Per capita gross domestic product (GDP) in Bangladesh has increased eight times over the last two and a half decades as the $30-billion economy of the mid-1990s swelled to the tune of $411 billion in the 2020-21 fiscal year.
In spite of the incredible development in income, health, education and other socio-economic indicators of development, rising inequalities among different groups and regions would confront inclusive growth and development in coming days, said economists at a webinar on Saturday.
At the online seminar styled "Journey Towards Inclusive Growth: Challenges and Policy Imperatives for Bangladesh at 50 and beyond", organised by the Research and Policy Integration for Development (RAPID), emphasised reforming the taxation structure, boosting investment in health and education, and increasing allocation for the social protection to reduce the inequalities.
Dr M Abu Eusuf, executive director of RAPID, presented the keynote paper at the webinar. He said Bangladesh has withstood overwhelming odds to emerge as a development success story over the last several decades.
"Despite its impressive achievements on many fronts, numerous challenges and vulnerabilities remain. The Covid-19 global pandemic has exacerbated some of the longstanding challenges."
He recommended that instituting an effective taxation system along with an appropriate redistributive policy mechanism is of paramount importance in attaining inclusive growth and development objectives.
Reforming the taxation system to provide the appropriate emphasis on direct taxation can help reduce income inequality and promote fairness, he observed, adding a lack of fiscal space has constrained increased spending in important sectors such as health, education, and social protection.
He also called for creating an adequate number of productive jobs and upgrading the skill set of the labour force.
In the wake of the Covid-19 crisis, sectors including education and health were particularly affected. Paying attention to these sectors could help mitigate the pandemic shocks, he continued.
In the existing situation, there is room for generating millions of jobs in these sectors alongside ensuring the quality of public services. Investment in public health and education can be seen as a major way of expanding the welfare of the poor and vulnerable population groups, said Dr M Abu Eusuf.
He also emphasised the need for pursuing the reforms proposed in the National Social Security Strategy (NSSS), addressing social constraints faced by women in labour market participation, and adopting need-based and tailored measures to enhance vulnerabilities of people prone to adverse impacts of climate change.
While addressing the event, Planning Minister MA Mannan said the government is taking care of the political and economic factors to unlock various development bottlenecks.
He said developing agriculture remains a priority and the government is willing to extend support to farmers and boost this sector to make growth work for all.
Dr MA Razzaque, chairman of RAPID, said policy instruments for tackling inequality and ensuring inclusive growth have not been effectively utilised. Dealing with inequality would require raising more government revenue through direct taxes such as income, wealth, and corporate taxes.
Dr Mustafizur Rahman, distinguished fellow at the Centre of Policy Dialogue (CPD), said upgrading the tax system through digitising the NBR, the Bangladesh Bank, the Anti-Corruption Commission (ACC) and other institutions would help to increase tax collection significantly.
"A one-taka additional investment for taxation would create revenue worth TK60," he said, adding the NBR stalled the upgradation process taken several years ago.
He underscored the importance of proactively pursuing a progressive taxation policy and addressing the political economy issues to tackle inequality.
He also noted the importance of deepening partnerships with trading partners and exploring the regional markets to boost trade and create productive jobs.
Dr Nazneen Ahmed, country economist of UNDP Bangladesh, stressed the need for strengthening agricultural farming by better integration with improved technology and marketing activities.
She also pointed out that technological innovation is not limited to machinery improvement only. "It is also about bringing out diversity in high-yield crop production, adopting climate-resilient agriculture."
To reduce the inequality in education and address the quality aspect, she called for training and appointing good quality teachers at all districts.
"To start with, focus should be given on science, English, and mathematics," the economist noted, adding, "This is where the development partners can play a critical role to help address the inequality issue."
Kazi Nabil Ahmed, MP, mentioned that regional inequality must be investigated in-depth to understand the dynamics and should be dealt with by adopting pragmatic policy measures.
In light of the Covid-19 crisis, there will be scope for developing and employing more human resources in the health sector, he also noted.