The government has set the economic growth targets at 9 percent by 2031 and 9.9 percent by 2041 as it unveils its new development roadmap for 20 years
Bangladesh's first perspective plan for the 2011-2021 period will expire next year without having met the major targets that include reduction of moderate poverty, achieving double-digit economic growth and boosting national savings and investments.
The plan had a goal to reduce moderate poverty to 15 percent, achieving 10 percent economic growth, boosting gross national savings to 39.1 percent and investment to 38 percent of GDP.
Under the circumstances, the government is likely to approve the country's second perspective plan for the next 20 years till 2041 today, with a roadmap for accelerated growth and eradication of poverty and inequality.
In the new plan, the government has given up its dream of achieving double-digit growth, and has set the economic growth targets at 9 percent by 2031 and 9.9 percent by 2041.
The General Economics Division (GED) of the planning commission has prepared the draft of the second perspective plan for the next 20 years, aiming to bring down extreme poverty to below 3 percent by 2031 and moderate poverty to below 3 percent by 2041 as well.
The draft will be placed in a meeting of the National Economic Council (NEC) for final approval on Tuesday. Prime Minister Sheikh Hasina will chair the meeting at the NEC conference room in the capital.
Dr Shamsul Alam, member of the GED, told The Business Standard that targets that had been set in the first perspective plan were higher than the reality, which is why they could not be achieved.
He also said the new plan will help Bangladesh achieve the status of a developed country by 2041, raising the per capita income to $12,500, from $1,909 which it is now.
Shamsul Alam said the new plan suggests a series of projects and programmes to achieve higher growth and increase the real income of people.
He said the new plan will put emphasis on developing skilled human resources, technology, energy, power, transportation, good governance and empowering the local governments.
Dr Zahid Hussain, former lead economist of the World Bank's Dhaka Office, said several offices of the government are not putting enough effort to achieve the over ambitious targets of the first perspective plan.
Despite a massive public investment and high GDP growth, investment from the private sector has not increased due to a lack of infrastructure and stability regarding policy.
He suggested ensuring stability in policy, reducing complications regarding land issue, developing proper infrastructure to achieve targets to be set in the upcoming perspective plan.
According to the data of the Bangladesh Bureau of Statistics (BBS), the level of extreme poverty in the country was 10.5 percent at the end of the 2018-19 fiscal year. The government will have to ensure poverty reduction by about 1 percentage point every year.
The annual decline of extreme poverty was 0.78 percent over the last six years. The reduction rate was 1.5 percent during the five years before that, according to the BBS data.
The poverty reduction rate is slowing down every year, and things are going to get even tougher in the future.
The new plan targets cutting the moderate poverty level to 9.9 percent by 2031, which would require 1.06 percent poverty reduction every year.
Encouraged by 1.8 percent poverty reduction per year between 2005 and 2010, the General Economic Division set the target of cutting poverty down to 15 percent by 2021, but according to the bureau of statistics, the current level is 20.5 percent.
Analysing the recent trend of poverty reduction, the executive director of the Center for Policy Dialogue (CPD), Dr Fahmida Khatun, told The Business Standard, "It will be very difficult to eliminate extreme poverty by 2031."
She said it is essential to increase employment and income to reduce poverty, but the economy does not have enough accommodation for new entrants into the job market.
"Corruption, bureaucratic procrastination, impairment of policy decisions and limitations of infrastructure are hampering the investment decisions of entrepreneurs in the private sector," she said, and recommended reducing the obstacles to meet the targets.
Dr Mirza Azizul Islam, an economist and a former adviser to a caretaker government, said the new employment generation to growth ratio is falling, which has a negative impact on employment earnings and is creating income disparity. Despite massive investments from the public sector, private investment is not rising significantly.
"The government should put emphasis on these priority issues to reduce poverty," Mirza Azizul recommended, adding that it is impossible to bring poverty down to zero.
Economist Zahid Hussain said the government has a political commitment to meet this target in order to achieve the sustainable development goals.
But the rate at which poverty is being reduced has been on the decline for the last six years because of rising inequality in employment and income. Labourer wages are not increasing in proportion to GDP growth. In fact, real wages of labourers in some sectors are reducing.
He recommended raising the income of workers, boosting their productivity by providing proper investment in health, education and other human capital sectors.
According to the planning commission, the current perspective plan had a target of 38 percent investment against GDP, but it reached only 31.56 percent in the 2018-19 fiscal year. The new plan will aim at achieving 46.88 percent investment against GDP.
The domestic savings are only 28.41 percent to GDP, against a target of 39 percent.
The government wanted to achieve 20 percent revenue target against GDP and increase the tax-GDP ratio to 17.5 percent by 2021.
But, the current tax-GDP ratio is only 9.3 percent, and the new plan will target a ratio of 21.85 percent by 2041.