis no otherway of
planning.Is planningto maximizeemployment, incomeor equityor any
precisecombinationof thesegoals? What is to be the trade-off between
growthand equity?Whatshouldbe thecriterion forallocationbetweenthe
privateand publicsector?Shouldthepublicsectorbe givenfunctions which
can be performed as good or betterby the privatesector?Can equitybe
achievedby fiscalmeasureswithoutover-extending the job of the public
sector?Is thegoal of equitycompatiblewithpaymentof subsidiesto the
publicunitsincurring losses? How shouldproductand inputpricesbe de-
termined?Whatkindoflaborpolicyis neededif democracyand socialism
are to be thetwinobjectives?Whatdoes equityimplyin termsof income
policy?Shouldfactors(in bothagriculture and industry)be paid accord-
ing toproductivity or principlesof equity?Equityhas a cost.Who willfoot
thebill and how? If theemployedfactoris to be paid morethanitsproduc-
tivityon groundsofequity,whatabouttheemployable unemployed? These
are issueswhichplannersmustresolveclearlypriorto makinga plan.
The basic requirements foreconomicdevelopment are to acceleratethe
rateof accumulation and to makeeffectiveutilizationoftheexistingand in-

relatestothepricesituation
'The calculation in thecountry
obtaining up to August
1974.

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386 PLANNINGSTRATEGYIN BANGLADESH
crementalresources.Theserequirements mustbe fulfilled by any economy
irrespective of ideologicalconsiderationsor the natureof practicalcon-
straints;otherwise therewill be no growth.Developmentstrategiesdiffer
fromone anotherin respectto: first, the methodsemployedin mobilizing
resourcesand accelerating therateof accumulation;second,theincentive
patterns and institutional arrangements usedto facilitateeffectiveutilization
ofresources;andthird, in decidingthecontents ofeconomicgrowth, namely,
thecomposition oftheoutputbundle,thetimehorizonand thebeneficiaries
ofgrowth.
The divergences amongcountrieswithregardto thevariousaspectsof
thegrowthstrategy enumerated above are dictatedby the politicalpredi-
lectionsofthepolicymakers. The orthodoxsocialistcountriessolvethefirst
problemby usinga directmethod.Theyquicklyenlargetherole of theso-
cializedsectorto coverabout80 to 90% of thematerialproductionof the
economy. Theycan,therefore, verysuccessfully preempta sufficient amount
ofresourcesforthedevelopment ofinvestment goodsand thusdirectly pro-
moteaccumulation. To solve the secondproblem-i.e., efficient utilization
of resources-theydependmore on ideologicalmotivationand improve-
mentsin thecentralized instruments used to managea commandeconomy.
The stylizedaccountof thesalientfeaturesof socialiststrategyof de-
velopment has beenmentioned hereto use it as a frameof reference forthe
strategy of development in theFirstFive-YearPlan of Bangladesh.In the
Plan ithasbeenexplicitly assumedthata socialistpatternofgrowth has been
envisaged.Logically,therefore, the strategy of development in Bangladesh
mustacquirethe characteristics delineatedabove. In the Five Year-Plan,
Bangladeshis farfromsuch a strategy forseveralreasons.
The shareofthepublicsectorin theGDP and in totalmaterialproduc-
tionis insignificant.5Formobilization ofresources, thePlan has to dependon
non-socialist instruments suchas encouraging privatesavingsanddependence
on foreignaid. Finally,a mixtureof marketeconomyand centralized plan-
ningis beingreliedon to solvetheproblemof allocation,distribution and
utilization of resources.The need forincomedifferentials formotivation is
admitted.6 In essentialterms, theFive-YearPlan possessestheattributes ofa
mixedeconomy.Onlyin termsofPlan allocationhas thepublicsectorbeen
assigneda transcending rolecorrespondingly minimizing thatof theprivate
sector.The patternof development cannotbe tranformed into a socialistic
one merelyby enlargingthe allocationto the public sectorand reducing
thatoftheprivatesector.The indicativeallocationsare meaningless unless
thecorresponding institutional arrangements and the requisitemachinery
to generate theinvestible fundsenvisagedin thePlan allocationare also de-
signedand developed.It is absolutelyunclearhow thefoundationsof so-
cialismcan be laid downby settingup islandsof socialismby nationalizing

5ThePlan explicitlyadmitsthis."In an economywheremorethan80 percentof the

activityis dependenton agriculture,it is inconceivable to bring in socialism without
socialisationof agriculture."First Five Year Plan (1973-78), Chapter1, p. 2.
'The Plan asserts that "Disparityin income fromwork and high rewards for ex-
ceptionalperformance shouldcontinue."FirstFive Year Plan (1973-78), Chapter1, p. 7.

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 A. M. A. RAHIM 387
industrieswhichcontribute only6% totheGDP. In thecurrent management
of theeconomy,notonlyconsiderableingestiblefundsand entrepreneurial
and managerialtalentsremainidle in theprivatesector,butalso largeaddi-
tionalsurplusesare beingreapedby theprivatesector.7
The basic objectiveofdevelopment has been recognizedas removalof
povertyby raisingsubstantially theconsumption levelsof thelowest30%
of population.This strategy has to be two-pronged. On thesupplyside,the
volumeand composition of outputconsistent withtheconsumption targets
have to be planned;on the demandside, theinvestment patternhas to be
suchthatit generates therequiredincomeforthepeoplebelowthepoverty
line. An investment plan whichcan achievethe requiredvolumeand com-
positionof outputdoes notnecessarilygeneratethedesiredincomeforthe
poor.Whatis neededis a plan whichprovidesthe neededgoods and ser-
vicesas wellas generatestherequiredincomeforthepoor to enablethem
to buy thegoods made available.Analytically, it is not essentialthatthe
investment be in thepublicsector.
Currently,theincomedistribution in Bangladeshseemsto be getting
further skewed.Demandforincomeelasticgoods,luxuryand prestigeitems
is on theincrease.In thisbullockcartcountry, buyersare foundreadilyfor
automobilesimportedunderhome deliveryschemesat pricesaround200
timesmorethantheaverageannualper capita income.
Planningin Bangladeshhas been a perfunctory mixtureof the ele-
mentsofplanningby directionand planningby inducement. There seems
tobe a naiveattempt to combinethevirtuesofbothsocialismand capitalism
whileavoidingtheunpleasantaspectsofeach.Therehavebeenconfiscations
of privateproperties in some areas of thecorporatesector,restrictions on
privateownershipof wealthand capital,and fixingof an upperlimiton
salariedincome.Industrialfinanceand tradeare dominatedoverwhelmingly
bythepublicsector.All oftheseare purported tobe fortherealizationof an
exploitationfreesocietyand an egalitariandistribution of income.Conse-
quentlyBangladeshhas acquiredthedisadvantages ofbothsystems without
beingable to enjoybenefits of either.The innercontradictions in theplan-
ningprocessof Bangladeshcan be listedas follows.First,a government
pursuingliberalsocialismcannothope to be a highmobilizerlike thegov-
ernments who pursuefull-blooded socialism.Sources of economicsurplus
remainpredominantly underprivatecontroland the machinationsof the
permitted privatesectordenudethepublicsector'spotentialeconomicsur-
plus.The government has to dependon the capitalisticsectorforsavings
and investments. But nationalization of privateproperty, low limitson pri-
vatewealth,and thegeneralintoleranceshownto the ownershipof riches

7A veryconservativeestimateof the surplus generatedfromthe sale of domestic

manufactured cottontextiles,cottonyarnand cigarettes,and the scarcitymarginof im-
portsof consumergoods during 1972-73comes to around Tk. 3,000 million which has
been appropriatedby the privatesectorwithoutrenderingany contributionto the econ-
omy.This is purelyunearnedincome and constitutesblack moneyin the privatesector.
If this surpluscould be capturedby the government,deficitfinanceincluding credit to
the public sectorin 1972-73could have been completelyeliminatedand the presentin-
flationavoided.

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388 PLANNINGSTRATEGYIN BANGLADESH
makestheincentive forcapitalaccumulation weak.8In fact,someof these
threatsand vexationsfavorflight of capitaland enterprisefromthesystem.
The environment of economicliberalismfacilitatesthe transferof such
capital seekingsafe havenand the exit of theirowners.Otherownersof
economicsurplusfritter it away on conspicuousconsumption.9
Second,whilethe rate of savingsand investments in theeconomyis
low, operationalefficiency also suffers.The public sectoris overextended
without anyconsideration ofitscapacityforefficientfunctioning.The scope
and incentive forrobbingthestateenterprises forpersonalgains are very
high.Sinceopportunities forowningprivateproperty and wealthexists,the
publicfunctionaries entrusted withthemanagement and protectionofpublic
enterprises have highincentivesforgettingrichat thecost of the society.
The privateentrepreneurs oftenbribethecivil servantsand corrodetheir
senseofhonesty. The liberaldemocratic institutions
makethethreatofbeing
caughtandthepenaltyofdefaulttoomildcomparedwiththepotentialgains.
On theotherhand,egalitarianconsiderations makeprovisionsof high re-
wardsto skilled,honestand highlyresponsibleofficers impossible.No won-
der thatsuch qualitiestendto witheraway. Averageproductivity in the
economydeclines.
Third,the combinedeffectof a low rate of accumulationand poor
operationalefficiency is a low rate of economicgrowthwhichin all prob-
abilityfallsfarbehindthepopulationgrowthrate.This leads to a decline
in percapitaincomeand generalaggravationof poverty.
For a poor economylike Bangladesh,the tolerancelimitfor such a
situationis almostnon-existent. Unlesslarge-scaleforeignassistancefrom
abroadkeepsthedistressconditionsfromburstinginto the open,political
andsocialtensionswillfurther adversely affect
theworkingofsucha system,
accelerating theprocessof instability.
Bangladeshmustfirmly optforone or theotherof thetwobasic eco-
nomicsystems.Each of themcan be satisfactory frompurelytheoretical
considerations. The politiciansmust decide which of themis politically
feasibleand acceptable.A politicaldecisionis, therefore, necessaryin the
basic methodology of management of theeconomy.How muchmotivation
and incentive shouldbe combinedwithhow muchfearand regimentation?
Unlessa cleardecisionis givenonthisissue,thedevelopment ofthestructure
cannotbe designedproperly. Structuresare setup to executetheunderlying
decisionsdetermining the blend of incentiveand fear; lack of clarityon
thisissuemuddledup themanagement oftheeconomy.All economicpolicies
and structures unmistakably reflect
thischaos in theeconomicsystem.
The Five-YearPlan calls forfinancialoutlayof Tk. 44,550 millionof
which90% is tobe incurredin thepublicsector(see Table 1). The domestic
resources atconstant 1972-73pricesis tobe Tk.26,980million.The dominat-

8Untilthe recentrevisionof policy,the ceiling on privateindustrialinvestmentwas

Tk. 2.5 million.
9A. M. A. Rahim and A. H. N. M. Chowdhury,"Some FundamentalIssues on Eco-
nomic Managementin the Contextof Bangladesh," Bangladesh Bank Bulletin,Vol. 6,
December1973.

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 A. M. A. RAHIM 389
ing share of thepublic sectorin the development programis muchmore
substantialthantheshareallocatedpriorto independence. The expenditure
on therevenuebudgetaccordingto thePlan document is to growat a com-
poundrateof 10% perannumand thatofthedevelopment budgetat a com-
poundrateof20% perannum.In nominalterms, thefinancialoutlayof the
Plan is over65% greaterthantheoriginalallocationforBangladeshin the
ThirdFive-YearPlan ofPakistan(1965-70). On correcting fortheinflation
thathas occurredsince thenand also forthe growthin population,the
presentPlan constitutesonlya negligibleor no increasein per capita real
in viewof a seriouseconomiccrisisthatis nowraging
outlay.Nevertheless,
in Bangladesh,implementation of such a programwouldbe quite a high
achievement.
The averagedomesticsavingsrate overthe Plan periodis estimated
to be 9.2% of GDP risingfroman expectedrate of 4.5% in 1973-74to
14.2% in theterminalyear. Such targetsappear overtlyambitiouswhen
comparedwiththerecordofthelasttwoyears.In viewoftheinelasticnature

TABLE 1: The FirstFive-YearPlan and its Financing

(In millionsof Taka at constant1972/73prices)

Amount

Public sector financingoutlay 39,520

Privatesectorfinancialoutlaya 5,030

Total 44,550
Financed by:
I. Domesticresources 26,980
A. Public savings 16,180
Government revenuesurplus at 1972/73 rates 5,370
New taxes and increasedrates 6,250
Governmentdomesticcapital receiptsb
(except fromprivatesector) 3,500
Additionalmeasures (unspecified) 1,060
B. Privatesavings 10,800
II. Externalresourcesc 17,570

Source: Planning Commissionof Bangladesh

alt is assumed thatin the nonmonetizedprivatesectoran additionaloutlay
of Tk. 5,850 millionwill be incurred.
bThis includesthe depreciationfundsfromthe nationalizedindustriesand
fromdevelopmentprojectsas well as interestpaymentschargedto development
projects duringthe period of construction.
cThe estimateis forthe domesticresourcecounterpartafteran estimated
subsidy of Tk. 420 millionforfood.

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390 PLANNINGSTRATEGY IN BANGLADESH

TABLE 2: RevenueReceiptsat ExistingRates forthe Five Year Plan

1973/74-1977/78
and BudgetEstimatesfor1973-74(In millionsof Taka)

TotalPlan BudgetEstimates
1973-74

Customs duty 7,570 1,430

Exciseduty 6,260 990
Sales tax 2,430 460
Incometax 700 160
Landrevenue 230 50
Othermisc.receiptsa 2,370 270

Total 19,560 3,360

Source: PlanningCommission of Bangladesh.

aIncludesminortaxes(wealthtaxes,estateduty,capitalgainstax,urban
propertytax), variousfeessuchas registration
fees,stampduty,etc.,and re-
ceiptsfromvariouspublicutilities
andenterprisesbutexcludingreceiptsfrom
mostnationalizedindustriesand financial
institutions.

TABLE 3: ProjectedYield fromAdditionalTaxes

(In millionsofTaka)

Y i el d
Year of introduction 1973-74 1974-75 1975-76 1976-77 1977-78
1973-74 250 265 281 298 316
1974-75 - 335 355 376 399
1975-76 - 500 530 562
1976-77 - 546 579
1977-78 - - 694

Total annualadditions 250 600 1,136 1,750 2,550

of Bangladeshfortotalannualadditions.
Source:PlanningCommission

of the tax system,inflationis unlikelyto increase Governmentrevenue. If

the total tax revenue as projected in the Plan is to be realized, the rate of
increase will have to be remarkableby any standards (see Tables 2 and 3).
Total tax revenue would have to grow by about 20,% per annum if the tax
ratio is to be raised from 6,% of GDP to 10% over the four years of the
Plan, implyinga marginal tax rate of over 25,%. Since the built-inelasticity
of the presenttax systemwith respectto GDP appears to be less than unity,
recourse will have to be taken to discretionarytax measures to meet the
revenuetarget.Additional measures would be needed to provide for about
75% of the growthin tax revenue. Agriculture,which contributesaround
56% of GDP, bears a negligibletax burden. Last year the national assembly

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 A. M. A. RAHIM 391

TABLE 4: Approximate
Value of FixedAssets of NationalizedEnterprises
No. of Value of fixedassets
enterprises (Taka in millions)

A. Corporations
1. JuteMills (BJMC) 76 1784.00
(for73 units)
2. Textile Mills (BTMC) 52 391.70
(for45 units)
3. Sugar Mills (BSMC) 15 235.30
4. Steel (BSC) 8 473.74
5. Engineering(BESC) 17 26.48
(for 7 units)
6. Fertilizers,Chemicals and
Pharmaceuticals(BFCPC) 9 56.64
7. Food and Allied (BFAPC)
(Products) 16 38.56
8. Paper and Board (BPBC) 10 489.60
9. Oil, Gas and Minerals (BOGMC) 6 28.30
(for 5 units)
10. ForestIndustries(BFIDC) 6 35.90
11. Tanneries (BTC) 30 10.00

B. Foundations
1. Sena Kalyan Sanstha 20 22.40
2. Freedom FightersFoundation 15 11.30

C. DisinvestmentBoard 340 170.00

(approximate)

Total 620 3773.92

Note: This informationrelates to the period immediatelyafterliberation.

rejected proposals to tax agriculture. The prospect of success of any re-

newed effortto overcomethe resistance of vested intereststo the inclusion
of agriculturalincome in taxable income is very dim.
In view of the above facts,the followingconclusions emerge. First,the
revenue surplus of the Governmentis nominal; it was only Tk. 130 million
in 1973-74 and is estimatedto be Tk. 100 million in 1974-75. The aggregate
currentpublic sector savings is not even sufficientto cover the depreciation
requirements (see Table 4).10 This implies a declining productivecapacity
with negative growth.In order to maintain the existing productivecapacity
intact,a minimuminvestmentof the quantum of depreciationis required. In
order to maintain the existingper capita income intact,the investmentrate
will have to be even higherto compensatefor the growthin population. The
public sectorby the record of the last two years has so far not been able to
fulfillthishope. In the absence of any massive foreignaid, the economy will

"0Onthe basis of 10% replacementneed, the requirementin the nationalizedsector

alone comesto approximatelyTk. 380 million.

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392 PLANNINGSTRATEGY IN BANGLADESH
continueto go downhillunlessthesocio-economic structures are appropri-
atelyreorganized to generatea higherrateof accumulation.
Mobilizationof domesticsavingsfor economicdevelopment may be
attempted by alternativemethods,namely,throughtaxationand public
revenuesurplus, through higherincentives to saversand financialintermedi-
aries and throughincomeredistribution in favorof sectorswhichpossess
highincentives to save and invest.Pakistanprimarilydependedon thelast
strategy to mobilizedomesticsavings.'1As can be seen fromtherecordof
thelasttwoyears,Bangladeshhas no strategyof resourcemobilizationat
all. The programofnationalization was undertaken withtheobjectofusing
thesurpluswhichthe privateentrepreneurs had earlierappropriatedfor
themselves forthe development of the country.State ownershipof indus-
trialassetsalongwiththesurplusis certainly a betteroptionthantheprivate
ownership and surplus.Butcurrently therelevantquestionis whetherstate
ownership withlossesis preferable to privateownership withsurplus.There
is, ofcourse,roomfordebateaboutthelogicallinkbetweenstateownership
and inefficiency. In theoperationalcontext, however,theempiricalevidence
duringthelast twoand a halfyearshas notbeen encouraging.'2
Accordingto the FirstFive-YearPlan, the labor forceis increasing
annuallyby about800,000.13The strategy laid downin thePlan is to create
opportunities for employment for this additionallabor forcethroughin-
vestment in thepublicsector.To some extent,therefore, whethergrowing
inequalitycan be containeddependsupon new investment to absorb the
additionallabor force.Goingby theexistingrecordsand the availableevi-
dence,chancesof proportionate investment in thepublicsectorto keep un-
employment levelsconstantare veryslender.The net consequenceof the
presentstrategy of development will,therefore, be to increaseinequalityin
incomedistribution and thereby frustratethegoal of distributive justice.
The specificsocioeconomicenvironment in Bangladeshmakestheso-
cialisticmodelofdevelopment theonlysystemthatwillbe viablein thevery
longrun.The massiveupsurgein populationat therateof 3% per annum
further focuseson theurgencyof developinga capacityto utilizeeffectively
thevastpool oflabor.The onlyeffective way is to organizethishugelabor
forceforconstructive workthrough socialmethodsand community develop-
mentschemes.Unlessactionsin thisdirectionare undertaken, theincrease
in populationis boundto eat up all thefruitsofdevelopment efforts and will
in additionaccrue a huge futureliabilitywhichwill concomitantly be re-
flected in fallingper capita income.The employment of thelabor forceor
population controlin Bangladeshcan neverbe leftto marketforcesin view
of around30% unemployment. The soonerthisis realizedand efforts are
madein thisdirection, thebetteritwillbe forsocialstability andequilibrium.
"Edward S. Mason in Forwardto Gustav Papanek, Pakistan's Development:Social
Goals and PrivateIncentives,Cambridge: Harvard UniversityPress, 1967.
"Since liberation,therehas been no clear officialstatementon the changesin assets
and liabilitiesofthenationalizedindustriessectorto conclude unambiguouslyabout their
performances.
"According to estimatesof the Planning Commission,currently30% of the total
manpowerin the countryare eitherunemployedor underemployed.

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 A. M. A. RAHIM 393
It is appropriateto concludewitha quotefromW. A. Lewis,

One can planbydirection alone,or byinducementalone,butone cannot

plan by exhortationalone,whenthemajorresultof one's actionsis to
maketheinducements workin theoppositedirection.
Nearlyall theplan-
ningdonein thiscountry withits apparatusoftargetsand speeches,has
beenofthischaracter andthatis whyall thetargetshavebeenunfulfilled
andwhytheveryword"target"has becomea laughingstock.Thisis not
planning,butmerely pretendingto plan.Planningis a seriousbusiness.
Whatmakesplanning, is notthetargets,whichmerelyexpresswhatwe
wouldlike to see happen,butthe actionthatis takento achievethese
targets.'4

It seemstobe a goodidea to directthecurrent

economicpoliciestowards
tacklingpressingimmediateproblemsand bringingabout stability.At the
same time,thespadeworkfora moreseriousand realisticfuturePlan may
be undertaken dulyreflecting the new socio-political
compulsionsand the
presentrealitiesof the Bangladesheconomy.

14W.A. Lewis, The Principles of Economic Planning, London: Unwin University

Books,1963.

A. M. A. RAHIM is EconomicAdviser,
BangladeshBank,Dacca.

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