Poor governance hampers sustainable growth in Bangladesh, India, Pakistan: Experts

Poor governance and weak institutions caused by collusion among politicians, bureaucrats, and businesspeople are the most common problems in the three South Asian countries of India, Pakistan, and Bangladesh, experts and analysts said at an event on Monday.

Corruption in the region is hampering sustainable growth and preventing people from accessing public services, they said at the programme organised by the Policy Research Institute of Bangladesh (PRI) on Monday to unveil a book titled "Development Pathways: India, Pakistan, and Bangladesh 1947-2022."

Dr Ishrat Husain, the author of the book and a former governor of the State Bank of Pakistan, presented a highlight of his book at the event. He noted that Pakistan had previously ranked ahead of Bangladesh in terms of many socioeconomic indicators, including per capita income, but that Bangladesh is now ahead of Pakistan in this regard.

Dr Ishrat Husain said Pakistan achieved an average economic growth of 6.5% in the 1990s, but frequent changes in policy with each change in political power pushed the country's economy backward.

He said corruption caused by weak governance and low institutional capacity is increasing inequality in the region, depriving the masses of public services. He emphasised that governance and institutions are fundamental for steady and sustainable growth in any country.

Fortunately, the poverty rate in Bangladesh has declined, and the Gini coefficient is also lower than in the other two countries. However, regional inequality in India and Pakistan is higher, and gender disparity is also higher in these two countries, he added.

Dr Ishrat Husain noted that income distribution has not improved significantly, and economic growth has not trickled down to the poor. He expressed concern about the growing informal sector and said that workers from high-productivity sectors are migrating to lower-productivity sectors, which is reducing the share of income going to labour.

Prof Rehman Sobhan, chairman of the Centre for Policy Dialogue, said a system of elites from the business, political, and bureaucratic sectors has emerged.

He noted that the problem of inequality is systemic, not periodic. Sobhan also said that income inequality is transforming into political inequality, making it increasingly difficult for the poor to participate in the political process.

The seasoned economist expressed concern about the neglect of banking sector reforms, noting that these issues have not been discussed in parliament for over a decade.

"Who is sitting in parliament, and what is their relationship to this issue? A large number of members of parliament are from the business community," he added.

PRI Chairman Zaidi Sattar, who presided over the event, emphasised the importance of liberalising trade, strengthening institutional capacity, and reducing trade barriers to ensure economic development through regional trade.

He also stressed the need to implement a single exchange rate and a unique trade policy for all export sectors.

Salehuddin Ahmed, former governor of the Bangladesh Bank, emphasised the importance of central bank autonomy and argued that it is unwise to set interest rates at meetings held in hotels.

He also criticised the multiple exchange rate system and the long-term management of the exchange rate.