Economists have urged the government to put more emphasis on the quality of GDP growth and make sure its benefits are inclusive, instead of debating about the growth rate.
Bangladesh has achieved a high economic growth in recent times, backed by farmers, readymade garment sector's low-wage female workers, remittance sent by unskilled migrant workers, and small and medium enterprises belonging to the informal sector.
To help Bangladesh achieve the status of a middle income country, the per capita income must be increased. Labour-intensive industries can help achieve a high GDP growth, but these industries will not help increase per capita income.
Which in turn will make transitioning to a middle income country difficult for Bangladesh, said the economists. Under the circumstances, they recommended that the government reform institutions, increase their capabilities, grant more autonomy, and ensure transparency and accountability.
Economists made the comments on Saturday at the unveiling ceremony of "Empowering Economic Growth for Bangladesh," a book authored by Dr Biru Paksha Paul, a former chief economist of the Bangladesh Bank.
Planning Minister MA Mannan was the chief guest at the event organised by University Press Limited.
Addressing the programme, former adviser of caretaker government Professor Dr Wahiduddin Mahmud said, "A high GDP growth does not always mean that a country's economic condition is good too.
"In the current year, International Monetary Fund (IMF) has predicted that countries such as Dominica, Guyana and Senegal will achieve better GDP growth than Bangladesh. Such growth without increasing per capita income will provide no benefits for them."
Dr Wahiduddin pointed out that the government is developing infrastructures by taking out loans from foreign and domestic sources, which is contributing to the high GDP growth.
"These new infrastructures could become a liability to the government if those fail to attract private investments," he said, adding, "Bangladesh's per capita income must be increased to achieve the status of a middle income country.
"To reach this goal, labour productivity must be increased and the economy must be transformed based on knowledge and innovation."
Distinguished fellow of the Centre for Policy Dialogue, Dr Mustafizur Rahman said, "Unless the benefits are inclusive, the GDP growth will be sustainable. Which in turn may restrict the opportunity for further growth.
"Indicators such as inflation, interest rates and exchange rates cannot be controlled just by increasing the capabilities of institutions. The government must decide accordingly on what to prioritise."
He further said, "Private sector credit growth reached only 10 percent, despite a target of 14 percent in the current fiscal year. Public investments have gone up, but private investments stagnated. The GDP growth will not go up without more private investments."
Discussing the book authored by Dr Biru Paksha Paul, Dr Mustafizur said that the book should have expanded the discussion on governance of the central bank.
Claiming that the Bangladesh Bank is not properly using its autonomy, the daily Prothom Alo's Special News Editor Shawkat Hossain Masum said, "The central bank is mostly following the decisions of the finance ministry.
"Bank owners are fixing interest rates while meeting in hotels, and the Bangladesh Bank representatives are attending those programmes almost as guests. The central bank is then issuing circulars."
Masum recommended that the government should allow the market to adjust the interest rates.
Adding that the estimation of a large GDP growth rate has become a matter of self-satisfaction, he said, "Indicators such as the revenue collection, investment and export are not doing well.
"Under such circumstances, should the government feel self-satisfaction by the forecast a large GDP growth? Or, should they make a serious effort on reforms?"
Discussing his book, Dr Biru Paksha Paul said, "The capability of institutions must be improved to ensure the quality of the GDP growth. The growth will not be sustainable if it destroys the fundamental pillars of institutions and economy.
"Government is setting monetary indicators such as the circulation of money and rate of inflation in the national budget. But the budget's only goal is to set fiscal targets."
He continued, "At present, the quality of data provided by the Bangladesh Bureau of Statistics (BBS) is quite low."
He suggested that the government should increase the autonomy of the bureau.
Dr Biru Paksha Paul also recommended that the Bangladesh Bank's governing body be dissolved and 50 percent independent representatives – who have no investment interests – be appointed in the reformed body.
He raised questions behind the logic of running an "ineffective" organisation such as the Bangladesh Petroleum Corporation.
Speaking at the event, Planning Minister MA Mannan said that the BBS is providing data on the GDP growth and other statistics with far more autonomy than ever before.
Putting more emphasis on fairness instead of inclusivity, the minister added, "Inclusivity does not always ensure fairness. If the government receives specific recommendations on reform, it takes a serious initiative regarding the matter.
"As ordered by the court, the government has already taken initiatives to amend laws enacted during regimes of military dictators."