CHAPTER I

AN OVERVIEW OF PAST PLANNED DEVELOPMENT

1.1 Macro Economic and Social Development

1.1.1 Bangladesh has had two and a half decades of development efforts at lifting
the economy out of its abject poverty. The country has followed the course of
planned development since 1973. In a medium term framework, the First Five Year
Plan was launched in July 1973. This was followed by a Two Year Plan (1978-80) in
the background of world-wide inflation and uncertainties. In 1980, the five year plan
framework was reinstated and since then three five year plans were implemented in
succession. There was no development plan during 1995-97 after the expiry of the
Fourth Plan (1990-95). Every plan targeted at an average annual GDP growth rate of
above 5 per cent but achieved about 4 per cent. In spite of large inflow of foreign
assistance to augment meagre domestic resources, the planned effort for development
has not been able to free the economy from the low growth trap. Almost half of the
population of Bangladesh still continues to eke out an existence below poverty line
with very little access to the basic amenities of life.
1.1.2 Planned development has been frustrated by a number of factors. First, political
instability loomed large over most of these years since independence though a semblance of
elected government was maintained. It was in the nature of thing that the absence of a truly
representative government led to political turmoil adversely affecting development process.
Worse still was the private agenda that the lack of public accountability bred indiscriminately.
This not only added fat to projects but as said, gift horses also failed to earn their hay.
Secondly, foreign aid flow and its modality affected the development effort. Although
Bangladesh received generous aid, its level was not adequate to mount the investment
programmes which the successive Plans envisaged. Even in that year (1989/90) when aid
flow (disbursement) reached its peak ($ 1.8 billion) investment/GDP ratio was 12.80 per cent
only, still one of the lowest in the south-east Asian region. Nor was aid flow steady; it appears
to have reached its plateau at around $ 1.4 billion at constant market prices of 1984/85. At
such prices average annual inflow of foreign aid during the Second Plan was lower than that
in 1979/80 and steadily declined in real terms (at 1984/85 import prices) after the flood year
of 1987/88 when aid flow was $ 1.59 billion. The modality of aid has also drastically changed
with the gradual withering of commodity aid which used to generate counterpart fund for
local currency financing of projects, and commitment of counterpart fund of food aid to
selective projects. Thirdly, the development process has been disrupted by frequent
occurrences of natural disasters like flood, cyclone and drought. They not only pre-empted
scarce resources for relief work and rehabilitation but also sapped saving and investment
habit, particularly in the agriculture sector due to high risk. All these compounded to frustrate
planned development with shortfalls in investment and output. The planned outlay and GDP
growth targets with their actuals of the successive Plans are shown in Table 1.1.
 2

Table 1.1
Plan Size Actual Expenditure and GDP Growth Rate of Past Plans
(at respective base year prices)
(in million Taka)
Plan Plan Size Estimated Actual Expenditure Growth Realised
Target Growth
Total Public Private Total Public Private (%) (%)
1 2 3 4 5 6 7 8 9
First Five Year Plan 44,550 39,520 5,030 20,740 16,350 4,390 5.50 4.00
Two Year Plan 38,610 32,610 6,000 33,590 24,020 9,570 5.60 3.50
Second Five Year Plan 172,000 111,000 61,000 152,970 103,280 49,690 5.40 3.80
Third Five Year Plan 386,000 250,000 136,000 270,110 171,290 98,820 5.40 3.80
Fourth Five Year Plan 620,000 347,000 273,000 598,480 274,083 324,397 5.00 4.15

1.2 Review of Fourth Five Year Plan (1990-95)

1.2.1 The Fourth Five Year Plan (1990-95) was launched in July, 1990, but the draft Plan had
to undergo several revisions before it was formally approved by the government in June,
1995. The Plan outlay was reduced from Tk.689.30 billion to Tk.620 billion. The Plan placed
emphasis on poverty alleviation and meeting the basic needs of the people with particular
focus on human resources development, women in development and environmental
sustainability. The main objectives of the Plan were: (a) accelerating economic growth to
achieve an overall annual GDP growth rate of 5 per cent, (b) poverty alleviation and
employment generation through human resources development and (c) increased self-
reliance.
1.2.2 The allocation for the public sector was Tk.347 billion (56%) while that for the private
sector was Tk.273 billion (44%). The share of the private sector was kept higher than that in
the Third Plan (35%) and the Second Plan (16%) in view of expanding market economy and
public resource constraint. To meet the resource requirements, the Plan aimed at raising
domestic saving rate to an average of 8.60 per cent to achieve an investment rate of 14.80 per
cent and tax/GDP ratio of 9.30 per cent in the terminal year of the Plan.
1.2.3 Growth performance: The average annual growth rate during the Fourth Plan period
was 4.15 per cent against the Plan target of 5 per cent. The low growth was due to almost
stagnant agricultural production. The growth of the sector was only 0.98 per cent compared
with the Plan target of 3.42 per cent. Agricultural growth suffered due to problem with
fertiliser distribution and lack of adequate public procurement of foodgrain at support prices.
The manufacturing sector showed a modest growth rate of 7.05 per cent against the target of
9.02 per cent. The energy sector, however, accounted for an accelerated growth rate of 15.31
per cent while its target was 9.28 per cent. The public services sector showed some shortfall
in attaining the growth target. The housing and other services, however, had marginally
higher growth rates. The sectoral growth targets and achievements of the Fourth Plan along
with GDP are given in Table 1.2.
1.2.4 Changes in economic structure: There was a marked change in the structure of the
economy in the Fourth Plan period. The shares of the manufacturing and services sectors
went up further and the share of agriculture declined in line with its historical trend
(Table 1.3). The share of the agricultural sector went down to 32.77 per cent in 1994/95 from
41.77 per cent in 1984/85. In spite of these shifts, the economy continued to be dominated by
agriculture; so it remained susceptible to natural hazards.
 3

Table 1.2
GDP Composition and Growth Rate During Fourth Plan Period
(at 1984/85 prices)
(in million Taka)
Sector 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 Annual Growth Rate (%)
Target Achievement
1 2 3 4 5 6 7 8 9
Agriculture 190,354 193,421 197,662 201,230 201,915 199,822 3.42 0.98
Industry 49,322 50,503 54,211 59,140 63,786 69302 9.02 7.05
Electricity, Gas and Natural Resources 5,561 6,704 7,876 8,933 10,184 11,339 9.28 15.31
Construction 29,749 31,087 32,471 34,032 36,074 38,593 5.86 5.34
Transport and Communication 59,024 60,840 63,349 66,416 70,089 74,203 5.39 4.68
Trade and Other Services 105,124 110,237 115,780 122,041 129,516 140,115 5.00 5.92
Housing 38,030 39,316 40,656 42,187 43,792 45,457 3.62 3.63
Public Services 20,363 22,334 24,184 26,240 28,484 30,962 10.65 8.74
Total GDP 497,527 514,442 536,189 560,219 583,840 609,793 5.00 4.15

Table 1.3
Structural Change in Economy (1984-95)
(in per cent)
Sector Composition of GDP Contribution to
(at 1984/85 prices) Incremental GDP
1984/85 1989/90 1994/95 Third Plan Fourth Plan
1 2 3 4 5 6
Agriculture 41.77 38.27 32.77 22.50 8.43
Industry 9.86 9.91 11.36 10.16 17.80
Electricity, Gas and Natural Resources 0.58 1.12 1.86 3.55 5.15
Construction 5.53 5.98 6.33 7.98 7.88
Transport and Communication 11.22 11.86 12.17 14.76 13.51
Trade and Other Services 19.82 21.13 22.98 27.01 31.17
Housing Services 7.97 7.64 7.45 6.17 6.62
Public services 3.25 4.09 5.08 7.87 9.44
Total 100.00 100.00 100.00 100.00 100.00
Source: BBS
1.2.5 Savings and investment: Historically, the levels of aggregate savings and investment
have been very low in Bangladesh. However, there have been some improvements in
domestic savings and investment rates during the Fourth Plan period. Domestic savings as a
ratio of GDP increased from 2.72 per cent in 1989/90 to 8.31 per cent in 1994/95. The
increased savings rate was due to higher savings by the government as well as by the private
sector.
1.2.6 The level of investment in the economy of Bangladesh is low compared to that in many
developing countries. The rate of aggregate investment in 1990/91 was 11.50 per cent which
rose to 16.63 per cent in 1994/95. This exceeded the Plan target of 14.80 per cent. This rising
trend is a positive development in resource mobilisation for faster economic growth and
socio-economic upliftment. In this period, the relative share of private investment rose while
that of the public sector declined. This reflects the reorientation of the Bangladesh economy
towards the private sector.
1.2.7 Public sector outlay: Annual phasing of public sector outlay at 1989/90 prices and
ADP allocation and achievement during the Fourth Plan are given in Table 1.4. The increase
in ADP size was due to the inclusion of certain lumpy projects such as the Bangabandhu
(Jamuna) Bridge, Madhyapara Hard-rock and Barapukuria Coal Development projects.
 4

Increased investment in education, particularly in primary and mass education, stipend for
female students, food for education and rapidly enhanced investment in rural roads,
electrification, water supply etc., also necessitated significantly higher resource deployment in
the public sector.
Table 1.4
Public Sector Outlay and Realisation During Fourth Plan
(at 1989/90 prices)
(in million Taka)
Year Plan Allocation ADP Size % Realisation over
Revised Realised RADP Allocation Plan Allocation
1 2 3 4 5 6
1990/91 48,390 56,954 49,042 86 101
1991/92 55,070 63,475 53,480 84 97
1992/93 70,110 69,642 56,170 81 80
1993/94 82,700 81,175 75,976 94 98
1994/95 90,730 94,998 87,772 92 97
Total 347,000 366,244 322,440 88 93
Note: Used Investment Deflator
1.2.8 Sectoral allocation: The sectoral allocations of the public sector outlay of Tk.347
billion at 1989/90 prices and expenditures are given in Table 1.5. Total financial achievement
was 92.93 percent of the Plan allocation. The transport sector including Bangabandhu
Table 1.5
Public Sector Allocation and Expenditure During Fourth Plan
(at 1989/90 prices)
(in million Taka)
Sector Allocation % Realised % Financial
Share Expenditure Share Achievement as %
of Plan Allocation
1 2 3 4 5 6
Agriculture 23,260 6.70 18,820 5.84 80.91
Rural Development and Institutions 16,500 4.76 17,930 5.56 108.67
Water Resources 38,290 11.03 26,730 8.29 69.81
Industry 16,840 4.85 5,030 1.56 29.87
Power 45,360 13.07 41,880 12.99 92.33
Oil, Gas and Natural Resources 23,980 6.91 15,320 4.75 63.89
Transport 46,530 13.41 51,260 15.90 110.17
Communication 6,520 1.88 12,130 3.76 186.04
Physical Planning and Water Supply 18,420 5.31 13,780 4.27 74.81
Education and Religious Affairs 26,580 7.66 29,050 9.00 109.29
Sports and Culture 1,460 0.42 1,510 0.47 103.42
Health 10,600 3.05 9,830 3.05 92.73
Family Welfare 15,980 4.61 15,160 4.70 94.87
Mass Media 1,230 0.36 1,190 0.37 96.75
Social Welfare, Women Affairs and Youth 2,350 0.68 2,020 0.63 85.96
Development
Public Administration 2,010 0.58 710 0.22 35.32
Science and Technology 540 0.16 490 0.15 90.74
Labour and Manpower 850 0.24 180 0.06 21.18
Others 49,700 14.32 59,420 18.43 119.58
Total 347,000 100.00 322,440 100.00 92.93

(Jamuna) Bridge accounted for the largest chunk (15.90%) of the expenditure which exceeded
the share envisaged in the Fourth Plan. The power sector was the second highest recipient
claiming 13 per cent of the expenditure. The social sector received higher emphasis
 5

compared to the original allocation. The education sector's share in the ADP expenditure
appreciably increased to about 9 per cent as against 7.66 per cent earmarked in the Plan.
Other social sectors (except Labour and Manpower) also showed higher realised expenditure
compared to the planned outlay.
1.2.9 Public sector financing: As regards financing of the planned public sector outlay of
Tk.347 billion, an amount of Tk.119 billion (34.29%) was to come from domestic resources
and Tk.228 billion (65.71%) from external resources. Table 1.6 shows the actual amount of
expenditure at current prices during 1990/91-94/95 made through the ADPs and the
contribution of the government thereto.
Table 1.6
ADP Allocation and Government Contribution During Fourth Plan
(at current prices)
(in million Taka)
Fiscal Total ADP Government % of
Year Allocation Contribution Total Allocation
1 2 3 4
1990/91 61,210 12,980 21.21
1991/92 71,500 17,870 25.00
1992/93 81,210 20,530 25.28
1993/94 96,000 34,400 35.83
1994/95 111,500 47,980 43.03

1.2.10 The domestic resource share in public sector financing was below the planned
projection (34.29%) during the first three years of the Plan. The share picked up during the
last two years of the Plan rising to 35.83 per cent in 1993/94 and to about 43 per cent in
1994/95, but on average, there was a shortfall; together with lower aid inflow, it resulted in a
lower development expenditure in the public sector than planned.
1.2.11 There was a significant improvement in tax collection due to the introduction of VAT
during the Fourth Plan period. Domestic resource generation amounted to Tk.158.92 billion
at 1989/90 prices. This exceeded the Plan target of Tk.119 billion by 33.55 per cent. Total
revenue receipts during the Fourth Plan period was Tk.471.57 billion against the target of
Tk.457.9 billion. Out of the total revenue receipts, tax revenue was Tk.379.48 billion and
non-tax revenue was Tk.92.09 billion. Total revenue receipts increased at an average annual
rate of about 10.00 per cent at 1989/90 prices. Tax revenue and non-tax revenue grew at the
average annual rates of about 8.76 per cent and 16.15 per cent respectively. Tax/GDP ratio
increased to 9.71 per cent in 1994/95 exceeding the Plan target of 9.30 per cent. In spite of
this, there was shortfall in public development outlay as revenue expenditures were more than
planned.
1.2.12 Implementation: During the early years of the Fourth Plan, implementation of ADP
posed to be a major challenge as development programmes/projects involving large
expenditures for the rapid socio-economic development of the country were launched. Over
the Plan period, shortfall in ADP implementation was a matter of grave concern for the
government. Reforms of project execution process in terms of delegation of authority to the
project directors, reinforcement of the review and monitoring process, reallocation of
developmental resources from the slow-moving to the fast-moving projects through objective
review exercises and gearing up of the project approval process were identified as necessary
steps for improvement of implementation of ADP. Through adoption of some of these
 6

corrective measures, the rate of ADP utilisation picked up appreciably from 1993/94 and the
process of improvement was more or less sustained during the remaining period of the Fourth
Plan.
1.2.13 Private investment: An amount of Tk.273 billion was earmarked for the private
sector in the Fourth Plan. This was about 44 per cent of the total Plan allocation. The annual
phasing of the Fourth Plan projection by sectors is shown in Table 1.7.

Table 1.7
Projected Private Investment During Fourth Plan
(at 1989/90 prices)
(in million Taka)
Sector/Year 1989/90 1990/ 91 1991/ 92 1992/ 93 1993/ 94 1994/ 95 Total
(Benchmark) (1990-95)
1 2 3 4 5 6 7 8
Agriculture 6,500 6,150 6,130 6,950 8,050 9,500 36,780
Industry 4,500 5,360 6,340 7,900 10,500 14,100 44,200
Housing and Construction 7,000 9,560 6,810 7,500 8,440 9,750 42,060
Transport and Communication 5,300 5,910 5,880 7,150 8,750 11,400 39,090
Trade and Other Services 7,000 7,160 16,210 21,450 28,400 37,650 110,870
Total 30,300 34,140 41,370 50,950 64,140 82,400 273,000

1.2.14 A significant acceleration of private investment was envisaged during the Plan period
(1990-95). Private investment was expected to rise from Tk.30.30 billion in 1989/90 to
Tk.82.40 billion in 1994/95 giving an average annual growth of 22.20 per cent. The estimate
of realised private investment at current prices is shown in Table 1.8.
Table 1.8
Realised Private Investment During Fourth Plan
(at current prices)

(in million Taka)

Sector Plan Allocation Realised Investment
(1989/90 prices) 1990/91 1991/92 1992/93 1993/94 1994/95
1 2 3 4 5 6 7
Agriculture 36,780 4,194 7,468 8,316 9,616 10,431
Industry 44,200 15,084 19,361 23,079 23,552 32,972
Housing and Construction 42,060 6,770 8,168 10,724 12,859 18,668
Transport and Communication 39,090 5,514 5,861 6,592 6,914 12,267
Trade and Other Services 110,870 17,000 19,205 25,695 27,735 35,844
Total 273,000 48,562 60,063 74,406 80,676 110,182

1.2.15 At the sectoral level, the performance of industry was affected in the closing years of
the Plan due to political unrests; yet its share in total private investment rose from 14.85 per
cent in 1989/90 to 29.92 per cent in 1994/95. In real terms (at 1989/90 prices), industrial
investment (private) was more than double the planned target (Table 1.9).
 7

Table 1.9
Realised Private Investment During Fourth Plan
(at 1989/90 Prices )
(in million Taka)
Sector/Year 1989/ 90 1990/ 91 1991/ 92 1992/ 93 1993/ 94 1994/ 95 Total Plan Percentage
(Actual) (1990-95) Allocation Attainment
over Plan
Allocation
1 2 3 4 5 6 7 8 9 10
Agriculture 6,500 3,902 6,630 7,131 8,131 8,887 34,681 36,780 94
Industry 4,500 14,035 17,188 19,792 19,915 28,092 99,022 44,200 224
Housing and Construction 7,000 6,299 7,252 9,196 10,873 15,897 49,517 42,060 118
Transport and Communication 5,300 5,131 5,203 5,653 5,846 10,451 32,284 39,090 83
Trade and Other Services 7,000 15,818 17,049 22,035 23,452 30,539 108,893 110,870 98
Total 30,300 45,185 53,322 63,807 68,217 93,866 324,397 273,000 119

1.2.16 It can be seen from Tables 1.7 and 1.9 that realised total private investment in the
successive years from 1990/91 through 1994/95 during the Fourth Plan period was higher
than the targeted private investment. It grew at an annual average rate of 25.40 percent. There
were, however, some shortfalls in agriculture, transport and communication, and in trade and
service sectors.
1.2.17 Balance of payments and external resources: The country enjoyed a relatively
comfortable balance of payments position during the first four years of the Fourth Plan. A
continued higher growth of exports and remittances vis-a-vis a sharp decline in imports
during 1990/91 and 1991/92 and a slow growth during the following two years helped contain
the balances of trade and payments and keep them below their benchmark levels during the
period. The balance of payments situation, however, worsened in the terminal year of the
Plan, largely because imports recovered substantially from the unusually low levels.
1.2.18 Preliminary estimates indicate that aggregate imports, exports and remittances during
the Plan period were 99.34 per cent, 96.29 per cent and 99.31 per cent of their projected totals
respectively. The share of imports financed through exports was 53.85 per cent in 1994/95
compared with 55.21 per cent expected in the Plan. As a result, the current account deficit
overshot the target by 10.12 per cent. There was a shortfall of around 10 per cent in aid
disbursements also.
1.2.19 Imports: Total imports grew at an annual rate of 6.14 per cent which exceeded the
Plan target of 5.11 per cent. However, merchandise imports during the Plan period was still
$130 million less than $19.81 billion projected in the Plan. Imports started to pick up after
the first two years of the Plan and reached a peak of $5.05 billion in the terminal year.
Foodgrain imports rose sharply to $622 million in 1994/95 against the Plan expectation of a
fall to $100 million. Imports of non-food and intermediate goods grew slowly at the rates of
5.4 per cent and 5.5 per cent respectively compared with 6.6 per cent and 9.8 per cent
projected in the Plan indicating a depressed domestic demand. Imports of capital goods which
declined by 2.20 per cent rather than rising at 1.70 per cent as projected in the Plan similarly
manifested a depressed demand.
1.2.20 Exports: Total exports during the Plan period fell short of the target by $400 million
and amounted to $ 10.39 billion. However, exports picked up by the close of the Plan
reaching a level of $ 2.72 billion in 1994/95. The average annual growth rate of exports was a
little higher (12.20 per cent) than that (11.60 per cent) envisaged in the Plan. Non-traditional
 8

exports grew at a higher annual rate of 17.20 per cent than the Plan's projection of 16 per
cent; this offset the shortfall in traditional exports.
1.2.21 Terms of trade: The terms of trade which suffered a deterioration of 2.60 per cent in
1989/90 improved between 1990/91 and 1993/94 but an 8.90 per cent appreciation in the
import price index against a 6.60 per cent rise in the export price index resulted in a small
deterioration of 2.20 per cent in the country's terms of trade in 1994/95.
1.2.22 Remittances: Total home remittances during the Plan period amounted to $4.30
billion, lower by only 0.69 per cent than the target of $ 4.33 billion. The annual growth of
private transfer was slow, 4.80 per cent against the projection of 5.10 per cent. Annual
manpower export reached its peak of 238 thousand approximately in 1992/93 from 110
thousand in 1989/90 but thereafter fell below 205 thousand and was about 200 thousand in
1994/95. Annual remittances increased from $761 million in 1989/90 to $1.09 billion in
1994/95. Total foreign employment was 0.95 million in the terminal year of the Plan.
1.2.23 Foreign aid: The global recession after the Gulf war, the emergence of independent
states in the former Soviet Union, and above all, newly emerging donor priorities adversely
affected the availability of external assistance and caused a decline in the flow of foreign aid
to Bangladesh. Implementation problems also adversely affected aid disbursement. During
the Plan period, the total aid disbursement fell short of the target by 9.28 per cent to $7.56
billion and accounted for 47.64 per cent of development expenditure at 1989/90 prices.
1.2.24 Debt service: The country's debt obligation consists mainly of the public sector debt
which increased in nominal terms from $10.61 billion in 1989/90 to $16.77 billion in 1994/95
showing a growth rate of 9.60 per cent a year. Debt service payments for the public sector
MLT debt rose at the rate of 9.20 per cent from $302 million in 1989/90 to $ 468 million in
1994/95. Against this burden, export earning grew at the annual rate of 17.50 per cent in
nominal terms. As a result the debt service burden declined to 13.48 per cent of export
earnings in 1994/95 compared with 19.75 per cent in 1989/90.
1.2.25 Exchange rate management: Bangladesh has been pursuing a flexible exchange rate
policy to ensure its competitiveness in international trade. The Bangladesh Bank fixes its
buying and selling rates of US dollar for the banks on a daily basis. While setting the buying
and selling rates, changes in exchange rates and price levels of major trading partners are
taken into account after due adjustments for trade weights. In other words, buying and selling
rates of US dollar in terms of taka are changed with due regard to the nominal as well as real
effective exchange rate (REER) index and levels of trade with its important trading partners.
Bangladesh Bank has been progressively liberalising the foreign exchange restrictions in
tandem with the government's reform policies for trade liberalisation, export promotion and
deregulation with a view to creating an environment conducive to growth in investment and
productivity. Taka has been made convertible for all transactions in the current account. In
addition, several steps have been taken to activate the inter-bank foreign exchange market.
The exchange rate in the secondary exchange market and the official rate have been unified
since January 1, 1992. On the other hand, exporters retention rate has been increased from 20
per cent to 40 per cent since FY96. These liberalisations have strengthened the unification of
the two rates. Taka was depreciated by 22.10 per cent during the Fourth Plan period which
stimulated both export and workers' remittances and helped reduce Current Account gap in
the external sector.
 9

1.2.26 Money and prices: The Consumer Price Index for the middle income families in
Dhaka increased roughly at an annual average rate of 4.50 per cent during the Fourth Plan
period compared with the average rate of 9.80 per cent during the preceding 5 years. The
inflation rate came down to as low as 1.40 per cent in 1992/93; thereafter, it began to rise and
was 5.20 per cent in 1994/95. The lower inflation rate could be attributed to two major
factors: the availability of consumer items including foodgrains was adequate and stable, and
the money supply was contained, particularly during the first three years of the Plan period.
However, the money supply (M1) during the last two years of the Plan rose significantly
which resulted in a higher inflation rate in 1994/95.
1.2.27 Employment situation: The Fourth Plan (1990-95) laid specific emphasis on
employment generation to alleviate poverty. The trend in employment is shown in Table 1.10.
Table 1.10
Labour Force Employment and Unemployment During 1972 to 1997
(million person-years)
Year Labour Employment Unemployment Unemployment
Force Domestic Foreign Total Rate (%)
1 2 3 4 5 6 7
1972/73 21.38 13.09 - 13.09 8.29 38.78
1977/78 24.10 16.04 0.05 16.09 8.01 33.24
1979/80 25.29 16.09 0.05 16.14 9.15 36.18
1984/85 29.50 18.97 0.32 19.29 10.21 34.61
1989/90 34.80 22.82 0.43 23.25 11.55 33.19
1994/95 40.47 26.88 0.95 27.83 12.64 31.23
1995/96 41.70 28.18 1.14 29.32 12.38 29.69
1996/97 42.97 29.62 1.34 30.96 12.01 27.95
Note: i. Underemployment counted on the basis of duration of work.
ii. LFS 's usual definition used,
iii. Estimation of labour force for 1972/73 and 1977/78 based on 1974 and 1981 census population
growth respectively and for 1979/80, manpower survey of 1980 adjusted; similarly, for 1989/90
LFS 1989 adjusted.
iv. The rate of unemployment covers underemployment also; employment and unemployment
calculated on person year basis.
v. Foreign employment figure shows cumulative net employment.
The labour force has almost doubled since independence growing at a rate faster than the
population. Against this, employment on man-year basis has more than doubled resulting in a
reduction of unemployment rate (including underemployment) from 38.78 per cent in
1972/73 to 31.23 per cent in 1994/95. During all the Five Year Plans, unemployment rate
showed a decline, faster during the First Plan than during the others. However, it suffered a
setback during the Two Year Plan (1978-80) when unemployment rate increased. As the
domestic employment increased at an annual rate of 3.30 per cent, GDP grew at 3.90 per cent
a year there was some marginal gain in the overall average productivity of labour.
1.2.28 Sectoral employment during Fourth Plan: Sectoral employment situation at the
beginning and end of the Fourth Plan and the volume of employment generated during the
Plan period is shown in Table 1.11. In 1989/90 agriculture accounted for 56 per cent of total
domestic employment. Agriculture continued to absorb over half of the employment in
1994/95 in absence of alternative employment opportunities but its share in GDP declined to
less than one-third indicating a much lower productivity of labour in agriculture than in the
non-agricultural sector.
 10

Table 1.11
Sectoral Employment During Fourth Plan Period
(million persons)
Sector Employment in 1989/90 Employment in Employment Generation
1994/95 during Plan period
1 2 3 4
Agriculture 12.85 13.97 1.12
(56.3) (52.0) (27.6)
Industry 2.52 3.84 1.32
(11.0) (14.3) (32.5)
Construction 0.92 1.34 0.42
Power and Gas 0.05 0.09 0.04
Transport and 2.18 2.54 0.36
Communication (9.6) (9.4)
Education 2.63 3.28 0.65
(11.5) (12.2) (16.0)
Trade and Other Services 1.67 1.82 0.15
Sub-Total (domestic) 22.82 26.88 4.06
Foreign Employment 0.43 0.95 0.52
Total 23.25 27.83 4.58
Note: Figures in parentheses indicate percentage share of domestic employment.
1.2.29 Reform measures: A comprehensive programme for structural reforms which was
progressing in piece-meal earlier was started in the second half of the 1980s under the
Structural Adjustment Facilities (SAF) loan. This was further strengthened in 1990s and
aimed at liberalising the foreign trade and exchange rate regimes, restructuring the industrial
sector, strengthening fiscal and monetary management, encouraging private sector
participation in development and privatising the state owned enterprises (SOEs). As a result,
macro economic stability was brought about with lower inflation rates, smaller fiscal and
current account deficits and higher foreign exchange reserves. In 1986/87, the first year of the
programme of structural adjustment with growth, the overall budget deficit was 8.40 per cent
of GDP (Tk. 45.03 billion) and by the end of the decade, it was 7.70 per cent of GDP
(Tk.58.10 billion). This eased somewhat the inflationary pressure of the budget. The deficit
declined further during the next two years to reach around 6 per cent of GDP. It was displaced
in 1994/95 to 6.80 per cent as a result of a sudden spurt in public expenditure. In 1994/95,
public expenditure (revenue) grew by 18.57 per cent when revenue receipt rose by 13.16 per
cent only. Net foreign financing covered the budgetary gap to a large extent (72.18 per cent),
and public borrowing doubled to Tk. 22.17 billion compared to the previous year. Fiscal
imbalance had been creeping back after 1992/93 when fiscal deficit in both absolute and
relative terms as percentage of GDP was the lowest. As a result of fiscal operation and
increased public borrowing in 1993/94 and 1994/95, there was expansion in monetary
aggregates and total liquidity increased by 33.87 per cent over those years. This fuelled
inflation, and the CPI (Dhaka Middle Class) began to rise in 1993/94 after falling to the
lowest level (1.40 per cent) in 1992/93, partly due to fiscal and monetary restraints but mainly
due to good harvest. The inflation rate rose to 5.22 per cent in 1994/95, marginally exceeding
what it was in 1991/92 (5.10 per cent). Domestic imbalances (over-expenditure and inflation)
had their logical effect on the external sector also; current account deficit crept up to 3.54 per
cent of GDP in 1994/95, exceeding that of 1991/92 (2.43 per cent) even though export
earning was about double during this period and wage earners' remittances rose by about 50
per cent. Rising imbalance in the external sector led to exchange rate depreciation.
 11

1.3 Review of Performance During Two Years Plan Holiday (1995-97)

1.3.1 The government of that time could not draw up a new plan after the Fourth Plan.
ADPs in the public sector in 1995/96 and 1996/97 were prepared on an ad-hoc basis. Private
investment could not be projected in a framework of facilitation package.
1.3.2 Growth performance: During this period, the overall GDP in real terms attained
modest gains. It registered a growth of 5.40 per cent in 1995/96. The growth in agriculture
was 3.70 per cent in 1995/96 compared with a negative growth of 1.04 per cent in 1994/95.
The growth of industry declined from 8.64 per cent in 1994/95 to 5.29 per cent in 1995/96.
The contribution to GDP was 32.24 per cent by agriculture, 11.34 per cent by industry, 6.25
per cent by construction, 1.94 per cent by power, gas and water and 48.21 per cent by other
services. Following the taking over charge by the democratically elected new government in
June 1996, a set of co-ordinated measures were taken to increase investment in both the
public and private sectors. According to preliminary estimates, GDP grew by 5.70 per cent in
1996/97 over that in 1995/96. The growth of agriculture was about 6 per cent, industry 3.60
per cent and services 6.20 per cent. The growth in agriculture was due to significant increase
in major crop production. The decline in growth of the industry sector was due to shortfall in
production of both large and medium scale industries.
1.3.3 Saving and investment : During 1995/96, the rate of domestic saving was 7.27 per
cent and that of national saving was 11.85 per cent of GDP. Preliminary estimates of
domestic and national saving rates in 1996/97 were 7.70 per cent and 14.63 per cent
respectively. The rate of investment rose from 16.63 per cent of GDP in 1994/95 to 17.0 per
cent in 1995/96 and to 17.37 per cent in 1996/97. In 1996/97, public sector investment was
6.52 per cent and the private sector was 10.85 per cent of GDP.
1.3.4 Financing of ADPs: In the absence of a plan, public sector's outlays during 1995/96
and 1996/97 were set through the annual development programmes (ADPs). Original ADPs
of 1995/96 and 1996/97 were Tk.121billion and Tk.125 billion respectively. Due to resource
constraint, ADP of 1995/96 was reduced by 13.70 per cent to Tk.104.47 billion. The actual
ADP expenditure, however, amounted to around Tk. 100.16 billion. The contributions of
domestic resources to the financing of annual development programmes of 1995/96 and
1996/97 were Tk.44.14 billion (42.30%) and Tk.59.26 billion (47.40%) respectively.
1.3.5 Balance of payments situation: The country's balance of payments came under strain
in 1995/96. A steep rise in imports coupled with slower aid disbursements triggered a
rundown in the country's foreign exchange reserves. By the end of the fiscal year, the reserves
stood at $ 2.04 billion, equivalent to 3.6 months' imports as on June 30, 1996. The trade
deficit widened by more than 27 per cent to $ 3.0 billion after imports jumped up by 18 per
cent to $ 6.88 billion against an 11.80 per cent growth of export to $ 3.88 billion. Several key
imports like cotton, POL, rice and wheat suffered from rises in prices in the world market,
significantly raising the import bill. The rise in imports came largely from a 15 per cent
increase in non-food imports led by textiles, cement, POL and capital goods and a 37 percent
escalation in foodgrain import. Gain in exports of knitwear and ready-made garments mainly
contributed to the overall export growth during the year. But inflow of remittances from
overseas workers levelled off at $ 1.2 billion. As a result, the current account deficit widened
to $ 1.6 billion. Aid disbursements also declined by around 17 per cent to $ 1.44 billion. All
these led to the draw-down of the foreign exchange reserves.
1.3.6 The strain experienced in the external balances in 1995/96 eased, albeit marginally, in
1996/97. Faster growth of exports, aided and strengthened by a turn-around in the flow of
 12

remittances, narrowed the current account deficit to an estimated amount of $ 860 million
(3.40 per cent of GDP) compared with $ 1.64 billion (5 per cent of GDP) in 1995/96. With
the rise in foodgrain output in 1996/97, the import demand for foodgrain was estimated to
decline substantially- by more than 67 per cent to $ 212 million. Therefore, total imports were
estimated to grow at a slower rate of 1.70 per cent and reach $ 7.0 billion. On the other hand,
estimated higher export earnings from garments, knitwear, frozen food, tea and raw jute led to
a 13.30 per cent rise in export earnings to $ 4.40 billion in 1996/97.
1.4 Overall Macroeconomic and Social Development Trend
1.4.1 Macroeconomic trend: Recent macroeconomic management has achieved successes
in infusing stability in the economy (Table 1.12). A number of features are noteworthy here.
Firstly, GDP growth has improved in recent years. Secondly, dependence on foreign aid has
been significantly reduced; foreign aid financing is less than one-sixth of investment against
about two-thirds a decade ago. Thirdly, inflation has been contained. Fourthly, external
sector's imbalance has been brought down to a manageable limit of available external
resources due to the growth of exports and remittances. Finally, fiscal deficit has been
contained and dependence on foreign aid has been reduced as a result of greater domestic
resource mobilisation through tax efforts and reforms.
Table 1.12
Macroeconomic Indicators
(in million Taka)
Items 1972/73 1977/78 1979/80 1984/85 1989/90 1994/95 1995/96 1996/97 (P)
1 2 3 4 5 6 7 8 9
GDP (at 1984/85 prices) 264,555 323,015 341,298 406,,933 497,527 609,793 642,441 678,753
GDP (at current prices) 49,853 145,194 196,050 406,933 737,571 1170,261 1301,600 1402,580
External Resources Balance 2,459 14,650 25,572 43,172 74,329 97,428 126,554 116,027
Import 5,484 22,855 39,588 74,361 135,751 263,133 310,913 329,328
Export 3,025 8,205 14,016 31,189 61,422 165,705 184,359 213,301
National Resources 52,312 159,844 221,622 450,105 811,900 1267,689 1428,154 1538,218
Consumption 50,811 142,674 191,646 397,438 717,473 1073,038 1206,954 1294,532
Investment 1,501 17,170 29,976 52,667 94,427 194,651 221,200 243,686
Domestic Saving -958 2,520 4,404 9,495 20,098 97,223 94,646 108,048
National Saving -1,383 5,407 7,755 18,414 42,628 153,245 154,288 205,171
Current Account Balance 2,884 11,763 22,221 34,253 51,799 41,406 66,912 38,515
Tax Revenue 1,866 9,842 14,363 28,070 57,120 113,640 122,330 140,740
Overall Fiscal Deficit 4,656 10,436 19,412 29,960 58,100 79,700 74,500 74,800
Rate of Inflation (% change in CPI) 47.40 12.74 18.85 11.20 9.33 5.22 4.07 3.91
Real GDP growth rate - 7.03 1.50 3.93 6.63 4.44 5.35 5.65
Exchange Rate (Taka/US$) 7.7808 15.1215 15.4777 26.0600 32.9323 40.2005 40.8400 42.7008
As % of GDP (at current Prices)
External Resources Balance 4.93 10.09 13.04 10.61 10.08 8.33 9.72 8.27
Import 11.00 15.74 20.19 18.27 18.40 22.48 23.89 23.48
Export 6.07 5.65 7.15 7.66 8.32 14.15 14.17 15.21
Consumption 101.92 98.26 97.75 97.67 97.28 91.69 92.73 92.30
Investment 3.01 11.82 15.29 12.94 12.80 16.63 16.99 17.37
Domestic Saving -1.92 1.74 2.25 2.33 2.72 8.31 7.27 7.70
National Saving -2.77 3.72 3.96 4.52 5.78 13.09 11.85 14.63
Current Account Balance 5.78 8.10 11.33 8.42 7.02 3.54 5.14 2.75
Tax Revenue 3.74 6.78 7.33 6.90 7.74 9.71 9.40 10.03
Overall Fiscal Deficit 9.34 7.19 9.90 7.36 7.88 6.81 5.72 5.33
Note : P = Preliminary, World Bank's definition of tax differs from that of the Ministry of Finance.
Source : BBS
 13

1.4.2 Trend in social development

a. Income distribution: The average per capita GDP has doubled in about 20 years, but
is still at a very low level. This has been accompanied by some improvement in the
poverty situation. The percentage of population below poverty level declined from 83
per cent in 1974 to 73 per cent in 1981, to 55.60 per cent in 1985 and to 47.50 per cent
in 1995 (Table 1.13). Preliminary estimate shows that in 1996, percentage of such
population was 45.8. But Gini coefficient shows a deterioration in income distribution
since 1985, rising from 0.372 to 0.430 in 1995. This apparent contradiction between
poverty level and income distribution can be explained by targeted food distribution
programme in a market economy driven by profit motive.
b. Economically active population: While population has grown between 1974 and
1991 by 54.50 per cent, the economically active population has gone up by 63.90 per
cent, indicating an increase in the refined activity rate from 44.30 per cent in 1974 to
69.60 per cent in 1990/91. In 1995/96, activity rate was 64.80 per cent against 48.30
per cent. Due to this growth in activity rate, the volume of unemployment increased
from 0.5 million in 1974 to 1.27 million in 1995/96. But because of the shift in the
structure of the economy and improvement in winter cultivation, overall employment
condition improved and the unemployment and under-employment rate declined from
38.78 per cent in 1972 to 27.95 per cent in 1996/97. Agriculture has not been able to
absorb increased labour force and as a result, there has been large migration from the
rural to the urban areas. This is supported by phenomenal growth of over 6 per cent in
urban population per annum since the 1970s. However, some of the demographic
variables improved. The rate of growth of population has slowed down. Despite that,
employment opportunities continued to lag behind the labour force growth.
c. Health and family planning: Despite low level of per capita income Bangladesh has
achieved impressive progress in the area of population planning and family welfare.
The rate of population growth declined from over 2.50 per cent in 1971 to 1.80
per cent in 1996. TFR declined from 6.3 in 1975 to 3.4 in 1996, infant mortality rate
declined from 140 per thousand live births in 1975 to 78 per thousand in 1996 and
maternal mortality rate from 6.2 in 1981 to 4.4 per 1000 live births in 1996.
Contraceptive prevalence rate went up from 8 per cent in 1975 to over 48 per cent in
1996. Life expectancy at birth rose from 45 years in 1970 to 58 in 1996. There have
been some impressive achievements in the area of primary health care and sanitation
also. Expanded programme of immunisation, increased its coverage from 2 per cent in
1985 to 77 per cent in 1996. Dramatic improvement in the use of oral rehydration
therapy (ORT) has also improved child survival significantly.
d. Over 90 per cent of the people in the rural areas now use safe drinking water
compared with 56 per cent only in 1975. There has also been improvement in the
coverage of the sanitary methods from 9 per cent in 1991 to 36.90 per cent in 1996.
The trend in the ratio of population to physicians and hospital beds, although
improving, is still low. Availability of nurses is very low. Therefore, there is a strong
need to improve availability of physicians, hospital beds and nurses, in addition to the
need for better quality of medical services.
e. One of the major indicators, in fact, an important precondition of social development,
is literacy and education. Time series of literacy shows that adult literacy rate which
was 25.80 per cent in 1974 rose to 29.20 per cent in 1981 and to 35.30 per cent in
1991. This means that in about 20 years time it rose by only 13 percentage points,
while 64.70 per cent of the population remained illiterate. The progress has been
 14

Table 1.13
Social Development Indicators
Area/Indicators 1970 1974 1975 1981 1985 1991 1992 1993 1994 1995 1996
Demographic Indicators
Population (million persons) 71.8 76.4 80.1 89.9 99.9 111.5 113.2 115.5 117.7 120.8 122..0

Population density (persons/sq. km) 486 518 543 609 677 755 767 782 798 818 832
Population growth rate (%) 2.60 2.48 2.57 2.35 2.07 1.98 1.92 1.88 1.87 1.85 1.80
Crude birth rate (per 1000 persons) - 42 46 35 35 32 31 29 27 28 27
Crude death rate (per 1000 persons) - 19.4 18.0 12 12 13 11 10 9 9 9
Total fertility rate (birth per woman) - 6.3 6.3 5.04 4.7 4.3 4.2 3.8 3.6 3.4 3.4
Net reproduction rate - - 2.3 2.0 1.8 1.7 1.6 1.6 1.5 1.4 1.5
Contraceptive prevalence rate (% of married
couple between 15-49 yrs) - 4.7 7.7 21.8 25 40 - 44.6 46.3 48.0 48.0
Maternal mortality rate (per 1000 live births) - - - 6.2 6.3 4.7 4.7 4.5 4.5 4.5 4.4
Infant mortality rate (per 1000 live births) 150 140 140 111 112 92 88 84 77 78 78
Life expectancy (National) 45 50.7 46 55 55 56.1 56.3 57.2 57.9 58.0 58.0
Male - 51.6 47 55 56 56.5 56.8 57.8 58.1 58.1 58.1
Female - 49.7 45 54 55 55.7 55.9 56.6 57.5 57.6 57.6

Population by age group (%)

o-14 46.2 45.9 43.8 41.3 41.8 42.0 - - 41.1 40.8 43.2
15-64 51.1 50.5 53.8 55.9 55.5 55.6 - - 54.9 55.1 53.4
2.6 3.6 2.4 2.8 2.7 2.8 - - 4.0 4.1 3.4
65+
Urban population (as % of total population) 7.6 8.8 9.3 15.2 16.2 17.2 18.0 20.0 21 22 23
Growth rate of urban population - 4.25 6.74 6.63 6.52 - 6.30 6.27 6.22 6.09 6.03

Mean age at first marriage

Male - 24.0 24.5 25.8 25.3 25.2 25.2 26.6 27.7 27.9 27.6
Female - 15.9 16.4 17.8 18.0 18.1 18.2 19.6 18.8 19.9 20.0

Health and Sanitation Indicators 1 2 69 - 74 76 77

EPI coverage (% of one year old children)
Sanitary system of excreta disposal (% of 9 35 35.3 36.9
population)
Access to safe water (% of population) 56 80 95 96 96
Persons per hospital bed 8122 6000 5110 4290 3635 3205 3254 3320 3384 3450 3307
Persons per physician 8430 10000 11350 7810 6886 4526 4596 4687 4777 4870 4915
Population per nurse 6578 - - - 8755 9955 10107 10312 10509 10714 8879
Daily per capita protein intake (grams) - 51 43 - 63 - 63 65
Daily per capita calorie intake (k. cal.) - 1892 1760 - 2191 - 2266 2244
Income Distribution Indicators
Income ratio of highest 20% to lowest 20% of 5.9 6.0 6.9 6.6 - 6.9 8.8
population
Gini co-efficient
National 0.36 0.39 0.37 0.39 0.43
Rural 0.35 0.36 0.36 0.36 0.38
0.38 0.41 0.37 0.40 0.44
Urban
Population below poverty level: per capita calorie
intake<2122 k.cal.
National 83 73 55.7 47.5 47.5
Rural 83 74 54.7 47.6 47.1
81 66 62.6 46.7 49.7
Urban
Income per capita GDP
in Taka 992 1594 2574 4174 7490 8001 8208 8754 9760 10660
In US$ 124 180 158 161 210 210 210 219 243 261

Contd.
 15

Area/Indicators 1970 1974 1975 1981 1985 1991 1992 1993 1994 1995 1996
Education Indicators
Adult literacy
National 25.8 - 29.2 33.0 35.3 39.7 41.5 42.0 47.3 47.3
Male 37.2 - 39.7 39.7 44.3 46.8 48.1 49.4 55.6 55.6
13.2 - 18.8 18.0 25.8 25.0 33.9 34.3 38.1 38.1
Female
Gross primary enrolment ratio (6-10 years)
National - 76.0 - 80.0 86.0 92.0 95.0
Male 56.2 81.0 - 82.0 88.0 93.0 96.0
43.8 70.0 - 78.0 84.0 91.0 94.0
Female
Primary school completion rate (%) - - - - - 41 53 60 61 - -
Female labour force (as % of total labour) - 4.1 4.5 5.8 4.1 13.6 14.5 - - - 18.2
Share of women in Public Service (in percentage) - - - - 6.3 8.0 8.5 8.6 9.1 - -
Share of women in the total primary school teachers - - - 9.0 12.9 20.4 21.4 23.8 25.0 26.9 27.5
Share of female members in the parliament (MPs) - - - - - 10.3 - - - - 11.2
Percentage of women participating in the national election - - - - - 1.7 - - - - 1.9
Daily newspaper in circulation (copies per 1000 persons) - -- - - - - - 14.9 17.3 18.5 19.0
T.V. Receivers (sets per 1000 persons) - - - - - 4.5 4.5 4.5 4.7 5.2 5.3

Source: BBS/Planning Commission

extremely slow. Historical observations of gross enrolment of primary education

indicate that, it in fact, went down in the 1980's, implying that primary education
failed to enjoy due importance and that enrolment did not keep pace with the growing
population. However, recently the government has not only made primary education
compulsory but has also given a big push to the development of primary and mass
education. It has allocated higher amounts and adopted innovative programmes like
Food for Education for rapid expansion of primary and mass education. As a result,
the gross primary enrolment ratio has gone up, particularly among girls. Gross
secondary enrolment ratio also rose from 17 per cent to 19 per cent during the period
of 1986-92.
f. Indicator of male-female gap : Labour force participation rate of the females
increased from 4.10 per cent in 1974 to 18.20 per cent in 1996. Life expectancy of the
females is hardly different from that of the males. These went up from 51.6 and 49.7
in 1974 to 58.1 and 57.6 in 1996 for males and females respectively. Literacy ratio of
the females as percentage of the males has gone up from 35.50 per cent in 1974 to
68.50 per cent in 1996. Primary school enrolment of the females as a percentage of the
males has also gone up steadily.
g. Access to credit and employment of women is also on the rise. Women are
increasingly entering into industrial employment. The percentage of female workers
rose from 24 per cent in 1984/85 to 38 per cent in 1995/96. Ninety per cent of the
workers in garment industries are presently women. Share of women in public service
went up from 6.30 per cent in mid 1980s to 9.10 per cent in 1994.
1.5 Sectoral Performances
1.5 .1 Agriculture : Agriculture accounts for about one-third of GDP and nearly 63 per cent
of the total employed persons in 1995/96. It attained modest growth and experienced slow
transition during the two decades since independence, though the development goal of the
sector was to transform the traditional and vulnerable agriculture into a modern one capable
of sustained growth. Since the First Five Year Plan, all the Plans emphasised the overall
development of the rural economy with food and agriculture as its centrepiece. The average
annual growth rate of the agriculture sector was 1.86 per cent from 1972/73 through 1979/80
and 2.17 per cent from 1980/81 through 1990/91.
 16

1.5.2 The target of foodgrain production in the First Plan was set at 15.14 million metric
tons (mt) against the benchmark of 10.02 million mt in 1972/73. However, production in the
terminal year, 1977/78 was 13.11 million mt which was 15 per cent less than the target. The
shortfall in crop production is mainly attributed to natural calamities and slow expansion of
the modern technology. Only 2.87 million acres of cultivable land could be covered under
mechanised irrigation by the terminal year of the First Plan against the target of 4.92 million
acres.
1.5.3 During the Second Plan, the target of food production was 17.5 million mt. The
growth of foodgrain production was modest and reached the level of 15.8 million mt against
13.5 million mt in 1979/80 though an input-based medium term food production plan was
undertaken in 1981 for accelerated production of foodgrain. The shortfall in production was
mainly due to frequent floods and droughts, inadequate irrigation facilities and shortfalls in
fertiliser distribution. The area under irrigation reached 6.12 million acres only against the
target of 7.21 million acres and fertiliser distribution was 1.26 million mt only against a
target of 1.6 million mt. The performance of the cash crops was also not satisfactory.
1.5.4 The Third Plan accorded priority to agriculture as the strategy for development of
domestic resources and accordingly, allocated about 30 per cent of the total Plan outlay to
the sector, including development of water resources and rural institutions. Moderate growth
was achieved in the sector with foodgrain production increasing to 18.75 million mt against
the benchmark of 15.8 million mt. The target of 20.6 million mt could not be attained because
of two consecutive severe floods in 1987 and 1988 though privatisation of fertiliser
distribution and liberalisation of import of minor irrigation equipment helped raise their use.
The annual growth rate of the agriculture sector was 2.5 per cent only as against a target of 4
per cent.
1.5.5 Agriculture accounted for 38 per cent of GDP in 1989/90. Of this, crop sub-sector
contributed 30 per cent to GDP, forestry 2.50 per cent, livestock 2.80 per cent and fisheries
2.60 per cent. At the end of the Fourth Plan, agriculture still accounted for about one-third of
GDP. Forestry, fisheries and livestock, each contributed about 3 per cent of GDP, while crop
sector’s share declined to about 24 per cent. Inadequate quality seeds, irrigation facilities and
extension services coupled with natural calamities like floods, droughts, salinity, etc.,
contributed largely to the sluggish growth of agriculture during the Fourth Plan period.
1.5.6 Food and crops: One of the prime goals of the Fourth Plan was to attain self-
sufficiency in foodgrain along with increased production of other nutritional crops. The
foodgrain production target of the Plan was set at 21.98 million mt against the benchmark
production of 18.85 million mt in 1989/90. The annual target of growth of the agriculture
sector was set at 3.60 per cent for the Plan period. The strategy for achieving the crop
production target put more emphasis on increasing yield per acre rather than increasing crop
acreage.
1.5.7 Foodgrain production however progressed slowly to reach the peak level of the Plan of
19.60 million mt in 1992/93- an increase of less than a million mt over 3 years. The
increased foodgrain production largely came from aman crop.This resulted from increase in
HYV acreage from 4.86 million acres in 1991/92 to 5.76 million acres in 1992/93. The flood
in 1993 and severe drought in 1994 along with depressed harvest prices, however, affected
foodgrain production in 1993/94 and 1994/95. Foodgrain production declined to 19.25
million mt in 1993/94 and to 18.17 million mt in 1994/95. Acreage under rice also declined
 17

from 25.88 million acres in 1989/90 to 24.52 million acres in 1994/95. Acreage under wheat
marginally increased from 1.46 million acres in 1989/90 to 1.58 million acres in 1994/95 but
production of wheat increased by 40 per cent to 1.25 million mt in 1994/95 from the
benchmark production of 0.89 million mt. Table 1.14 shows production of rice and wheat
during the Fourth Plan period.
Table 1.14
Production of Foodgrain During Fourth Plan
(in million m.ton)
Crops 1989/90 Plan Target 1990/91 1991/92 1992/93 1993/94 1994/95
(Benchmark) (Terminal
Year)
1 2 3 4 5 6 7 8
Aus 2.49 2.42 2.33 2.18 2.08 1.85 1.79
Aman 9.20 11.00 9.17 9.27 9.68 9.42 8.50
Boro 6.17 7.20 6.36 6.80 6.59 6.77 6.54
Wheat 0.89 1.20 1.00 1.07 1.17 1.13 1.25
Total (Rice and Wheat) 18.75 21.82 18.86 19.32 19.52 19.17 18.08
Other Coarse grain 0.10 0.16 0.08 0.08 0.08 0.08 0.09
Total Foodgrain 18.85 21.98 18.94 19.40 19.60 19.25 18.17
Source : Ministry of Agriculture

1.5.8 The failure to achieve production targets was due to shortfalls in both area and yield.
Yield levels continued to reflect past trends rather than the accelerated improvements
envisaged in the Plan. The production of aus, aman and boro rice — all fell short of their
respective targets.
1.5.9 The growth of the agriculture sector as a whole during the Fourth Plan fell short of the
rate envisaged. Annual average growth rate attained was 0.98 per cent against the target of
3.60 per cent. It declined through the Plan period and suffered a serious setback during
1993/94 (0.30 per cent) and 1994/95 (-1 per cent). The crop sector declined in both the years.
Although the adoption of modern varieties increased, their yields have fallen in recent years.
The main reasons for this were inadequate supply of high quality seeds and loss of vigour of
the HYV seeds. The expansion of minor irrigation also slowed down. Non-availability of
fertilisers at the farm level in time also emerged as a vexing problem. The unbalanced use of
fertilisers and depletion of organic matter affected soil fertility and yield. Increasing land
erosion, soil degradation, water logging and salinity, frequent floods and droughts and
declining ground water level in several areas remained as the main problems for increasing
production.
1.5.10 The thrust on foodgrain self-sufficiency was maintained during 1995/96 and 1996/97
and crop diversification programme of the Fourth Plan was continued. Total foodgrain
production during 1995/96 was somewhat better than that in the previous two years though
still below the 1992/93 peak of 19.6 million mt. Aus crop suffered from inadequate rainfall
and was 1.68 million mt — 0.11 million mt less than that of the terminal year of the Fourth
Plan. This shortfall was made up by aman harvest of about 8.8 million mt Production of
boro rice was 7.2 million mt. Total rice production was 17.69 million mt. With the wheat
production of 1.37 million mt, total foodgrain production was 19.14 million mt in 1995/96,
but still below the 1992/93 level. The estimate for total cereal production during the year
1996/97 was at 20.43 million mt, the highest ever production of cereals. The aman production
rose to 9.59 million mt while aus, boro and wheat gained marginally only to 1.87 million mt,
7.42 million mt and 1.45 million mt respectively.
 18

1.5.11 Food management: The main objective of the “Food Policy” is to ensure food
security to all the households. During the Fourth Plan, food management underwent major
changes. With the growth in foodgrain production as well as development of infrastructure,
marketing of foodgrain improved. Growth in private foodgrain trade enabled the government
to moderate its intervention in the foodgrain markets. All restrictions and obstacles to
participation of the private sector in foodgrain trade and management were removed. The
level of commercial operation of the Public Food Distribution System (PFDS) declined.
Simultaneously, foodgrain distribution through various safety net programmes was intensified
along with some improvements and enlargements of targeted intervention programmes such
as the Food for Education.
1.5.12 During the Fourth Plan period, the year-end stock of foodgrain with the PFDS was
maintained at around 0.8 million mt. Procurement of foodgrain from the farmers decreased
from 0.78 million mt in 1990/91 to 0.28 million mt in 1994/95 as the production remained
below the record level of 1992/93. During the same period, off-take of foodgrain through
PFDS also declined from 2.37 million mt in 1990/91 to 1.57 million mt in 1994/95.
1.5.13 The foodgrain storage capacity increased from 1.02 million mt to 1.86 million mt at
the end of the Third Plan. The same level of storage capacity was maintained upto the end of
the Fourth Plan. In order to retain foodgrain storage capacity at the level of around 1.86
million mt and to ensure quality of stock, the government undertook various projects for
rehabilitation and reconstruction of food godowns and modernisation of the food management
system.
1.5.14 While rehabilitation and reconstruction of food godowns and modernisation of food
management system were continued, some policy oriented projects for efficient monitoring
and forecasting of the country’s food situation were also undertaken to cope with unexpected
price and supply situations.
1.5.15 Forestry : Forest is ecologically important and plays an important role in the
economy of Bangladesh. The forestry activities contribute nearly 3 per cent of the GDP and
about 2 per cent of the total labour force is employed in this sub-sector. An estimated 2.45
million ha (17 per cent) of the total land of the country is under forests or potential forests.
Out of this, 2.18 million ha is owned by the government as classified and unclassified forests
and the rest 0.27 million ha is controlled privately, e.g. by homesteads, tea gardens, rubber
plantations, etc.
1.5.16 The major emphasis during the earlier Plans was quantitative expansion of forests for
providing increased supplies of wood and wood products and qualitative improvement of the
natural forests through afforestation. During the Fourth Plan, extraction of forest resources
was discouraged for environmental conservation and afforestation of newly accreted land
received priority. However, the major thrust during the Fourth Plan was people’s participation
and private sector investment in the management and development of forests.
1.5.17 The physical target for forest plantation during the Fourth Plan was 46,947.5 ha;
against this 43,619.84 ha were brought under actual plantation. Coastal afforestation was
more or less fully achieved (19,565 ha). Similarly, the Plan target of 16,158 km. of strip
plantation was achieved by almost 100 per cent by the end of the Fourth Plan. Rubber
plantation covered 1,261.78 ha of land under BFIDC and production of rubber was 7.83
million kg. against the target of 11.03 million kg.
 19

1.5.18 The main objective of the forestry sub-sector during 1995/96 and 1996/97 was to
expand forest resources, make the forests adequately productive, develop institutional
capabilities including human resource and involve local people as much as possible in
forestry activities. People oriented programmes covering forestry on marginal lands, char
lands, road sides, etc. got momentum during these years.
1.5.19 The coastal afforestation programme covered about 2,730 ha against the target of
3,010 ha. Targets for industrial and strip plantations during 1995/96 were to cover 4,239 ha
and 1,778 km respectively. The former target was fully realised but the latter covered 1,665
km. During 1996/97, targets for coastal afforestation, industrial plantation and strip plantation
were set at 2800 ha, 3895 ha and 3295 km respectively.
1.5.20 Livestock: The contribution of the livestock sub-sector to the country’s GDP is
around 3 per cent and to agricultural GDP around 9 per cent. The latter share has been rising
steadily in recent years. Livestock contributes 95 per cent of draught power to agriculture and
provides full-time employment to about 20 per cent of the rural population generating cash
income for the rural poor with a small amount of investment. This sub-sector earns also
significant amount of foreign exchange through export of hides and skins, leather products,
bones, horns, etc.
1.5.21 Keeping these in view, the programmes undertaken during the Fourth Plan period
were: (a) feed and fodder development for poultry and cattle, (b) animal health and disease
control by treatment and vaccination, (c) improving breed and breed multiplication, (d)
marketing, (e) credit, (f) research, and (g) extension services, training and education.
1.5.22 Targets and achievements in some of the areas of the livestock sub-sector during the
Fourth Plan are shown in Table 1.15. Production of dairy and poultry remained below their
respective planned targets.
Table 1.15
Targets and Achievements of Livestock Sub-sector During Fourth Plan

Item Unit 1989/90 1994/95 (Terminal Year)

(Benchmark) Target Achievement
1 2 3 4 5
Milk ‘000’ metric tons 1,326 1,480 1,412
Meat ‘000’ metric tons 435 510 505
Egg million number 1,910 2,600 2,539
Vaccines million doses 220 300 370
Artificial Insemination million cases 0.8 1.5 1.4
Source : Department of Livestock

1.5.23 The livestock sub-sector continued the programmes during these two years following
the objectives and strategies of the Fourth Plan like genetic upgradation of livestock,
development of dairy and poultry enterprises and expansion of employment opportunities.
During 1995/96, livestock sub-sector provided 1,472 million doses of liquid semen, 0.35
million doses of frozen semen, 1.32 million artificial inseminations, 4.1 million day-old
chicks and 19.58 million doses of vaccines. Dairy and poultry outputs were 1.07 million litres
of milk and 2.6 billion eggs. Production during 1996/97 were 1.54 million litres of milk, 3.25
billion eggs and 8.36 million day-old chicks.

1.5.24 Fisheries : Fisheries accounts for about 9 per cent of agricultural GDP and
contributes about 60 per cent of the nation’s protein intake. It provides full time employment
 20

to about 1.2 million people and also generates part time employment for some 11 million
people. About 10 per cent of total export earnings come from fisheries. Increased production,
export and creation of employment opportunities have been the main focus of development
activities in the sub-sector over the years.
1.5.25 The Fourth Plan laid emphasis on the development of fisheries sub-sector with major
objectives such as (a) increasing fish production for domestic consumption; (b) improving the
socio-economic conditions of the fishing community; (c) enhancing the fisheries resource
base; (d) improving management technology; and (e) increasing foreign exchange earnings
through export of fish and fish products.
1.5.26 The Fourth Plan envisaged fish production of 1.20 million mt in 1994/95 as against
the actual production of 0.85 million mt in 1989/90. Total fish production at the terminal year
of the Plan was 1.17 million mt (inland fish production 0.91 m.mt and marine, 0.26 m.mt) as
against the target of 1.20 million mt (inland, 0.94 m.mt and marine, 0.26 m.mt).
1.5.27 The total export earnings from fisheries during 1994/95 stood at $315.69 million (at
current dollars). Export earnings from frozen food was $226 million exceeding the Plan
target of $158 million by 43 per cent (at constant $ of 1989/90).
1.5.28 Fisheries sub-sector continued to get priority during 1995/96 and 1996/97.
Aquaculture was given high priority because of shortfall in inland fishing during the Fourth
Plan as well as its potential. This included fish culture in derelict fish ponds, paddy fields ,
open water areas and other water bodies.
1.5.29 In 1995/96, 1.24 million mt of fish was produced against a target of 1.26 million mt.
The target of fish production for 1996/97 was set at 1.37 million mt. The hatching in 1995/96
was 3,500 kg as against the target of 3,000 kg from the government fish seed multiplication
farms and hatcheries. In 1996/97, the hatching rose to 3,800 kg. Export earnings during
1995/96 was Tk.13.41 billion from the export of 38,929 mt of fish and fish products. The
target of export earnings in 1996/97 was set at Tk.16 billion.
1.6 Water Resources
1.6.1 The key strategy for the water resources development was the expansion of irrigation
coverage through water conservation measures, conjunctive use of both surface and ground
water resources along with optimum utilisation of available flows of major/minor rivers in a
phased manner.
1.6.2 In order to achieve a sustained growth of 3.60 per cent in the agriculture sector, it was
planned to bring about 4.8 million ha of land under irrigation by the terminal year of the
Fourth Plan. To achieve this target, BWDB undertook gravity irrigation mainly under flood
control, drainage and irrigation (FCDI) projects in order to cover 0.5 million ha, while the
remaining areas were to be covered by minor irrigation equipment and traditional methods.
Schemes were drawn up to bring about 3.64 million ha of land under flood control and
drainage during the Plan period.
1.6.3 Surface water irrigation: The surface water irrigation consisting of gravity flow, LLP,
floating pumps, etc. was carried out during the Plan period by both the public and the private
sectors. The cumulative target for surface water irrigation coverage in 1990-95 was estimated
at 1.79 million ha against which 1.14 million ha was covered at the end of the Plan period.
 21

1.6.4 Ground water irrigation: Ground water irrigation programmes through DTW, STW,
HTW and other technologies were under implementation mainly by the private sector since
late 1980s. Subsidies on DTW were withdrawn and minor irrigation was entirely privatised.
The cumulative target for ground water irrigation during 1990-95 was set at 3.02 million ha.
As against this target, the cumulative achievement at the end of June, 1995 was 2.17
million ha.
1.6.5 Minor irrigation development programmes were also carried out by LGED and other
concerned organisations. Taking into account all these activities, the cumulative irrigation
target for the Fourth Plan was 4.81 million ha. Against this target, actual achievement at the
end of the Plan period was estimated to be 3.33 million ha. Shortfall occurred mainly due to
poor command area development, lack of motivation and people’s participation, shortage of
water in the dry season, damage to irrigation infrastructure by floods, cyclones and natural
calamities, etc. Other major problems that hindered the achievement of irrigation target were
the threat from saline water intrusion and a lack of effective water-sharing of the common
rivers, particularly of the Ganges.
1.6.6 Flood control and drainage: BWDB constructed 7,900 km. of embankments to
protect valuable crops, lives and properties in different areas. The flood control and drainage
targets for the Fourth Plan was to cover an area of 3.64 million ha. Against this, about 3.84
million ha. was brought under flood control and drainage facilities by the terminal year of the
Plan. Irrigation, flood control and drainage coverage during the Fourth Plan against their
targets are shown in Table 1.16.
Table 1.16
Targets and Achievements of Irrigation and Flood Control
During Fourth Plan
(in million hectare)
Programme 1989/90 1994/95 (Terminal Year)
(Benchmark) Target Achievement
1 2 3 4
I. Irrigation
A. Surface Water Irrigation
i) Gravity Flow 0.21 0.50 0.35
ii) LLP 0.78 1.09 0.54
iii) Traditional 0.30 0.20 0.25
Sub-Total A 1.29 1.79 1.14
B. Ground Water Irrigation
i) STW 1.25 2.20 1.64
ii) DTW 0.50 0.76 0.50
iii) HTW 0.05 0.05 0.02
Sub-Total B 1.80 3.01 2.16
C. Others - - 0.02
Total (A+B+C) 3.09 4.80 3.32
II. Flood Control and Drainage 3.24 3.64 3.84
Source: i. National Minor Irrigation Census, 1995/96
ii. Bangladesh Water Development Board.

1.6.7 Flood Action Plan (FAP) : The unprecedented floods of 1987 and 1988 caused a major
setback to the economy. A number of countries offered help for finding ways to mitigate the
effects of natural disasters. At the request of the Government of Bangladesh, the World Bank
 22

co-ordinated various efforts and prepared a programme of studies and pilot projects in order
to get a better understanding of the flood problem. The Flood Action Plan started with 11
main components and 15 supporting studies and pilot projects for implementation during
1990-95.
1.6.8 Most of the original programmes of studies under FAP have been completed. The
regional studies identified and evaluated a number of projects at prefeasibility stage, and
some possible flood mitigation projects have been identified in the regional context. A few
priority projects such as the protection of Dhaka city and a number of secondary towns,
erosion protection on the Brahmaputra right bank and the rehabilitation of the coastal
embankments are currently under implementation. Work on a number of important long-term
studies and pilot projects are still going on.
1.6.9 The sectoral development activities were continued in 1995/96 and 1996/97 on the basis
of the Three Year Rolling Investment Programme and Annual Development Programmes
(ADPs). During these two years, most of the Flood Action Plan (FAP) studies were
completed and the Second Phase of Bangladesh Water and Flood Management Strategy was
approved to prepare a Water Sector Master Plan and implement selected projects to follow-up
earlier FAP studies. As regards sectoral performance in 1995-97, irrigation coverage at the
end of June, 1997 was about 4.0 million ha. On the other hand, area coverage under flood
control and drainage improvement was 4.20 million ha upto June, 1997.
1.7 Rural Development and Institutions
1.7.1 Although alleviation of poverty was the principal objective of all successive plans, no
appreciable improvement could be achieved; consequently, poverty in Bangladesh still
remains pervasive, and particularly conspicuous in rural areas. Keeping the overall
perspective of the poverty situation in view, the main objectives and targets in the RDI sector
for the Fourth Plan were:
a. generating employment for the poor by 0.53 million by the year 1995, mostly self-
employment through co-operatives;
b. development of physical infrastructure such as rural roads, culverts, hats and bazars to
create necessary infrastructural facilities and at the same time, generate employment
opportunities to the tune of 133.1 million man-days during the Plan period; and
c. development of irrigated agriculture, drainage and minor flood control schemes.
1.7.2 The important programmes envisaged for achievement of these objectives included
production and employment programmes for the poor and development of rural physical
infrastructure. The strategy was adopted to cover a minimum of one full district with one or
more of these components.
1.7.3 Poverty alleviation and employment generation: During the Plan period,
mobilisation of the rural poor, training for awareness raising, skill development, leadership,
management capability, i.e., human resources development and access to credit were provided
through co-operative activities, particularly by BRDB. About 0.79 million members were
enrolled in various newly formed co-operatives out of which 60 per cent were women. The
activities under RDI made a good impact on human resources development, particularly
among women with focus on environmental problems, sanitation and safe drinking water,
and nutritional situation. The Ministry of Land established some 384 self-reliant ideal villages
to rehabilitate 17,315 landless and rootless families.
1.7.4 Infrastructure : Under LGED 3,709 kms. of roads were constructed against the target
of 2,399 kms. About 42,000 metres of bridges and culverts were either constructed or
 23

rehabilitated against the target of 30,000 metres. Against the target of development of 316
growth centres, 277 were developed through construction of sheds, internal roads, trading
areas, etc. In the course of implementation of infrastructure programmes, LGED generated
over 112.00 million person-days of seasonal employment which was 84 per cent of the target.
1.7.5 Rural Development sub-sector continued its focus on poverty alleviation through
production and employment programmes (PEP) and development of physical infrastructures
along with irrigated agriculture. Under the PEP, 0.39 million persons were targeted to be
employed by the end of 1996/97 through self-employment of the members of the co-
operatives, and formal and informal groups formed for self-employment. Under the
infrastructure programme, 2,856 kms of pucca roads and 20,800 metres of bridges and
culverts were to be constructed. Apart from these, 163 growth centres were planned to be
developed.
1.8 Industry
1.8.1 Review of past performance: Industries sector plays a pivotal role for accelerated
economic growth as well as productive employment generation. As the agricultural sector is
constrained by land and under- employment situation resulting in a relatively low output -
labour ratio, industry will have to become the engine of development. A breakthrough in
industrial development is also called for to achieve the desired structural change in the
economy in order to reduce its dependence on nature.
1.8.2 The growth rate of the manufacturing sector fluctuated largely during the past Plan
periods. The annual average growth rates of the manufacturing sector during the First Plan,
the Two Year Plan, the Second Plan and the Third Plan were 7.35, 6.21, 0.93 and 4.22 per
cent respectively.
1.8.3 Development policies and programmes in the initial years after independence
concentrated on repairs, rehabilitation and consolidation to restore the sector at the pre-
independence level with some new investments in priority areas. The First Plan mainly aimed
at better utilisation of the existing capital stock. These yielded good results. In both the
Second and Third Plans, the primary objectives of industrialisation were to support the
agricultural sector, meet basic needs of people and strengthen the balance of payments
position.
1.8.4 With the introduction of the New Industrial Policy (NIP) of 1982 and the Revised
Industrial Policy (RIP) of 1986, a number of changes and improvements were made in various
procedures and incentive structures to promote private investment in industry. As a result,
non-traditional export industries, viz. ready-made garments, frozen food, etc. became
important sources of industrial growth. Export earnings from manufacturing rose from a
level of US$ 617.81 million in 1984/85 to US$ 1.2 billion in 1989/90. The share of export of
non-traditional items increased from 35.8 per cent in 1984/85 to 67.74 per cent in 1989/90.
1.8.5 During the Third Plan, a total of 39 public enterprises were disinvested and transferred
to the private sector in order to create more confidence among the private entrepreneurs about
the industrial policy and to boost up private investment. However, the payment of purchase
price instalments by the privatised enterprises has been very poor.
1.8.6 Performance during Fourth Plan: During the Fourth Plan period, the annual growth
rate of industry was 7.05 per cent. This was below the targeted growth rate of 9.02 per cent.
During this period, the industrial sector provided employment to 1.32 million persons against
the benchmark of 2.52 million persons. The private sector largely provided the new
 24

employment opportunities. During the Plan period, production of jute goods, fertiliser,
cement, paper and newsprint and sugar was more or less close to their respective targets. Due
to various reasons like mismanagement, obsolete machinery, lack of fund and proper
planning, industrial unrest, power failure, etc. growth in this sector was impeded. In current
prices, foreign exchange earnings from major industrial products increased continuously
though slowly. During the Plan period, the aggregate level of private investment was about
Tk.99 billion against the public sector investment of Tk.5.03 billion at 1989/90 prices. Most
of the public corporations of this sector incurred losses during the Plan period; hence, the
government emphasised the policy of privatisation.
1.8.7 Reforms and privatisation: A number of reform measures in the industrial, financial
and trade sectors were undertaken during the Plan period in pursuit of a more open and
competitive economy. In the industrial sector, the reform measures may be categorised as
under :
a. Reorganisation of public sector
b. Privatisation
c. Liberalisation
1.8.8 In order to improve operational efficiency and economic viability of the state owned
enterprises (SOE), a number of measures were undertaken. The issue of conversion of
enterprises into public limited companies and holding companies was a very widely discussed
subject. However, the policy could not be implemented. The pace of other reform measures
including performance evaluation of the corporations against set targets, operation of the
enterprises in accordance with company laws, induction of experienced personnel in the
board of directors, etc., were either slow or at a stand-still.
1.8.9 There was a stiff resistance particularly from the workers against privatisation. There
was also no clear policy as to whether the losing enterprises or the profitable ones would
come first for privatisation. Decision was taken to privatise 22 jute mills and 20 textile mills.
So far, one jute mill and 3 textile mills have been privatised and 3 units of the Chemical
Industries Corporation were sold to the private sector.
1.8.10 Jute: The jute industry is the most important sub-sector of the economy of
Bangladesh. But due to unfavourable international demand, the industry has been incurring
losses facing severe liquidity crisis. The Fourth Plan set the production target of jute goods at
715 thousand mt — 410 thousand mt in the public sector and 305 thousand mt in the private
sector in the terminal year of the Plan. Bangladesh Jute Mills Corporation (BJMC) produced
272 thousand mt of jute goods and the private sector produced 150 thousand mt.
1.8.11 A total of 154,933 persons were employed by BJMC in 1989/90. The size of
manpower was reduced to 121,338 persons at the end of the Fourth Plan, following
government policy for reduction of manpower in public enterprises. The total export earnings
of BJMC during the Fourth Plan were Tk.26.28 billion from exports of 1,285 thousand mt of
jute goods. On the other hand, member mills of the Bangladesh Jute Mills Association
(BJMA) exported about 614 thousand mt of jute goods.

1.8.12 Textiles: The main focus of the textile sector during the Fourth Plan period was on
generation of employment, private investment, export, rationalisation of tariffs, providing
monetary and fiscal incentives, product diversification and horizontal market expansion, etc.
Production targets were 204 million kg. of yarn and 1.93 billion meters of cloth. Actual
production during 1994/95 was 96.50 million kg. of yarn and 1.04 billion metres of cloth.
 25

1.8.13 During the Fourth Plan the Ministry of Textiles and its agencies focused their
programmes on balancing, modernisation, replacement and expansion of the selected old
mills. Private investment was given preference in the field of spinning, weaving, knitting,
dyeing and finishing and garments making.
1.8.14 The target set for employment generation in the textile sector was 1.79 million
numbers. As against this target, only 0.80 million people were employed. High prices of
inputs, stiff external competition in yarn and fabric markets and weak institutional back-up
were responsible for the slow response of the textile sector excluding garments. As a result,
textile sub-sector was not able to generate the targeted employment.
1.8.15 Chemical industries: The most important entities of this industrial sector are the
urea factories of the Bangladesh Chemical Industries Corporation (BCIC). Out of such six
factories, five are in the public sector. During the Fourth Plan, fertiliser output grew at an
annual rate of 5.75 per cent and the overall growth of chemical industries including
pharmaceuticals was 9.92 per cent. During the Plan period, the Corporation was however
financially strained due to official regulation of their product prices such as for urea and
newsprint.
1.8.16 Small and cottage industries (SCI): Promotion of small, cottage and rural industries
was given high priority during the Fourth Plan period. The public sector programmes of this
sub-sector were focused on promotional measures like development of industrial estates,
training, extension and research, market promotion, supply of institutional credit, equity
support, etc.
1.8.17 In order to achieve the objectives and targets set forth in the Plan, a comprehensive
programme both for the public and private sectors was undertaken with an allocation of
Tk.2.54 billion to the public sector and Tk.13.6 billion to the private sector. Allocation was
subsequently revised to Tk.2.02 billion to the public sector and Tk.17.55 billion to the private
sector.
1.8.18 The public sector spent Tk.1,391.7 million. Estimated private investments in small
and cottage industries during the Plan period were Tk.17.91 billion and Tk.582.2 million
respectively. During the Fourth Plan period 47,982 units of small and cottage industries were
established against the target of 50,723 units.
1.8.19 At the end of the Plan, actual contribution of the SCI sector to GDP was 5 per cent
against a target of 7.5 per cent. Target for employment generation was 0.4 million against
which about 0.30 million employment opportunities were created.
1.9 Power and Gas
1.9.1 The Fourth Plan had an investment allocation of Tk.64.5 billion at 1989/90 prices for
the power sector. This allocation was inadequate compared to the production targets. Due to
the shortage of both local and external resources the Plan allocation as well as Plan targets
had to be revised downward. The revised allocation for the power sub-sector was Tk.45.36
billion at 1989/90 prices against which Tk.67.48 billion was spent at current prices. Major
physical targets as well as achievements during the Plan period are shown in Table 1.17.
 26

Table 1.17
Targets and Achievements of Power Sector During Fourth Plan
Agency Particulars 1989/90 1994/95
(Benchmark) (Terminal Year)
Target Achievement
New Cumulative
addition position
1 2 3 4 5 6
BPDB Installed capacity (MW) 2,352 2,878 581 2,908*
Capabilities (MW) 1,834 2,743 581 2,133**
Transmission line (km) 230 KV, 2,652 3,151 507 3,159
132 KV, and 66 KV (including
DESA)
Grid Substation capacity (MVA) 4,750 2,621 2,369 7,119
230 KV, 132 KV and 66 KV
Distribution line (km) 33 KV and below 33,441 36,734 1,252 34,693
(excluding DESA)
Consumer connection (No.) 850,438 1050,000 225,296 1075,734
REB Distribution line (km) 35,333 64,333 29,853 65,186
Electrified village (No.) 8,545 14,530 7,939 16,484
Consumer connection (No.) 495,565 978,565 679,006 1174,571
DESA Transmission line (km) 132 KV 403 - 45 448
Distribution line (km) 3,465 6,765 1,995 5,460
Consumer connection (No.) 324,134 570,000 192,326 516,460
Note: * 2352 MW+581 MW new - 25 MW retired/standby = 2908 MW
** 1834 MW+581 MW new - 11 MW retired - 271 MW derated/decrease for maintenance and
rehabilitation = 2133 MW
1.9.2 The forecast peak demand of 2,485 MWs for the terminal year of the Fourth Plan
could not be met due to shortage of available generation capacity. The peak demand served by
the end of the Plan period was 1,970 MWs. This gave an annual growth of 4.80 per cent. The
targeted generation in the Plan period was 55,735 GWh and achievement was 46,962 GWh.
As a result, there followed load shedding.
1.9.3 The system loss in BPDB, REB and DESA was 41.11 per cent, 16.27 per cent and
35.55 per cent respectively in the first year (1990/91) of the Fourth Plan. The combined
system loss envisaged in the Fourth Plan was 25 per cent. To reduce the system loss, some
measures were taken such as creation of DESA and introduction of incentive/punishment
scheme to improve overall performance as well as introduction of a new commercial
operation system.
1.9.4 During the Fourth Plan period, total ADP allocation for Bangladesh Oil, Gas and
Mineral Corporation was Tk.23.98 billion. The actual utilisation against the financial target
was Tk.15.32 billion. Petrobangla produced 247 BCF of natural gas in 1994/95 as against the
target of producing 275 BCF but consumer connections (631,710 customers) exceeded the
Fourth Plan target. BOGMC continued its exploration, appraisal, seismic survey activities,
etc., as per their programmes.
1.10 Transport and Communication
1.10.1 Transport and communication play a vital role in facilitating the growth of the
economy as they provide the essential services for movement of people and goods and help
exchange business information.
1.10.2 Transport : During the First Plan, rehabilitation was the main focus of the transport
sector programme to regain the pre-liberation operational efficiency as well as to meet the
rising traffic demand of the economy. Tk.5.28 billion was allocated for this sector during the
 27

Plan period. Major physical achievements were reconstruction and rehabilitation of war-
damaged bridges and roads and construction of 8 new major road bridges, pavement of about
500 miles of new roads, construction of two new airports (Dhaka International Airport and
Saidpur Airport), reconstruction of 6 old jetties of the Chittagong sea port, procurement of
locomotives, coaches and wagons for the Bangladesh Railways and procurement of over 500
new buses by the Bangladesh Road Transport Corporation to augment urban transport.
1.10.3 Due to shortage of funds, a large number of on-going projects spilled over to the
Two Year Plan (TYP) and the major objective of the TYP was to complete those on-going
projects.
1.10.4 During the Second Plan period, the allocation to the transport sector was Tk.12.86
billion (1980 prices). In Railway sub-sector, 684 km of tracks were renewed. Railways have
been persistently incurring losses since liberation except in the years 1973/74, 1975/76 and
1978/79, which affected maintenance programme adversely as well as efficiency. The most
important development in the road sub-sector was the construction of Khulna-Mongla Road
and upgrading of the Dhaka-Chittagong and Dhaka-Aricha Road. Out of 19 war-damaged
bridges, 11 were rehabilitated.
1.10.5 During the Third Plan period, a total of Tk.30.02 billion was allocated to the
transport sector (at 1984/85 prices). The share of various sub-sectors were: Railway Tk.8.36
billion (27.85%); roads Tk.11.85 billion (39.48%); water transport Tk.5.71 billion (21.65%)
and air transport Tk.2.10 billion (6.99%). The salient feature of the road sector programme
was undertaking the Bangabandhu Bridge. Some 744 km of paved road and 10,249 metres of
bridges and culverts were constructed.
1.10.6 Under the Fourth Plan, the total allocation to the transport sector was Tk.63.73 billion
(including the Bangabandhu Bridge). An allocation of Tk.10.0 billion in 1989-90 prices was
earmarked for the Bangabandhu Bridge. Some 4,650 km of paved roads and 29,000 metres of
bridges and culverts were constructed/reconstructed. Most importantly, 3 bridges on major
rivers were completed. Under Railway sub-sector, 693 km Metre Gauge (MG) and 287 km
Broad Gauge (BG) railway track were rehabilitated, 84 Narrow Gauge (NG) and 24 BG
bridges were completed and a new railway station was constructed at Tarakandi in 1992 for
transportation of fertiliser from the Jamuna Fertiliser Factory. A modern workshop for heavy
repair and major overhauling services with an annual target of 120 locomotives was set up at
Parbatipur in 1992. During the Plan period, 21 BG passenger carriages, 3 (2 MG and 1 BG)
cranes and 9 MG locomotives were procured.
1.10.7 In the Fourth Plan period, the Civil Aviation Authority of Bangladesh took up projects
for strengthening of runways, extension of international passenger terminal, construction of
cargo complex, installation of boarding bridge and construction and development of airports
and related facilities.
1.10.8 The sectoral allocation during 1995/96 was Tk.21.53 billion. Against this allocation,
utilisation during this year was Tk.20.10 billion. In 1996/97, allocation was Tk.23.32 billion,
against which utilisation up to January 1997 was Tk.9.68 billion.
1.10.9 Communication: During the First Plan, the total allocation for the communication
sector was Tk.1.18 billion out of which Tk.1.07 billion was utilised. The targets could not be
achieved due to fund shortages.
 28

1.10.10 During the Two Year Plan period, the total allocation for the communication sub-
sector was Tk.1.3 billion and the expenditure was Tk 940 million. The task of the Two Year
Plan was mainly to complete the unfinished works of the First Plan.
1.10.11 During the Second Plan, the allocation for this sector was Tk.3.41 billion but the
actual expenditure was Tk.3.47 billion. A sum of Tk.390 million was provided for the Thanas
and Chittagong Hill Tracts development.
1.10.12 The total allocation during the Third Plan period was Tk.3.88 billion and the actual
total expenditure was Tk.6.38 billion. During the period, 59,190 telephone lines were
installed against the target of 75,000 lines. Automatic telephone exchanges were established
in 28 important Thana towns as against the target of 42 exchanges. In the post-office sub-
sector, Tk.370 million was spent against the allocation of Tk.380 million. Three hundred and
fifty eight new post-offices were set up against the target of 500.
1.10.13 The total allocation for the Fourth Plan period was Tk.6.52 billion of which Tk.12.13
billion was utilised. During the Plan period, the objectives of the communication sector were
expansion of services including that in the rural areas and modernisation of the
telecommunication system. A total of 72,507 telephone lines against the target of 103,658
was installed. But the services expanded mainly in the urban areas although 4,706 manual
lines against the target of 2,758 were installed in the rural areas.
1.10.14 The sectoral allocation during 1995/96 was Tk.3.52 billion, against which utilisation
was Tk.2.90 billion. In 1996/97, the allocation was Tk.2.25 billion; against this allocation
utilisation up to January 1997 was about Tk.1.05 billion.
1.11 Physical Planning Water Supply and Housing
1.11.1 In order to provide different services to the growing urban population an amount of
Tk. 2.72 billion was allocated for the physical infrastructures during the First Plan, out of
which Tk. 2.7 billion was spent. During the Two Year Plan, the amount allocated was Tk.2.5
billion against which Tk.2.41 billion was spent. The expenditure was mainly for construction
of public servants housing, office buildings, etc. However, about 1,50,000 squatters were
relocated; 3,00,000 shallow drinking tube-wells were sunk and 8,456 housing units and 2000
plots were developed till 1979/80.
1.11.2 During the Second Plan, Tk.8.2 billion was allocated against which Tk.7.39 billion
was utilised. In addition, Tk.3.19 billion was spent for development of infrastructure facilities
like construction of offices and residential buildings at the thana centres for supporting
administrative reform.
1.11.3 Third Plan allocation for this sector was Tk.5.5 billion. Actual allocation through
ADPs was Tk.9.27 billion at current prices and the amount spent was Tk.8.6 billion. In
addition, Tk.6.96 billion was provided for the development of Zilla and Thana infrastructure
from the bloc allocation. The entire amount was spent.
1.11.4 An amount of Tk.18.42 billion (at 1989/90 prices) was allocated in the Fourth Plan,
but Tk.20.58 billion (at current prices) was allocated through ADPs and Tk. 20.94 billion (at
current prices) was spent. Land Use Master Plan for 398 thanas and 60 district towns were
completed. Core house for 1000 squatter families was provided and 5000 service plots in
Dhaka and 4100 in Chittagong were developed. In addition, 3000 government quarters and 44
circuit houses in 44 newly created districts and 3000 quarters in Dhaka were constructed.
Installation of water supply and sanitation facilities were taken up in different thanas.
Sanitation coverage in rural Bangladesh went up to 36 per cent. Against the target of 105
 29

MGD water production in the district towns, the achievement was 65 MGD. In case of rural
water supply, the coverage of person per tubewell was improved to 107 in 1995 against 125
in 1990.
1.12 Education
1.12.1 Education is one of the basic needs for developing human capabilities. In Bangladesh,
educational development was not adequate in the past to meet this human need. In 1981, only
19.70 per cent of the population was counted as literate against 17.00 per cent in 1961. The
gap of literacy rate between the urban and rural areas was also striking - 35 per cent in urban
and 17 per cent in rural areas in 1981. Gender difference in attaining literacy also was no less
striking. The female literacy rate was 13.20 per cent in 1981 while that among men was 26
per cent.
1.12.2 Past performance: The Plan allocation for education during the First Plan and the
Two Year Plan (TYP) periods together was Tk.4.54 billion but because of resource shortfall,
allocation was later on reduced to Tk.2.59 billion.
1.12.3 The Second Plan accorded top-most priority to the introduction of the Universal
Primary Education (UPE) programme. The outcome was not satisfactory. Against a target of
13 million primary enrolment, actual achievement was 8.92 million. This was mainly due to
the inability to create adequate physical facilities. The Mass Education Programme also
suffered due to lack of motivation as well as weak supervision. Only 0.7 million people in the
age group 10-45 could be made literate while the target was 4.0 million. Community schools
were run to impart vocational and technical training to the adult population.
1.12.4 During the Third Plan, the major objective of the primary education sub-sector was to
enrol 11.60 million school age children by 1990. Against an estimated primary age-group
population of 14.9 million in June, 1990, schools enrolled 80.54 per cent compared with 52
per cent in June, 1985. A total of 1000 non-government primary schools were nationalised to
add to the 36,881 government primary schools existing upto June, 1985. The floods of 1987
and 1988 caused serious damage to the educational institutions, particularly in rural areas. In
1987-90, two major rehabilitation programmes were implemented covering about 1,430
educational institutions. The number of secondary education institutions increased to 10,448
in 1990 from 9,440 in 1985. The enrolment in schools also increased from 2,583,311 in 1985
to 2,993,730 in 1990. In the course of the Third Plan, 13 new departments/institutes were
established in different universities of the country with an added enrolment of 2,253. Two
new universities, one each at Sylhet and Khulna, were also established to provide higher
education.
1.12.5 Primary and mass education: The Fourth Plan objectives for expanding primary
and mass education were to introduce compulsory primary education, reduce mass illiteracy ,
ensure optimum use of existing facilities, maintain regional balance in respect of the growth
of educational facilities, ensure enhanced participation of women and inculcate ethical values
in the society.
1.12.6 The major strategy in the field of primary education was the introduction of
compulsory primary education (CPE). In order to provide effective administrative and policy
support to primary and mass education, the Primary and Mass Education Division started
operation in September 1992. The enrolment in primary schools increased from around 12.0
million in 1990 to 17.3 million in 1995. Completion rate of primary education cycle increased
from 41 per cent in 1991 to 60 per cent in 1995. Food for Education was an important
programme to increase enrolment and reduce drop-out among the poor children.
 30

1.12.7 Two major projects in the primary education sub-sector, namely, 'Development of
Primary Education in Dhaka, Rajshahi and Khulna Divisions' and 'Development of Primary
Education in Chittagong Division' were taken up. Under these two projects, a total of 1,134
low cost schools were constructed, 5,082 government primary schools were reconstructed and
3,932 schools were repaired, 39 District Primary Education Office (DPEO) and 52 Primary
Teachers Training Institutes (PTI) were developed. Besides, under the flood rehabilitation
projects, 1,620 flood-affected government primary schools were reconstructed and 4,152
schools were repaired during 1991-95. Under the cyclone rehabilitation projects,
reconstruction work of 897 and repair work of 1,695 government primary schools were
completed till June 1995. In addition 20 government primary schools in flood-free areas were
completed under the Government Primary School Rehabilitation Project during the Plan
period.
1.12.8 In order to meet the growing demand for universalisation of primary education, a
development programme for the reconstruction of 7,832 and repair of 998 registered non-
government primary schools was under implementation with domestic resources. Up to June
1995, reconstruction of 7,232 and repair of 580 registered non-government primary schools
were completed while the work on 718 registered schools remained at various stages of
development. Besides, 689 government primary schools were reconstructed and 1,518
primary schools were repaired.
1.12.9 Due to the introduction of CPE, social mobilisation programmes and 'Food for
Education Programme' coupled with infrastructural development and improvement of school
management and supervision system, the enrolment rate at the primary level increased to 92
per cent (17.3 million) in 1995 while the rate was 70 per cent (12.1 million) in 1990.
Participation of girl students at all levels increased. The girls' enrolment at the primary and
secondary levels increased particularly due to the introduction of free education for girls up to
grade 10 and provision of stipends for girls in the rural areas. In primary education, the
number of girl students increased from 5.4 million to 8.2 million while in the secondary level,
the number increased from 1.05 million to 2.40 million . The percentage of female teachers
increased from 21 per cent in 1990 to 27 per cent in 1995 as a result of the amendment of the
recruitment rule requiring 60 per cent of the posts of the primary school teachers to be filled
up with the female teachers. Under the mass/non-formal education programme, projects were
undertaken for 1.6 million targeted beneficiaries.
1.12.10 Secondary and higher education: The government had taken up expansion
programmes at the secondary and higher secondary levels in order to accommodate
increased number of students. As such, the allocation for educational programmes through
ADPs also increased to Tk.14.45 billion which was 31 per cent higher than the Plan
allocation. Enrolment at the secondary level increased from around 3.0 million in 1990 to
4.4 million in 1995 and that at the college level from 0.9 million to 1.46 million. In technical
education, enrolment nominally increased from 6,685 to 7,255. Though there had been a
quantitative expansion in different areas of secondary and higher education, qualitative
improvement of education could not reach a satisfactory level.
1.12.11 Enrolment at the university level increased from 34,902 in 1990 to 60,000 in 1995.
An amount of Tk. 2.29 billion was spent mostly for civil works in 11 public universities, but
important programmes such as curricula development/reform, modernisation of laboratories/
equipment, training of teachers, development of libraries etc., fell short of their targets.
However,a number of private universities were permitted to start their activities.
 31

1.13 Population and Family Welfare

1.13.1 During the period of 1969-72, the family planning programme was virtually at a
standstill owing to political disturbance, war of liberation and resettlement problems in the
early post-Independence period. During the next two years, not much could be done in this
sector because of the nation's pre-occupation with the rehabilitation and reconstruction of the
economy. In November 1974, however a separate Population Control and Family Planning
Division with elaborate field and national structures was set up.
1.13.2 In the First Plan (1973-78), a nation-wide population control programme was drawn
up at an estimated cost of Tk. 700 million which was revised up to Tk. 900 million at the time
of preparation of the Hardcore Programme (1975-78). For the Two Year Plan (1978-80), an
allocation of Tk. 1.0 billion was made.
1.13.3 In view of the fast growing population adversely affecting socio-economic progress,
population control and family planning received the highest emphasis during the Second Plan.
This led to very ambitious targets also in terms of population growth rate, contraceptive
prevalence rate (CPR) and net reproduction rate (NRR). The Plan envisaged to reduce
population growth rate to 1.80 per cent in 1984/85 and to increase CPR to 47 per cent with a
view to reaching NRR-1 in 1990. The actual achievements in all these areas were far below
the targets envisaged. The growth rate of population was around 2.40 per cent, CBR was
39/1000 population and CPR was 25 per cent only in 1984-85.
1.13.4 Nevertheless, efforts of the Second Plan began to yield their long term effects. Over
the Third Plan period, the rate of population growth declined from 2.40 per cent in 1985 to
2.15 per cent in 1990 as against the target of 1.82 per cent. During the same period, the CPR
increased from 25 per cent to 39.00 per cent against the target of 40 per cent. Consequent
upon intensive efforts, infant mortality and maternal mortality rates reduced to 94 and 6.0
respectively per 1000 live births in 1990.
1.13.5 In the Fourth Plan period, the rate of population growth declined from 2.15 per cent
in 1990 to 1.85 in 1995. The results of various population planning and family welfare
programmes are shown in Table 1.18.
Table 1.18
Demographic Achievements During Fourth Plan
Indicators 1990 1995 1995
(Target) (Achievement)
CBR (per 1000 population) 33.50 28.90 27.50
CDR (per 1000 population) 12.00 10.70 9.00
Population Growth (%) 2.15 1.82 1.85
IMR (per 1000 live births) 94 80 78
MMR (per 1000 live births) 6.00 4.50 4.50
CPR (%) 39.00 50.00 48.00
TFR (per woman) 4.90 4.00 3.40
Life expectancy at birth 54 58 58

1.13.6 In 1995/96, a total of 44 projects spilled over from the Fourth Plan. The number of
projects in 1996/97 stood at 46 of which 35 projects will spill over to the Fifth Plan. During
1995-97, allocation was Tk.9.69 billion (at current prices) and the estimated expenditure was
Tk.8.33 billion (at current prices).
 32

1.14 Health
1.14.1 Health is one of the basic requirements to improve the quality of life. Since
Independence, the government has been consistently attempting to formulate policies for
providing essential/minimum health care to all, particularly to the underprivileged.
1.14.2 During the Second Plan, the government adopted the goal of "health for all by 2000
AD". At the beginning of the Plan, only 30 percent of the population was covered by
essential health care services. However, some major epidemics and endemic diseases were
eradicated (e.g., small pox) or were virtually brought under control (e.g. cholera). The Second
Plan emphasised the development of health infrastructures in rural areas. A drug policy was
adopted in 1982 to make drug supply cheaper.
1.14.3 Health sector programme in the Third Plan was based essentially on Primary Health
Care (PHC) for providing a minimal level of health care to all. In order to achieve this, 374
Thana Health Complexes (THC) against the target of 397 were made functional. To increase
availability of health facilities the number of hospital beds in the country were increased to
34,488 (24,501 in the public sector) giving a bed-population ratio of 1:3200. Under the
immunisation programme, the coverage achieved was 75 per cent for BCG, 68 per cent for
DPT, 50 per cent for measles, 68 per cent for polio and 45 per cent for TT (pregnancy).
1.14.4 In the absence of a comprehensive national health policy, the development
programmes of the health sector during the Fourth Plan was guided by the policies pursued in
the previous Five Year Plans. The review of the Fourth Plan revealed both progress and
shortfalls in achievements compared to the targets. Infant mortality rate per thousand live
births declined from 94 in 1990 to 78 in 1995; the maternal mortality rate declined from 4.7
in 1992 to 4.5 in 1995 and life expectancy at birth increased from 56.1 in 1991 to 58 years in
1995. There were however shortfalls in achievements compared to the targets in
immunisation coverage, primary health care, delivery services by trained medical persons,
ante-natal care, development and deployment of trained manpower, infrastructure building
construction (Thana Health Complex, FWC), etc.
1.14.5 During the Fourth Plan, allocation for the health sector was Tk. 10.6 billion. Against
this allocation, a total of Tk.12.10 billion (at 1989/90 prices) was made available through the
ADPs of which Tk.9.83 billion was utilised .
1.14.6 On completion of the Fourth Plan, 76 projects spilled over to 1995/96 and the major
programmes continued with an allocation of Tk.4.17 billion. The amount spent during the
year was Tk.2.76 billion. In 1996/97, the allocation was Tk.5.85 billion and the expenditure
was Tk.5.0 billion.
1.15 Sports and Culture
1.15.1 Sports: Sports is considered as one of the major elements needed for developing sense
of discipline, good physical and mental health and character of the citizens.
1.15.2 The First Plan laid the foundation for development of essential elements of physical
education. During the Plan period, a number of development projects were undertaken mostly
for repair and renovation of existing sports facilities to make them functional and creation of
new physical facilities in the country. During the Second Plan some measures were adopted
for qualitative improvement as well as for quantitative expansion of sport facilities. During
this period, 14 gymnasium-cum - coaching centres at District Headquarters and a National
Tennis Complex at Dhaka were built. In addition 33 sub-divisional stadia were made
 33

functional and the construction of stadia at Chittagong, Rajshahi and Khulna Divisional
Headquarters and Bangladesh Krira Shikkha Protisthan (BKSP) was started.
1.15.3 During the Third Plan, construction of 6 gymnasium-cum-coaching centres at District
Headquarters, National Stadium-2 with flood light and shifting of 7 clubs from National
Stadium-1 area to other places were completed. In addition, two physical colleges at Dhaka
and Rajshahi were completed. Bangladesh Krira Shikha Protisthan (BKSP) started its krira
college.
1.15.4 During the Fourth Plan, an allocation of Tk.760.0 million was made for this sub-sector
and measures were taken for further qualitative improvement and quantitative development of
sports and games. Projects taken included further development of 52 district stadia,
construction of one International Standard Swimming Pool and Indoor Stadium, vertical
extension of Hockey Stadium with synthetic turf, laying of synthetic athletic tracks in
National Stadium-2, modernisation of Gulshan shooting range in Dhaka and development of
tennis complexes in Dhaka and Rajshahi. During the Plan period, the third phase of
Bangladesh Krira Shikkha Prothisthan (BKSP) was completed at a cost of Tk.150.0 million.
The most important event was the 6th SAF games organised successfully in Dhaka during this
Plan period.
1.15.5 During 1995-97, a total of 21 projects were under implementation of which 13
projects spilled over from the Fourth Plan and an amount of Tk.192.31 million was spent upto
June 1996. In 1996/97, the total number of projects included were 21 and the allocation
during the period was Tk.373.90 million.
1.15.6 Culture: Cultural development is one of the indicators of overall development of a
nation. Development programmes for this sub-sector were first initiated from the period of
the Second Plan. During that period, some infrastructure facilities were developed and some
publications of Bengali text books for higher education were made. Besides, research work on
Bengali language and literature was emphasised. During the Third Plan period, some more
infrastructural facilities were provided.
1.15.7 An amount of Tk.700.0 million was allocated for this sub-sector during the Fourth
Plan period and Tk. 533.11 million was utilised. Programmes emphasised: (a) research and
publication on Bangla language and literature, and use of Bangla for higher education, (b)
library development; (c) promotion of fine and performing arts; and (d) conservation,
preservation and presentation of folklore, history and heritage, etc.
1.15.8 During 1995-97 an amount of Tk.347 million was allocated out of which Tk.298.70
million was spent upto June, 1997. During the period 1995-97, major programmes of the
Fourth Five Year Plan continued and a total of 5 projects were completed.
1.16 Social Welfare Women Affairs and Youth Development
1.16.1 Social welfare: Social service programmes assist and empower socio-economically
disadvantaged people like the poor, the landless, the unemployed, children in especially
difficult circumstances, the disabled and distressed people and the vagrants and orphans.
Attempts were made during the First Plan to give due emphasis on the role of the social
welfare sector in the overall socio-economic development of the country and to adopt
programmes for the benefit of those who were unable to find a place for themselves in the
society. Forty rural thanas were covered under rural community development programmes to
make the disadvantaged groups and the landless people more productive through skill training
and production-oriented programmes. Under the urban community development programmes,
 34

68 centres were established to render vocational training to slum dwellers. During the First
Plan period, Tk.122.8 million was allocated which was almost fully utilised. During the Two
Year Plan, an allocation of Tk.136.0 million was made to complete the on-going projects
against which Tk.112.98 million was utilised. During the Second Plan, an amount of
Tk.590.0 million was allocated and Tk.391.0 million was utilised. During this Plan period, a
rural community development programme was undertaken with the focus on disadvantaged
groups including women for skill training and education. The programme covered 104 thanas
and established 196 community centres.
1.16.2 A total of Tk. 750.0 million was allocated for the social welfare programmes in the
Third Plan. The expenditure was Tk. 630.0 million. The programmes undertaken during the
Third Plan period emphasised provision of institutional services for the rehabilitation of the
orphans and the physically handicapped. A total of 18,000 handicapped persons and 12,000
orphans were provided with institutional services during the Plan period.
1.16.3 In the social welfare sector, the major theme of the Fourth Plan was poverty alleviation
and human resources development. A total of Tk.1.32 billion was allocated through ADPs to
the social welfare programmes during the Plan period and the expenditure was Tk.1.15
billion. The most important project of social welfare sector was "Rural Social Service" which
included group organisation, skill development training, income and employment generation
through various financial support in the form of interest free loans, promotion of self-
supporting funds, motivational programmes for family development and population planning,
social forestry, social education, etc. Approximately, 1.5 million people benefited as a result.
In many urban areas, a programme for welfare of children in specially difficult circumstances
was initiated through which about 15,000 children were benefited. Under institutional
services, projects covered the welfare of 4,000 orphans, 400 disabled, 150 juvenile
delinquents, 2,700 vagrants and destitutes. Joint programmes with NGOs benefited about 1
million distressed and disabled people.
1.16.4 During 1995-97, a total of 30 projects including 13 spillover projects were financed
and an amount of Tk.973.0 million was allocated. The expenditure during the period was
Tk.899.54 million. During the period of 1995-97, implementation of major programmes of
the Fourth Plan continued.
1.16.5 Women and children affairs: During the First Plan, a programme, entitled
"Rehabilitation of War Affected Destitute Women and Children" was undertaken under the
social welfare sector . In the Two Year Plan, women's development received special priority
and Tk.105.6 million was allocated. The Second Plan emphasised training and creation of
employment opportunities for women. An amount of Tk.310.0 million was allocated.
1.16.6 During the Third Plan, the programmes on women's affairs aimed at promoting
activities for overall development of women and children. To increase female employment in
the public and private sectors, a number of measures were taken by the government which
included reservation of 15 per cent jobs for women in the public sector and raising the age
limit for entry into public service up to 30 years. Under the women's affairs sub-sector,
around 60,000 women were trained in different vocational skills and other human resources
development activities; about 0.2 million women were given non-formal education and
20,000 women were provided with credit facilities for self-employment.
1.16.7 To help increase women's participation in development activities and to realise the
ultimate goal of equality, development and peace of the UN Decade the Fourth Plan
attempted to integrate women's development into the macro framework for multi-sectoral
 35

thrust in order to bring women in the mainstream of socio-economic development. But a

comprehensive national policy for women's development was missing. Though a National
Council for Women's Development (NCWD) was formed during the Fourth Plan for inter-
ministerial co-ordination and monitoring the WID activities, satisfactory progress could not
be made due to lack of co-ordination among different government organisations and between
government and NGOs. The Ministry of Women and Children Affairs has identified and
designated focal points in 32 ministries/ agencies for WID activities.
1.16.8 Under various projects, 63,127 women were trained in different vocational skills and
other human resources development activities, about 86,304 women were given non-formal
education and other services and 34,629 distressed women were brought under credit
facilities programme for self-employment. A total amount of Tk.1.28 billion was distributed
as loan on easy terms. In addition, a loan amount of Tk.2.85 billion was distributed among
9,080 poor women under the Prime Minister's Special Fund. Besides, there was a separate
allocation of Tk.100 million for Bangladesh Shishu Academy for undertaking development
activities for children all over the country. Food for Work (FFW), Vulnerable Groups
Development (VGD) and Rural Maintenance Programme (RMP) employing destitute women
were also undertaken. The total revised allocation for the Ministry of Women and Children
Affairs was Tk.550.0 million in the Fourth Plan out of which Tk.545.0 million was utilised
upto June 1995.
1.16.9 During 1995-97, an amount of Tk.659.20 million was allocated and Tk.651.12 million
was spent upto June, 1997. A total of 20 projects were undertaken and two of them were
completed.
1.16.10 Youth development: Separate youth programme at government level started in
1979. During the Two Year Plan, an amount of Tk.95.0 million was provided for youth
development programmes out of which Tk.70.10 million was utilised. The physical target
fixed for the Two Year Plan was to train 42,255 unemployed youths against which 36,200
were trained.
1.16.11 During the Second Plan, an amount of Tk.255.0 million was allocated for youth
development. A total number of 163,070 youths received training in different vocational
trades, livestock and poultry farming, telecommunication, secretarial science, agriculture,
fisheries, driving auto-rickshaws, etc. About 3000 trained youths undertook self-employment
projects.
1.16.12 An amount of Tk.170.0 million was allocated for youth development activities during
the Third Plan. An additional amount of Tk.760.0 million was allocated for implementation
of a new project named "Thana Resource Development and Employment Project" (TRDEP).
In two phases, 32 thanas came under this project. During the Third Plan period, 42,937
unemployed youths were trained in different trades against the target of 43,935 and 17,739
youths took up self-employment programmes till June, 1990 against the target of 18,830.
1.16.13 During the Fourth Plan period projects/programmes were undertaken to provide
unified direction and co-ordination of youth development programmes. The Plan envisaged
programmes for the youth for poverty alleviation, skill development training, self-
employment promotion, and community development through voluntary youth organisations.
A total of 254,074 unemployed youths were trained and 50,808 youths were self employed.
 36

1.16.14 During 1995-97, a total of 10 projects were included in the ADP of which 5 projects
spilled over from the Fourth Five Year Plan and an amount of Tk.907.79 million was spent
upto June,1997 at current prices against an allocation of TK.1.34 billion.
1.17 Mass Media
1.17.1 A total of Tk.500.00 million was allocated in the Third Plan of which an amount of
Tk.342.4 million was spent during the Plan period. A project entitled "Establishment of 3
Low Power Transmitters" was undertaken to establish 3 radio stations at Comilla, Rangpur
and Thakurgaon. The project "Establishment of 100 kw Transmitter in the Northern Zone,
Bogra" was commissioned during this period. Besides, the project entitled "Further
Development of BTV including construction of office building/ Garrage-cum-Workshop"
was completed.
1.17.2 During the Fourth Plan, an amount of Tk.1230 million was allocated for the sub-
sector and 21 projects were undertaken. The amount spent was Tk.1.36 billion at current
prices. For various reasons, only two projects of Bangladesh Betar could be completed.
1.17.3 In 1995-97, a total of 29 projects were included in the ADP of which 13 projects were
spilled-over from the Fourth Plan. The expenditure during the period was Tk.506.0 million at
current prices. During the period 1995-97, major programmes of the Fourth Five Year Plan
continued and only 5 projects were completed.
1.18 Science and Technology
1.18.1 Breakthrough in science and technology is the key to rapid economic development in
modern world. As such, the government has consistently tried to formulate appropriate
science and technology related policies. One of the basic elements of these policies is to
encourage research and development. Main institutional facilities were built up during the
Second Plan for these purposes, while the Third Plan focused on research activities.
1.18.2 During the Fourth Plan period, an amount of Tk.540 million was allocated for this
sub-sector out of which Tk.518.70 million was spent. Bangladesh Atomic Energy
Commission (BAEC) established 4 Nuclear Medicine Centres (NMC) at Khulna,
Mymensingh, Rangpur and Barisal. It also continued its research activities in different fields
like food irradiation and preservation, isotope production, etc. The other important project on
which BAEC started work was "Renovation of Beach Sand Exploitation Centre at Cox's
Bazar and Balancing, Modernisation, Rehabilitation and Extension of Pilot Plant". Research
activities carried out by the Bangladesh Council of Scientific and Industrial Research
(BCSIR) during the period were on fuel, herbal medicine, foodgrains, etc.
1.18.3 During the Fourth Plan period, Bangladesh Computer Council (BCC) provided
computers to one hundred secondary schools for conducting training on computer.
1.18.4 During 1995/96, an allocation of Tk.275.0 million was made available for 33 projects
of which 25 were spill over from the Fourth Plan. A total of 4 projects were completed and
the expenditure during the period was Tk.159.50 million. In 1996/97, an allocation of
Tk.380.20 million was made available for 34 projects.
1.19 Labour and Manpower
1.19.1 Development of skill and its optimum utilisation constitute one of the basic elements
of economic growth and income generation. Increasing productive employment is an
important goal of development. However, in the process of growth, such opportunities will
increasingly depend on both deepening and widening of human skills.
 37

1.19.2 Prior to the First Plan, Bangladesh had only a small institutional network consisting
of one Industrial Relations Institute (IRI), 18 Labour Welfare Centres, 5 Employment
Exchanges, 4 Vocational Guidance and Youth Employment Units, one Management
Development Centre and 5 Technical Training Centres. These facilities and institutional
arrangements were equipped, managed and run under severe constraints of both financial and
human resources. Against this background, the First Plan allocated Tk.276.90 million with
the objectives of expanding facilities for training engineering craftsmen, raising the volume of
employment, enhancing labour welfare facilities and cultivating healthy labour relations.
Subsequently, due to financial constraints, the allocation was reduced to Tk.120.00 million in
the Hard-core Programme and still further through the revised ADPs.
1.19.3 As financial performances had severe shortfall, the physical progress also remained
unsatisfactory. During the Second Plan, Tk.1.12 billion was allocated for strengthening the
institutional network for skill development, expansion of the institutional infrastructure for
overseas as well as in-country employment promotion including self-employment,
enhancement of labour welfare, improvement of industrial relations and manpower research
and evaluation. During the Third Plan, priority was given to training programmes for skill
development through the institutional network of 12 Technical Training Centres (TTC)
including the Bangladesh Institute of Marine Technology (BIMT). By the end of the Third
Plan, the country had a network of 21 District Employment and Manpower Offices (DEMO)
to operate as facility centres for promotion of employment both at home and abroad.
1.19.4 Skill development training, promotion of self-employment and foreign employment,
sound labour/industrial relations, labour welfare and maintenance of industrial peace were the
major activities in the labour and manpower sector during the Fourth Plan period.
1.19.5 During Fourth Plan, BMET imparted institutional training to 14,396 persons,
apprenticeship training to 1,731 persons and language training to 479 nurses. During the same
period, BMET, under its employment services programme, provided self-employment
opportunities to 9,450 persons and foreign employment to 911,836 persons. Department of
Labour took programmes to promote sound industrial relations and labour welfare and to
maintain industrial peace in order to attract foreign and domestic private investment.
1.19.6 During 1995/96, an allocation of Tk.74.60 million was made to 16 projects of which
10 were spill-over projects from the Fourth Plan. The expenditure during the year was Tk.
50.31 million, and only 2 projects were completed. In 1996/97, a total of 15 projects were
included in ADP with an allocation of Tk.90.0 million. The estimated expenditure during the
year was Tk.71.10 million approximately.
1.20 Public Administration
1.20.1 As a developing country Bangladesh has given serious attention to rationalise its
administrative organisations, financial and personnel systems and rules and procedures for
achieving efficiency and transparency in public service commensurate with the country's
socio-political and economic aspirations. In the First Plan, public administration sub-sector
had a modest allocation of Tk.131.20 million. Out of the above allocation, only an amount of
Tk.40.60 million was spent. In the Two Year Plan an allocation of Tk.111.20 million was
made of which Tk.89.80 million was utilised. Sectoral programmes during the period
concentrated mostly on training, research and related activities.
1.20.2 The Second Plan envisaged a much wider scope of development covering the entire
spectrum of administration and management. During the Third Plan, creation of an efficient
 38

public administration system was one of the major objectives. Enhancement of job related
knowledge and skills of the public officials through systematic training, establishment of
training institutes for such purposes, improvements of personnel administration in the
government, semi-government and autonomous bodies, streamlining of administration
through simplification of accounts, budgeting and financial and administrative procedures and
restructuring of government offices and agencies were some of the major efforts undertaken
towards improving efficiency in administration.
1.20.3 Projects taken up in the public administration sector during the Fourth Plan were
broadly in the fields of (a) development of administration and management training; (b)
project planning, implementation and monitoring; (c) organisational development; (d) system
improvement; and (e) administration and financial reforms. These could not yield better
administration as the system was abused by the power that be.
1.20.4 Several institutes are functioning in the country for imparting training in public
administration and management. Notable of them are Public Administration Training Centre
(PATC), Regional Public Administration Training Centres (RPATC), Bangladesh Civil
Service Academy, Institute of Chartered Accountants of Bangladesh (ICAB), Institute of
Cost and Management Accountants of Bangladesh (ICMAB), Institute of Bank Management
(IBM) and Academy for Planning and Development (APD). The projects during the Fourth
Plan were mostly meant for strengthening the training efforts of these institutes. Projects were
also undertaken during the Fourth Plan for institutional development of BCS (Admn.)
Academy and establishment of a Statistical Training Institute. Bangladesh Institute of
Administration and Management (BIAM) was established during this Plan period.
1.20.5 During the Plan period, the mechanism of collection of household expenditure survey
and local level data system was modernised and the examination system of the Public Service
Commission (PSC) was improved. Disaster Management Bureau (DMB) was established.
Besides, a number of studies were undertaken on administrative reforms and a committee was
formed to look into the study reports. The studies were undertaken by UNDP, ODA, World
Bank and USAID.
1.20.6 During the Fourth Plan, 71 projects were taken up, out of which 21 were completed.
During the same period, the sector was provided with an allocation of Tk. 2.01 billion out of
which Tk.710.0 million was utilised.
1.20.7 During 1995/96, an allocation of Tk.1.76 billion was made available for 61 projects of
which 50 were spill-over projects from the Fourth Plan. A total of 14 projects were completed
and an amount of Tk.1.55 billion was spent. In 1996/97, an allocation of Tk.956.20 million
was made to 50 projects including 3 new projects; out of these 16 projects were likely to be
completed. The expenditure during the year 1996/97 was Tk.698.30 million.
 39

CHAPTER II

OBJECTIVES AND STRATEGIES

2.1 Introduction
2.1.1 Bangladesh is one of the poorest countries of the world with a per capita income of
US $ 240. Its people have a life expectancy of only 58 years. Mortality rate of children under
5 in Bangladesh is one of the highest in the world. About 60 per cent of the children
experience moderate to severe malnutrition. The population suffers from endemic health
problems. Approximately 53 per cent of the population is illiterate. As a result, about one-half
of the population cannot contribute to the country’s development efforts. The Sonar Bangla
that the Father of the Nation Bangabandhu Sheikh Mujibur Rahman dreamt of still remains
the unrealised vision for the nation. The overwhelming problems of poverty, hunger,
malnutrition, illiteracy, unemployment and under-employment, particularly in rural
Bangladesh, persist as a challenge for all development planners.
2.1.2 The closing decade of the twentieth century has been witnessing milestone of events -
the collapse of communism, end of the Cold War and relaxation in the East-West tension,
creation of a new World Trade Organisation (WTO) for promoting rule-based free and fair
trade and economic opportunities at local, regional and sub-regional levels, global nurturing
of greater respect for democratic systems, norms and values, erosion of interventionist
philosophy and practice hitherto pursued by many countries of the world for their socio-
economic development, ascendance of market forces as the dominant allocator of resources,
and emergence of a global consensus for increasingly greater partnership between the
governments and civil societies in the decision - making process. These developments have
resulted in what is now known as the new international order characterised by globalisation of
economies at different stages of development. The WTO along with the IMF and the World
Bank, will nurse and promote this globalisation through coherence of policies and strategies
relating to trade, money, finance and development. These will have far reaching effects in
shaping not only the destiny of the people of individual nations but also that of mankind as a
whole.
2.1.3 Governments all over the world are coming to terms with the new international order.
The rapid pace of political and technological change and fast-moving globalised markets are
posing fundamental questions as to the role of the government and how it can lead nations to
respond to changing circumstances. The relationships and balances between governments, the
private sector and non-government organisations (NGOs) are rapidly changing. Performance
of the government in all sectors is subject to greater scrutiny and accountability. Situation as
obtaining in Bangladesh today warrants a new vision to accelerate and sustain growth,
alleviate poverty, take advantage of new opportunities and meet challenges of the future, and
enable the private sector to realise its full potential and play its rightful role in a competitive
global market. In this context, Bangladesh will have to redefine the role of the government;
overhaul the rules and processes by which the government conducts its policy and decision
making functions; streamline the regulations, laws and processes through which the
government interacts and regulates citizens and the private sector, maintains an honest,
efficient, committed and professional public service and enhances accountability and
responsiveness of public agencies to citizens they are mandated to serve.
2.1.4 Until recently, it was a common practice to compartmentalise human activities and
their effects within nations, within sectors (agriculture, industry, energy, trade, services, etc.)
 40

and within broad areas of concern such as economic, social and environmental issues. Now,
these compartments have begun to dissolve. Today, all have come to realise that
impoverishing the local resource base can impoverish wider areas, even beyond the borders of
countries. Deforestation in the highland causes destructive flooding in the lowland and
adversely affects downstream nations. Fertilisers used for boosting agricultural production,
pesticides used for protecting plants and crops and pollution from factories destroy fishery
and rob fishermen of their means of livelihood. Degradation of agricultural land drives
millions from their rural homesteads not only towards urban centres but also across national
boundaries, thus turning them into economic refugees. Sustainable long-term development
must address these environmental and social concerns.
2.1.5 Over the past few decades, life threatening environmental concerns have surfaced.
Rural arable lands are coming under pressure from increasing number of farmers and the
landless. Cities are being increasingly crowded with people, automobiles and factories. A
significant part of GDP is derived from agriculture, forestry, energy production and mining
as well as export of natural resources. There is, thus, enormous economic pressure, both
domestic and international, to overexploit the natural resource base.
2.1.6 New technology is the mainspring of higher economic growth through increases in
productivity and income. Access to it not only improves the efficiency and shifts the
competitive edge of a nation but also offers the potential to economise the consumption of
rapidly depleting resources. However, at the same time, it also contains risks, including new
forms of pollution. Introduction of genetic engineering could have far reaching effects on the
mankind. Time has come to revisit the conventional ‘green-revolution’ technologies that
depend upon the intensive use of energy, chemicals such as fertilizers and pesticides, for
boosting agricultural production which, experience has shown, cannot be sustained at high
level indefinitely. Progressively increased recourse to organic input-based bio-technologies,
which will have the advantage of being ecologically sound and sustainable over a longer
period of time, is the imperative of the hour.
2.1.7 For women, it is still an unequal world. This inequality varies from country to country
as it does from society to society. It is true that after centuries of neglect, the past two
decades, as part of an integrated approach to human development, have witnessed the
demonstration of great awareness and considerable concern for closing the gender gap
through building women’s capabilities. Despite this, disparity between women and men
persists - in their access to education, health and nutrition, in their right to life and property
and protection by their societies and legal systems. This determines the pace of progress of a
nation and how much women can contribute to and benefit out of this progress.
2.1.8 The Constitution of the Republic provides clear directives which the government has
to take into account while formulating development goals, objectives and strategies.
Fundamental Principles of State Policy, as embodied in the Constitution, while addressing
the issue of meeting the basic needs of the people, vest on the state the responsibility to attain,
through planned economic growth, a constant increase of productive forces and a steady
improvement in the material and cultural standard of living of the people, with a view to
securing to its citizens:
a. the provision of the basic necessities of life, including food, clothing, shelter,
education and medical care;
b. the right to work, that is the right to guaranteed employment at a reasonable wage
having regard to the quantity and quality of work;
 41

c. the right to reasonable rest, recreation and leisure; and

d. the right to social security, that is to say, to public assistance in cases of undeserved
wants arising from unemployment, illness, or disablement; or, suffered by widows or
orphans, or in old age, or in other such cases1.
2.1.9 On the question of equity, the Constitution unequivocally undertakes that the State
shall endeavour to ensure equality of opportunity to all citizens and shall adopt effective
measures to remove social and economic inequality to ensure equitable distribution of wealth
among citizens and of opportunities in order to attain a uniform level of economic
development throughout the Republic2.
2.1.10 With regard to rural development, the Constitution provides that the State shall adopt
effective measures to bring about a radical transformation in the rural areas through
promotion of an agricultural revolution, provision of rural electrification, the development of
cottage and other industries, and improvement of education, communications and public
health, in those areas, so as to remove progressively the disparity in the standards of living
between the urban and rural areas3.
2.1.11 On the issues of promoting local government institutions and mainstreaming of
women in development, the Constitution commits that the state shall encourage local
government institutions composed of representatives of the areas concerned with special
representations, as far as possible, of peasants, workers and women; and that steps shall be
taken to ensure participation of women in all spheres of national life4.
2.1.12 Regarding human resources development, the Constitution requires the State to adopt
effective measures for the purpose of establishing a uniform, mass-oriented and universal
system of education and extending free and compulsory education to all children to such stage
as may be determined by law, relating education to the needs of society and producing
properly trained and motivated citizens to serve those needs, and removing illiteracy within
such time as may be determined by law. In this context, the Constitution further provides that
the State shall regard raising the level of nutrition and improvement of public health as among
its primary duties5.
2.1.13 On the establishment of a corruption free society, creating and sustaining equal
opportunities, the Constitution provides that the State shall endeavour to create conditions in
which, as a general principle, persons shall not be able to enjoy unearned incomes6.
2.1.14 Towards the objective of good governance, the Constitution provides for separation
of the judiciary from the executive organs of the State and establishment of a pro-people
public service system, every member of which, will strive at all times to serve the people7.

Notes: Paragraphs with subscripts 1, 2, 3, 4, 5, 6, and 7 correspond to Articles 15, 19, 16, 9 and 10,
20(2) and 22 and 21(2) of the Constitution of the People’s Republic of Bangladesh, respectively.
 42

2.2 Nature and Focus of Fifth Plan

2.2.1 Keeping in view the changing structure of the global economy, the Fifth Plan has been
prepared within a flexible framework. In a radical departure from traditional planning model,
the Fifth Plan framework rests more on flexible projections and forecasts of incremental
change in various development parameters than on rigid targets for realisation during the Plan
period. In the context of increasing globalisation of the economy, the Plan places markets at
the centre but, at the same time, attaches due importance to the appropriate role of the
government and the public sector, as required to fulfil the constitutional obligations of the
State for raising the standards of living of all citizens of the country. In recognition of
inevitable imperfections in information, competition and play of market forces in a
developing country like Bangladesh, the Plan envisages appropriate and effective
interventions in the market to remedy well-identified problems emanating from these
imperfections.
2.2.2 To fulfil their central role in efficient resource allocation and increasing wealth and
living standards, markets need enabling environment and supportive infrastructures. The
government will promote, guide and develop markets. The Plan presents, in details, various
policy packages, which will provide necessary enabling environment for efficient functioning
of the private sector. The Plan also outlines areas of activities from which the government
will divest away at the quickest possible pace. This will assist the private sector in planning
its future investments. Further, a comprehensive policy package has been presented in the
Plan which is expected to attract much needed foreign direct investment during the Plan
period.
2.2.3 The greater part of GDP growth during the Fifth Plan period is expected to come from
the private sector. The private sector's share of investment, as estimated in the Plan, is more
indicative than abiding in nature and should not be construed as any limit on private
investments. For promoting market-based development, the role of the government will be
limited mainly to the establishment of the educational, technological, financial, physical,
environmental, and social infrastructure of the economy. The government will also provide
those utilities/services where the private sector is not forthcoming. Needless to say that
construction of such infrastructure is beyond the capacity or interest of any single firm. The
Plan, therefore, provides necessary resources for investment by the government and the public
sector in these areas with a clear indication that the government will not be a competitor to
the private sector.
2.2.4 The Fifth Plan has another added dimension. It departs from the concept of central
planning in a significant way. In tune with the government's thrust on strengthening local
government institutions at all tiers and their developmental role, a major focus of the Fifth
Plan is local level participatory planning and integration of the local level development
programmes/projects with those at the national level. In this context, necessary reorientation
of the role of the Planning Commission is envisaged. Further, the Fifth Plan envisages an
active coalition of the government and the NGOs on the development front so that the full
potential of the NGOs in complementing the development efforts of the government can be
tapped in a cost effective manner.
2.2.5 The Fifth Plan has sufficient built-in flexibility. Its performance will be regularly
monitored. The projections and forecasts of the Plan, based on available data and reasonable
assumptions about improvement in institutions and other exogenous variables, will be
reviewed and revised, if actual performance so dictates.
 43

2.3 Objectives of Fifth Plan

2.3.1 In the context of prevailing global realities and in compliance with the aforementioned
constitutional obligations and to the end of fulfilling the commitment made to the people
before the national election in June 1996, the government has set out its development goals
and objectives and, at the same time, enunciated supportive policies and strategies to bring
about the long-cherished socio-economic transformation for building a happy and prosperous
Bangladesh. Development goals and objectives of the Fifth Plan are briefly presented below:
a. Alleviation of poverty through accelerated economic growth (on an average 7 per cent
per annum) during the Plan period to bring about a noticeable improvement in the
standard of living of people by raising their level of income and meeting their basic
needs. In this context, alleviation of poverty will be considered as synonymous with
development.
b. Generation of substantial employment opportunities and increase in productivity
through an optimal choice of the traditional labour intensive and new capital-
intensive technologies.
c. Improvement in the quality of life of the rural population through mobilisation of the
rural masses and resources at their command as well as channelling increased volume
of invisible resources to the rural economy so as to attain an accelerated growth in
rural employment and income.
d. Transformation of the rural socio-economic structure into a more equitable, just and
productive one and empowerment of the rural poor through ensuring their increased
access to resources.
e. Attainment of food production beyond the self-sufficiency level in the shortest
possible time and of higher production of diversified high-valued export goods.
f. Human resources development with emphasis on compulsory primary education and
vocational training and foundation laying of a knowledge based society.
g. Development of necessary infrastructure, utilities and other services needed to
promote growth, particularly in the private sector, with special attention to generation
of power, exploitation of gas, coal and other natural resources and to the development
of rural infrastructure, including market outlets, for marketing rural products within
and outside the locality.
h. Development of industries essentially based on comparative advantage of the
country.
i. Development of hitherto neglected areas like the north-west region, Chittagong Hill
Tracts and coastal areas.
j. Achievement of a lower population growth rate (1.32 per cent) by the terminal year of
the Plan, coupled with provision of necessary health care and improved nutrition of
mother and child.
k. Strengthening of the country’s scientific and technological base with emphasis on
research and development of new generation technologies, including in areas such as
electronics and genetic engineering.
l. Protection and preservation of environment by putting in place adequate regulatory
regimes and effective institutions, keeping in view the need for regeneration, recycling
and optimum exploitation of natural resources consistent with sustainable
development.
m. Closing the gender gap, giving priority to women’s education, training and
employment and special support for education of the girl child.
 44

n. Establishment of social justice through equitable distribution of income, resources and

opportunities, and creation of effective safety nets for the socially and economically
disadvantaged sections of the population and by strengthening the law and order and
the rule of law.
o. Putting in place effective local government institutions, at the union, thana and zilla
levels, and vesting on them the power and responsibilities for design, formulation and
implementation of local level development programmes and projects, with active
participation of people belonging to all strata of the rural society as well as through
effective co-operation between the local government institutions and non-government
organisations.
2.4 Strategies of Fifth Plan
2.4.1 Poverty alleviation and rural development: Bangladesh is poverty-ridden. Poverty is
reflected in its low per capita GNP, dominance of cereals in food-intake and low standards of
nutrition. Average daily calorie intake per capita hardly exceeds 2,000 K. cal. The vast
majority of the people are still ill-fed, ill-clothed, ill-housed and ill-educated, and the
percentage of absolute poor in Bangladesh is one of the highest in the world. Bangladesh is
trapped in the vicious circle of poverty which is characterised by large scale unemployment
and underemployment, low level of income, low productivity due to deficiency of capital,
weak technological base, market imperfections and lack of skill.
2.4.2 About 80 per cent of the population lives in the rural Bangladesh and about half of
them live in abject poverty. The aim of rural development is not only to lift the poor above
the poverty line but also to bring about improvement in the quality of both material and
cultural life. It will include both widening and deepening the production and technological
base of the rural economy and expanding public services, such as, primary education, health
services and transport and communication in the rural areas. The success of the rural
development strategy will, however, depend on containing successfully the problem of
population growth on the one hand and providing opportunities for productive employment of
family labour including women, on the other. In the present democratic setting, the prime
mover of rural development will, in fact, be the people themselves, while the government
will act as a catalytic agent through provision of an enabling policy framework and support
services to complement local efforts. As reflected in the plan of actions already initiated by
the government, effective local level institutions will be put in place and practical modalities
will be worked out for active participation of local people in evolving a framework for grass-
root planning and implementation of local level development programmes and projects.
2.4.3 Accelerated agricultural production : Keeping in view the target of raising the
cereal production level to 25 million tons by the year 2002, the Plan seeks an overall
accelerated growth in agricultural production and productivity. Agricultural development is
still synonymous with the economic development of Bangladesh. Without rapid change in
agriculture, there can hardly be any rural or national development in Bangladesh, nor can
there be any significant reduction of poverty. All efforts will, therefore, be geared to provide
the thrust necessary for boosting agricultural production. While self-sufficiency in food grains
at a higher level of per capita consumption is a major objective of the Plan, a more
nutritionally enriched diet of the population will also be provided through substantial increase
in the production of oil-seeds, pulses, fruits and vegetables, fish, eggs, livestock, poultry and
dairy products. Besides, more attention will be given to increased production of high-value
cash crops.
 45

2.4.4 The modernisation of agriculture will be sought through the provision of extension
services, training, requisite inputs and credit to farmers. Such a change of agriculture requires
high cash investment, as producing more for market involves risk which small farmers and
share - croppers cannot generally afford to undertake. Optimum use of modern inputs, along
with land, water and labour, is difficult to attain because land is owned in small plots by the
majority of the farmers; a large proportion of farmers are landless, while some land is owned
also by those who are not farmers. A land use plan for various crops and purposes is
envisaged in the long run, with focus on sustained increases in yield. It may not, however, be
necessary to interfere with the ownership of land beyond what is envisaged by the Land
Reform Act of 1984; what is intended is to influence land use and production plans at the
village level indirectly through information, extension and an appropriate package of
incentives.
2.4.5 Agricultural production strategy has to be improved to implement institutional changes
to cope with market forces. Appropriate policy relating to pricing, input supply, support
services and infrastructure development will have to be put in place.
2.4.6 The main thrust of the agricultural production programme will be increased irrigation
coverage, better water management and variety improvement of rice and wheat. Irrigation
coverage will be increased further during the Plan period with emphasis on minor irrigation
projects and full capacity utilisation of irrigation facilities including supplementary irrigation
during Aus and Aman seasons. Area under HYVs of rice and wheat will be expanded through
extension of water management and fertilizer use will be further increased during the Plan
period. Availability of fertilizer will be ensured not only by making better capacity utilisation
of existing fertilizer plants through implementation of necessary BMREs, but also by setting
up new plants at an early date. Market mechanism will be used to ensure timely import and
efficient distribution of different agro-inputs. Greater use of organic manure will also be
encouraged. Seed multiplication and storage facilities, both in public and private sectors, will
be part of the agricultural development strategy. Credit facilities will be increased through
greater allocation and better management of funds. A major effort will be made to put in
place adequate marketing, transport, and storage facilities as well as necessary price support.
Efforts will be made to increase domestic production of most inputs required for agriculture
and rural development, including fertilizer, agricultural implements and tools.
2.4.7 Efforts will be made to maintain appropriate incentive prices for important agricultural
commodities through market mechanism and policy instruments. Procurement and storage
efforts will have to be greatly improved. Adequate buffer stock will be built up to tide over
the difficulties of lean periods and natural hazards and a marketable surplus will be sought by
gearing up production of essential items. Subsidies on fertilizer and other inputs, if needed,
will be selectively provided with due regard to economy and efficiency of such subsidisation.
Prices of major food items such as rice, wheat, edible oil, sugar, baby food, pulses, fish,
poultry, etc., may also have to be stabilised on social development considerations through
appropriate pricing, distribution and production policies. Food policy will be properly
integrated with the agricultural programme, as output of food and its price influence the
production of jute, sugarcane, pulses, oil seeds and other cash crops.
2.4.8 To sum up, the strategy for attaining the projected increase in agricultural production
will consist of strengthening the policy environment and the technological base, establishing
grass-root level organisations for planning and implementation as well as provision of
necessary support services.
 46

2.5 Local Level Institutions for Participatory Rural Development

2.5.1 Local level institutions, at different tiers, had fairly deep roots in Bangladesh. Various
experiments were carried out with local level institutions, particularly from 1958 onwards,
primarily with the objective of establishing a centralised system of administration in the name
of devolution of administrative authority, but in fact, to keep the people out of the decision-
making process. Thus, the people of Bangladesh, particularly the rural people who comprise
about 80 per cent of the country’s population, lost almost half a century during which their
participation was virtually absent from the very process of development they were supposed
to be the beneficiary of.
2.5.2 However, in the background of lost opportunity for development and abject rural
poverty, growing awareness of the people as well as deeper insight into the miserable plight
of the rural poor by the civil society, the concept of decentralisation and revitalisation of the
local level institutions started capturing the imagination of academicians and policy-makers.
As a result, some fresh initiatives were launched during the 1980s for revitalising local level
institutions, at various tiers and delegating to them some developmental roles, along with
powers to raise some resources locally. These were, however, rendered dysfunctional, through
the extended arms of the central government, and the only local level institutions that remain
still in place are the Union Parishads (UPs).
2.5.3 The fundamental premise of participatory development is development by the people
and for the people. Popular participation manifests in the collective endeavour by the people
concerned in an organised framework to pool their efforts and whatever other resources they
decide to pool together to attain objectives they set for themselves. Participation, thus, is
viewed as an active process in which participants take initiatives and actions that are
stimulated by their thoughts and deliberations and over which they can exert effective control.
In this context, the local level institutions become important in providing the institutional fora
for both empowerment of people and promotion of participatory rural development in a cost-
effective and sustainable way.
2.5.4 In this backdrop, the government, immediately on its installation, established a
Commission to make an in-depth study and come up with recommendations on the forms and
functions of local government institutions at different levels. Following the recommendations
made by the commission, local level institutions at village, thana and zilla levels will be
established with elected local representatives. Besides, Union Parishads and Pourashavas will
be strengthened both functionally and financially. All these local government bodies will be
entrusted with the responsibility to formulate and implement local level development
programmes/projects, manage educational institutions, run health and family welfare services
as well as to maintain local level infrastructures. Necessary laws will be enacted to empower
these local level institutions to mobilise and raise resources for local level activities thus
lessening the burden on the central government. Law has already been passed to strengthen
and broad base women's representation in Union Parishads.
2.5.5 To ensure people's participation in the development process, local level institutions will
be encouraged to evolve on a spirit of self-help. They will also provide a system for efficient
use of voluntary labour in various fields of the rural life, not only in production but also in
community development. The government's role here will be catalytic and promotional.
Using the local government institutions, the Plan emphasises building grass-root level
production organisations among the target groups to promote a back-to-back relationship
between policies and felt needs of the people. An important area will be rural human resource
 47

development. To satisfy this, the literacy rate has to be raised significantly through measures
stated in the Fifth Plan. A bottom-up participatory process with emphasis on local level
initiative will constitute the cornerstone of socio-economic development in Bangladesh under
the Fifth Plan.
2.5.6 Land is the most scarce resource in Bangladesh. Its proper utilisation is a necessity for
the success of the Plan, as it ensures effective employment of the rural labour force and higher
output. Positive steps will be taken to provide an institutional framework for production and
employment planning at the local level and ensuring better use of land, water and human
resources. It is recognised that local level institutions for promotion of production,
employment, voluntary consolidation of holdings, etc., cannot perform readily without
adequate policy support and necessary changes in the legal system.
2.5.7 The local institutions will also encourage and organise fish, poultry and livestock
development. Employment of the rural landless will receive particular attention of the local
organisations. Such organisations will face initial problems and can be perfected through a
gradual process to encompass the rural life, concerned not only with production but also
community services like health, education, population planning and human resources
development.
2.5.8 In the Fifth Plan period, concrete steps will be taken to strengthen the local
government institutions in three hilly districts and to set up a co-ordinating body for three
Zilla Parishads of this area in accordance with the Peace Treaty concluded on December 2,
1997.
2.6 Population
2.6.1 Despite efforts in the past to contain the growth rate, the population is still growing at
the rate of 1.75 per cent, adding almost 2.2 million people every year. Even if NRR-1 is
achieved by the year 2005, about 1.2 to 1.3 million people per year will be added, increasing
man/land ratio, aggravating the unemployment problem and consequently thwarting the
prospects of socio-economic development of the country. Due to the young age structure of
Bangladesh’s population, more effective efforts will be called for to arrest the demographic
momentum.
2.6.2 Till now, the focus of population control programmes has been on the delivery system.
However, a breakthrough cannot be achieved without a large increase in mass literacy and
development of institutions such as women’s co-operatives and mother’s centres. In addition,
vocational training programmes and skill-development will also have a bearing on population
and development parameters. The local government institutions will have to be oriented to the
goal.
2.6.3 In the Fifth Plan period, the Union Health and Family Welfare Centres (HFWC) and
Mother and Child Welfare Centre (MCWC) will be focal point of Mother and Child Health
(MCH). The providers of both health and family welfare services at the village level will have
greater co-ordination to provide unified services under the overall supervision of the Medical
Assistant/M.O in charge of the HFWC/MCWC. He/she will be responsible for both health
and family planning/MCH service delivery and report for activities to the THA and TFPO,
respectively. This integrated service structure will ensure economies of scale and better
utilisation of HFWC/MCWCs. To enable it to play a more effective role, the National
Population Council will have to be suitably strengthened.
 48

2.7 Human Resources Development

2.7.1 A strategy of human resources development is a precondition for gainful employment
generation. The essential elements of the human resources development strategy are skill
formation and raising the technical capacity of the population through education and training,
research and extension, and an institutional set-up with appropriate linkages between all these
elements. It has two sets of needs to which to respond. Besides those receiving formal
education, there is the existing labour force in rural and urban areas whose technical skills
will have to be upgraded. As they are either engaged in productive activities or are age-barred
and thus ineligible for formal education, wide-spread non-formal programmes for education
and training will also have to be organised. These non-formal programmes have to be
effectively linked with productive activities like agriculture, animal husbandry, rural
industries, transportation, trade and services. Particular emphasis will be placed on non-
formal programmes, on-the-job training, training for self-employment and development of
small entrepreneurship.
2.7.2 Human resources development is a pre-requisite for sustainable development. Planning
for sustainable development, in turn, requires an emphasis on an integrated approach. In
Bangladesh, with two primary resources, man and land, the former overwhelming the latter,
existing inequality in the distribution of land can be mitigated by equitable development of
human resources and equitable access of all to the benefits of development.
2.7.3 It is envisaged to set up a network of institutions to be termed ''community schools''
which will provide effective linkages between formal and non-formal education. The
''community school'', based on existing secondary schools will actively encourage
participation of the community in enhancing the quality of education through establishment of
teacher-parent associations and curriculum advisory committees comprised of progressive
farmers, locally available experts and local leaders. These schools will also actively
participate in community development projects to instil a spirit of community involvement.
While the community schools will provide formal training to its students, its resources,
physical and human, will be fully utilised with appropriate supplement from other sources to
provide a range of programmes of non-formal education and training for adults. Training
centres for non-formal programmes are, at present, lacking below the Thana level; community
school will fill this important gap and make such training facilities available at the Union
level.
2.7.4 Research being essential in any programme of human resources development, the Fifth
Plan will provide resources to appropriate institutions for carrying out applied research which
has a bearing on development. This will, among others, cover agronomy, farm management,
small industry, ''appropriate technology'', employment and marketing. The Fifth Plan will
ensure that research results which prove to be economically viable and promise sufficiently
high returns on investment are translated into practice through appropriate policies and
extension services.
2.8 Education
2.8.1 The objective of attaining a better quality of life can be realised, through spread of
literacy. The ability to read and write is an important asset of man in modern life. It helps in
better understanding, efficient use of modern inputs in farming, facilitates transactions, enable
better land management, encourage use of family planning devices and above all, secures use
of democratic rights of a citizen. Universal primary education is, thus, a precondition for
modernisation and growth.
 49

2.8.2 Along with spread of primary education, removing illiteracy is considered an important
strategy for social and economic development of the masses. Since resources are limited,
there cannot be a simultaneous increase of investment of public funds at all levels of
education. It is necessary to economise the use of resources with greater emphasis on efficient
use of facilities, devoting more resources to primary education prioritising higher education
to the meritorious students and inducing the private sector to play a more effective role in
making the nation literate. Thus, expansion of primary and mid-level technical education in
the public sector, along with increased participation of the private sector in all tiers of
education, particularly in rural Bangladesh, will be pursued as a central strategy in the
education sector during the Fifth Plan period.
2.9 Private Sector - Dominant Player
2.9.1 In tune with the current global trend, the government has committed itself to the
market economy and has been pursuing polices through which the private sector will play the
dominant role in the country’s development efforts. In all cases where public ownership is
retained, efficiency must be increased through improving management, decentralising the
decision making process, ensuring commercially viable operations and following economic
pricing of all goods and services produced by the parastatals. Success in management is to be
rewarded through appropriate incentives, while inefficiency and poor performance will bring
punitive actions. Professionalism in management will be an important element of the public
sector strategy. Public sector monopolies will be progressively brought into the competitive
areas and the parastatals will be gradually disengaged from those activities in which the
private sector is well suited to perform efficiently.
2.9.2 While social direction of private enterprise in certain fields may be necessary to
safeguard the people’s interest, private enterprise will continue to be the main lever for
development in all areas where they have demonstrated satisfactory performance or are likely
to be more efficient. In particular, entrepreneurship will be encouraged through training,
extension services, input supply, credit and marketing facilities. Emphasis will be placed on
strengthening the financial and capital markets through appropriate policy measures so that
there can be a better mobilisation of resources, in particular private resources from abroad, for
productive investments.
2.10 Export-led Industrialisation
2.10.1 Bangladesh has placed huge emphasis on export-led industrialisation strategy. In order
to bring about sustained growth in exports, conscious policy shifts have been initiated to
transform a regulated economy into a market economy and a wide range of policy reforms
have been implemented. The major elements of these reforms, among other things, include
liberalisation of imports and streamlining of import procedures, rationalisation of tariffs and
reduction of tariff levels and elimination of quantitative restrictions to the extent possible,
adoption of a market-oriented flexible exchange rate policy and provision of more effective
and transparent export promotion measures.
2.10.2 An important prerequisite for development of export industries is the availability of
well-developed infrastructure. Export Processing Zones (EPZs) provide this infrastructure
and other incentives, under a single package and thus have been able to attract foreign direct
investment (FDI). In extending this approach further so as to attract substantial FDI, the
government has adopted the policy of entrusting the private sector with the responsibility of
developing private export processing zones as well.
 50

2.10.3 An enabling policy environment as well as further promotional measures, along with
simplification and minimisation of the regulatory and legal frameworks will be put in place to
encourage entrepreneurial initiative and foreign direct investment for the development of
export-oriented industries during the Fifth Plan.
2.11 Employment and Income Generation
2.11.1 A strategy of production for meeting basic needs of the people must be matched by a
viable strategy of employment generation and human resources development so that the poor
may have access to income. There is huge unemployment and under-employment in the
country. The growth of employment in the past did not keep pace with the growth of the
labour force and unemployment and under-employment remain very high. In the past,
employment goals were generally derived as a by-product of investment strategy; thus, it did
not receive as much priority as it should have, as a national problem. A comprehensive
employment strategy will be the corner-stone of the Fifth Plan, with productive employment
generation, particularly in the rural area, as an overriding objective reflected in all
programmes and projects.
2.11.2 A large increase in employment in the Fifth Plan period is envisaged in agriculture.
This will materialise partly through increasing the cropping intensity and expansion of high
yielding varieties of crops which require substantially more labour inputs than traditional
varieties. Fisheries, livestock and forestry will also contribute to a significant increase in
employment. Infrastructure building, especially in the rural areas, through the sectoral
programmes, in addition to the rural works programme and the food for works programme
will result in a sizeable increase in employment. Rain-fed agriculture, intercropping, and
farming system development will be given particular attention.
2.11.3 As a part of the strategy for productive employment, rapid industrialisation will be
pursued. There will be a selective promotion of appropriate technology in directly productive
sectors, through research, adaptations and diffusion of efficient technologies. Emphasis will
be given on productivity enhancement simultaneously with employment generation.
2.12 Microcredit
2.12.1 Empowerment of the poor is contingent on their access to resources, which in turn,
enhances the productive capacity of the poor and helps alleviate poverty. This is the vision
on which the Grameen Bank launched its innovative microcredit banking system to reach the
poor, who have nothing to offer as collateral for borrowing from the conventional banking
system. The success of the Grameen Bank has created optimism about the viability and
vitality of the innovative approach of reaching the poor with credit they desperately need.
NGOs like BRAC, PROSHIKA, ASA and others also reach the poor with microcredits. The
delivery of microcredit is assisted by appropriate training and motivation, formation of
associations, arrangements for supply of inputs and provision of market outlets for the sale of
products produced by the small entrepreneurs. In the Fifth Plan, every effort will be made to
extend microcredit and related activities.
2.13 Good Governance
2.13.1 Accountability to the people, transparency, efficiency and incorruptibility in
conducting the business of government and, above all, non-discriminatory application of the
laws of the land are some of the major features of a good government. The present
 51

government, in pursuance of its constitutional obligations, is committed to the nation to

ensure good governance. For this, the government will chalk out an action programme and
will make an all out effort to implement it.
2.13.2 The action plan will embody, among other elements, design of a legal framework for
strengthening the mechanism for law enforcement and speedy delivery of justice, public
administration reform, downsizing of the government, rationalisation of parastatals,
simplification of systems and procedures for delivering public service in a cost-effective
manner and modalities for involvement of civil society in development management. It will
also require redefining the role of the state and reorienting the mind-set of the bureaucracy.
2.14 Resource Mobilisation
2.14.1 Currently, Bangladesh is dependent on foreign aid for around 50 per cent of its
development outlay. Exports pay for less than half of its imports. This dependence on foreign
aid has had several undesirable consequences. The main problem is that, it results in a
compromise of the interest of the country with those of the suppliers of development
resources. It has also serious effects on the choice of technology. Heavy dependence on aid
prevents realistic annual programming of development activities. For all these reasons,
reducing dependence on aid by mobilisation of a greater amount of domestic resources and
increasing export earnings will be an important element of the development strategy during
the Fifth Plan. Side by side, efficient import substitution, reduction of imports of luxury items
and more productive use of indigenous resources as well as of remittances from the citizens
of Bangladesh abroad are necessary imperatives for attaining a greater degree of self-reliance.
2.14.2 Dependence on external resources has also raised other serious issues relating to
criteria for project selection and institutional capacity for project implementation and
management. There have been long discussions and debates on absorptive capacity
constraints, project quality and project sustainability issues. In the context of these
considerations, the government is committed to carry out a comprehensive review of public
investment programmes and initiate work on project prioritisation. A review of public
expenditure and its management will also be undertaken concurrently which will not only
sharply focus the development programmes but also relate these with the long-term
development vision of the nation as articulated in the constitution of the country and as
reflected in the commitment made by the government. At the sametime, domestic savings will
be raised through appropriate development of capital market and innovation of savings and
investment instruments.
2.14.3 Resource availability can be augmented significantly if management and capacity
utilisation of parastatals are improved and they are allowed to charge competitive prices. A
necessary prerequisite for price freedom, however, is the creation of cost-consciousness in
public corporations to eliminate wastage and improve efficiency. Economical use of resources
can also be achieved by holding down the expenditure on public administration with
improvement in the quality of services. Furthermore, there is a considerable scope of
mobilising more resources out of existing taxes through overhaul and improvement of the tax
collecting machinery as well as through widening of the tax-net.
 52

CHAPTER III
PLAN SIZE SECTORAL ALLOCATION AND PROJECTIONS

3.1 Introduction
3.1.1 The Fifth Five Year Plan aims to put Bangladesh on a path of self-sustaining growth for
the improvement of socio-economic condition of the people. Acceleration of GDP growth will
allow the economy to break through the continuing poverty syndrome. While there has been
substantial improvement in recent years in macroeconomic management, the Plan recognises
the need for massive investment, with private sector playing the major role for rapid growth and
efficiency.
3.1.2 Total outlay of the Fifth Plan is projected to be Tk.1,959.52 billion. Of this, the major
share (56 per cent) is anticipated from the private sector (Tk.1,100.58 billion), exceeding its
share in all the previous Plans. Table 3.1 shows the sizes of the successive Plans and relative
shares of the public and private sectors.
Table 3.1
Plan Sizes and Relative Shares of Public and Private Sectors
(in million Taka)
Plans At Respective Base Year Prices At 1996/97 Prices
Plan Size Public Private Plan Size Public Private
Sector Sector Sector Sector
First Five Year Plan 44,550 39,520 5,030 569,448 505,153 64,295
(1973-78) (100.00) (88.71) (11.29)
Two Year Plan 38,610 32,610 6,000 156,121 131,860 24,261
(1978-80) (100.00) (84.46) (15.54)
Second Five Year Plan 172,000 111,000 61,000 554,562 357,886 196,676
(1980-85) (100.00) (64.53) (35.47)
Third Five Year Plan 386,000 250,000 136,000 749,958 485,724 264,234
(1985-90) (100.00) (64.77) (35.23)
Fourth Five Year Plan 620,000 347,000 273,000 784,040 438,809 345,231
(1990-95) (100.00) (55.97) (44.03)
Two Year Plan Holiday 508,760 217,160 291,600 515,700 220,100 295,600
(1995-97) (100.00) (42.68) (57.32)
Fifth Five Year Plan 1959,521 858,939 1100,582 1959,521 858,939 1100,582
(1997-2002) (100.00) (43.83) (56.17)
Note : a. Plan sizes and shares of the public and private sectors at respective base year prices are adjusted to
1996/97 (Fifth Plan base year) price level by using BBS investment deflator.
b. Figures in the parentheses are sectoral shares in percentages. Percentage shares of the public and
private sectors at 1996/97 prices are same as at respective base year prices, because of the use of
uniform investment deflator for both the public and private sectors.

3.1.3 Public sector investment comprises of investment components of the Annual

Development Programme (ADP), capital expenditure components of the revenue budget and
own investment of the parastatals. During the Fifth Plan, public investment will mainly be
directed for expansion of public utilities like power and gas, development of physical
infrastructures like roads and embankments, expansion of social infrastructures like health
and education, alleviation of poverty and strengthening of public administration for efficient
response to the need of market economy. However, some public investment in productive
enterprises will be necessary where private sector may not be forthcoming to a desirable
extent.
 53

3.1.4 Private sector will be the main agent of growth during the Fifth Plan. Commitment to
a free market economy, privatisation of public enterprises, deregulation and liberalisation of
public control, reforms and structural adjustments will create an enabling environment for
expansion of the private sector. Private sector will be encouraged through proper incentives
and facilities to establish an export-led industrial base. For this, foreign direct investment
(FDI) will act as the lever for inflow of new technology, management skill and market
promotion. Priority will be given to the creation of a transparent and conducive environment
where a dynamic private sector can flourish. Private investment is projected to be Tk.1,100.58
billion in the Plan. This is, however, an indicative figure but will guide public policies during
the Plan period. Given the GDP growth rate of 7 per cent and estimated incremental capital
value added ratios(ICVRs), total investment has been estimated at Tk.1,867.49 billion.
Within the resource envelope, a feasible quantum of public investment has been worked out
to be Tk.766.91 billion and private investment followed residually. It gives the minimum
level of investment which the private sector can undertake. Chapter VI elucidates the fiscal,
monetary and industrial policies which will be necessary to bring forth a higher level of
private investment. With the accelerated growth, savings is expected to rise faster,
particularly at the household level. To transform such savings into investment, the
government will step in to mobilise household savings for private investment through
minimisation of investment risk. The Plan envisages mobilisation of private savings also
through issuing various kinds of bonds. It is envisaged that the surplus funds so generated in
the public sector will be transferred to specialised banks or development financing institutions
for financing private investment, particularly in those thrust sectors where private investment
may be shy.
3.2 Investment Profile
3.2.1 Sluggish growth of the economy in the past may be attributed largely to the low rate of
investment obtaining in the country. Severe natural calamities and adverse international
environment also contributed to this unsatisfactory performance. GDP growth rate staggered
around 4 per cent over the last twenty years. The level of investment was generally low from
the mid 1970s to 1980s, fluctuating from year to year. However, the investment rate started
rising steadily from the beginning of 1990s. The investment/GDP ratio, which declined to
11.5 per cent in 1990/91 from 12.9 per cent in 1988/89, increased to 17 per cent in 1995/96.
Various reform programmes undertaken to encourage the private sector, as parts of the
Structural Adjustment Programme, started to pay off in the early 1990s leading to a rise in
the level of investment.
3.2.2 The Fifth Plan aims at raising the GDP growth rate to a level that will take Bangladesh
to the threshold of take-off in the shortest possible time and allow an efficient and effective
pursuit of poverty alleviation programme through generation of high level of productive
employment opportunities. It projects GDP growth at an average annual compound rate of 7
per cent but the growth of the economy will be accelerated over the years. In the first year,
the rate is estimated at 6 per cent and in the terminal year at 8.3 per cent. Higher growth rate
will be brought about through higher rate of investment and greater efficiency by pursuing
productivity enhancing policies and skill development. Even at this GDP growth rate, against
an expected average population growth rate of about 1.37 per cent per annum, it will take
about 10 years for an average poor person to cross the poverty line.
3.2.3 ICVRs for various years of the Fifth Plan reflect the gain in productivity. Estimated
average ICVR for the Plan period is 2.85, reflecting the government's determination to reach
 54

a level of efficiency higher than now existing in the economy. Investment in this Plan
represents addition to fixed capital stock(net of depreciation), and as such does not include
wages and salaries. The Fifth Plan aims to achieve a higher efficiency in capital use with a
suitable technology-mix, greater utilisation of existing capacity, higher labour productivity
and improved management in a competitive market environment. GDP growth rates, ICVRs
and investment rates are shown in Table 3.2. In the first year, investment/GDP ratio will be
18.21 per cent and in the terminal year 25.1 per cent.
Table 3.2
Investment Profile for Fifth Plan
(at 1996/97 prices)
(in million Taka)
1
Year GDP GDP Growth ICVR Investment Investment as
Rate (%) Percentage of GDP
1996/97 1,402,580 5.70 2.90 243,686 17.37
(Base Year)
1997/98 1,486,735 6.00 2.89 270,690 18.21
1998/99 1,580,399 6.30 2.87 308,430 19.52
1999/2000 1,687,866 6.80 2.85 365,592 21.66
2000/2001 1,816,144 7.60 2.84 428,973 23.62
2001/2002 1,967,191 8.32 2.83 493,806 25.10
Total/Average - 7.00 2.85 1,867,491 -
(Fifth Plan)
1
ICVR has been estimated econometrically. The estimation period for the regression has been the post-flood
years from 1988/89 to 1995/96. The regression gives an excellent fit with R2 higher than 0.9 and both t and F
statistics are significant. ICVR so estimated was found to be 2.88. This estimate shows the level of capital
productivity in the recent past.

3.3 Financing of Fifth Plan Outlay

3.3.1 Proposed investment will be financed through increased domestic savings, remittances
of Bangladeshi workers abroad, FDI and official development assistance (ODA). In the public
sector, ODA will decline as a percentage of GDP from 4.3 per cent in the first year of the
Plan to 3.5 per cent in the terminal year. This is in conformity with the policy for achieving
self-reliance within the shortest possible time. Proposed financing of the Plan outlay is
shown in Table 3.3.
Table 3.3
Financing of Fifth Plan Outlay
( at 1996/97 prices )
(in billion Taka)
Items Total Share (%) Public Share (%) Private Share (%)
Plan Size 1,959.52 100.00 858.94 100.00 1,100.58 100.00
Domestic Resource 1,519.76 77.56 527.72 61.44 992.04 90.14
External Resource 439.76 22.44 331.22 38.56 108.54 9.86

3.3.2 Domestic savings is projected to rise from 7.7 per cent of GDP in 1996/97 to 16.5
per cent in the terminal year of the Plan. National savings is estimated at about 15 per cent of
GDP in the base year of the Plan. It is projected to rise to 20.14 per cent in the terminal year
of the Plan. To this end, appropriate fiscal and monetary measures will be undertaken.
Remittances of Bangladeshi workers abroad is projected to increase by 5 per cent annually
 55

over the Plan period. Annual phasing of the Plan outlay for the public and private sectors
alongwith their sources of financing is shown in Tables 3.4 and 3.5.
Table 3.4
Phasing of Public Outlay in Fifth Plan
( at 1996/97 prices )
(in million Taka)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Base Year)
ADP 117,000 121,905 138,534 167,308 199,279 231,913 858,939
External Resource 59,750 64,200 64,181 66,309 67,325 69,205 331,220
Domestic Resource 57,250 57,705 74,353 100,999 131,954 162,708 527,719
Domestic Resource Share(%) 48.93 47.34 53.67 60.37 66.22 70.16 61.44

Table 3.5
Phasing of Private Investment in Fifth Plan
( at 1996/97 prices )
(in million Taka)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Base Year)
Private Investment 139,222 161,846 184,740 216,210 251,045 286,741 1100,582
External Resource 13,730 15,961 18,219 21,323 24,758 28,279 108,540
Domestic Resource 125,492 145,885 166,521 194,887 226,287 258,462 992,042
Domestic Resource Share(%) 90.14 90.14 90.14 90.14 90.14 90.14 90.14

3.3.3 FDI is, at present, not very significant. This, however, is envisaged to be a prospective
rich source of financing of private investment in Bangladesh. During the Fifth Plan, FDI will
be attracted in substantial volume through incentives, deregulation and promotion of the
market economy and above all, maintaining macroeconomic stability.
3.3.4 Mobilisation of domestic savings is dependent on the implementation of several
policies, viz., (a) increase in revenue surplus through extension of tax base, effective tax
administration and budgetary discipline, (b) minimisation of government losses through
privatisation of the losing public enterprises and replacing administered prices by market
prices for goods and services produced in the public sector, (c) reduction of losses of retained
state owned enterprises and corporations through proper reforms and structural
reorganisation, (d) adoption of diversified savings schemes and introduction of new financial
instruments, (e) initiation of proper fiscal and monetary policies to curb inflation, (f)
collection of dues on privatised units, (g) increase in net capital receipts of the government,
(h) minimisation of food budget deficit by appropriate pricing for public food distribution and
(i) promotion of local development activities.
3.3.5 The financial sector reform, conversion of nationalised commercial banks (NCBs) into
private banks and establishment of new banks and financial institutions following
deregulation and liberalisation polices will play an important role in promoting financial
intermediation and private investment. Reforms of capital market, introduction of new
financial instruments and savings schemes and development of financial markets will lead to
increased mobilisation of domestic savings. As there is, at present, very little information
regarding the savings behaviour of different sectors and classes, such information will be
collected and savings mobilisation strategy will be devised during the early stages of the Fifth
Plan.
 56

3.4 Projection of GDP Growth

3.4.1 The Fifth Plan projects a GDP growth at an average annual compound rate of 7 per
cent. In the first year it is estimated at 6 per cent and in the terminal year at 8.3 per cent.
3.4.2 An input-output model has been used to project both sectoral growth as well as
sectoral investment. The input-output table of 1992/93 has been revised in the Planning
Commission using most recent census of manufacturing industries (CMI) data available with
BBS. New coefficients have been estimated for more than 25 sectors. While estimating
sectoral output and value added, care has been taken to protect the exogenously set targets for
basic need items such as food, clothes, housing, education and health.
3.4.3 Historical evidences show that the poor performance of agriculture has led to large
rural-urban migration and consequent burgeoning of the informal sectors. It is the aim of the
Plan to change this pattern which is not conducive to the acceleration of overall growth of
the economy. It focuses on the acceleration of growth in the productive sectors, especially in
agriculture and industry, to a rate higher than that achieved in the past. As the intersectoral
balance shows, there will be a tremendous demand for power and gas in order to achieve the
desired growth rate of GDP. As these require lumpy investment and there is a time lag in
their coming into production, immediate steps are needed to put in motion new capacity
creation in the area of power and gas.
3.4.4 Sectoral composition of GDP at market prices of 1996/97 with growth rates are
shown in Table 3.6. Agriculture is estimated to have contributed 29.82 per cent of GDP in
1996/97. The crop sub-sector accounted for 72.03 per cent of GDP in agriculture. Growth
rate of the crop sub-sector was only 5.6 per cent in 1996/97 against the growth rates of 8 per
cent, 8.9 per cent and 4.2 per cent of livestock, fisheries and forestry sub-sectors respectively.
Programmes for the development of crop sub-sector have therefore been formulated to
increase the output substantially. Foodgrain production is projected to be 25 million tons by
the terminal year, if not earlier. In order to achieve this, appropriate technological
improvements will be required and the agricultural research institutions will be strengthened
with focus on seed development, fertiliser application, and water use--all at the farm level.
With accelerated production of foodgrain, crop diversification programmes will be easier to
implement to increase output of minor crops and achieve nutritional balance. Also,
programme will be initiated to move into higher value added non-crop agriculture. Production
of livestock and fisheries are expected to increase by about 30 per cent and 52 per cent
respectively during the Plan period. The Plan will focus on increasing commercialisation to
facilitate the growth of these sub-sectors.
 57

Table 3.6
Projected Sectoral GDP Respective Shares and Growth Rates for Fifth Plan
(at 1996/97 prices)
(in million Taka)
Items 1996/97 2001 / 2002 Growth
Value Added Share (%) Value Added Share (%) Rate (%)
Agriculture 418,306 29.82 508,945 25.87 4.00
Industry 130,111 9.28 249,852 12.70 13.94
Construction 82,346 5.87 119,322 6.07 7.70
Power and Gas 30,834 2.20 86,808 4.41 23.00
Transport 158,040 11.27 227,000 11.54 7.51
Housing 134,117 9.56 173,660 8.83 5.30
Public Administration 79,048 5.64 95,254 4.84 3.80
Health 19,184 1.37 26,041 1.32 6.30
Education 58,685 4.18 80,566 4.10 6.54
Trade 125,799 8.97 177,173 9.01 7.09
Banking and Insurance 28,084 2.00 37,583 1.91 6.00
Other Services 138,026 9.84 184,987 9.40 6.03
Total 1,402,580 100.00 1,967,191 100.00 7.00

3.4.5 Manufacturing sector showed mixed performances in the past. Production of jute
goods, textile products, sugar, paper and cement fluctuated widely. Garments and leather
goods sub-sectors, however, expanded significantly. The government provided various
incentives and facilities to encourage private investment in the industrial sector. Opportunities
for foreign private investment have been opened up in all the areas except few nationally
strategic ones. It is expected that with the expansion of market economy, private investment
will increase substantially during the Fifth Plan and growth rate of the industrial sector will be
accelerated. Main thrust in this sector will be on diversification of its structure focusing
particularly on export oriented sectors such as garments, leather goods, computer data entry,
software and electronics. Establishment of backward linkage industries will be encouraged to
complement this process.
3.4.6 Critical importance of the energy sector for the overall development of Bangladesh is
recognised. In the past, the sector depended wholly on government fund to ensure adequate
supply of energy for industrial as well as agricultural development. In recent years the
government has formulated appropriate policies to encourage private investment, especially
foreign direct participation for large investment. There has developed significant shortfall in
power supply in meeting its growing demand. Therefore, investment for the energy sector is
proposed to be increased substantially in the Fifth Plan and higher growth rate is projected
for the sector. Inefficiency in power generation, transmission and distribution as indicated by
large system loss will significantly be reduced during the Plan period through appropriate
policy measures, organisational development and privatisation of the critical phases of the
power system.
3.5 Structure of GDP
3.5.1 Structure of GDP has been changing over the period of the previous Plans. There will
be a marked change in the structure of GDP during the Fifth Plan. Share of agriculture is
projected to fall from 29.82 per cent in the base year to 25.87 per cent in the terminal year of
 58

the Plan. The shares of industry and energy sectors will increase. The projected structural
changes are shown in Table 3.6.
3.5.2 Contribution of agriculture will decline over the Plan period due to faster growth of
the non-agricultural sectors, particularly industry and energy. High growth of industry (about
14 per cent) and energy (23 per cent) sectors as projected are required to support the overall
growth of GDP at the rate of 7 per cent.
3.6 Projection of Major Physical and Social Indicators
3.6.1 Growth rate of population, which has declined, is expected to fall further significantly
during the Fifth Plan. Population is projected to increase at an average annual growth rate of
around 1.37 per cent from 123.8 million in 1996/97 to 132.5 million in the terminal year of
the Plan. Per capita income will thus increase at an annual rate of around 5.6 per cent and per
capita consumption will significantly increase to bring about visible improvement in the
standard of living of the people. Besides raising per capita income, the Plan proposes to
further strengthen target group approach for implementation of poverty alleviation
programmes effectively in collaboration with the local governments and NGOs. In the light of
recent experiences in societal change, reduction of poverty will be taken as synonymous with
socio-economic development of the country. With this end in view, adequate resources will
be directed to the expansion of employment and income generating activities, rural
development, women and youth development and provision of basic needs for the target
groups. For a rapid expansion of employment opportunities, the Plan expects a greater role
for the private sector than ever before. Public sector will also create substantial employment
opportunities through its poverty alleviation and infrastructure development programmes.
3.6.2 Major physical and social indicators are given in Table 3.7. Such achievement will
depend not only on the flow of new investment but also on efficient use of existing capacities
through development of management capability in both the public and private sectors.
Appropriate macroeconomic policies and strategies will be implemented to achieve these
targets.
 59

Table 3.7
Projection of Major Physical and Social Indicators of Fifth Plan

Items Unit 1996/97 2001/2002 Percentage

Base Year Terminal Year Increase over
Base Year
I. Agricultural Production
1. Cropping Intensity percentage 185.00 192.00 3.78
2. Foodgrain million ton 20.43 25.12 22.96
(a) Rice million ton 18.88 23.40 23.94
(b) Wheat million ton 1.45 1.60 10.34
(c) Other Coarse Grain million ton 0.10 0.12 20.00
3. Jute (raw) million bale 4.87 7.24 48.67
4. Cotton (raw) million bale 0.10 0.26 160.00
5. Potato including Sweet Potato million ton 2.35 3.09 31.49
6. Vegetables million ton 1.45 1.82 25.52
7. Oilseeds million ton 0.37 0.76 105.41
8. Pulses million ton 0.53 0.85 60.38
9. Tea million kg 54.00 60.00 11.11
10. Fish million ton 1.37 2.08 51.82
11. Livestock Population million number 227.11 294.50 29.67
12. Irrigation million ha 3.99 5.04 26.32
13. Flood Control and Drainage million ha 4.20 4.90 16.67
II. Industrial Production
1. Sugar million mt 0.14 0.23 64.29
2. Yarn million kg 113.00 522.00 361.95
(a) Cotton Yarn million kg 75.71 349.74 361.95
(b) T.C and Others million kg 37.29 172.26 361.95
3. Fabrics million metre 1,163.00 3,651.00 213.93
(a) Cotton Cloth million metre 779.21 2446.17 213.93
(b) T.C and Others million metre 383.79 1204.83 213.93
4. Fabrics for Garments million metre 210.00 1620.00 671.43
(a) Cotton Fabrics million metre 140.70 1081.38 668.57
(b) T.C and Others million metre 69.30 538.62 677.23
5. Jute Textiles '000' mt 435.00 500.00 14.94
6. Paper, Pulp and Newsprint '000' mt 70.00 124.20 77.43
7. Fertilisers '000' mt 2,153.99 2,583.00 19.92
8. Cement '000' mt 107.30 233.00 117.15
9. Leather (export quality) million sq.m. 13.01 18.58 42.81
 60

Table 3.7 (Contd.)

Projection of Major Physical and Social Indicators of Fifth Plan

Items Unit 1996/97 2001/2002 Percentage

Base Year Terminal Year Increase over
Base Year
III. Energy Supply
1. Electricity Generation (capability) mw 2,148.00 5,739.00 167.18
Maximum Demand mw 2,087.00 4,051.00 94.11
Distribution Line '000' km 43.84 53.93 23.02
2. Rural Electrification
Distribution Line '000' km 85.11 135.11 58.75
Villages Electrified '000' number 20.52 32.52 58.48
3. Natural Gas bcf 285.00 365.00 28.07
4. POL Products million mt 2.38 3.49 46.64
IV. Physical Infrastructure
1. (a) Paved Road (National/Regional/
Thana Connecting) '000' km 11.50 14.00 21.74
(b) Rural Road '000' km 9.55 17.45 82.72
2. Telephone million number 0.52 1.22 134.62
V. Social Sector
1. Primary School Enrolment (6-10 yrs) million persons 17.28 18.99 9.90
2. Primary School Enrolment (6-10 yrs) ratio 95.00 100.00 5.26
3. Primary School '000' number 75.00 80.00 6.67
4. Literacy Rate (adult) percentage 47.30 70.00 48.00
5. Female Literacy Rate percentage 38.10 60.00 57.48
6. Drinking Water
(a) Urban Area (Piped Water) million litre/per day 850.00 1250.00 47.06
(b) Rural Area (Tubewells) million number 1.03 1.56 51.46
7. Sanitation
(a) Urban Area (Sewerage in Dhaka) coverage (%) of hh 35.00 40.00 14.29
(b) Rural Area (Sanitary Latrine) million number 2.56 5.38 110.16
8. Hospital Beds '000' number 37.13 42.00 13.12
9. Population Growth Rate % per year 1.75 1.32 (-)24.57
10. Population (mid year) million persons 123.80 132.50 7.03
11. Life Expectancy years at birth 58.00 60.00 3.45
12. Infant Mortality Rate per 1000 live births 78.00 55.00 (-)29.49
13. Maternal Mortality Rate per 1000 live births 3.60 3.00 (-)16.67
14. Immunisation (Under 1 Year Children) percentage 66 85 28.79
(a) BCG percentage 73 80 9.59
(b) DPT percentage 80 90 12.50
(c) Measles percentage 75 85 13.33
(d) Polio percentage 80 90 12.50
15. Population Below the Poverty Line percentage 45 30 (-)33.33
16. Nutritional Status /Energy Intake k.cal 1,950 2,300 17.95
17. Contraceptive Prevalence Rate percentage 48 60 25.00

3.7 Employment Prospect

3.7.1 Size of the labour force of Bangladesh was estimated, according to the usual
definition1 , at 40.5 million in 1994/95 and at 43 million in 1996/97. The Fourth Plan created
about 4.6 million additional employment against the target of 5.05 million. During the period
addition to the labour force was about 5.7 million persons.

1 Excludes own household economic activities.

 61

3.7.2 Labour force ( age 15+ years) is projected to grow at the rate of 2.5 per cent per
annum over the Fifth Plan period and rise to 58.33 million, according to the extended
definition2 in the terminal year. Total employment is likely to increase from about 50 million
persons in 1996/97 to 56.35 million persons in the terminal year. Thus, an additional
employment for 6.35 million persons will be created during the Plan period. Employment
generation in different sectors of the economy is presented in Table 3.8.
Table 3.8
Employment Projection for Fifth Plan
(thousand persons)
Sectors 1996/97* 2001/2002
Agriculture 31,500 33,382
Industry 3,700 5,847
Power, Gas and Natural Resources 105 215
Physical Planning, Housing and Construction 1,034 1,196
Transport and Communication 2,238 2,626
Trade and Other Services 11,423 13,079
Total 50,000 56,345

*Estimated on the basis of Labour Force Surveys, 1995/96 and 1990/91.

3.7.3 Projection of employment has been derived on the basis of sectoral growth rates. It
will be realised, in a larger part, through self-employment and rural development
programmes.
3.7.4 The objective of the Plan is to create productive employment. Several steps will be
taken for enhancing labour productivity. Such steps will include skill development through
on-the-job training, vocational training, improvement of less capital intensive technology and
acquisition of modern technology.
3.8 Resource Allocation for Fifth Plan
3.8.1 In order to bring about the planned growth rate of 7 per cent, total outlay is projected
to be about Tk.1,959.52 billion with 44 per cent in the public sector (Tk.858.94 billion) and
the rest in the private sector (Tk.1,100.58 billion). Besides trade and other services, the largest
share of investment is going to be in agriculture (16.46 per cent), closely followed by industry
(15.85 per cent) and transport and communication (13.5 per cent). Plan outlay by major
sectors is shown in Table 3.9.
3.8.2 While the Fifth Plan intends to bring about a much greater share for the private sector
through favourable institutional and policy changes, the relative share of the private and
public sectors in the Plan outlay will vary among different sectors of the economy. In the
public sector, highest share will be in agriculture (including rural development) in order to
develop infrastructure to facilitate growth. On the other hand, the government’s involvement
in directly productive activities will be reduced. The share of industries in the total public
outlay will hardly be 1.4 per cent. Against this, in the private sector, the greatest emphasis
will be on industries (27.15 per cent of total private investment). Growing partnership
between the private and public sectors in infrastructure investment is a global trend and

2 Includes own household economic activities.

 62

Bangladesh will be of no exception. During the Fifth Plan, total outlay in the transport and
communication sectors will almost be evenly split between the public and private sectors.
The role of the private sector is also envisaged to grow in the power and gas sector. Already,
some Memoranda of Understanding have been signed between the government and foreign
investors. A quarter of total investment in this sector is expected to be made by the private
sector.
Table 3.9
Sectoral Distribution of Plan Outlay
(at 1996/97 prices)
(in million Taka)
Sectors Public Sector* Private Sector Total
Agriculture 202,674.68 119,864.31 322,538.99
(23.60) (10.89) (16.46)
Industry 11,793.70 298,776.16 310,569.86
(1.37) (27.15) (15.85)
Housing and Construction 49,816.00 180,017.61 229,833.61
(5.80) (16.35) (11.73)
Power and Gas 114,400.60 37,726.07 152,126.67
(13.32) (3.43) (7.76)
Transport and Communication 145,540.11 118,876.80 264,416.91
( 16.94) (10.80) (13.50)
Trade and Others 334,713.91 345,321.15 680,035.06
(38.97) (31.38) (34.70)
Total 858,939.00 1100,582.10 1959,521.10
(100.00) (100.00) (100.00)
* Includes non-investment expenditures. Figures in parentheses are percentage share in total outlay. Of the total
public sector allocation, about Tk. 256 billion (30%) will be in the social services sectors.

3.8.3 Private investment is envisaged to be induced by the new prospects in a market

economy. The projected level of public outlay together with anticipated level of private
investment will sustain 7 per cent growth. Resource allocation between the private and public
sectors has been made according to the recent trend, efforts for mobilisation of domestic
resources by the government, saving-investment behaviour of the private sector, monetary
and fiscal policies to be pursued and sectoral linkages.
3.8.4 In conformity with the overall objectives of the Plan and greater role of the private
sector than ever before in a market economy, the public sector resource allocation has been
determined to address the sectoral priorities concerning public interventions for social justice,
supply of basic needs, poverty alleviation, productive employment generation, human
resource development and development of social and economic infrastructures. Accordingly,
agriculture, water resources and rural development, physical infrastructure development,
energy, health and education have been given high priority in the public sector as shown in
Table 3.10.
3.8.5 Rural development has been accorded priority for the reduction of rural poverty
through expansion of productive employment and income generating activities, human
resources development and skill formation, increased participation of women and youth in the
development process, building of physical infrastructure in the rural areas and development of
rural institutions. Successful rural development and poverty alleviation programmes and
projects will be supported and replicated and new projects will be undertaken. The Fifth Plan
takes a comprehensive view of rural poverty as a syndrome of rural under-development.
 63

Compared to the Fourth Plan where rural development was allocated 4.76 per cent of the total
public outlay, this sector will receive more than 10 per cent of the Fifth Plan public outlay.
This reflects the importance given to rural poverty alleviation through overall rural
development.
Table 3.10
Public Sector Outlay for Fifth Plan
(at 1996/97 prices)
(in million Taka)
Sectors 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Base Year) (FFYP)
Agriculture 6,407.00 5,956.00 6,719.28 8,910.27 9981.28 10,732.25 42,299.08
Rural Development 10,264.00 9,192.00 10,000.75 16,961.75 22,745.75 28,102.23 87,002.48
Water Resources 10,580.00 10,155.00 10,509.91 10,961.91 12,000.91 12,569.89 56,197.62
Ganges Barrage - - 555.63 4,830.62 5,608.62 6,180.63 17,175.50
Industry 1,867.00 1,179.00 1,596.17 2,409.18 3,032.17 3,577.18 11,793.70
Energy 14,083.00 13,831.00 15,859.50 19,109.50 19,800.50 19,760.50 88,361.00
Oil, Gas and Natural Resources 4,858.00 4,767.00 4,902.90 5,210.90 5,443.90 5,714.90 26,039.60
Transport 13,938.00 14,621.00 17,147.88 20,774.88 25,976.88 31,434.87 109,955.51
Bangabandhu Bridge 9,380.00 6,611.00 5,189.00 - - - 11,800.00
Communication 2,247.00 2,714.00 4,307.90 4,943.90 5,629.90 6,188.90 23,784.60
Physical Planning and Housing 6,804.00 7,907.00 8,170.75 8,926.75 10,949.75 13,861.75 49,816.00
Education 15,837.00 16,078.00 19,848.88 26,023.88 30,898.88 36,081.86 128,931.50
Health 5,849.00 5,607.00 7,721.35 12,274.35 15,796.35 20,873.35 62,272.40
Population and Family Welfare 4,938.00 5,190.00 5,238.00 5,644.00 6,073.00 6,445.00 28,590.00
Sports and Culture 596.00 764.00 962.62 1,139.63 1,342.63 1,529.62 5,738.50
Social Welfare, Women and 1,866.00 1,592.00 1,914.17 2,776.17 3,574.18 4,457.18 14,313.70
Youth Development
Mass Media 420.00 482.00 688.17 913.18 1,211.17 1,551.18 4,845.70
Science and Technology 380.00 429.00 780.03 994.03 1,269.02 1,579.02 5,051.10
Labour and Manpower 90.00 97.00 170.55 266.55 385.55 470.55 1,390.20
Public Administration 956.00 1,050.00 1,371.58 1,886.57 2,396.58 2,969.57 9,674.30
Sub-total 111,360.00 108,222.00 123,655.02 154,958.02 184,117.02 214,080.43 785,032.49
Bloc 5,640.00 13,683.00 14,878.98 12,349.98 15,161.98 17,832.57 73,906.51
Total 117,000.00 121,905.00 138,534.00 167,308.00 199,279.00 231,913.00 858,939.00

3.8.6 In order to accelerate the agricultural growth of the west zone which has a
comparative advantage in agriculture, a project for the construction of a barrage on the river
Padma will be undertaken during the Fifth Plan for optimum utilisation of the water flow for
flood management, irrigation and river basin development. The Fifth Plan allocation for the
project (Ganges Barrage) is shown separately under the water resources sector in Table 3.10.
The project will provide irrigation facilities to an area of about 1.35 million hectares. The
right bank intake canals from the barrage will feed water into the Gorai, the Kumar, the
Nabaganga, the Chitra, the Kobadak, the Modhumati and other rivers. This will also serve the
area to the west of the Ganges-Kobadak project areas. The total cost of this project has been
estimated at Tk. 140.82 billion. It includes costs of barrage, main canals, drainage canals as
well as feasibility study and detailed engineering. During the Plan period, Tk.17.18 billion
will be spent. The project will increase agricultural production through creating irrigation,
drainage and flood control facilities. It will also serve as a road bridge over the Padma.
Besides, the barrage will provide the required quantum of flows through the Gorai in the dry
 64

season to check the salinity intrusion in the south-west region of Bangladesh, maintain
ecological balance and protect environment of the region.
3.8.7 As of now, the power and gas sector is almost entirely in the public sector. As it is
highly capital intensive and lumpy, the development of this sector will receive public sector
priority, receiving more than 13 per cent of total ADP allocation. In order to meet the
existing power gap, larger allocation of fund has been made than in the previous Plans to
increase the generation capacity of the power sector. The government's present energy policy
provides for participation of local and expatriate private entrepreneurs in generation and
distribution of power. Private sector participation will get priority to ensure adequate energy
supply to industry and agriculture and rural development. Side by side, the transport and
communication sectors have also been given due priority in fostering the private sector
growth, receiving about 17 per cent of ADP allocation. The transport sector will implement
some lumpy projects like Bangabandhu Bridge to remove long haul transport bottlenecks and
integrate the rural and regional economies into the national markets.
3.8.8 The social sectors such as education, health, population and family welfare, social
welfare, women and youth development have been given high priority in the Fifth Plan. Over
30 per cent of the public outlay is earmarked for the social sectors. During the Fourth Plan,
education and health were allocated 10.7 per cent of the public outlay, while the Fifth Plan
has allocated over 22 per cent of the public outlay to these sectors. Compulsory primary
education , health for all, population control and supply of safe drinking water will get larger
shares of resources. Emphasis will be given on the quality of projects in social sectors. NGOs
and private sector participation will be encouraged in these areas.
3.9 Private Investment During Fifth Plan
3.9.1 Private investment has been projected on the basis of the investment trend of the
recent past, as well as the potential and prospects of the sector in a market economy. The
allocation of private investment is indicative only and has been made taking into account the
estimated benchmark of 1996/97. The broad sectoral allocation of expected private
investment for the Plan period has been given in Table 3.9.
3.9.2 Private sector investment will depend on profitability. However, care will be taken so
that profit motive does not infringe on social considerations for equity and environment.
Public sector investment will encourage private investment through its infrastructure
development programme and ensuring a stable macroeconomic environment. Incentives will
be given to the private sector to foster growth in an environment of a free market economy
and the society, in turn, will expect the private sector to pursue enlightened sef-interest within
the system of moral values.
3.10 Policies for Facilitating Private Investment
3.10.1 In order to facilitate private investment, existing structural adjustment policies will be
strengthened and further enabling policies will be put in place. The critical factors in
achieving the projected private investment will be improvement in (a) domestic resource
mobilisation and (b) inflows of FDI. Given the interest shown by various development
partners and multinational companies (MNCs), substantial FDI will flow in during the Fifth
Plan. In order to encourage the flow of FDI, further physical facilities will be developed and
investment friendly legal and administrative services will be created and sustained.
 65

3.11 Balanced Regional Development

3.11.1 The question of balanced regional development can hardly be ignored in a democracy.
This needs to be directly addressed within a plan framework. Till date, regional resource
endowments such as land and water have not been taken into consideration in designing
projects. Water resource development plan of the late 1980s, particularly, approached the
problem on a regional basis dividing the country into 5 regions as the regional water resources
appear manifestly diverse. At the other end, in the social sectors, such as education and
health, people-oriented programmes have been formulated with a more or less equitable
approach to the development of regional facilities. But due to the absence of an inter-regional
framework as a tool for balanced regional development, regions show significant differences
in their development. Not only that, past development also has failed to make full use of
comparative advantage of the regions in production and led to somewhat inefficient use of
resources. During the Third Plan, a study for optimal use of land and water resources was
completed but never used for production planning. Recently (1994), a study on comparative
advantage of wheat production covering 5 production regions in Bangladesh was completed.
A study for the development of the Rajshahi Division in the background of the Bangabandhu
Bridge has also been completed very recently. Nevertheless, a comprehensive framework for
balanced regional development is very much needed because of differences in the current
levels of development of the regions. In 1992/93, for example, per capita income of the
Rajshahi Division was 18.33 per cent less than the national average, though the economy of
the region has been growing faster in recent years than the country as a whole. Some of the
special area-specific issues and problems in this context are briefly discussed below.
3.11.2 North West Region : Per capita income of the Rajshahi Division was (Tk. 6,830)
lower than the national average (Tk. 8,363) in 1992/93 at 1984/85 prices and the level of
poverty measured by the calorie intake standard was higher in Rajshahi. Though the division
was surplus in food production, about 56 per cent of the population was below the poverty
line. In addition, the division has a lower life expectancy (56.5 years), a higher incidence of
illiteracy (72.9 per cent) and a lower coverage by immunisation programme in comparison to
their respective national averages. The division had also a higher population growth of 2.1 per
cent in 1995 than the national average of 1.8 per cent.
3.11.3 The area is now largely agrarian in character, relatively more of income (44.9 per
cent) originating in agriculture with correspondingly more of people living in the rural areas
(84.3 per cent) and higher proportion of landless households. Though the area has an edge
over the rest of the country in several crops in terms of yield, this hardly compensates the low
level of per capita income. Nominal wage was lower by a quarter of that of the national
average in 1993/94 and real wage about one-tenth less. Higher agricultural growth cannot
simply make up the lapses of growth in other areas, particularly in industrial production
where value addition per unit of labour is much higher than in agriculture. Industries
accounted for 2.93 per cent of Gross Regional Product (GRP) of Rajshahi against 10.56 per
cent of GDP of the country in 1992/93. For various reasons such as relative isolation and
higher transport cost, problems of raw materials and power supplies and scale of operation,
capital is half as productive in Rajshahi as that in the country as a whole (CMI, 1991/92).
Considering all these, the necessity for a planned approach towards the industrial
development of the area can hardly be overemphasised.
3.11.4 Inter-regional relation with the Rajshahi Division will stand at the crossroad as a
result of construction of the Bangabandhu Bridge. It will create a much better prospect for
 66

the integration of the Rajshahi Division with the industrially more advanced south-east
region. To mitigate underdevelopment of the region, special investment programmes are
envisaged under the Fifth Plan. These programmes will encompass 5 sectors/sub-sectors,
namely, agriculture, fisheries, industries and finance, transportation and urban development
and have at least 25 specific projects - 5 for each sector. Besides these, special attention will
be given to social sectors also.
3.11.5 Currently two massive projects, namely, Barapukaria Coal Mine (cost: Tk. 8.87
billion) and Madhayapara Hardrock Mine (cost: Tk. 8.95 billion) are under implementation in
the division. Direct benefits (value addition) from these two projects have been projected to
be Tk. 3.38 billion a year when completed by around 2000 AD. These will also enhance
opportunities for secondary and tertiary activities in the area. The coal mine will particularly
help to overcome its energy problem. A 300 mw power plant based on coal will be
undertaken and completed during the Fifth Plan period. In addition, projects will be drawn
up for mining coal at Jamalgonj and Khalispir and limestone at Joypurhat.
3.11.6 Special attention to Rajshahi Division will call for (a) extensive road network, (b)
enhanced telecommunication facilities, (c) appropriate development of surface and ground
water irrigation, (d) setting up 3 universities of science and technology, (e) extension of gas
pipe line, (f) establishment of an export processing zone, (g) setting up 3 more industrial
estates, (h) increasing regional co-operation with Bhutan, Nepal and Asam, (i) reaching water
sharing treaties on the Teesta and the Jamuna and (j) setting up a development finance
institution for giving term credit support to private industrial entrepreneurs.
3.11.7 Coastal area: Coastal area of Bangladesh is ecologically sensitive and climatically
vulnerable. It is ecologically sensitive because of the continuous process of land accretion
which needs to be protected for natural vegetative growth and afforestation. It also contains
one (5,000 sq. km) of the largest mangrove forests in the world. But the area has also been
subject to severe cyclonic storms originating in the Bay of Bengal, causing some of the
greatest disasters of the world. The area covers over 1.8 million of households (1991) in 133
thanas along the coastal belt and is considered as risk prone. In spite of the cyclonic risk, there
has been growing population pressure on the area, particularly since the beginning of the
construction of 5,000 km of coastal embankments. Such embankments have helped to bring
land under rice cultivation as salinity reduced. In recent years, the area has also taken up
extensive shrimp culture which needs saline water. This development has created conflict of
interests between small farmers and relatively wealthy shrimp farm owners. Besides this,
shrimp culture has also adversely affected the mangrove forest. Under these circumstances
there is a need for careful planning for the development of the area without irreparably
damaging the eco-system of the area.
3.11.8 The area is resourceful in many ways. It contains one of the two rich forest belts of
the country and provides fuelwood and raw material for the newsprint mill. Its flora and fauna
contribute to other production also. Indeed, with the loss of inland flood plains, the area
including its offshore belt has grown in importance for fisheries. Above all, continuous silting
of the area by rivers and channels has enriched the soil within the embankments for paddy
cultivation. In spite of these potentials, no concerted efforts has been made to secure the
development of the area against its natural risk and ecological sensitivity except for shelter of
people and livestock. Even in this respect, existing facilities are inadequate and in derelict
condition. After the cyclone of 1991 in which about 139 thousand people perished,
multipurpose cyclone shelter programme (MCSP) was developed with focus on the
 67

development of shelter-cum-school/community facilities. Though the programme will save

lives, it will not enhance the capability of people to endure the economic losses (crop, fish,
livestock, etc.) due to cyclone. The desired socio-economic goal can be achieved only by
accelerated development of the area.
3.11.9 For development of coastal areas, emphasis will be given on (a) development of
appropriate housing for low income people, (b) building more cyclone shelters, (c)
developing intensive shrimp and pisciculture, (d) completing embankments, (e) encouraging
fish processing industries, (f) setting up export processing zones and (g) building efficient
power, transportation and telecommunication links, particularly with the islands.
3.11.10 Very recently, sizeable gas resources have been found in the coastal areas. Special
emphasis will be given to utilise these resources for production of power and setting up of
downstream manufacturing based on gas.
3.11.11 Haors and Baors: Permanent water bodies, namely haors and baors, cover about
1,180 sq. km of area in the month of October, which shrinks to 316 sq. km in May. Part of
these permanent wetland has been lost to agriculture due to poldering for irrigation. The
existing ones are rich in fish resources. In 1981, an area of 0.42 million hectare was counted
as fishing area, of which, over 20 per cent was in Sylhet, 16.5 per cent in Khulna, 13.4 per
cent in the greater Mymensingh including Jamalpur and Tangail, 8.4 per cent in Dhaka and
7.9 per cent in Rajshahi. In 1992, the haors and beels produced over 50 thousand tons of fish
or 7.5 per cent of the total inland fish catch. Though currently they appear to be not much
significant as fishery resources, yet as wetland they occupy a critical position in maintaining
ecological balance. This balance has been disturbed by their empolderment in the interest of
food production, though their effect is not easily discernible. The geomorphological events
posited these depressions as they happened and the wet areas are scattered throughout the
length and breadth of the country; but as they are largely viewed as sources of both water and
fish, they can be protected for ecological balance only through proper planning and
management of water resources of the country. In the Fifth Plan, special attention to these
areas will be given.
3.11.12 Chittagong Hill Tracts: The area consists of 3 administrative districts covering an
area of 13.03 thousand sq. km with a population density of 78.2 persons per sq. km. Out of a
total area of 1,330 thousand hectares of land, only 80 thousand hectares of land are
considered as cultivable. This creates heavy pressure on usually cultivable land and
encourages Jhum cultivation in grove lands on hill slopes. Forest covers 6,404 sq. km of these
tracts - over one-third of the country’s total. The only hydroelectricity plant of the country is
located in the area. The economy of the area grew somewhat faster (4.26 per cent a year) than
that of the country as a whole (4.04 per cent) in terms of income between 1985/86 and
1992/93. Per capita income in these tracts was estimated at Tk. 14,400 in 1992/93 against the
national average of Tk. 8,368. The area is predominantly agricultural. More than 64 per cent
of the GRP of the area comes from agriculture compared with the national average of 35.92
per cent in 1992/93. Industries accounted for 6.13 per cent of GRP, which is lower than the
national average.
3.11.13 While the area fares better economically than some of the other areas, its
development in the social sector fails to be commensurate with it; for instance, literacy rate is
lower than the national average of 47.3 per cent. Ethnic diversities and terrain undoubtedly
make an overall social development of the area difficult. In early 1980s, special programmes
were undertaken for the development of the area. In 1992/93, there were about 91 primary
 68

schools per 100 thousand population in the area against about 46 on average in the country.
Thus, it seems that the isolation of the communities continues to affect efficient use of
facilities as the literacy rate shows. The isolation of the communities spread out in small
settlements is also reflected in the fact that there are 22 thana health complexes for a million
population in the area, while for the country as a whole there is 1 thana health complex for the
same size of population. Ethnic disturbances that pervaded the area since 1975 stood on the
way of full utilisation of all these facilities and realisation of the high development potential.
This problem has now been resolved.
3.11.14 Special attention to the development of these tracts in the Fifth Plan period will
manifest in (a) extensive road connection and telecommunication facilities, (b) intensive
geological survey for mineral resources, (c) horticultural development, (d) provision of safe
drinking water, (e) prevention of soil erosion, (f) intensive agricultural extension, (g) setting
up fruit processing industries, (h) extending agricultural extension services and (i)
encouraging creation of tourist facilities. Following signing of the Peace Treaty on December
2, 1997, the government has initiated a dialogue with the donors for the development of the
region.
3.12 Integration of Regional Development Programme with ADP
3.12.1 As regional development will receive high priority during the Fifth Plan, each ministry
will need to take up projects from their sectoral allocation under ADP addressing issues
related to development of various regions. The maintenance of these projects, as discussed
elsewhere in the Plan, will be the responsibility of the relevant local governments. Local
governments will also need to get involved in the implementation of that part of the central
project which falls under their jurisdiction. As these projects, in most cases, will address
directly the problems the local people face, the efficiency of implementation will be higher.
69
 70

CHAPTER IV

DOMESTIC RESOURCES

4.1 Introduction
4.1.1 The Fifth Plan considers the generation of resources not as a static process, but as a
dynamic one. Efficient utilisation of resources, which is one of the key themes of the Fifth
Plan, will initiate a growth process which itself will produce additional resources. Part of
this, in turn, will be mobilised for development through innovative financial instruments and
strengthening of financial intermediation. These steps will also activate the national savings
for development purposes. The Fifth Plan will make an all-out effort to mobilise people for
development. Initiative of the people will bring into use even the non-monetised resources
as evidenced by many rural development experiments in Bangladesh.
4.1.2 Given the expected level of foreign aid, about 78 per cent of the total Plan outlay will
require to be financed from domestic resources (including remittances from abroad). Out of
the Plan outlay of Tk.1,959.52 billion, only Tk.439.76 billion is expected to be foreign
financed. The balance Tk.1,519.76 billion will need to be mobilised from domestic sources.
Both the public and private savings will have to be increased substantially to finance the Fifth
Plan. It will have to be ensured that resource mobilisation for the public sector does not
impinge on the savings required for financing private investment. Much of the success of the
Fifth Plan to mobilise domestic resources will depend on the proper use of fiscal and
monetary measures. The Fifth Plan projects that about Tk.527.72 billion (35 per cent) of the
domestic resources will be mobilised in the public sector and rest Tk.992.04 billion (65 per
cent ) will be in the private sector. Therefore, the private sector is expected to play a major
role in the domestic resource generation. In view of the recent dynamism of the private
sector, especially expansion of investment and acceleration of growth in the export-oriented
industries, it is expected that the private sector will be able to mobilise the required domestic
resources as the financial deepening of the economy continues.
4.2 Review of Fourth Plan
4.2.1 A major objective of the Fourth Plan was to improve domestic resource mobilisation
in both the public and private sectors. Because of strong reform measures, both tax and non-
tax revenues exceeded their respective Plan projections. As a result, total revenue receipts
during the Plan period was Tk.471.57 billion at 1989/90 prices exceeding the Plan projection
of Tk.457.9 billion. However, current expenditure overshot its target by about 3.7 per cent so
that revenue surplus barely exceeded the Plan expectation by 0.7 per cent. While there was a
food budget deficit, it was offset by higher net capital receipts. As a result, domestic resource
generation in the public sector exceeded the planned amount by more than 33 per cent.
4.3 Public Sector Development Expenditure During Fourth Plan Period
4.3.1 The Fourth Plan provided Tk.347 billion at 1989/90 prices for the public sector
development outlay. Total development expenditure in the public sector during the Plan
period was estimated at Tk.322.44 billion realising about 93 per cent of the target. Sector-
wise distribution of development expenditure is presented in Table 4.1. Sectoral
performance during the Fourth Plan has been discussed in details in the respective sectoral
chapters as a prelude to the Fifth Plan. The table shows that there was under-spending in
some sectors. In industry, actual development expenditure stood at Tk.5.03 billion as against
Tk.16.84 billion earmarked for the sector. The shortfall was attributed to the government
 71

policy shift towards encouraging private sector investment in industry. Development

expenditures in health, family welfare, labour and manpower and public administration
sectors lagged behind the targets. There was, however, over-spending in rural development,
transport and education. This was also due to policy shift of the government towards public
investment for infrastructure development and for human resource development.
Table 4.1
Public Sector Performance During Fourth Plan
(at 1989/90 prices)
( in billion Taka)
Sectors Allocation Realised Realised Expenditure as
Expenditure Percentage of Allocation
Agriculture 23.26 18.82 80.91
Rural Development and Institution 16.50 17.93 108.67
Water Resources 38.29 26.73 69.81
Industry 16.84 5.03 29.87
Power 45.36 41.88 92.33
Oil, Gas and Natural Resources 23.98 15.32 63.89
Transport 46.53 51.26 110.17
Communication 6.52 12.13 186.04
Physical Planning and Water Supply 18.42 13.78 74.81
Education 26.58 29.05 109.29
Sports and Culture 1.46 1.51 103.42
Health 10.60 9.83 92.74
Family Welfare 15.98 15.16 94.87
Mass Media 1.23 1.19 96.75
Social Welfare, Women and Youth Development 2.35 2.02 85.96
Public Administration 2.01 0.71 35.32
Science, Technology and Research 0.54 0.49 90.74
Labour and Manpower 0.85 0.18 21.18
Sub-total 297.30 263.02 88.47
Others 49.70 59.42 119.56
Total 347.00 322.44 92.92
4.3.2 Operation of the Annual Development Programme (ADP) as a development tool is
shown in Table 4.2. The size of the revised ADPs increased at an average rate of about 13.65
per cent between 1990/91 and 1994/95. This is attributed to intensive efforts for domestic
resource mobilisation. The utilisation of ADP funds also showed significant improvement in
terms of absorption of both local resources and project aid in the last two financial years.
Table 4.2
Utilisation of ADP Funds During Fourth Plan
(at 1989/90 prices)
(in billion Taka)
Year Revised ADP Actual Expenditure
Total Taka Project Aid Total Taka Project Aid
1990/91 56.95 22.62 34.33 49.04 21.38 27.66
1991/92 63.47 27.52 35.95 53.48 23.37 30.11
1992/93 69.64 33.38 36.26 56.17 27.12 29.05
1993/94 81.17 44.31 36.86 75.97 41.32 34.65
1994/95 95.00 55.47 39.53 87.78 51.06 36.72
 72

4.4 Trend in Fiscal Indicators During Fourth Plan

4.4.1 Trend in the five fiscal indicators during the Fourth Plan period is shown in Table 4.3.
The table shows that the Tax/GDP ratio increased from 7.9 per cent in 1990/91 to 9.7 per cent
in the terminal year . Non-tax/GDP ratio was 2.4 per cent in 1994/95 rising from 1.7 per cent
in 1990/91. Revenue expenditure/GDP ratio increased from 8.7 per cent in 1990/91 to 9.1 per
cent in 1992/93 and then came down to 8.8 per cent in 1994/95 as a result of containing
expenditures. ADP Expenditure/GDP ratio increased from 6.3 per cent in 1990/91 to 8.8 per
cent in the terminal year of the Fourth Plan. Overall fiscal deficit however was reduced from
7.2 per cent of GDP in 1990/91 to 6.8 per cent in 1994/95, though it had been rising since
1992/93 after falling to a level of 5.9 per cent.
Table 4.3
Trend in Fiscal Variables During Fourth Plan
( at current prices)
(in billion Taka)
Items 1990/91 1991/92 1992/93 1993/94 1994/95
GDP 834.39 906.50 948.06 1,030.36 1,170.26
Tax 65.88 79.10 91.69 97.33 113.64
Non-tax 14.08 19.16 21.20 26.64 27.79
Revenue Expenditure 72.28 77.92 85.97 92.78 103.18
ADP Expenditure 52.70 60.24 65.50 89.84 103.03
Tax/GDP Ratio (%) 7.90 8.73 9.67 9.45 9.71
Non-tax/GDP Ratio (%) 1.69 2.11 2.24 2.59 2.37
Revenue Expenditure /GDP Ratio (%) 8.66 8.60 9.07 9.00 8.82
ADP Expenditure /GDP Ratio (%) 6.32 6.65 6.91 8.72 8.80
Fiscal Deficit/ GDP Ratio * (%) 7.20 5.90 5.90 6.00 6.80
Source: Ministries of Finance and Planning and World Bank.
* Fiscal deficits are higher than the difference between total revenue and total expenditure due to inclusion of
expenditure items like non-ADP projects, FFW, miscellaneous investment (non-development), net loans and
advances and food deficits.
4.4.2 During the Fourth Plan period, a total amount of Tk.602.98 billion was invested at
1989/90 prices. Out of this, Tk.278.59 billion ( 46.2 per cent) of investment was made by the
public sector and the rest Tk.324.39 billion (53.8 per cent) by the private sector. This led to
an average annual growth rate of 4.15 per cent in GDP against the Plan target of 5 per cent.
4.4.3 Investment/GDP ratio which was 12.8 per cent in 1989/90, increased to 16.63 per cent
in 1994/95. Domestic savings/GDP ratio increased even faster from 2.7 per cent in 1989/90
to 8.3 per cent in 1994/95. This shows that domestic savings financed almost a half of total
investment in 1994/95.
4.5 Monetary Management During Fourth Plan
4.5.1 The financial sector reform programme was implemented in order to attain the
objective of gradually liberalising monetary sector in consonance with the development of a
market economy. Domestic credit and broad money expanded slowly by 9.4 per cent and 13.6
per cent respectively per annum during the Fourth Plan period. Growth rate of broad money
was brought down from 16.88 per cent in 1989/90 to 15.96 per cent in 1994/95. Broad money
grew at an average annual rate of 13.6 per cent during 1990-95 against the average annual
growth rate of 16.2 per cent during 1985-90. Of the components of broad money (M2),
average annual growth rates of time deposits, demand deposits and currency outside banks
 73

were at 12.8 per cent, 15.8 per cent and 15.5 per cent respectively during the Fourth Plan
period.
4.5.2 Total domestic credit grew at an annual average rate of 9.4 per cent during the Fourth
Plan period. However, net credit to the government increased by an annual average rate of 18
per cent, while credit to the rest of the public sector declined by 0.42 per cent and that to the
private sector increased by 10.7 per cent. Thus the growth of credit to the government sector
was mainly responsible for the expansion of credit during the Plan period. Assumption of a
substantial amount of liability of the banking sector by the government, financial sector
reform, jute sector reform, exemption of agricultural credit coupled with higher public
expenditures on salaries and wages due to implementation of the new pay scale, etc. resulted
in such a high growth rate of credit in the government sector. Denial of new credit to the
defaulting borrowers and cautious attitude in the face of large loan defaults were the major
causes of slow growth of credit to the private sector in the first four years of the Plan period.
The economy also moved sluggishly as was reflected in the lower growth of import which
went down in 1990/91 and picked up gradually to 15.5 per cent in 1992/93 but only to
decline sharply to a mere 2.9 per cent in 1993/94. During the last 3 years of the Plan period,
measures were taken to increase liquidity of banks but private demand for credit was lacking.
It was in the last year of the Plan that substantial growth of private sector credit by 26.7 per
cent appeared to signal the picking-up of economic activities. Larger expansion of credit to
agricultural, industrial and foreign trade sectors contributed largely to the higher growth of
credit. Measures such as allowing bank credit against share/debenture, expansion of the scope
of export credit and withdrawal of restriction on personal loan contributed to the
augmentation of credit to the private sector.
4.5.3 Price situation showed improvement over the Fourth Plan period. Inflation came down
from 9.3 per cent in 1989/90 to 8.9 per cent in 1990/91 and to 5.1 per cent in 1991/92 and
dropped to 1.3 per cent in 1992/93, but increased to 1.8 per cent in 1993/94 (Table 4.4).
Because of increased food prices, as a result of decline in foodgrain production for two
consecutive years after the record harvest of 1992/93 and expansion of credit raised inflation
rate over 5 per cent in 1994/95. Annual average rate of inflation during the Fourth Plan period
was 4.5 per cent as compared to a rate of around 10 per cent during the Third Plan period.
Table 4.4
Dhaka City Middle Class Cost of Living Index
(Base: 1973/74=100)
Period Annual Average
General Index Percentage Change
1990/91 689 8.85
1991/92 724 5.08
1992/93 734 1.38
1993/94 747 1.77
1994/95 786 5.22
Source : Bangladesh Bureau of Statistics.

4.6 Review of Two Year Plan Holiday Period (1995/96-1996/97)

4.6.1 The Fourth Five Year Plan (1990-95) ended in June 1995. The Fifth Five Year Plan
would have been launched in July 1995. The government of the time could not draw up the
next Five Year Plan. As a result, there was a 'Plan Holiday' for a period of two years (1995-
97) between the Fourth and Fifth Plans. During the Plan Holiday period spill-over projects
were implemented under the Three Year Rolling Investment Programme (TYRIP). Though
 74

there was no Plan during these two years, they provided an opportunity to the present
government to start a new Plan according to its programmes reflected in the election
manifesto and to adjust the economy in 1996/97 smoothly towards a new socio-economic
direction.
4.7 Domestic Resource Mobilisation in Public Sector
4.7.1 Domestic resource mobilisation in the public sector during the Plan Holiday period for
financing ADPs is shown in Table 4.5. In the original development budget of 1995/96, the
ADP size was Tk.121 billion, of which domestic resource was estimated at Tk.48.77 billion
(40.3 per cent) and the rest Tk.72.23 billion (59.7 per cent) was expected from official
development assistance (ODA). However, the revised estimate of domestic resource was only
Tk.44.14 billion, which was nearly 9 per cent less than the original estimate. This was due
mainly to the revenue expenditure overrun from Tk.110.7 billion to Tk.118.14 billion, which
was 6.7 per cent higher than the original budget, even though revenue receipts were slightly
higher than the original budget. As a result, revenue surplus declined by 15.6 per cent from
Tk.43.8 billion to Tk.36.98 billion. Domestic resource shortfall was also due to higher
negative impact of the food budget. Shortfall in revenue surplus was, however, somewhat
compensated by an increase of Tk.4.92 billion in net capital receipts which was 106 per cent
higher than the original budget estimate. Resource shortfall compelled the government to
reduce the ADP size from Tk.121 billion to Tk.104.47 billion. In 1996/97, Tk.59.26 billion
was expected to be generated as domestic resources, which was 47.4 per cent of the ADP size
of Tk.125 billion and the rest Tk.65.74 billion was expected to come from external sources.
Table 4.5
Resource Generation in Public Sector During Plan Holiday
(at current prices)
( in billion Taka)
Sources 1995/96 1996/97
Budget Revised Budget Budget Revised Budget
Domestic Resource (c+d+e+f+g) 48.77 44.14 59.26 57.25
a) Revenue Receipts 154.50 155.12 171.20 171.45
Tax 122.05 122.33 140.25 140.74
Non-tax 32.45 32.79 30.95 30.71
b) Revenue Expenditure 110.70 118.14 121.03 125.35
c) Revenue Surplus (a-b) 43.80 36.98 50.17 46.10
d) Net Capital Receipts 4.64 9.56 9.00 13.09
e) Self-financing by Parastatals 1.50 1.50 1.50 1.55
f) T & T Bond 4.35 3.25 1.45 1.85
g) Impact of Food Budget (-)5.52 (-) 7.15 (-) 2.86 (-)5.34
External Resource 72.23 60.33 65.74 59.75
Total Resource 121.00 104.47 125.00 117.00
ADP 121.00 104.47 125.00 117.00
Source : Ministry of Finance.
4.8 Tax Revenue
4.8.1 Tax revenue performance during the Plan Holiday period is shown in Table 4.6. It
appears from the table that an amount of Tk.122.05 billion was expected to be generated as
tax revenue in 1995/96 budget. In the revised budget, tax revenue was raised a little higher to
Tk.122.33 billion. In 1996/97 budget, tax revenue figured at Tk.140.25 billion which was
14.65 per cent higher than the revised budget of 1995/96. The revised budget estimate for
1996/97 was slightly higher at Tk.140.74 billion.
 75

Table 4.6
Performance of Tax Revenues During Plan Holiday
(at current prices)
( in billion Taka)
Taxes 1995/96 1996/97
Budget Revised Budget Budget Revised Budget
Customs Duty 39.79 38.50 44.10 42.52
Excise Duty 2.00 1.80 2.07 2.07
Value Added Tax 36.29 37.90 43.90 44.40
Supplementary Duty 16.76 17.12 19.73 21.73
Income Tax 16.35 15.83 18.50 17.35
Land Revenue 1.80 1.70 1.85 1.85
Stamps (Non-judicial) 4.50 4.77 5.03 5.27
Others 4.56 4.71 5.07 5.55
Total 122.05 122.33 140.25 140.74
Source : Ministry of Finance.
4.9 Revenue Expenditure
4.9.1 Revenue expenditure performance during the Plan Holiday period is shown in Table
4.7. In 1995/96 revised budget, revenue expenditure exceeded the budget estimate in all its
components. Expenditure for general services overran by 3.5 per cent and debt services by
35.1 per cent. Budgeted revenue expenditure in 1996/97 was Tk.121.03 billion, 2.5 per cent
higher than the revised estimate of 1995/96, but the revised expenditure for 1996/97 figured
at 6.1 per cent above that of 1995/96.
Table 4.7
Performance of Revenue Expenditures During Plan Holiday
(at current prices)
( in billion Taka)
Services 1995/96 1996/97
Budget Revised Budget Budget Revised Budget
General Services * 44.23 45.80 49.23 49.00
Economic Services * 13.81 14.49 14.18 14.42
Social Services * 37.22 37.60 39.95 39.54
Subsidies 2.56 2.85 3.22 4.83
Debt Services 12.88 17.40 14.45 17.56
Total 110.70 118.14 121.03 125.35
Source : Ministry of Finance.
* Includes the share of unexpected expenditure.
4.10 Implementation of Annual Development Programmes
4.10.1 The Plan Holiday period forms a part of the TYRIP (FY 96-98). The TYRIP (96-98)
bears a special significance because the last year (97-98) of it will be the first year of the
Fifth Plan. There were a large number of unfinished projects at the end of the Fourth Plan.
The on-going programmes and projects carried over from the Fourth Plan in areas of poverty
alleviation , generation of productive employment, integration of disadvantaged groups of the
society including women in the mainstream of national development process, and
development of human resources were included in the revised ADP for 1995/96. In addition,
quite a good number of new projects and programmes were included in the ADP which were
 76

considered necessary for overall sectoral development activities. ADP for 1996/97 estimated
an expenditure of Tk. 125 billion.
4.10.2 Implementation performance of the ADPs during the Plan Holiday period is shown in
Table 4.8. It shows 96 per cent utilisation of the allocated fund of 1995/96 revised ADP. ADP
size of 1996/97 was Tk.125 billion which was 24.8 per cent higher than the actual ADP
expenditure of 1995/96.
Table 4.8
Performance of Annual Development Programmes During Plan Holiday
(at current prices)
( in billion Taka)
1995/96 1996/97
Sectors Revised Actual Actual Budget Revised Revised
Expenditure Expenditure as % of
as % of Budget
Revised
Agriculture 5.59 4.55 81 7.49 6.40 86
Rural Development and Institutions 7.43 6.81 92 9.75 10.26 105
Water Resources 8.51 5.63 66 10.21 10.58 104
Industries 1.72 1.47 85 1.85 1.86 101
Power 12.50 13.74 110 13.08 14.08 108
Oil, Gas and Natural Resources 4.53 4.08 90 4.80 4.86 101
Transport 11.45 10.11 88 13.80 13.94 101
Bangabandhu Bridge 10.08 9.99 99 10.60 9.38 88
Communication 3.52 2.90 82 3.93 2.25 57
Physical Planning, Water supply 5.87 4.58 78 7.58 6.80 90
and Housing
Education 14.02 13.05 93 17.69 15.84 90
Sports and Culture 0.31 0.28 90 0.84 0.60 71
Health 4.17 2.76 66 6.12 5.85 96
Family Welfare 4.75 4.12 87 3.92 4.94 126
Mass Media 0.23 0.15 65 0.60 0.42 70
Social Welfare, Women and Youth 1.13 0.95 84 1.85 1.87 101
Development
Public Administration 1.76 1.14 65 1.28 0.96 75
Science, Technology and Research 0.28 0.16 57 0.60 0.38 63
Labour and Manpower 0.07 0.06 86 0.20 0.09 45
Sub-total 97.92 86.53 88 116.19 111.36 96
Others 6.55 13.63 208 8.81 5.64 64
Total 104.47 100.16 96 125.00 117.00 94
Source : Ministry of Finance and IMED.
4.11 Development in Monetary Sector During Plan Holiday
4.11.1 Monetary policy was geared in co-ordination with fiscal and other policies towards
maintaining macroeconomic stability and longrun economic growth alongwith the stability of
the external and internal values of the national currency.
4.11.2 During 1995/96, broad money (M2) increased by 8.2 per cent to Tk.456.9 billion
compared with the rise of 15.96 per cent in 1994/95 (Table 4.9). Of the components of broad
money, time deposits rose by 7.6 per cent, demand deposits by 10.9 per cent, and currency
outside banks by 8.5 per cent. During 1995/96, expansion of credit to the government and
private sectors were Tk.16.96 billion (36.8 per cent) and Tk.50.95 billion (19.2 per cent)
respectively. Credit to the private sector during 1995/96 was due to increased import demand.
 77

On the other hand, credit to the government sector during 1995/96 was due to the expansion
of government expenditure in the face of lower domestic resource mobilisation and also lower
inflow of foreign resources.
4.11.3 Reserve money increased by Tk.1.99 billion (1.95 per cent) during 1995/96 as
compared to the decrease of Tk.7.53 billion (6.87 per cent) during 1994/95. An analysis of
the causative factors of the change in reserve money reveals that the increase in Bangladesh
Bank's credit to the government sector by Tk.17.83 billion and that to the scheduled banks
and other financial institutions by Tk.21.43 billion exerted expansionary influence. On the
other hand, the contractionary impact of Tk.37.27 billion in net foreign assets largely
neutralised the expansionary impact of these sectors.
Table 4.9
Causative Factors of Changes in Money Supply
(at current prices)
(in billion Taka)
Period Credit to Credit to Credit to Total Time Net Net Net Money Broad
Govern- Other Private Domestic Deposits Foreign Other Domestic Supply Money
ment Public Sector Credit Assets Assets Assets (M1) (M2)
(Net) Sector
1 2 3 4 5 6 7 8 9 10 11
1994/95 46.14 49.07 265.65 360.86 290.33 104.63 -43.37 317.49 131.79 422.12
1995/96 63.10 54.82 316.60 434.52 312.31 67.36 -44.98 389.54 144.59 456.90
1996/97 80.17 58.75 355.05 493.97 354.61 65.45 -53.14 440.83 151.67 506.28
Source : Bangladesh Bank (Economic Trends, December, 1997).

4.11.4 Rate of inflation came down to 4.1 per cent in 1995/96 compared with 5.2 per cent in
1994/95 mainly due to lower money supply and low foodgrain prices as a result of higher
production of foodgrains during the year. Inflation declined further to 3.9 per cent in 1996/97.
This was due to lower foodgrain prices.
4.11.5 A comprehensive package of the financial sector reforms has been carried out in this
period. Steps, including improvement in banking regulations and bank supervision, have been
undertaken. A new capital adequacy requirement, based on risk-weighted measurement of
bank's portfolios has been introduced. A five phase programme has been undertaken to
strengthen credit discipline and bring loan classification provisioning regulation in line with
the international standard. Measures have been strengthened for improved recovery of bank
loans. Apart from enforcement of stricter discipline for sanction of new loans to defaulters,
administrative and legal measures have been taken to improve the legal environment through
amendment/enactment of laws. Steps have been taken to make the financial loan courts more
effective.
4.12 Domestic Resource Projection for Fifth Plan
4.12.1 Financial outlay of the Fifth Plan amounting Tk.1,959.52 billion is proposed to be
financed by Tk.1,519.76 billion in domestic resources and Tk.439.76 billion in net foreign
capital inflow- both ODA and foreign direct investment (FDI). Thus about 78 per cent of Plan
outlay will be financed by domestic resources. This will require relentless effort for domestic
resource mobilisation. The Plan outlay, its breakdown between the public and private sectors
and their broad financing sources are shown in Table 4.10.
 78

Table 4.10
Financing of Fifth Plan Outlay
(at 1996/97 prices)
( in billion Taka)
Items Total Share (%) Public Share (%) Private Share (%)
Plan Size 1,959.52 100.00 858.94 100.00 1,100.58 100.00
Domestic Resource 1,519.76 77.56 527.72 61.44 992.04 90.14
External Resource 439.76 22.44 331.22 38.56 108.54 9.86
4.13 Financing of Public Sector Outlay During Fifth Plan
4.13.1 Public sector outlay during the Fifth Plan period is projected to be Tk. 858.94 billion
or 44 per cent of the total outlay. Of the total public sector outlay, Tk. 527.72 billion (61.4 per
cent) will be financed from domestic sources i.e., revenue surplus, capital receipts, self-
financing by the parastatals, etc. Rest of the public sector outlay Tk. 331.22 billion (38.6 per
cent) will be financed by ODA. Public investment for the development of physical and social
infrastructure will mainly be financed through increasing revenue, particularly tax revenue.
Use of foreign savings or debt for financing these outlays generates certain fundamental
weaknesses which make the economy vulnerable. Recent experience of the miracle
economies of East and South East Asia testifies to this apprehension.
4.13.2 Proposed financing of public sector outlay is presented in Table 4.11. The Plan
projects a revenue surplus of Tk. 377.26 billion. The underlying assumptions are that total tax
revenue will increase at an annual average rate of around 10.9 per cent and non-tax receipts at
around 8.6 per cent while revenue expenditure will grow at an average annual rate of around
6.5 per cent. The government will make a determined effort to increase other domestic
resources. The Plan, however, recognises that given the exogenous events, actual
performance may deviate from that of the projected. Under such circumstances, projection
will be revised based on assumption about future trend of exogenous variables.
Table 4.11
Financing of Public Sector Outlay* During Fifth Plan
( at 1996/97 prices)
( in billion Taka)
Sources Amount
Domestic Resources (c+d) 580.87
a) Revenue Receipts 1,159.73
Tax 957.82
Non-tax 201.91
b) Revenue Expenditure 782.47
c) Revenue Surplus (a-b) 377.26
d) Other Domestic Resources 203.61
External Resources 331.22
Total Resources 912.09
* Includes transfer to private sector.
Note : Other Domestic Resources include net capital receipts, self-financing of the parastatals, net resources
generated by food budget and public borrowing (net).
4.13.3 Present tax/GDP ratio in Bangladesh is one of the lowest among the developing
countries. The Fifth Plan projects that tax revenue will increase from Tk.140.74 billion in
1996/97 to Tk.235.63 billion in 2001/2002 (Table 4.12). This will raise tax/GDP ratio from
around 10 per cent in 1996/97 to 11.98 per cent in the terminal year of the Plan. This will
still be lower than that in other neighbouring South Asian countries. Since early 1990s, there
 79

have been some erosion and weakening of the tax base as well as tax efforts, resulting in
stagnation and sometimes decline in tax/GDP ratio. A Commission will be appointed to
examine the tax system and make recommendations for improvement of tax system and tax
administration.
Table 4.12
Projection of Tax Revenues During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Benchmark) (Fifth Plan)
Customs Duty 42520.00 47714.29 48281.29 49253.18 53614.79 58658.57 257522.12
VAT 44400.00 48095.24 63061.96 76347.80 87490.42 99705.38 374700.80
Income Tax 17350.00 18571.43 20163.57 22447.49 25128.46 28262.33 114573.28
Non-judicial Stamp 5270.00 5380.95 5436.78 5583.39 5758.80 6088.73 28248.65
Land Revenue 1850.00 1857.14 1873.17 2005.87 2170.56 2352.03 10258.77
Electricity Duty 1053.00 1121.91 1215.76 1422.34 1678.94 1991.64 7430.59
Registration Fee 1650.00 1714.29 1593.99 1732.34 1883.01 2058.03 8981.66
Motor Vehicles Tax 1300.00 1761.90 1788.81 1862.27 2085.54 2389.97 9888.49
Others 3617.00 3716.19 3701.31 4102.91 4591.58 5187.75 21299.74
Supplementary Duty 21730.00 23904.76 22874.45 23592.51 25608.29 28937.18 124917.19
Total Tax 140740.00 153838.10 169991.09 188350.10 210010.39 235631.61 957821.29
Note: Above projection is based on a conservative estimate of import growth. However, it is anticipated that
the acceleration of growth during the Plan will lead to a somewhat higher level of import.
4.13.4 Adequate reform measures will be undertaken to bring about desirable changes and
improvement in the tax structure and tax administration. The main objectives will be to : (a)
attain a steady increase in tax/GDP ratio, (b) make major taxes elastic, (c) ensure
progressivity in incidence and (d) provide incentives for income, savings, exports and
production. Reform measures in tax administration will aim at strengthening its functioning
in order to cope adequately with tax evasion. It will be undertaken in view of the fact that an
increasing degree of tax evasion is the major factor behind inelasticity of revenue rather than
the tax structure itself.
4.13.5 The Fifth Plan recognises that tax evasion is a function of complexity of the tax
collection machinery and the reported corruption within the system. However, if the system
is simplified, the tax level is reasonable and public accountability is instituted with enough
checks and balances, the evasion is likely to decrease substantially in future. This issue will
be accorded priority during the Fifth Plan. If this issue is resolved expeditiously, the amount
of time spent on controlling tax evasion can be used more productively. This, in turn, will
lead to higher profitability and further tax collection.
4.13.6 Technical and management capacity of the National Board of Revenue (NBR) will be
improved substantially. Tax administration, both income and commodity taxation, which
aims at reduced contact between tax officials and the public will develop indirect methods
for determination of tax base and tax yield. These include audit, standardised production
coefficients, etc. These institutional deficiencies will be addressed on an urgent basis.
4.13.7 Given the policies of export led growth, flexible exchange rate and trade
liberalisation, it is expected that the importance of import-related taxes will predictably
decline. To offset that, emphasis will be shifted to domestic value added tax (VAT) and
income taxation. In order to increase tax revenue, emphasis will be laid on expansion of VAT
 80

network extending it to the retail level, and broadening the income tax base. In order to make
VAT system efficient, collection procedure of VAT will be simplified and evasion will be
reduced and VAT administration will be strengthened. At the same time VAT collection
procedure will be carefully monitored in order to control evasion and corruption.
Supplementary duties will be rationalised and brought under normal tax system as a potential
tax instrument so that it can address both revenue and equity concerns in tariff reforms. Both
income as well as corporate tax rates will be reduced. This, in turn, will increase profitability
of enterprises leading to improvement in tax discipline and subsequent larger collection.
4.13.8 In order to make the tax system more equitable, measures will be taken to increase the
share of direct taxes in revenues. Collection of direct taxes will be increased through
increasing tax bases and strengthening tax administration and reducing tax rates, where
appropriate. Numerous exemptions that erode the base of personal income taxation will be
eliminated gradually. Use of tax holiday for companies will be discouraged. The scope of
wealth and capital gains tax will be extended to cover other sources of wealth and property.
4.13.9 Policies will be undertaken during the Plan period to increase the contribution of non-
tax revenue. Narrow base of non-tax revenue and deficits in railway and postal departments
are responsible for low contribution of non-tax sources to the total revenue receipts. To
extend the base, cost recovery will be sought from rendering public services in such fields as
education, health, irrigation and water-supply. The Plan projection has been made on the
assumption that deficits in railway and postal departments will decline over the years and they
will make positive contribution at the end of Plan period. Non-tax revenue is projected to
increase at the rate of around 8.6 per cent annually from Tk.30.71 billion in 1996/97 to Tk.
46.35 billion in 2001/2002 (Table 4.13).
Table 4.13
Projection of Non-tax Revenues During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Benchmark) (Fifth Plan)
Interest Income 5300.00 5238.10 4685.95 5263.36 5925.16 6386.96 27499.53
Dividend and Profit 7410.10 7756.00 7614.67 8707.76 9426.39 10211.71 43716.53
Public Financial Institutions 5245.50 5047.62 4685.95 5418.16 5771.26 5941.36 26864.35
Public Enterprises 2164.60 2708.38 2928.72 3289.60 3655.13 4270.35 16852.18
Water Charges 20.00 21.43 93.72 108.36 123.12 133.68 480.31
Ferry Receipts 100.00 114.29 62.48 61.92 61.56 59.41 359.66
Tolls 470.00 485.71 468.60 541.82 615.60 742.67 2854.40
Railway -893.70 -609.52 -585.74 -193.51 192.38 557.00 -639.39
Postal Services -256.00 -198.29 -78.10 38.70 76.95 111.40 -49.34
Telegraph and Telephone 6300.00 7142.86 7419.42 7740.23 8464.52 8912.03 39679.06
Disinvested Industrial Units 650.00 1304.76 2342.98 2322.07 1539.00 742.67 8251.48
Rents from Government 600.00 609.52 2967.77 3096.09 3231.91 3267.75 13173.04
Housing
Passport and Visa Fee 1750.00 1714.29 1522.93 1586.75 1654.43 1671.01 8149.41
Others 9259.60 9480.29 11285.33 11726.45 12388.98 13553.67 58434.72
Total 30710.00 33059.44 37800.01 41000.00 43700.00 46349.96 201909.41
4.13.10 Non-tax revenues are going to increase significantly during the Fifth Plan because of
strong policy measures to be taken by the government. These are described below, under
different heads of non-tax revenue collection:
 81

a. A significant amount of debt service liability still remains to be paid to the

government by the state owned enterprises (SOEs). Administration for recovery of
loan and interest income from these SOEs will be strengthened on a priority basis.
b. More than 217 SOEs have been identified for disinvestment by March 1997, of which
21 have already been transferred to private owners by April 1997. Rest of them will
be transferred during the Plan period. This is going to increase revenue from this head.
c. Administered prices of public utilities will be left free to be determined by market
forces. This will increase revenue receipts of the government.
d. Under the public sector reform programme, several reforms have been undertaken in
the administration of the SOEs, which have already started paying dividends. In the
industrial sector, BMRE will be undertaken in BTMC and BJMC which will increase
productivity. All these are going to increase dividends from such SOEs.
e. Under the financial sector reform programme the performance of the public financial
institutions are being revamped which will start paying off during the Plan period.
f. Projects will be undertaken to increase the irrigated area by 26 per cent from 3.99
million hectare in 1996/97 to 5.04 million hectare in 2001/2002. Huge investment is
being made in large scale flood control and irrigation projects of BWDB. However,
the collection of water charges from these projects are far from being satisfactory.
Revenue collection machinery will be strengthened so as to increase collection of
water charges.
g. During the Plan period Bangabandhu, Bhairab and Paksey bridges will be completed,
leading to collection of substantial tolls.
h. During the Plan period the number of telephones is projected to increase from
523,185 to 1223,185. The subscribers for internet, pager and radio trunking are going
to increase from about 47,200 to 51,100. These will correspondingly increase
revenues for the government.
i. With the pay increase for the government employees, rent receipts for use of
government housing will also increase. In addition, the number of government flats is
going to increase from 20,528 to 26,628 during the Plan period. As a result revenue
collection under this head is going to increase .
j. Bangladesh Parjatan Corporation has extensive programme for promoting Bangladesh
as a tourist destination of the South Asia and will encourage FDI for the development
of tourism infrastructure. Income and revenue from these sources will increase during
the Plan period.
k. Number of subscribers for gas and electricity will increase substantially. This is
going to be a source of substantial revenue generation.
l. Charges for services in the fields of education and health will be cost-based, reducing
or eliminating subsidy.
m. During the Plan period, receipts from exploration of gas, oil and mining of coals in
terms of royalties and profits will increase.
n. During the Plan period the number of post offices will increase from 9,068 to 10,068.
This is going to reduce deficit from postal services.
o. Railway has been suffering mainly due to a fall in the revenue from passengers.
Revenue from freight is likely to increase as import and export pick up leading to
reduction in the deficit of Bangladesh Railway.
4.13.11 A major goal of fiscal management during the Plan period will be to restrict the
growth of revenue expenditures. Efficient governance and reduction of wasteful expenditures
will be the main focus of public expenditure programmes. The award of 1997 Pay
 82

Commission was considered in this calculation. It is estimated that the increase in pay will be
accompanied by substantial rationalisation of the government workforce and considerable
improvement in productivity in the government service. The government will take all
necessary steps so that incentive effect of this pay increase turns to be positive and several
human resource development programmes in the public sector contribute to efficiency.
Projection of major components of revenue expenditures during the Plan period is shown in
Table 4.14. Revenue expenditure in real terms will increase at an average annual rate of 6.5
per cent from Tk. 125.35 billion in 1996/97 to Tk. 171.34 billion in 2001/2002. The growth
of revenue expenditure at this rate assumes that expenditure on public administration
including law and order and defence will be kept to the indispensable minimum level. Debt
services will vary between 12 to 15 per cent of the total revenue expenditure. Transfer of
personnel required for maintenance and operation of completed projects to revenue budget
will be rigorously scrutinised.
4.13.12 Required mobilisation of domestic resources on the scale projected will call for a
strong political will to make tax administration efficient and effective. Measures will have to
be undertaken for eliminating losses of SOEs, withdrawing of public investment from the loss
making manufacturing SOEs, rationalising prices of goods and services produced by the
public utilities, avoiding low priority investment projects and restricting public consumption.
The macro policy framework will be tailored appropriately to achieve these objectives.
Table 4.14
Projection of Major Components of Revenue Expenditures During Fifth Plan
(at 1996/97 prices)
(in billion Taka)
Components 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Benchmark) (Fifth Plan)
General Services 49.17 51.56 52.53 54.63 56.82 59.09 274.63
Economic Services 13.40 14.19 14.99 15.07 15.87 16.67 76.79
Social Services 40.25 39.86 41.89 43.23 45.80 48.08 218.86
Subsidies 4.83 6.48 3.39 2.78 2.58 2.20 17.43
Debt Services 17.70 19.76 18.68 20.92 22.57 23.91 105.84
Others - 6.67 19.75 20.61 20.50 21.39 88.92
Total 125.35 138.52 151.23 157.24 164.14 171.34 782.47

4.13.13 During the Plan period, projected domestic resource generation through increasing
revenue surplus and capital receipts, containing self-financing of autonomous organisations
and controlling revenue expenditures will reduce Bangladesh's dependence on external aid for
its public sector development outlay from 51.1 per cent in the base year to 29.8 per cent in the
terminal year. Of the total domestic resources, contribution of revenue surplus will be 47.7
per cent to ADP in the terminal year.
4.13.14 Recent trends in revised allocation of the ADPs show that self-financing by the
parastatals is declining in nominal terms. The trend is likely to continue in the future. Under
the macroeconomic stabilisation programme, the government has the commitment to reduce
the budget deficit. To this end, one of the important issues to be addressed is the collection of
debt service liability (DSL) payments from the parastatals. With the improvement in financial
performance of the parastatals, they will be obliged to fulfil their debt service payment to the
government. This can impose a limit on the liberty to transfer resources by themselves
towards their self-financed projects. Besides, no self-financed new public projects will be
 83

encouraged in the future. To complete the on-going projects, an amount of Tk.11.42 billion
has been allocated in the Fifth Plan.
4.13.15 Food budget operations have become a major source of instability for domestic
resource mobilisation. The impact of food budget, which has emerged as a large deficit since
late 1980s, causes a huge drain on domestic resources. Elements of the food budget are so
unpredictable and volatile in nature that no attempt can be made to estimate the net impact of
food budget for a period of 5 years in future. In the near future, the scope for reducing the
size of deficits substantially is very limited. On the other hand, there are reasons to believe
that the deficits may increase. The projection of external resources indicates that food aid is
going to decline by sizeable amount during the Fifth Plan. This will lead to increase in
commercial import and domestic food procurement at higher prices. Without commensurate
adjustments in ration prices, such excess expenditure is likely to increase deficits in food
account. Further, since price support will be given to agriculture during the Plan period, the
food procurement will increase. At the same time Food for Works and Food for Education
programmes are going to be expanded. As a result, not much will be received from the food
budget. Since 1991/92, the deficits, on an average, amounted to more than Tk. 3 billion per
annum at current prices. In order to increase the contribution from the food budget the
government will resort, in lean season, to open market sales at prices higher than procurement
prices.
4.13.16 Net capital receipt, which has been positive in recent years, is expected to improve
on account of increase in collection from various bonds, growth in the deposits in national
savings and provident fund and better recovery of cash loans from the parastatals. During the
Fifth Plan extensive efforts will be made to introduce innovative financial instruments which
will be tax free. This is going to increase revenue from this head substantially. Contribution
of net capital receipts to the ADP was more than 9 per cent in 1995/96 and estimated at over
11 per cent in 1996/97. Against this backdrop, it is estimated that the net capital receipts are
going to make significant contribution during the Plan period. Table 4.15 presents financing
of the ADPs during the Fifth Plan.
4.13.17 Given the imperfection in the financial market and superior position of the
government in risk diversification, the government will undertake borrowing from the public
with the objective of transferring the major part of this along with resources generated in the
energy sector to the private sector. Government will institute various kinds of funds. Such
funds will include Industrial and Export Development Funds through which funds will be
channelised to the private sector, particularly in those thrust sectors where private investment
is shy. Public sector will generate a surplus of more than Tk.50 billion for transfer to the
private sector. Inspite of additional borrowing, the new domestic debt to GDP ratio will be
hardly 2.8 per cent in the terminal year of the Plan.
4.13.18 One of the important areas where additional resources will be generated is through
pruning of unproductive projects and projects which are taking unduly long time to complete.
Public accounting of investment projects with questionable quality will be instituted.
Thorough public accounting of the development projects will bring in additional dividend.
4.13.19 Emphasis will be given on improving the financial position of the local governments.
More revenue will be generated through broadening the base of taxes and fees. Tax
administration will be strengthened further to reduce tax defaults and evasion. Tax rates will
be revised and taxes will be imposed/extended in certain areas which have potentials for
raising revenues at the local levels. Emphasis will be given to make Zilla, Thana and Union
Parishads financially solvent to enable them to finance development activities of their own.
 84

4.13.20 Besides financing the development outlays, elimination of poverty will continue to
be one of the primary objectives of domestic resource mobilisation in the public sector. To
improve the quality of and access to educational and health services, social services have
received priority in the projection of expenditures. This will enhance the earning capacity of
the poor and reduce direct demand on public resources. Public Foodgrain Distribution System
will be adjusted adequately to favour the non-monetised channels, such as, FFW, VGD, etc.
This will transfer income to the poor.
Table 4.15
Financing Annual Development Programmes During Fifth Plan
(at 1996/97 prices )
(in million Taka)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 Total
(Benchmark) (Fifth Plan)
Domestic Resource 62030.0 60339.5 87794.8 108709.8 144218.8 179800.8 580863.7
Tax 140740.0 153838.1 169991.1 188350.1 210010.4 235631.6 957821.3
Non-tax 30710.0 33059.4 37800.0 41000.0 43700.0 46350.0 201909.4
Total Revenue 171450.0 186897.5 207791.1 229350.1 253710.4 281981.6 1159730.7
Revenue Expenditure 125350.0 138520.0 151227.3 157240.3 164149.6 171337.8 782475.0
Revenue Surplus 46100.0 48377.5 56563.8 72109.8 89560.8 110643.8 377255.7
Net Food Budget -560.0 466.7 -500.0 -500.0 -500.0 -500.0 -1533.3
Self-financing 1550.0 1666.7 1950.0 2100.0 2600.0 3100.0 11416.7
Net Capital 13090.0 5400.0 6500.0 7000.0 7500.0 8000.0 34400.0
T & T Bond 1850.0 1428.6 3000.0 3500.0 3500.0 3500.0 14928.6
Biman Bond - - 650.0 700.0 750.0 800.0 2900.0
New Debt - 3000.0 19631.0 23800.0 40808.0 54257.0 141496.0
Extenal Resource 59750.0 64200.0 64181.0 66309.0 67325.0 69205.0 331220.0
Total Resources 121780.0 124539.5 151975.8 175018.8 211543.8 249005.8 912083.7
ADP 117000.0 121905.0 138534.0 167308.0 199279.0 231913.0 858939.0
Resource Surplus **4780.0 2634.5 13441.8 7710.8 12264.8 17092.8 53144.7
As Percentage of GDP
Tax 10.03 10.35 10.76 11.16 11.56 11.98 -
Non-tax 2.19 2.22 2.39 2.43 2.41 2.36 -
Total Revenue 12.22 12.57 13.15 13.59 13.97 14.34 -
Revenue Expenditure 8.94 9.32 9.57 9.32 9.04 8.71 -
Revenue Surplus 3.28 3.25 3.58 4.27 4.93 5.63 -
Net Food Budget -0.04 0.03 -0.03 -0.03 -0.03 -0.03 -
Self-financing 0.11 0.11 0.12 0.12 0.14 0.16 -
Net Capital 0.94 0.36 0.41 0.41 0.41 0.41 -
T & T Bond 0.13 0.10 0.19 0.21 0.19 0.18 -
Biman Bond - - 0.04 0.04 0.04 0.04 -
New Debt - 0.20 1.24 1.41 2.25 2.76 -
Total Debt 1.07 0.66 1.88 2.07 2.89 3.39 -
Other Domestic Resource 1.14 0.81 1.98 2.17 3.01 3.51 -
Domestic Resource 4.42 4.06 5.56 6.44 7.94 9.14 -
External Resource 4.26 4.32 4.06 3.93 3.71 3.52 -
Total Resources 8.68 8.38 9.62 10.37 11.65 12.66 -
ADP 8.34 8.20 8.77 9.91 10.97 11.79 -
Resource Surplus 0.34 0.18 0.85 0.46 0.68 0.87 -
As Percentage of ADP -
External Resource 51.07 52.66 46.33 39.63 33.78 29.84 -
Revenue Surplus 39.40 39.68 40.83 43.10 44.94 47.71 -
** Transfer of non-ADP FFW programme. Resource surplus in other years ( 1997/98-2001/2) will be transferred
to the private sector.
 85

4.14 Local Level Resource Mobilisation

4.14.1 Local level resource mobilisation will play a significant role in domestic resource
mobilisation during the Fifth Plan period. So far local level resource mobilisation in
Bangladesh has been very poor and could not cater to the needs of local governments
towards building physical infrastructures and providing local public services. There are two
sources of resource for local governments: (a) collection of taxes and non-tax revenues such
as various fees and tolls, incomes from hats, bazars, sairat mahals etc. and (b) grants from the
central government. Local governments e.g., Zilla Parishad, Thana Parishad and
Municipalities depend heavily on the central government grants. Own revenue income of
Union Parishads barely covers wages and salaries of staff and requires government grants for
their development expenditures. Zilla Parishads and Municipalities, however, spend between
20 to 30 per cent of their own resources on administrative costs. Thus at the lowest strata of
local governments, Thana and Union Parishads face serious resource constraint for
development.
4.14.2 Presently, local governments, except Municipalities and City Corporations, rely on a
very few sources for raising revenue. Zilla Parishads depend mostly on the immovable
property transfer tax (IPTT). Union Parishads mainly rely on chowkidari tax. This calls for
broadening the tax base in order to enable the local governments to generate more revenues.
Efforts will be made to revise the existing tax rates and fees and impose/extend taxes in
certain areas such as road user tax at the local level, betterment fees on land protected by
embankments, entertainment fees, charges on slaughters, local tax on profession, business and
trade, agriculture, etc.
4.14.3 City Corporations and Municipalities have varied sources of revenue. These
organisations resort to variety of taxes and fees. They also derive a substantial income from
properties. The Dhaka City Corporation earns about 40-45 per cent of revenue from this
source. However, tax collections of the City Corporations are affected by tax defaults and
evasions. Tax administration will be strengthened further in these local bodies. Municipalities
at present rely on the government grants to the extent of 22 per cent of their income. City
Corporations and Municipalities will be made more self-reliant so as to reduce their
dependence on the government grants. In future, the City Corporations will float bonds for
mobilising resources.
4.14.4 Local resource mobilisation during the Plan period will depend on raising of tax rates
and improving tax administration and service delivery at the local level. It is necessary to
recast sources of tax and non-tax revenues for the different strata of local governments. Taxes
on property transfer may be shared by all local governments. Motor vehicles tax can be shared
by Municipalities, Zilla Parishads and the central government. Taxes on income from auction
for hats and bazars, sairat mahals and ponds below 3 acres may conveniently be shared by
Union Parishad, Thana Parishad, Zilla Parishad and the central government. Proper steps will
be undertaken to fix up the shares of these taxes and incomes among different local
governments. Similarly, bloc allocation from the central government to the local governments
will be made on the basis of a definite allocation criteria. This will ensure proper use of the
fund for the development of physical and social infrastructure at the local level and provide
utility services to people at the grassroot level. Political leadership will enthuse people in
taking initiatives and participating in the development process at the local level. Non-
monetised resources will augment resource collection from the traditional sources
contributing to acceleration of the growth of the rural economy and alleviation of poverty.
 86

4.15 Financing of Private Sector Investment

4.15.1 Private sector will play a leading role during the Fifth Plan. Private sector investment
has been projected to be Tk.1,100.58 billion which is around 56 per cent of the total outlay.
Performance of the private sector in the recent past has been encouraging and the projected
level of private investment will be realised, provided rational fiscal, trade and monetary
policies are pursued.
4.15.2 Unlike the public sector financing, private sector investment will be financed through
various sources. There are thousands of small individual investors in the economy who
finance most of their investment with own resources or resource borrowed from informal
sources. The investors in the formal sectors finance their investment through equity,
borrowing from domestic financial institutions and foreign sources. During the Fifth Plan a
significant part of private investment is going to come in the form of FDI. The share of FDI is
increasing gradually. Most of FDI in Bangladesh is channelled through export processing
zones (EPZs). There are three EPZs in the country and more are in the offing. These EPZs are
expected to make a considerable amount of investment during the next five years and beyond.
For the local investors of Bangladesh, investment fund can be raised at the stock exchanges
through public subscription of shares. However, stock markets are not yet highly developed.
The bulk of investment will be financed by the commercial banks and specialised financial
institutions. NGOs will have their own investment and fund arrangements for micro
enterprises. Bangladesh Bank will continue to monitor the process of financial intermediation
and ensure the flow of investible credit at reasonable cost within the framework of
macroeconomic stability.
4.15.3 A major share of the planned investment in the private sector will be realised through
mobilisation of domestic savings for which new institutions and instruments will be
developed. Efforts will be made to save a larger proportion of the incremental income through
the banking system and using new savings instruments. In order to increase deposits,
competitive interest rate policy will be pursued. The short and medium-term deposits will be
channelised as long term investment through appropriate time transformation. Private
investment, to the extent of 20 per cent, will be financed in the form of equity and the
remaining 80 per cent will be met through borrowing from the money market.
4.15.4 Development Financing Institutions like BSB, BSRS, BKB and RAKUB will be
strengthened for this purpose. ICB will be strengthened for bridge financing. Underwriting of
capital issues will be pursued alongwith syndication. More financial institutions like export-
import bank, employment bank, insurance companies, exchange banks, commercial banks
and venture capital institutions will be set up during the Plan period. More superannuation
funds will be created and funded. Newer financial instruments are anticipated to attract
substantial savings. Investment in selected financial instruments will be made tax free.
4.15.5 Small investors, particularly professionals, will be encouraged to set up both
manufacturing and service enterprises with bank loans where possible without collateral. For
this purpose credit guarantee scheme of Bangladesh Bank will be restructured and expanded
in scope.
4.15.6 Micro credit will have a major thrust during the Fifth Plan in accordance with the
declaration of Micro Credit Summit, 1997. However, micro credit will have a new approach
during the Plan period. Both consumption and investment loans will be given together to poor
borrowers intending to set up business enterprises. This will prevent diversion of investible
fund to consumption. Palli Karma Shahayak Foundation will play an important role in the
 87

management of micro credit disbursement. The role of individuals in poverty alleviation

through disbursement of micro credit from their personal fund will be emphasised.
Individuals with surplus resources will be encouraged to disburse micro credit to the poor
people particularly to the poorest of the poor in rural areas who can use the credit for
productive purposes. Following the principle of profit and loss, one may charge small
percentage of profit to cover disbursement and supervision cost. This will generate
substantial amount of resources. However, for this, social leaderships will have to take
initiatives and set examples.
4.15.7 Public sector will provide necessary infrastructural facilities to accelerate the pace of
growth of private investment besides continuation of efforts for prudent macroeconomic
management. A sum of Tk.992.04 billion or around 90 per cent of total projected private
investment will be generated domestically and Tk.108.54 billion will be financed from
external sources. Domestic stock markets and borrowing from financial institutions will play
the major role to supply funds for private investment. Remittances from Bangladeshi
nationals working abroad and FDI will be encouraged and promoted to finance the projected
private sector investment. Industrial policy will be further liberalised at the beginning of the
Fifth Plan for achieving the target of private sector investment. Efforts will be made to
encourage household savings through adoption of suitable institutions, monetary and fiscal
measures including rationalising interest rate for savings deposits, expansion of insurance
business, introduction of new savings and investment schemes such as mutual funds,
strengthening of the existing savings institutions, capital market and financial
intermediations, establishment of new savings institutions, development of secondary capital
markets, extension and strengthening of micro credit organisations to mobilise savings of
small rural households.
4.15.8 Gross domestic savings ratio was 8.3 per cent of GDP in 1994/95. Major fiscal and
monetary reforms are under implementation to increase the savings rate. Personal and
corporate savings will be encouraged by tax incentives alongwith wider institutional
arrangements to enhance savings rates to a respectable two digit level during the Plan period.
With declining ODA the national savings rate has to be increased to 20.14 per cent to make
possible investment necessary for achieving an average annual 7 per cent growth rate of GDP
in the Fifth Plan.
4.16 Monetary Management During Fifth Plan
4.16.1 In a regime where private sector plays the dominant role, money market becomes the
most important source of resource mobilisation. As such, efficient monetary management
will be given priority during the Fifth Plan. During the Plan period, the key objective of
monetary policy will be to achieve a growth rate in monetary aggregates that is consistent
with achieving the projected growth rate of GDP as well as sustaining a reasonable price
stability. To meet the requirements of the economy, broad money (M2) in nominal terms has
been projected to increase from Tk.506.28 billion in the 1996/97 to Tk.1,079.13 billion in the
terminal year. The demand for broad money will vary over the Plan period according to the
variation of the GDP growth rates as shown in Table 4.16.
4.16.2 The government has undertaken the financial sector reform programme in order to
strengthen Bangladesh Bank's monitoring and supervision functions while undertaking a
programme of bank restructuring, making procedural improvements and providing training in
order to ensure the viability of NCBs and private commercial banks. During the Plan period,
monetary management priorities will include: tightening of loan recovery procedures and
updating of the legal framework, strengthening of Bangladesh Bank's overseeing capabilities
 88

for better supervision and enforcement to improve the functioning and accountability of the
NCBs and DFIs as well as the private banks. It is anticipated that such reform programme
will strengthen the capability of the financial sector to finance private investment more
effectively.
Table 4.16
Projection of Broad Money (M2) During Fifth Plan
(in billion Taka)
1995/96 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002
Money Supply (M2) 456.90 506.28 582.12 671.71 779.65 913.44 1079.13
Percentage Change - 10.81 14.98 15.39 16.07 17.16 18.14
Note: 1. Years are on end June basis.
2. Income elasticity of demand for Broad Money (M2) = 1.362.
3. Growth in M2 is based on income elasticity of demand for Broad Money, implicit inflation of 5 per
cent and growth of GDP.
4.16.3 Interest rate policy will play the key role in overall monetary management. Substantial
progress has been achieved in the liberalisation of interest rates and making them more
market-oriented. Proper interest rate policy will not only create incentive for savings, but will
also channel the generated savings towards productive investment. Persistence of wide
difference between deposit and lending rate has had negative impact on both savings and
investment. This issue will be addressed during the Fifth Plan and further liberalisation of
interest rate will be considered.
4.16.4 Maintenance of a sustainable external balance has implication for domestic resource
mobilisation effort of the government. During the Fifth Plan, Bangladesh will follow an
exchange rate policy which is sufficiently flexible to deal with macroeconomic environment
and to maintain sustainable external balance. This will require adjustment of the exchange
rate in line with the movement of the real effective exchange rate (REER) of Taka.
Bangladesh is, at present, adjusting its Taka in terms of a basket of foreign currencies.
Imports have been liberalised and with the exception of few items, the quantitative
restrictions have been removed from all importables. The liberalised trade policy will be
pursued during the Fifth Plan which will make exports more competitive and induce setting
up of competitive industries. The balance of payments policy will be managed in such a way
that the foreign savings is maximised which is vital for acceleration of the growth process.
4.17 Domestic Resource Mobilisation and Macroeconomic Stabilisation
4.17.1 The basic resource mobilisation strategy will be to limit the size of the budget deficits
by stronger revenue initiatives and restraints on revenue expenditures. If these measures are
implemented effectively, they will, in the medium term, achieve three things - first, the
attainment of macroeconomic stability; second, improvement in public savings; and third,
lessening of the burden of public debt.
4.17.2 Since the mid 1980s Bangladesh has been following a package of macroeconomic
policies under the Structural Adjustment Programme. The basic objective of such a
programme has been the attainment of macroeconomic stability. The Fifth Plan will,
however, institute an efficient and dynamic macro policy regime which will play an
important role in economic growth and development. Such a macro policy regime will
increase savings and will channel savings into productive uses, encourage productive
consumption and discourage unproductive consumption, lower inefficiency and wastage,
remove bottlenecks of various kinds, eliminate growth-retarding distortions in the tax system
 89

and other distortions in the relative prices of factors of production due to public policies, and
at the same time maintain overall macroeconomic stability.
 90

CHAPTER V
TRADE AND EXTERNAL RESOURCES

5.1 Review of Fourth Plan

5.1.1 During the first four years of the Plan, exports and remittances grew at a continued
higher rate while imports grew at a slower rate fluctuating from year to year. These trends in
export earnings and import payments for goods helped contain trade deficit and ultimately
caused the current account deficit to decline. The trade balance and the current account
balance, however, worsened in the terminal year of the Plan, largely because of the growth of
imports in 1994/95. Overall balance of payments position over the Plan period is shown in
Table 5.1.
Table 5.1
Balance of Payments 1990-95
(at 1989/90 prices)
( in million US$)
Category Projection Actual Achievement (%)
Import Payments (-) 22,668 (-) 22,735 100.30
a. Goods (c.i.f.) (-) 19,811 (-) 19,681 99.34
b. Services (-) 2,857 (-) 3,054 106.90
Export Receipts 13,528 13,138 97.12
a. Goods (f.o.b.) 10,792 10,392 96.29
b. Services 2,736 2,746 100.37
Balance of goods & services (-) 9,140 (-) 9,597 105.00
Remittances 4,326 4,296 99.31
Current Account Balance (-) 4,814 (-) 5,301 110.12
Medium & Long Term debt (-) 1,343 (-) 1,140 84.88
repayments
Balance of Payments gap (-) 6,157 (-) 6,441 104.61
Aid Inflow 8,338 7,564 90.72

5.2 Imports
5.2.1 Import of goods at 1989/90 prices grew at an annual rate of 6.14 per cent which was
higher than 5.11 per cent envisaged in the Plan. Total import during the Plan period was,
however, $130 million (0.66 per cent) less than $19,811 million projected in the Plan due to
low imports during the early years. Imports started picking up after declining during the first
two years of the Plan and spurred to a peak of $ 5,051 million in the terminal year. Foodgrain
imports rose sharply to $622 million in 1994/95, as opposed to the expectation of a fall to
$100 million. Non-food imports and imports of intermediate goods grew at a lower rate of
5.4 per cent and 5.5 per cent respectively compared to 6.6 per cent and 9.8 per cent projected
in the Plan. Capital goods import actually declined by 2.2 per cent against the expectation of a
1.7 per cent growth during the Plan. Import of textile goods grew at about 30 per cent in
response to higher foreign demand for ready-made garments(RMG) against an average
growth of 20.7 per cent as envisaged in the Plan. The commodity structure of imports in the
base year (1989/90) of the Plan and that in its terminal year (1994/95) are shown in Table 5.2.
 91

Table 5.2
Merchandise Imports During Fourth Plan Period
( at 1989/90 c. i. f. prices )
( in million US$)
Sl. Commodity Unit 1989/90 1994/95
No (Benchmark)
Qty. Value Projection Actual
Qty. Value Qty. Value
FOODGRAINS mill. tons 1.523 343 0.51 100 2.567 622
1. Rice -do- 0.300 102 … … 0.813 276
2. Wheat -do- 1.223 241 0.51 100 1.754 346
NON-FOOD … … 3,407 … 4,700 … 4,429
1. Edible oil & 0il ‘000’ tons 294 131 570 268 548 241
seeds
2. Crude petroleum -do- 904 125 1,400 193 1,364 188
3. Petroleum -do- 983 197 1,000 200 1,181 236
products
4. Cotton & staple ‘000’ 371 137 420 156 381 142
fibre bales
5. Yarn mill. lbs. 20 37 35 64 53 98
6. Textiles … … 288 … 735 … 1,028
7. Fertiliser ‘000’mt. 375 74 775 153 710 140
8. Cement -do- 1,606 95 1,800 106 2,200 130
9. Chemicals … … 87 … 150 … 158
10. Iron & Steel … … 177 … 250 … 230
11. Milk & Cream ‘000’ tons 63 88 80 113 22 31
12. Sugar -do- 91 44 100 48 147 70
13. Spices -do- 11 13 35 41 10 12
14. Cocoanut oil -do- 30 22 40 29 4 3
15. Pharmaceutical products … … 28 … 40 … 30
16. Dyeing, Tanning, … … 29 … 40 … 43
etc. extracts
17. Capital goods … … 1,296 … 1,410 … 1,160
18. Others … … 539 … 704 … 489
TOTAL … … 3,750 … 4,800 … 5,051

5.3 Exports
5.3.1 Total exports during the Plan period fell short of the projection by $400 million (3.71
per cent) and amounted to $ 10,392 million. In contrast, the average annual rate of growth of
exports was a bit higher at 12.2 per cent than 11.6 per cent envisaged in the Plan as export
picked up slowly during the early years. Non-traditional exports grew at a higher rate of 17.2
per cent against the Plan projection of an average annual growth of 16.0 per cent thereby
offsetting the shortfall in traditional exports. Ready-made garments fell short of the target
which was more than compensated by the knitwear export. Export earning by commodities
may be seen in Table 5.3. It may be pointed out that the Fourth Plan experienced some
healthy developments in the shares of ready-made garments and frozen food. These two
items together grew at an annual rate of 16.79 per cent. However, their share declined from
72.67 per cent of non-traditional export earnings in 1989/90 to 71.28 per cent in 1994/95.
Non-traditional exports thus underwent further diversification which reduced the overall risk
of price fluctuations. Knitwear, leather goods and the specialised textiles added to this
diversification.
 92

Table 5.3
Merchandise Exports During Fourth Plan Period
(at 1989/90 f.o.b. prices)
( in million US$)
Sl. Commodity Unit 1989/90 1994/95
No. (Benchmark) Projection Actual
Qty. Value Qty. Value Qty. Value
TRADITIONAL … … 501 … 487 … 443
01. Raw jute mill. bales 2.06 125 1.80 108 1.72 103
02. Jute goods ‘000’tons 545 337 525 325 474 294
03. Tea mill. kgs. 22.6 39 31 54 27 46
NON-TRADITIONAL … … 1,028 … 2,163 … 2,277
01. Leather mill. sft. 157 179 160 182 162 184
02. Frozen food mill.lbs. 48 138 55 158 78 226
03. Readymade garments … … 609 … 1,480 … 1,397
04. Fertilisers ‘000’ tons 144 21 500 74 438 64
05. Naphtha -do- 59 8 50 7 28 4
06. Furnace oil -do- 130 11 0 0 129 10
07. Newsprint -do- 5 3 1.5 1 0.15 negligible
08. Paper -do- 0.6 1 1 2 0 0
09. Handicrafts … … 5 … 8 … 5
10. Specialised textiles & … … 4 … 25 … 26
household linen
11. Knitwear … … 15 … 155 … 237
12. Vegetables ‘000’tons 5.6 8 10 14 8 12
13. Tobacco -do- 0.5 1 4 2 0.1 negligible
14. Betel leaves -do- 0.2 negligible 2 3 1.2 2
15. Others … … 25 … 52 … 110
TOTAL : … … 1,529 … 2,650 … 2,720

5.4 Terms of Trade

5.4.1 The terms of trade which deteriorated by 2.6 per cent in 1989/90 improved by 2.3 per
cent in 1990/91, 1.4 per cent in 1991/92, 3.5 per cent in 1992/93 and 2.7 per cent in 1993/94,
largely as a consequence of a faster growth in the prices of exports in general than imports
(Table 5.4). However, 8.9 per cent increase in the import price index against 6.6 per cent rise
in the export price index resulted in a deterioration of 2.2 per cent in the country’s terms of
trade in 1994/95.
Table 5. 4
Terms of Trade During Fourth Plan Period
(1979/80 = 100)
Year Export Price Indices Import Price Indices Terms of Trade
1989/90 95.6 103.0 92.8
1990/91 101.9 107.4 94.9
1991/92 100.4 104.4 96.2
1992/93 107.3 107.8 99.6
1993/94 113.3 110.8 102.3
1994/95 120.8 120.7 100.1

5.5 Private Transfers

5.5.1 Total home remittances during the Fourth Plan period amounted to $4,296 million.
This fell short by only 0.69 per cent of the target of $4,326 million while the growth of
 93

private transfers was 4.8 per cent against the projected 5.1 per cent. This compares with a 9.6
per cent annual growth during the Third Plan period. Main reasons for lower growth of
private transfers were political unrest and administrative hurdles. Manpower export was
91.18 thousand persons during the Plan period against 40.93 thousands during the previous
Plan period giving an annual rate of growth of 17.37 per cent on an average.
5.6 Foreign Aid
5.6.1 The global recession after the Gulf war, the emergence of independent states in the
former Soviet Union and the donors’ constraints adversely affected the availability of external
assistance and caused a decline in the flow of foreign aid to Bangladesh. During the Plan
period, the total aid disbursement which was also affected by implementation problems fell
short of the target by 9.28 per cent and reached $7,564 million.
Table 5.5
Disbursement of Foreign Aid 1990-95
(at 1989/90 prices)
( in million US$)
Category of Aid Projection Actual Achievement (%)

Food 972 1,109 114.09

Commodity 2,100 1,923 91.57
Project 5,266 4,532 86.06
TOTAL 8,338 7,564 90.72

5.7 Debt Service

5.7.1 The country’s debt obligation consists mainly of public sector debt which increased,
in nominal terms, from $10,609 million in 1989/90 to $16,767 million in 1994/95. Debt
service payments for public sector MLT ( medium and long term) debt rose from $302
million in 1989/90 to $ 468 million in 1994/95, representing 13.48 per cent of export earnings
in 1994/95 compared to 19.75 per cent in 1989/90.
Table 5.6
Debt Service Payments of MLT Loans 1990-95
(at current prices)
( in million US$)
Year Total DSL Exports DSL as % of Exports
1989/90 302 1,529 19.75
1990/91 317 1,718 18.45
1991/92 337 1,994 16.90
1992/93 374 2,383 15.69
1993/94 402 2,534 15.86
1994/95 468 3,473 13.48

5.8 Balance of Payments Performances in 1995-97

5.8.1 The country’s balance of payments came under strain in FY96. A steep rise in imports
coupled with slower aid disbursement triggered a rundown in the country’s foreign exchange
reserves by the end of the fiscal year 1995/96 ($2,039 million, equivalent to 3.6 months’
import bill). The trade deficit widened by more than 27 per cent to $2,999 million due to
higher import payments rising by about 18 per cent to $6,881 million while export receipts
posted an 11.8 per cent growth to $ 3,882 million. The current account deficit rose to $ 1,637
million, up by $ 572 million or 54 per cent over $ 1,065 million in FY95. Aid disbursements
declined by about 17 per cent down to $ 1,444 million while inflow of remittances from
 94

overseas workers levelled off at $ 1,217 million. The strains experienced in the external
balance in FY96 are likely to ease, although marginally, in FY97. An estimated faster growth
of exports than imports, aided and strengthened by an expected turnaround in the flow of
worker’s remittances, could narrow the current account deficit to an estimated 3.4 per cent of
GDP compared to 5.0 per cent in FY96.
5.8.2 During the year 1996/97, overall export receipts are expected to rise by 13.3 per cent
to $ 4,400 million while total import payments are likely to grow by 1.7 per cent to $ 7,000
million leaving a trade deficit of $2,600 million. The current account deficit is estimated to be
limited to $ 860 million, 47.5 per cent below the level of $ 1,637 million a year back
(1995/96), with the help of an estimated 20.7 per cent rise in private transfers.
5.8.3 Total exports are estimated to grow by 13.3 per cent to $4,400 million in FY97
compared to a growth of 11.8 per cent in FY96. Export earnings from jute, jute goods,
garments, knitwear, frozen food, and tea - the leading export items of the country, are all
estimated to register higher growth during the year. Total export growth would have been
even higher if it was not constrained by short supply of fertilisers, newsprint, paper and
bitumen, and weak performance of the leather sector.
5.8.4 In FY 96, there was a sharp fall in aid commitments compared to the previous year.
Aid commitments declined from $ 1,612 million in FY 95 by about 20 per cent and amounted
to $ 1,284 million in FY 96; project aid commitments declined by about 12 per cent while
commodity aid commitment declined by about 54 per cent in FY 96. There was also a sharp
fall in the actual aid disbursement. Despite attempts to improve the rate of aid utilisation,
disbursement performance continued to reflect the inherent weakness of development
administration and aid modality. It is estimated that disbursement position of foreign aid may
not improve appreciably in the short run.
5.8.5 The terms of trade remained more or less static in FY96 because of almost equal
increases in both the export and import price indices during the year. The terms are, however,
likely to decline slightly in FY97 under the combined effect of an estimated higher increase in
import price index of 5.0 per cent and a lower increase in export price index of 3.5 per cent.
5.9 Fifth Five Year Plan (1997-2002)
5.9.1 The projected balance of payments for the Fifth Plan is shown in Table 5.7. It shows
balance of payments gap declining from $1.3 billion in 1996/97 to $0.9 billion in 2001/2002.
 95

Table 5.7
Projection of Balance of Payments During Fifth Plan
(at 1996/97 prices)
( in million US$)
Category 1996/97 (Benchmark) 2001/02 1997-2002
Import Payments (c.i.f) (-)7000 (-)10525 (-)45395
Export Receipts (f.o.b) 4400 7750 31300
Trade Balance (-)2600 (-)2775 (-)14095
Invisibles(net) (-)40 (-)65 (-)275
Inflows 712 1145 4770
Outflows (-)752 (-)1210 (-)5045
Private Transfers 1780 2270 10350
(Of which Remittances) (1500) (1915) (8705)
Current Account Balance (-)860 (-)570 (-)4020
MLT Debt Amortisations (-)330 (-)310 (-)1598
IMF Repurchases (-)114 (-)34 (-)357
Balance of Payments Gap (-)1304 (-)914 (-)5975
Disbursement of Aid 1450 1617 7745
a. Food 110 62 413
b. Commodity 161 137 761
c. Project 1179 1418 6571

5.10 Imports
5.10.1 During the Fifth Plan, the total import bill is estimated to grow at an annual rate of 8.5
per cent from $ 7,000 million in the base year to $10,525 million in 2001/02. The total import
bill for the Plan period will be about $45.40 billion. Given that domestic production of
foodgrains will reach 25 million metric tons in 2001/02 as planned, food import bill will
marginally increase to a level of $242 million in 2001/02 to import 1.21 million tons of
wheat only. A single item of import that will dominate during the period will be textiles
which is projected to rise from $1,960 million in 1996/97 to $3,155 million in 2001/02 in
order to support RMG exports. Other import items which will grow fast to meet domestic
demand are edible oil and oil seeds, cotton and cotton yarn, staple fibres, fertilisers, POL, etc.
Details of projected imports are shown in Table 5.8.
 96

Table 5.8
Projection of Merchandise Imports During
Fifth Plan (at 1996/97 prices )
( in million US$)
Commodity Unit 1996 / 97(Benchmark) 2001/02
Quantity Value Quantity Value
01. Foodgrains million tons 1.070 220 1.21 242
(a) Rice -do- 0.069 20 0 0
(b) Wheat -do- 1.001 200 1.21 242
02. Edible oil ‘000’ tons 300 180 550 330
03. Oil seeds -do- 140 45 275 88
04. Crude petroleum -do- 1,200 205 1,300 222
05. POL ‘000’ tons 1,596 361 2,515 568
(a) Petroleum -do- 1,545 345 2,440 544
products
(b) Lubricating oil -do- 51 16 75 24
06. Cotton ‘000’ bales 400 190 550 261
07. Staple fibre -do- 75 30 150 60
08. Yarn million lbs 95 166 200 350
09. Textiles … … 1,960 … 3,155
10. Fertilisers ‘000’ tons 750 169 1,500 338
11. Cement -do- 2,200 165 3,000 225
12. Chemicals … … 165 … 250
13. Iron & steel … … 200 … 250
14. Milk & cream ‘000’ tons 25 52 30 62
15. Sugar -do- 150 56 133 49
16. Spices -do- 5.5 11 18 35
17. Cocoanut oil -do- 5 5 10 10
18 Pharmaceutical … … 20 … 30
products
19. Dyeing, Tanning … … 50 … 60
etc. extracts
20. Capital goods … … 1,650 … 2,150
21. Others … … 1,100 … 1,790
TOTAL : … … 7,000 … 10,525

5.11 Exports
5.11.1 During the Fifth Plan, export earning is expected to grow at an annual rate of 12.0 per
cent from $4,400 million in 1996/97 to $7,750 million in 2001/02. The share of non-
traditional exports will rise from 90.1 per cent in 1996/97 to 92.5 per cent in 2001/02 (Table
5.9). Traditional exports are envisaged to rise by 6.1 per cent only over the Plan period from
$434 million in 1996/97 to $585 million in 2001/02. Export of raw jute is projected to grow
at an annual rate of 9.3 per cent to a level of $162 million compared to $104 million in
1996/97. Frozen food export is envisaged to increase to $595 million in the terminal year
from $ 332 million in the base year reflecting an annual growth of 12.4 per cent. RMG export
excluding knitwear is expected to rise from $2,200 million in 1996/97 to $3,850 million in
2001/02, at an annual growth rate of about 11.8 per cent. Knitwear export will increase by
17.5 per cent annually during the Plan period.
 97

Table 5.9
Projection of Merchandise Exports During
Fifth Plan (at 1996/97 prices)
( in million US$)
Commodity Unit 1996/97 (Benchmark) 2001/02
Quantity Value Quantity Value
1 2 3 4 5 6
01.Frozen Food million lbs 80 332 140 595
(a) Frozen shrimps 60 292 110 535
(b) Frozen fish 20 40 30 60
02. Fish ‘000’ tons 1.3 7 4.05 19
(a) Dried Fish 0.5 2 3.00 13
(b) Salted & dehydrated fish 0.8 5 1.05 6
03.Vegetables ‘000’ tons 20 23 30 35
04.Fruits ‘000’ tons 1.3 2 1.8 3
05.Betel leaves ‘000’ tons 1.1 1 1.6 2
06.Tobacco ‘000’ tons 2.5 3 3.0 3
07.Tea million kgs 27 32 32 38
08.Crude fertiliser ‘000’ tons 0.3 Negligible 2.5 1
09.Raw jute million bales 1.6 104 2.5 162
10.Jute goods ‘000’ tons 425 298 550 385
11.Tortoise & turtles ‘000’ tons 6.0 14 8.5 20
and crabs
12.Pharmaceuticals … … 3 … 5.5
13.Fertiliser ‘000’ tons 655 123 750 140
(a) Urea 549 104 175 31
(b) Ammonia 106 19 575 109
14.Leather million sft. 145 203 200 280
15.Handicrafts … … 6 … 8.5
16.Specialised textiles and … … 56 … 112
household linen
(a) Terry towel million dozens 5 46 10 92

(b) Specialised textiles … … 10 … 20

17.Knitwear million dozens 29 779 65 1745
18.Readymade million dozens 54 2200 94.5 3850
garments
19.Fishing reel … … 15 … 30
20.Electronics … … 2 … 4.5
21.Leather goods … … 30 … 40
(a) Footwear … … 25 … 30
(b) Leather bags/purses … … 5 … 10
22.Textile fabrics … … 15 … 25
23.Tents … … 12 … 17
24.Ceramic tableware … … 15 … 20
25.Golf shaft … … 10 … 35
26.Others … … 115 … 174.5
TOTAL: … … 4400 … 7750
5.12 Newly Developed Non-traditional Exports
5.12.1 The government attaches top priority to increase export of newly developed non-
traditional and higher value added products in order to accelerate economic growth, create
jobs and increase earnings to reduce the import-export gap. Some of them are outlined as
follows:
 98

a. Rural industry : Currently, there are little export-oriented activities in rural

Bangladesh. Garments made from hand-woven fabrics have a tremendous export
potential. The emergence of Grameen Check in Bangladesh capitalises on the
existence of a rural GO/NGO network in this regard. If agricultural intensification and
diversification proceed apace, tropical fruits, vegetables, cut flowers and fresh water
shrimp can also be produced to cater to foreign demand. There are also niche markets
in which competition is less fierce and locally available craft skills could facilitate
entry. Three examples of niche products suited to the mix of skills available in
Bangladesh are bamboo fishing rods and fishing flies, bamboo cane, cocoanut fibres
and straw products and handloom products. Crafting wooden boats for recreational
sailing is another activity which can draw upon the large pool of boat building skills
present in Bangladesh.
b. Computer software services : There is a significant potential of earning foreign
exchange through data entry and data processing work. The data entry/data processing
work may be classified into two categories, i.e., on-line processing and batch
processing. The software services market is one of the most dynamic and attractive in
the informatics industry. The total world market for software services accounted for
around $190 billion and is growing at an annual rate of over 15 per cent. The share of
the United States in the market is about 50 per cent. The Japanese and the European
markets are growing at a much faster rate than that of the United States. During the
1980s, a large number of international companies sought ways and means to make
their industries more profitable by reducing labour cost. Consequently, a good number
of the third world countries like China, India, the Philippines, Republic of Korea,
Jamaica, etc. developed export market in data processing. It includes communication-
based services that provided processing to user’s site via terminals connected to the
vendor’s computer (on-line).
An expanding base of personal computers in Bangladesh can provide a fertile ground
for the growth of PC-based software services for exports. It requires government
patronage in the form of creating service infrastructure and necessary financial and
motivational incentives to attract the private enterprises to come forward in this new
field of exports. If necessary, duties and responsibilities of economic and commercial
wings of Bangladesh missions abroad will be redesigned to include export market
development activities. Personnel of these wings will be well-trained and, if
necessary, nominated from the private sector on a contract and trial basis.
c. Export of cut flowers : A number of flowers like helliconia, ginger lily, gerbera, etc.
have a good export market. A number of decoration pot plants and ferns easily grown
in Bangladesh have also high export potential. The government will extend all
necessary incentives to attract the private enterprise to export cut flowers from
Bangladesh to Japan, the Middle East and the European countries.
d. Stuffed toy : It is a labour intensive product having ample scope for development as
an export item. Effective execution of a number of export orders of stuffed toys
demonstrates that, if supported properly, this sector will turn out to be a prospective
export item soon. The government will provide necessary assistance to promote this
sector for export to the target markets in Europe and the Middle East.
e. Jewellery : As a traditional industry, jewellery has good prospect for growth. There
are presently thousands of jewellery producing units/selling outlets in the country.
These are, however, meant for meeting demands of local consumers. Organised effort
in product development, design promotion and marketing initiative will surely fetch
 99

good results for this sector in exporting to the niche markets in the Middle East.
Execution of a few orders of jewellery for the Middle Eastern markets has proved
highly promising. The government has already adopted some effective measures for
product development of jewellery for export. Future needs are being assessed for
continued support.
5.13 Trade Policy
5.13.1 Reforms: In the past decade, Bangladesh’s trade regime had undergone substantial
transformation with gradual unfolding of an environment conducive to export-oriented
development. There has been progress in several aspects of the trade regime. Average
nominal protection which was above 100 per cent in 1985 dropped to a mere 22 per cent in
FY 96. The coverage of QRs (for trade reasons) was reduced from 42 per cent in 1985 to only
2 per cent of imports in 1996. The exchange rate regime has been unified and is more market-
based than ever. Export incentive schemes, which were barely developed in 1985, have been
streamlined and made more effective. It is also expected that policies recently introduced in
fields of trade, commerce and industry will stimulate investment response and bolster up
manufacturing production.
5.13.2 More specifically, trade and exchange rate liberalisation has been the cornerstone of
the government’s policy to promote competitive efficiency in production and achieve
neutrality of incentives between production for exports and import substitutes, while
gradually making trade facilitation the centrepiece of customs administration. The specific
policies undertaken to achieve these goals are:
a. liberalisation of imports through removal or significant reduction of tariff and
non-tariff barriers and gearing up customs administration for speedy clearance of
goods;
b. rationalisation of the tariff structure to remove disincentives to domestic
production arising from tariff anomalies; this involves lowering of duties,
particularly on industrial inputs and capital machinery ; and
c. promotion of exports through simplification of procedures for importation of
duty-free inputs, introduction of export incentive schemes like special bonded
warehouse scheme, back-to-back L/C scheme, duty-drawback scheme, gearing
up customs administration for speedy clearance of export cargo and making
foreign exchange convertible in the current account.
5.13.3 A key objective of tariff rationalisation was to create a neutral trade regime by
eliminating anti-export bias resulting from high tariffs and QRs. Any residual anti-export bias
will have to be compensated by other broadly applicable and well functioning mechanism that
ensures duty/tax-free access to inputs used in exports. The government is committed to the
reduction of tariffs as part of its liberalisation programme commensurate with reasonable
protection to local industries. The Bangladesh Tariff Commission will play an important role
in providing policy advice to the government based on professional analysis.
5.13.4 The rationale for using tariff values is to reduce incentive for mis-invoicing and to
simplify the administrative process of valuation. The government recognises the need to
eventually conform to the WTO Agreement of Custom Valuation which requires that dutiable
value of imported goods should be determined on the basis of “transaction value” i.e. the
price paid or payable by the importer in a particular transaction. Pre-shipment inspection
(PSI) has been used on a voluntary basis as an alternative revenue-safeguard instrument
against under-invoicing. Importers using off-shore PSI services have the advantage of getting
 100

quick clearance through customs. The coverage of PSI was extended in FY95 to tariff value
imports as well and improved monitoring has reduced potential abuse of the system. While
compulsory PSI is an option to be considered, it must be recognised that it is not a substitute
for further streamlining and strengthening of the customs administration which can only be
accomplished through modernisation, computerisation and proper administrative measures.
5.13.5 Like tariff rationalisation, significant progress has been made in removing QRs to the
point where a short list of sensitive items remains. Whereas almost 25 per cent of all items
under 4-digit headings were subject to QRs in 1990, now only 119 items covering only 2 per
cent of imports are so disposed. Of these , only 27 items are restricted for trade reasons.
5.13.6 New Policy: In tune with the prevailing world trend, the government is committed to a
liberal trade policy in a market economy. Bangladesh has embarked on an export-led
industrialisation strategy to take the advantage of free trade in order to achieve a faster
economic growth. In bringing about a desired level of export growth, a shift of emphasis from
a regulated economy to a market economy is significant. The major elements of the policy
reforms to adjust to a free trade regime include, among others, (a) liberalisation of import
including simplification of procedures, (b) rationalisation of the tariff structure, (c) reduction
in tariff rates and quantitative restrictions, (d) pursuing a flexible exchange rate policy, (e)
allowing IMF-consistent counter trade and (f) provisions of specific and transparent export
promotion measures. To provide continuity and long-term direction to the trade sector, the
government has decided to formulate a Five Year Trade Policy (Import and Export Policy)
instead of the hitherto followed annual/biannual ones. The trade policy announced eventually
is subject to annual review to adjust them with emerging requirements.
5.13.7 An accelerated development of the country’s export is an over-riding need, not only
for easing the growing pressure on the balance of payments, but also equally and more
importantly for the growth of viable and efficient agricultural and industrial sectors for
sustained economic development. This is only possible by making greater and determined
efforts for increased export.
5.13.8 In this context, the government has adopted an export-led growth policy and decided to
follow a long term strategy to implement the same. This long term strategy is embodied in the
Export Development Strategy of the government. Within the broad framework of the Export
Development Strategy, the main objectives of the export policy during the Plan period will
be to:
a. develop marketability of exportables through product diversification and quality
improvements;
b. establish backward linkages with export-oriented industry and service sectors for
utilisation of more of local inputs;
c. attract increased number of entrepreneurs for setting up export-oriented industries
and encourage them through the provision of suitable incentive mechanism; and
d. expand and consolidate existing markets and also develop new markets for
Bangladeshi exportables.
5.13.9 The salient elements of the strategy to reach these objectives will be to:
a. remove procedural and regulatory bottlenecks incompatible with the stated objectives
of the Export Development Strategy;
b. provide progressively updated policy support comparable with those of other countries
to enable Bangladeshi exporters to be on a sound footing in the international market;
 101

c. strengthen and improve the institutional framework for providing better services to
the exporters and export-oriented industries;
d. recognise that supportive infrastructural services can play an important role to
improve the exporters’ capability to perform efficiently and accordingly give priority
to the development of such infrastructural facilities;
e. remove the entrepreneurial and managerial inadequacies in the context of the
international competitive environment through appropriate resource development
programmes;
f. formulate and implement an export development programme to broaden and diversify
the range of exportable products through backward linkages;
g. participate in international trade fairs, both general and specialised, organise single-
country exhibitions abroad and field business delegations for creating new markets
and consolidating existing ones; and
h. formulate policy for quality improvement and encourage export enterprises to adopt
international standards such as ISO - 9,000 and ISO -14,000.
5.13.10 Expansion of the country’s supply base is important to any export strategy. Removal
of constraints to supplies and improvement in the incentive structure will enhance export
performance of the country in the short to medium term. At the same time, expansion of
production across the industries along with adaptation and development of products to
compete in the overseas market constitutes a medium to long-term priority. The strategy thus
intends to turn the drive for export-led growth into an economic movement.
5.13.11 In line with the above objectives and strategies, an incentive package has been
worked out. Facility for duty free import of raw materials for export-oriented industries under
bonded warehouse has been extended and more and more items are being continuously
brought under flat-rate of duty-draw-back system. In addition, facilities such as cash
compensatory support, market development cash assistance and duty-free import of capital
machinery have been extended to the exporters. These incentives are, however, subject to
continuous review with a view to rationalising and expanding their application and also
making them comparable with those of the competing countries. The main incentives in this
package may be summarised as follows:
a. Fiscal incentives
i. Continuance of duty-free import of capital machinery for export-oriented
industries outside Export Processing Zones;
ii. Provision for bonded warehouse to facilitate duty-free import of raw materials
for export production;
iii. Provision for duty-drawback, if the bonded warehouse facilities are not availed
of;
iv. Provision for sale of 20 per cent of the products by the cent per cent export-
oriented industries in the local market on payment of duties and taxes;
v. Exemption to the extent of 50 per cent of income arising out of export
business from income tax;
vi. Provision for tax holidays; and
vii. Provision for duty-free import of samples.
b. Financial incentives
i. Provision for local currency export-credit at a concessional rate of interest
within a band (present band is 8-10 per cent );
 102

ii. Provision for foreign currency export-credit under Export Development Fund
at a concessional rate of interest (rate of interest applicable is LIBOR+1 per
cent);
iii. Provision for back-to-back letters of credit for import of raw materials for
export production on deferred payments basis;
iv. Retention of export earnings by the exporters in their own foreign currency
accounts to the extent of 40 per cent in general cases and 7.5 per cent in lower
value-added items like ready-made garments ;
v. Facility for use of $25 million credit line for the markets of Commonwealth
of Independent States (CIS) ;
vi. 25 per cent compensatory cash benefit to the producers and suppliers of
fabrics and other textile products for the ultimate purposes of export in lieu of
bonded warehouse and duty draw-back facilities;
vii. Provision for 10 per cent Market Development Assistance for export of jute
yarn and twine;
viii. Banking facility for consignment sale and BMRE projects; and
ix. Export Credit Guarantee facility.
c. General incentives
i. Recognition of leather industries exporting at least 80 per cent of their
products as 100 per cent export oriented industries;
ii. Banning the export of crust leather;
iii. Giving facility of entrepot for export;
iv. Enhancing the financial limit for despatch of export samples abroad;
v. Provision for product and market development support under Export
Promotion Fund; and
vi. Awarding national trophy for export performance.
5.13.12 Following establishment of the WTO, every member country is committed to
liberalise the economy in such a way that there will be no artificial barrier on the way of free
movement of goods and services between nations. This has, on the one hand, thrown
challenges of severe competition and, on the other hand, provided opportunities to expand
trade for the developing countries.
5.13.13 The objective of the multilateral trading system is to encourage and enable countries
to pursue open and liberal trade policies. The Uruguay Round furthered and consolidated the
process of trade liberalisation through improvements in market access and more stringent
disciplines over trade measures. In addition to trade in goods, the Round has brought trade in
services and trade-related aspects of intellectual rights within the purview of the WTO trading
system. It recognises that countries which are at a lower stage of development, particularly the
least developed countries, may have to maintain, both in trade in goods and services,
reasonable protection or support. The rules, therefore, provided for special and differential
treatment in the form of total exemption from, or far lesser level of obligations and longer
time period between five to ten years, to accept the obligations by the least developed
countries in the various agreements.
5.13.14 Globalisation and liberalisation have increased the potential for international trade to
become an unprecedented engine of growth and an important mechanism for integrating
countries into the global economy. Bangladesh has adopted an export-oriented growth
strategy and recognises that in the effective operation of the multilateral trading system lies its
vital interest. Since the middle of the last decade, Bangladesh has, therefore, been making
 103

systematic efforts to liberalise trade by reducing tariffs and removing quantitative restrictions.
Simultaneously, attention is being given to improving and strengthening the capacity of the
administration to build up the regulatory framework that would ensure efficient performance
of the market economy. During the Plan period, efforts will be made to make the domestic
laws and regulations covering trade in goods and services as well as intellectual property
rights compatible with its commitments under the Uruguay Round Agreements and new laws
will be enacted where and when necessary.
5.13.15 The full benefit of globalisation and liberalisation can materialise only if countries
can increase their share in the world trade. However, many developing countries, particularly
the least developed countries, risk being left behind and marginalised as a result of more
intense global competition in the post Uruguay Round period in the world trade and
investment. Bangladesh has been taking up the issues on marginalisation in various
international forums including WTO and UNCTAD. The first WTO Ministerial Conference
held in Singapore has adopted the Integrated Programme of Action for the LDCs which
promises joint action by multilateral organisations including the financial institutions and the
developed countries to enhance the trading opportunities of the LDCs through capacity
building in them and increasing access for their products in the markets of developed and
developing countries. During the Fifth Plan period, Bangladesh will intensify its efforts to
enhance its international competitiveness and attain a larger share of the global market for its
exports through infrastructural development, capacity building, institutional and legal,
economic and trade policy reforms, privatisation and more investment in social sectors for
human resources development. Attempts, co-ordinated with other countries, will be made to
withstand the after effects of opening trade in agricultural commodities and services to global
competition and constraints imposed in relation to trade related investment measures
(TRIMS) and trade related aspects of intellectual properties (TRIPS). At the regional level,
efforts to enhance access to the markets of the neighbouring countries will continue through
intensification of regional and sub-regional co-operation. In particular, steps will be taken for
transition from the SAPTA to the SAFTA and closer co-operation with neighbouring India,
Nepal and Bhutan in a sub-regional framework within the ambit of the SAARC. Further,
efforts for greater integration with the Islamic countries, countries of the South East Asia and
of the Asia Pacific region will be strengthened taking advantage of various regional
integration schemes.
5.13.16 At the same time, proper attention will be given for the development of the
infrastructure and speeding up the implementation process of the reform measures so that a
real investment and export friendly environment is created within the country. Fortunately for
the country, market access lobby is getting strengthened externally and macro-economic
reforms are reflecting a better and more stable situation internally. An export development
strategy is in place and the government’s firm commitment to pursue an export-led growth
policy has been reaffirmed. After the success of RMG, attention is being focused on knitwear,
frozen food and leather. In these sectors, trade creating investments are being encouraged,
particularly for composite textiles, finished leather, leather footwear and jackets as well as
scientific culture and processing of shrimps. Some more high potential products have also
been identified and brought under the crash programmes for development. More prominent
among these products are leather goods, toys, cut and artificial flowers, luggage items and
computer data entry and software. Other items which need attention for development include
jewellery and diamond cutting, electronic products and components, mechanised poultry and
dairy farming, terry towel and specialised textiles, telephone and electric cables, ceramic
 104

kitchen and tablewares, engineering products, pharmaceutical products, packet tea and
diversified jute items. In order to boost production and promote export of the crash
programme items, assistance will be provided by way of product and market development and
credit on easy terms, duty-drawback or bonded warehouse facility, market exploration and
joint venture tie-up. Besides, more and more items will be included in the crash programme
list keeping in view the export potential of those items.
5.13.17 The government has formed a National Committee for Export with the Prime
Minister as the Chairperson. Besides, a Task Force and an Export Promotion Council under
the Chairmanship of the Minister for Commerce are also working. Now, what is needed is the
consolidation and sustaining of the momentum that has already been gained in the export
sector and to sustain it over time. For this, more intense, concentrated and special efforts are
required to be undertaken in the fields of product development, product diversification,
market promotion and market expansion. It is necessary at this stage for both the government
and the entrepreneurs to commit themselves to this task and do what is possible to materialise
the avowed objectives.
5.14 Private Transfers
5.14.1 Barring any adverse international development, especially in the Middle East where
the concentration of workers has taken place, it is expected that during the Fifth Plan, private
unrequited transfers including worker’s remittances will grow at the rate of 5 per cent per
annum. The government will maintain a flexible and competitive exchange rate to encourage
the flow of remittances through official rather than the informal channels and will streamline
the mechanisms and encourage diversification of instruments for investment of remittances.
5.15 Official Development Assistance (ODA)
5.15.1 Commitment and disbursement of ODA in the form of project and commodity
assistance are projected to remain below the benchmark throughout the Fifth Plan period.
However, despite a projected decline in commitment, project aid disbursement is planned to
pick up during the Plan period following an expected proportionately higher disbursement
from the huge opening pipeline at the beginning of the Plan. The government policies towards
turning into a private sector-led economy and privatisation of the State Owned Enterprises
(SOEs) are the main reasons for the declining trend of ODA. Rigorous conditionalities of the
development partners are also liable for slow utilisation of ODA. However, it must be noted
that inflow of foreign capital will be sustained and encouraged through foreign direct
investment. Projected foreign aid commitment and disbursement for the Fifth Plan is shown
in Table 5.10.
 105

Table 5.10
Foreign Aid Projection During Fifth Plan
(at 1996/97 prices)
( in million US$)
Year Food Commodity Project Total
1996/97 (Estimate)
Fresh commitment 105 120 1200 1425
Disbursement 110 161 1179 1450
2001/2002 (Projection)
Fresh commitment 47 43 945 1035
Disbursement 62 137 1418 1617
1997-2002 (Projection)
Opening pipeline 117 360 4929 5406
Fresh commitment 442 541 6137 7120
Total available 559 901 11066 12526
Disbursement 413 761 6571 7745
Closing pipeline 146 140 4495 4781
Source : Economic Relations Division
5.15.2 Aid utilisation will be facilitated if the projects are formulated prior to aid negotiation.
Procedures stipulated by the development partners sometimes complicate the utilisation of
project aid. Therefore, conditions under project aid should be flexible enough to ensure
smooth utilisation.
5.15.3 Food Aid : Bangladesh is expected to attain self-sufficiency in production of foodgrain
in the Fifth Plan period. However, food aid in the form of wheat will continue as the scarcity
of land will not permit increasing acreage for wheat cultivation. Food aid in recent years has
become an important instrument for agricultural development, poverty alleviation, education,
environment protection and gender equality. Food aid will continue to play a critical role over
the Fifth Plan period for its poverty alleviation programmes. Sale proceeds of food aid will
also be utilised for various agricultural, water management and rural development projects to
be implemented through the Annual Development Programmes. A part of food aid will also
be used for rural infrastructure development through the Rural Road Maintenance
Programme, the Food for Education and the Food for Works Programmes.
5.15.4 Commodity Aid : Flow of commodity aid will slowdown in the coming years owing
to various reasons like changes in development partners’ aid policy, transformation into open
market economy, etc. The disbursement of commodity aid is, therefore, projected to fall from
$ 161 million in 1996/97 to $ 137 million in 2001/02. This will sharply slow down the
formation of counterpart funds. Consequently, the government will have to mobilise larger
domestic resources to implement infrastructure development projects, particularly in the rural
areas.
5.15.5 Project Aid : A higher absorption capacity of project aid is essential for the steady
growth of the economy. However, utilisation of project aid in the past suffered due to a
shortfall in matching funds and other implementation problems. Slow utilisation of project
aid is more or less persistent, while there is a positive improvement in the domestic resource
mobilisation. Therefore, a quick utilisation of project aid in the pipeline will be given priority.
Disbursement of project aid is estimated to be $ 6,571 million which is 85 per cent of the total
aid expected for the Plan period while a fresh commitment of $6,137 million is expected
during the Fifth Plan period.
5.15.6 Technical Assistance : Technical Assistance for both macro-planning and sectoral
investment programme is very crucial. Flow of technical assistance can play a major role in
strengthening the development process by way of transferring technology and skill. Technical
 106

assistance should be demand-oriented rather than supply-based and it should aim at the
gradual upgradation of skill-base of the recipient country. Technical assistance should be
untied as far as possible and promote technical co-operation among developing countries.
One of the most difficult problems associated with technical assistance is the synthesis
between donor preference and the priority of the recipient country. The problems of divergent
priorities, time frames, attitudes and preferences on many occasions may turn out to be of
critical significance and cause delay.
5.16 External Debt
5.16.1 It is assumed that all foreign financing during the Fifth Plan, especially from ODA
countries, will be concessional and the main terms of borrowing will remain broadly
unchanged as in recent years. Analysis indicates that under the projected 7 per cent average
GDP growth during the Plan period, Bangladesh will be able to service its external debt
obligation . In addition, it is expected to contribute to a decline in the country’s debt/GDP
ratio. Debt sustainability will, however, be at stake should there be hardening in the terms of
external borrowing as to both interest rate and term structures.
5.16.2 The debt-burden will go up in the long run as soon as the share of highly concessional
loans in the total aid package begins to decline. It implies that Bangladesh must improve
performance of the export sector in future to keep debt-servicing liabilities within manageable
limits in terms of export and foreign exchange reserve, while satisfying current import need.
5.17 Foreign Direct Investment
5.17.1 Given the current aid scenario, Bangladesh will have to look for other sources of
foreign exchange to support its current account balance as well as rising investment level as
envisaged in the Plan. The most promising source of foreign exchange for the developing
countries in recent years has been foreign direct investment (FDI). However, only a handful
of developing countries have been able to attract foreign direct investment to any significant
extent. Bangladesh has not yet been able to attract much foreign direct investment which
brings additional resources - technology, management know-how and access to export
markets. The government has, however, made good progress in reforming policies and
programmes to encourage FDI in the country; but other constraints remain which make the
flow of FDI into the country less than its potential. The government will take necessary
measures to remove these constraints, e.g., shortage of power, inadequate infrastructures, low
level of human resources, etc. and to promote the image of the country as a safe and profitable
destination of FDI. In this regard, parliamentary democracy and political stability of the
country are the important elements which need to be realised and provided by both the party
in power and the parties in opposition.
5.17.2 The benefits accruable from FDIs are inclusive of (a) transfer of technology to
individual firms and technological spill-over to the wider economy, (b) increased productive
efficiency due to competition from multinational subsidiaries, (c) improvement in the quality
of the factors of production including management in other firms, not just the host firm, (d)
benefits to the balance of payments through inflow of investment funds, (e) increase in
exports, (f) increase in savings and investment and (g) faster growth and employment. The
possible negative effects may be enumerated in terms of (a) negative effects on balance of
payments owing to increase in the import of inputs and payments of dividends and royalties
abroad, (b) distortion in competitive environment because of large size of multinationals, (c)
discouragement of home-spun technical know-how, (d) relatively more capital intensiveness
of investment and (e) financial and currency speculation. Weighed simultaneously, it is
apparent that FDI promises more than it delivers. In the process, the need for selectivity and
 107

strategic approach to FDI in the context of a well-charted national policy to encourage socio-
economic development and technological change comes under focus. In this context, it may
be noted as well that a conscious development orientation framework does not necessarily
limit FDI.
5.17.3 Bangladesh Export Processing Zones Authority (BEPZA): It was established in 1980
with a view to improving the environment of private foreign investment for export. At
present, in two EPZs, namely, Chittagong EPZ and Dhaka EPZ, 73 and 23 industries are in
operation and, 34 and 46 industrial units are under implementation in CEPZ and DEPZ
respectively. In the operational units of Chittagong and Dhaka EPZs, total investment, export
and employment are $ 180 million, $1,120 million and 31,724 persons and $56.56 million,
$179 million and 14,783 persons respectively.
5.17.4 During the Plan period, it is expected that the existing and the projected EPZs will be
fully operational and their targets for investment, employment and exports will be as follows:
EPZ Number of Investment Employment Export (Yearly)
Industries (in million US$) (persons) (in million US$)
1. Chittagong 110 350 50,000 600
2. Dhaka 90 300 40,000 500
3. Comilla 150 400 60,000 700
4. Mongla 100 300 40,000 500
5. Ishurdi 90 300 40,000 700

Thus, at the end of the Fifth Plan period, 540 industrial units with a total investment of
$1,650 million and employment of 230,000 persons are expected to be set up. The yearly
export after the Plan period is expected to be $ 3 billion. In addition, another exclusive EPZ at
Chittagong is being developed by the Korean investors. The government will also allow the
private sector to establish their own EPZs as it has done in case of the Koreans.
5.18 Capital Market Development
5.18.1 Systematic development of capital market in Bangladesh has become indispensable to
broaden the scope for domestic resource mobilisation raising the low savings and investment
rates and attracting portfolio investment from abroad .
5.18.2 Measures will be designed to improve domestic resource mobilisation and attracting
portfolio investment from abroad by expanding the market capacity to raise debt and equity
capital, increase the current limited resources available through the banking system and
enhance the efficiency of the market by strengthening and modernising the market
infrastructure. This will manifest in steps aimed at (i) facilitating market access for security
issues to increase the limited supply of securities in the market; (ii) developing institutional
sources of medium to long-term funds to raise demand for securities; (iii) reinforcing
market regulation and supervision; (iv) strengthening the market infrastructure and
modernising the support infrastructure; and (v) improving policy co-ordination.
5.19 Foreign Exchange Reserves
5.19.1 An economy maintains a certain level of foreign exchange reserves primarily to bridge
the gap between foreign exchange receipts and payments. While foreign exchange reserves
are used to earn interest income, keeping reserves means tying up valuable resources
alternative which have more productive uses. These resources can be used to import
intermediate or capital goods which will expand production and employment, given fiscal and
monetary incentives. Keeping these in mind, Bangladesh will maintain foreign exchange
 108

reserves equivalent to 4-6 months’ imports through a combination of fiscal, monetary and
exchange policies.
5.19.2 The balance of payments position as projected over the Fifth Plan period shows a net
surplus of $1,770 million in reserve in the country’s external account. This amount will add
to the country’s foreign exchange reserve which by 2002 will figure at $ 3,489 million. This
is equivalent to about four months’ import bill of that year. This projection of external
account does not, however, include the foreign direct investment (FDI) which is very likely to
flow in by a substantial amount ( the estimate is $ 3.6 billion for the entire Plan period). If this
amount is realised, the foreign exchange reserve will figure at $6.2 billion after allowing for
outflow of a part of it in short-term account. The net gain from FDIs will be about half of the
gross inflow. Total reserve will be expected to be equivalent to seven months’ import bill by
2001/02. Foreign exchange position will thus emerge at a quite comfortable level.
5.20 Exchange Rate Policy
5.20.1 Bangladesh is pursuing a managed flexible exchange rate system. The nominal
exchange rate is maintained at a level which is consistent with keeping the real effective
exchange rate (REER) stable or slightly depreciating over time on the basis of estimated
REER indices using trade weights of a 15-country currency basket. Taka was devalued in
relation to US Dollar seven times between July, 1996 and the 6th April, 1997. However, these
reduced the exchange rate by Tk. 1.90 altogether.
5.20.2 An analysis of the exchange rate behaviour and export performance does not, however,
support the hypothesis that a strong correlation existed between the exchange rate of taka and
Bangladesh’s export performance. Bangladesh’s export demand is highly sensitive to the
income growth and trade policy of its trading partners and remains relatively insensitive to
price changes. Bangladesh’s export growth is determined more by the volume of world trade
and exchange rate volatility than by changes in domestic and foreign export prices. It will be
noted that when devaluation is accompanied by trade liberalisation and exports have a high
import content, then devaluation will in fact lead to inflation leading to ultimate appreciation
of the exchange rate. In such circumstances, management of inflation along with improved
productivity rather than devaluation may be an appropriate instrument to enhance
Bangladesh’s competitive strength. The real effective exchange rate will be maintained at a
stable level to influence choices not only between tradables of Bangladesh vis-a-vis its
trading partners but also between tradables and non-tradables within Bangladesh. The real
effective exchange rate will be closely monitored by the Bangladesh Bank.
5.21 Southeast Asian Currency Crisis
5.21.1 The Asian economic crisis began in Thailand where the economy had become
overheated in 1995 and 1996. The current account deficit widened rapidly and there was an
increase in short-term overseas borrowing in dollars. This borrowing, which was largely
unhedged, was facilitated through an offshore banking facility. The baht, which had been
linked closely to the US dollar for over a decade, became overvalued. This hurt international
competitiveness and was exacerbated by the appreciation of the US dollar against the yen and
other currencies. The effect of these factors was not immediately apparent. Thailand’s exports
were very strong in 1995 and there was very little inflationary pressure. However, export
growth fell very dramatically in 1996. While the collapse in export growth was partially offset
by a commensurate fall in imports, slower export growth combined with the rapid growth in
external debt was enough to spook investors and to attract currency speculation. Combined
with over-leveraged equity and property markets, and a weak financial sector having many
bad loans in its books, the economy was unable to easily withstand the pressure on the
 109

currency. There was an attack on the currency by various international fund managers
accompanied by domestic players in bringing about further capital flight. The central bank
defence was unsuccessful. Reserves were run down and eventually the country was forced to
devalue in mid 1997. A crisis in the banking sector ensued as a result of the bursting financial
bubble and a falling exchange rate. Bad loans surfaced and interest rates were raised to keep
the exchange rate from falling further. Eventually, the government went to the IMF for the
rescue and received a large package of financial assistance and advice, particularly for
restructuring the ailing financial system.
5.21.2 The financial distress spread rapidly to the other Southeast Asian economies. The
boom mentality in Southeast Asia had led to over enthusiastic investment and over-leveraging
in property and real state markets. Stocks were used to collateralise further borrowing in all
countries, particularly so in Malaysia. Furthermore, Indonesia and the Philippines also
suffered from being lumped into the same group as Thailand by the foreign investors. It was
true that they had similar problems to that of Thailand but initially they were of a lower order
of magnitude. There were large current account deficits in case of Malaysia and to a lesser
extent in Indonesia and the Philippines. However, the size of the increase in external short
term debt was not nearly as rapid as it was in Thailand, or was the collapse in exports as
dramatic. On the contrary, the Philippines had sustained rapid growth in 1996 which the other
countries did not achieve. But these subtle differences did not seem to matter to foreign
investors, who were joined by domestic market participants as the herd instinct to move out
of these emerging markets and into a safe abode of dollar based assets gained strength. The
macroeconomic fallout in Indonesia, Malaysia and the Philippines has been similar in broad
summary to that of Thailand - currency depreciation, financial difficulties because of bad
loans, collapse of the stock market and of the property market bubble. However, the extent
and severity of macroeconomic problems vary widely.
5.21.3 The Southeast Asian currency crisis warrants us to be cautious in our approach
towards convertibility of currency and flexibility of exchange rate. In addition, coupled with
the recent South Korean experience, this episode calls for going deep into macro-economic
fundamentals so that stylised interpretation does not bypass the actual situational context.
5.22 South Asian Development Triangle
5.22.1 Large scale of production with less unit cost will lead to large markets. So, it is a
better proposition to create a large common market, wherever it is possible, instead of
remaining closeted in a separate national market. The question of size of a country is
immaterial as to the benefits of the individual country out of such regional co-operation. In
the European Union, a large country like Germany with a population of over 80 million and a
small country like Luxembourg with a population of less than a million are members deriving
benefits without economic discrimination.
5.22.2 Trade and investment will benefit big and small countries alike. Economic co-
operation through unhindered trade and investment, in particular free flow of goods and
services through each other’s territories involving a group of adjoining countries or segments
thereof - is considered to be a big passage, if not the main gateway, to economic growth.
However, the passage to such trade and investment cannot be opened unless the economic
grouping among the neighbouring countries is initiated and constituted.
5.22.3 Now the South East Asian countries are in a move to set up growth triangles to
promote trade and investment, particularly in areas which are lagging behind. For example,
northern Thailand, north-eastern Myanmar, Laos and Yunnan Province of China are being
linked together to form such a co-operation. Countries or provinces thereof along Mekong
 110

river have started to implement common river basin development projects and have decided
to promote a growth quadrangle. Similarly, there are plans to form such a trade and
investment co-operation covering Mindanao province of the Philippines, Sabah and Sarawak
provinces of Malaysia and parts of Indonesian island of Sumatra. Furthermore, the North
American Free Trade Area (NAFTA) also aspires to achieve the same purpose of trade and
investment growth among Canada, Mexico and the United States.
5.22.4 South Asia Development Triangle encompassing Bangladesh, Bhutan, Nepal and
eastern and the north-eastern parts of India may follow the trends which have already been
well developed elsewhere in the world. Bangladesh being the only partner and having access
to the seaports, its gains are likely to be much more than the others.
5.22.5 The proposed growth quadrangle aims at creating an enabling environment for
rapid economic development through identification and implementation of specific projects
for co-operation in the core economic sectors. The sectors are multi-modal transportation,
communication, energy, trade and investment facilities/promotion, tourism and optimal and
sustainable utilisation of natural resources.
5.22.6 These projects will serve as ‘building blocks’ for sub-regional co-operation which will
accelerate regional co-operation. These should be supportive of and complementary to
national plans of the countries in the growth quadrangle and result in tangible benefits to the
people of the sub-region in poverty eradication, employment and income generation, social
welfare and improvement in the quality of life.
5.22.7 Development of a deep sea port around Chittagong will facilitate handling of
export/import cargo of Bhutan, Nepal and eastern and north-eastern parts of India. It will
create a good number of new jobs along with substantial foreign exchange earnings for the
nation as port handling charges.
5.23 Border Trade Arrangement
5.23.1 Border Trade Arrangement helps formalise informal trade and thereby generate
revenue for the government. The traders are also benefited from the relaxed travel restrictions
and simplified trust housed transactions outside the procedures of L/Cs. In early 1996,
Bangladesh and Myanmar established a border trade arrangement in the Teknaf side of
Bangladesh and the Maungdu side of Myanmar. This arrangement, if appropriately nurtured,
will benefit both the economies. Similar arrangements may be considered with other
neighbouring countries as well.
111
 112

CHAPTER VI

PRIVATE SECTOR
6.1 Introduction
6.1.1 There is now a growing realisation that a vibrant and dynamic private sector is the key
to economic progress and sustained growth. The East Asian miracle exemplifies as to how the
government can accelerate progress as a partner and as a facilitator. Developing countries,
including Bangladesh, have come to increasingly rely on market forces to guide their
development strategy. Efforts are being focused on the promotion and supporting of the
private sector and creation of an enabling environment for it to flourish and maximise its
contribution to economic progress within a business friendly and equitable framework.
Bangladesh has been increasingly relying on this philosophy as a strategy for growth. As a
consequence of this, the share of the private sector in total investment has risen. Public sector
reforms will continue to be undertaken as a complement to the private sector so that it can
function more effectively and upto its potential.
6.1.2 Stable political climate, continuity of policy and conducive social environment being
essential ingredients for development, it will be the endeavour of the government to enlist
social and political support for replicating concerns in the policies being formulated. There
will be a continuous dialogue between the government and the business community as well as
those associated with the process of development to identify the impediments that hampered
the way of proper and fuller participation of the private sector. Issues such as those relating to
simplification of procedures for credit, import and export, labour, infrastructure, energy etc.
will be reviewed regularly and where necessary, policy re-adjustments will be made or
appropriate decisions taken. While it will be the responsibility of the government to undertake
supportive measures and develop infrastructure facilities such as that relating to
communication, energy etc. which influence business decisions, the private sector will be
encouraged to venture into such fields which hitherto have been the realm of the public
sector.
6.2 Past Performance
6.2.1 Bangladesh inherited a mixed economic system at the time of liberation. But the
economy was in shambles as a result of displacement of people, destruction of physical
infrastructures and disruption and abandonment of industries. As a natural consequence as
well as on account of the government policy, the public sector acquired a commanding role.
The Government of Bangladesh nationalised various industries, business enterprises, banks
and financial institutions exceeding Tk. 15 million in assets in order to reactivate the
economy. The nationalisation policy covered a total of 725 industrial units under the
management of 10 newly created public sector corporations. But owing to the growing
pressure from such nationalised units on the financial and management resources of the
public sector, 155 small enterprises earlier taken over by the government were gradually
disinvested with the objective of fostering industrial growth and lessening the government's
burden. The policy of disinvestment initiated the process of gradual expansion of the private
sector. As cost continued to escalate, the ceiling on the private investment was raised
gradually from Tk. 2.50 million under the first industrial policy of 1973 to Tk. 30 million in
1974. It was further raised to Tk. 100 million in 1975 and totally withdrawn in 1978. The
government has been implementing structural adjustment and liberalisation policies since the
 113

1980s, which enhanced the role of the private sector and created an environment conducive
to its accelerated growth.
6.2.2 The growing emphasis on the private sector is reflected in the fact that the share of the
private sector investment increased from 11 per cent in the First Plan to 44 per cent in the
Fourth Plan (Table 6.1). The performance of the private sector was better than what was
planned for in the Fourth Plan. In fact, the share of the private sector in the total realised
investment was 54 per cent of the total investment in FY95.
Table 6.1
Projected and Realised Private Investment During Past Plans
( in million Taka)
Projected Percentage Realised Investment Realised
Investment of total Plan Annual Average
(at base year Outlay Investment
Plan prices) at base at 1996/97 (at 1996/97
year prices prices prices)
1 2 3 4 5 6
First Plan (1973-78) 5,030 11 4,390 56,114 11,223
Two Year Plan (1978-80) 6,000 16 9,570 38,697 19,348
Second Plan (1980-85) 61,000 35 49,690 160,209 32,042
Third Plan (1985-90) 136,000 35 98,820 191,997 38,399
Fourth Plan (1990-95) 273,000 44 324,397 410,226 82,045
Plan Holiday Period (1995-97) 291,600 57 291,600 295,600 147,800
Note : Realised investment based on investment deflators of BBS.
6.2.3 The investment rate of the private sector in FY91 was 5.82 per cent of GDP which rose
to 10.71 per cent in FY96. On the other hand, the investment rate of the public sector rose
from 5.65 per cent of GDP in FY91 to 6.29 per cent only in FY96. During FY97, the
investment rates of the private and public sectors were 10.86 per cent and 6.52 per cent
respectively. The estimate of private saving rate in FY94 was 11.70 per cent which increased
to 12.30 per cent in FY95. This rate declined in FY96 though it remained above 11 per cent.
This was partly due to the large interest rate spread between advances and deposits with
inflationary expectation continuing low. While total private investment has grown in recent
years, its performance in different sectors has been rather mixed (Table 6.2.).
Table 6.2
Realised Private Investment During Fourth Plan Period
(at 1989/90 prices)
(in million Taka)
Sector/ 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 Average Annual
Year (Benchmark) Compound
Growth Rate
Agriculture 6,500 3,902 6,630 7,131 81,31 8,887 6.46
Manufacturing 4,500 14,035 17,188 19,792 19,915 28,092 44.24
Housing and Construction 7,000 6,299 7,252 9,196 10,873 15,897 17.83
Transport and Communication 5,300 5,131 5,203 5,653 5,846 10,451 14.55
Trade and Other Services 7,000 15,818 17,049 22,035 23,452 30,539 34.26
Total 30,300 45,185 53,322 63,807 68,217 93,866 25.38
Source: BBS
6.2.4 The private investment in agriculture has grown at a rate of 6.46 per cent per annum
during the Fourth Plan. Agriculture has always been dominated by the private sector as farms
are operated and managed by private individuals. The public sector in agriculture is
responsible for the creation of infrastructure for gravity flow irrigation, barrages, etc. On the
 114

other hand, the private sector has been involved in land development and small irrigation
facilities. The distribution and sale of agricultural inputs like fertiliser, irrigation equipment,
seeds, pesticides, etc., is also being handled by the private sector. The growth of livestock,
fisheries and forestry has been faster than the growth of the crop sub-sector. These sub-sectors
have grown at rates between 4 to 9 per cent annually during the 1990s while the highest
growth rate achieved in recent years in crop sub-sector has been around 2 per cent in FY96.
The growth of these sub-sectors has been largely possible due to the dynamism of the small
entrepreneurs of the private sector involved in non-crop activities.
6.2.5 The private sector activities in manufacturing have been expanding rapidly and there
has been perceptible diversification involving the emergence of ready-made garments
industries. During the Fourth Plan, private investment in the manufacturing sector grew at an
annual average rate of 44.24 per cent leading to an increase in the share of the sector. The
emergence of RMG is a very significant phenomenon in the development of the
manufacturing sector and has been made possible primarily by the dynamism of private
entrepreneurs. As a result of the growing private sector involvement, the growth of the
manufacturing sector has picked up in recent years. The annual growth of manufacturing
during FY90 and FY97 has been in the range of 7 to 9 per cent.
6.2.6 The growth of services sector has been high in recent years. This sector now contributes
more than half of Bangladesh's GDP. Because of the ongoing liberalisation policy, including
the privatisation policy of the government, activities covering transport, trade, housing,
health, education, banking and insurance and professional services are increasingly being
managed by the private entrepreneurs. Private investment in trade and other services grew at
an annual average rate of 34.26 per cent, while total investment in the private sector grew at a
rate of around 25 per cent during this period. The public sector involvement continues to be
there but at the same time the role of the private sector has accelerated and privatisation of the
service sector is encouraging.
6.3 Review of Reforms
6.3.1 In pursuance of the government objective of developing a market economy with the
private sector as the key player, several structural adjustment policies have been undertaken.
These include reforms in fiscal and monetary management, banking, trade policy,
privatisation, etc.
6.3.2 Macro policy reforms: Experiences of developing countries show that the performance
of the private sector is significantly dependent on macro economic stability. Prudent fiscal
and monetary management is an essential instrument for bringing about this change. Since the
late 1980s, efforts have been made to improve the content and effectiveness of both these
macro policies.
6.3.3 The main features of the fiscal policy during the last few years have been the, (a)
containment of current expenditure and (b) earning of more revenues through rational tax
measures. Major tax reforms included expansion of coverage of income tax and VAT instead
of customs and sales tax. The tax/GDP ratio increased from 7.90 per cent in FY91 to 9.40 per
cent in FY96 while current expenditure to GDP ratio remained almost constant (Table 6.3).
The overall budget deficit to GDP ratio has declined during this period minimising the impact
of fiscal operations on inflation. In fact, the inflation rate came down from 9.33 per cent in
FY90 and 8.85 per cent in FY91 to 5.22 per cent and 4.07 per cent in FY95 and FY96,
respectively.
 115

Table 6.3
Fiscal Indicators FY 90-96
(as per cent of GDP)
FY90 FY91 FY92 FY93 FY94 FY95 FY96
Total Revenue 9.30 9.59 10.84 11.91 12.04 12.08 12.00
Tax Revenue 7.80 7.90 8.73 9.67 9.45 9.71 9.40
Non-tax Revenue 1.50 1.69 2.11 2.24 2.59 2.37 2.60
Total Expenditure 15.20 14.98 15.25 15.98 17.72 17.62 16.80
Current Expenditure 8.80 8.66 8.60 9.07 9.00 8.82 9.10
ADP Expenditure 6.40 6.32 6.65 6.91 8.72 8.80 7.70
Revenue Surplus 0.50 1.10 2.10 2.80 3.00 3.90 2.90
Overall Budget Deficit* 7.90 7.20 5.90 5.90 6.00 6.80 4.80
Net Foreign Financing 6.60 6.20 4.90 5.60 4.90 4.90 4.10
Net Domestic Financing 1.30 1.00 1.00 0.30 1.10 1.90 2.10
Inflation Rate (% change in CPI) 9.33 8.85 5.07 1.38 1.77 5.22 4.07
Source: Ministries of Finance and Planning and World Bank.
* Fiscal deficits are higher than the difference between total revenue and total expenditure due to inclusion of
expenditure items like non-ADP projects, FFW, miscellaneous investment (non-development), net loans and
advances and food deficits.
6.3.4 The monetary policy has also been used prudently and money supply has been kept
within targeted limits. Partly as a result, prices have been more or less stable during the last
few years. However, supply of credit has fluctuated over the period. Generally, the interaction
between monetary and fiscal policies was meaningful and mutually supportive.
6.3.5 Financial sector reform programme (FSRP) : A sound financial system is crucial for
the functioning of a dynamic private sector and with this end in view, the FSRP was initiated
in 1990. The objective of the programme was to create an environment in which banks and
financial institutions could operate within the frame-work of relevant rules, regulations and
guidelines. Bangladesh Bank, as the Central Bank of the country, monitored the observance
of such rules in order to ensure monetary stability. The banks and financial institutions now
function on a flexible system wherein interest rates are set on the basis of economic indicators
in consultation with the Bangladesh Bank. A new system for loan classification and
provisions for risks has been introduced in line with international standards from January,
1995. Recently, a bankruptcy law has been enacted to deal with the problem of recovery of
overdue loans and to bring back discipline in the banking sector. Such steps are expected to
increase the volume of bank finance as well as to ensure greater efficiency in the allocation of
bank resources to the private sector, particularly for increasing export.
6.3.6 Trade policy reforms: Trade is an engine of rapid growth and development. Liberal
trade policy, in fact, has been a major feature of development strategy of the high performing
economies of the East Asia. Until recently, the trade policy in Bangladesh has been
characterised by import restrictions, insufficient export incentives and wide array of
regulations constricting private investment. Both tariff and non-tariff barriers contributed to
the high effective rate of protection of the domestic industries and created an anti-export bias
in the system.
6.3.7 In the course of past decade, Bangladesh's trade regime has undergone substantial
transformation. The government has been steadily liberalising the foreign trade regime by
 116

reducing direct controls and tariffs. The custom duty has largely been rationalised and duty on
import of capital machinery for export-oriented industries has been withdrawn to make such
industries more competitive. The average nominal tariff rate which was 89 per cent in FY91
has been reduced to 22 per cent in FY96, the highest rate having been brought down to 42.5
per cent in FY98 budget. The protection levels in Bangladesh have been lowered making it
among the lowest in South Asia. According to an estimate made by NBR, the nominal
protection has come down significantly during the post-reforms period (Table 6.4). As a
result of reforms, difference between the lowest and highest nominal protection rates,
reflected in coefficients of variation (CV), has declined in the case of agriculture. Even
though the CV have not declined in other sectors, steps are being taken to bring them down.
The policy of the government will be to simplify the tariff schedule and discourage tariff
concessions based on end-use. Other reforms have steadily dismantled a complicated
structure of import controls. At the same time to protect the domestic industries from unfair
foreign competition the Tariff Commission has been empowered to investigate and initiate
anti-dumping and countervailing action.
Table 6.4
Trends in Nominal Protection 1990/91 to 1995/96
(percentage of assessed value)
Agriculture Mining Manufactures All Tradables
Pre-reform, 1990/91
Unweighted 90.5 54.1 89.0 88.6
Import-weighted 20.9 24.0 51.8 42.1
Dispersion (CV) 63.3 51.7 58.6 59.0
Post Reform, 1995/96
Unweighted 26.0 13.6 24.6 24.6
Import-weighted 10.1 38.8 21.9 21.0
Dispersion(CV) 56.7 82.2 73.5 72.7
Source : NBR.
a. Import-weighted nominal protection rates for 1990/91 are weighted by import data for the corresponding
year; for 1995/96 they are weighted by 1994/95 imports.
b. CV is the coefficient of variation for the unweighted average.
6.3.8 There has been a significant progress on the reduction of quantitative restrictions
(Table 6.5). Existing restrictions will be reviewed and where necessary reduced.
Table 6.5
Phased Removal of Quantitative Restrictions
Fiscal Year Total Trade Reasons Non-trade
Reasons
No. of No. of Banned No. of No. of Partly No. of Banned
Commodities Commodities Restricted Banned and Partly Commodities
Commodities Restricted
Commodities
1989/90 315 135 66 52 62
1990/91 239 93 47 39 60
1995/97 115 5 6 12 92
Source: Ministry of Commerce.
6.3.9 As a result of reforms, the effective rates of protection has decreased (as estimated by
NBR) for most industries. However, analysis of the observed effective rates of protection
shows that even though the level of protection has declined, the anti export bias in the
incentive system has not yet been completely eliminated. The impressive growth of exports
from Bangladesh has largely been due to factors such as liberalisation of the economy, supply
 117

of inputs at world prices, GSP facilities and simpler administrative requirements and credit
supports.
6.3.10 International comparison of trade policy reforms shows that Bangladesh has been
quite successful in implementing these reforms. Bangladesh brought down its maximum tariff
from 509 per cent in 1990 to 50 per cent in 1995. During the same period, India brought its
maximum tariff from 400 per cent to 50 per cent. In 1994, the maximum tariff rates in Nepal
and Pakistan were 100 per cent and 70 per cent respectively.
6.3.11 A competitive real exchange rate is essential to achieve the desired structural change
which will ensure greater share of exports to GDP. As such, the government along with the
policy of import liberalisation is following a flexible exchange rate policy in order to make
exports more competitive. It may be recalled however, that in the early 1990s, a substantial
reduction of external deficit was achieved without significant real devaluation of Taka
although the real effective exchange rate computed by the IMF showed a secular depreciation
in its value since the beginning of the 1990s (Table 6.6). The real effective exchange rate fell
during the period while in nominal terms the official exchange rate continued to increase.
Table 6.6
Indices of Real Effective Exchange Rates and Official Exchange Rates
(base 1980=100)
Year 1989 1990 1991 1992 1993 1994 1995
REER 95.47 88.78 86.96 82.12 82.10 78.53 75.10
OER 207.49 212.52 230.34 246.29 252.68 258.23 259.52
Source : World Bank and Bangladesh Bank.
Note : REER = Real Effective Exchange Rate; OER = Official Exchange Rate.

6.3.12 Besides a flexible exchange rate policy, functional convertibility of Taka has also been
made operational to enhance competitiveness of the economy. This is evident from the rising
share of export to GDP. The export / GDP ratio has gone up from 8.33 per cent in FY90 to
14.16 per cent in FY95 and to 15.21 per cent in FY97.
6.3.13 Privatisation: The policy of privatisation, if properly conceived and implemented,
can ensure substantial benefits including higher productivity, growth of output and
employment, besides, lesser stress on governmental resources. Such a policy also enables the
government to focus more on policy making to create an enabling environment. Because of
such gains, privatisation has been on the rise all over the world. According to a World Bank
estimate, more than 8500 SOEs have been privatised in over 80 countries during the last 12
years. The Bangladesh Government is committed to the process of privatisation, and with this
end in view, the Privatisation Board was established in March, 1993. The major functions of
the Privatisation Board are- formulation and implementation of a privatisation policy, sale of
identified SOEs with a view to reducing the burden and drainage of government resources
and to ensure timely recovery of sale prices. Since 1993, a number of SOEs identified for
sale/disinvestment stood at 217 of which 21 were transferred to the private owners by April
1997. Privatisation efforts, however, have been hampered as purchasers have defaulted in the
payment of instalments/ dues.
6.4 Deregulation of Private Investment and Provision of Incentives
6.4.1 In tune with the spirit of deregulation, the last vestige of "investment sanctioning" has
been abolished in Bangladesh and the Board of Investment (BOI) has been re-organised to
 118

function under a fresh mandate emphasising its role in promotion and facilitation rather than
regulation.
6.4.2 Most of the restrictions and barriers to private investment including foreign investment
have been removed. Even registration of investment units by the BOI has been made optional.
6.4.3 The government facilitates the growth of an enterprise through (a) provision of
incentives and services available from BOI, BEPZA and BSCIC; (b) supply of utilities such
as gas, power, water supply and telephone; and (c) administering of industrial regulations
linked to environmental protection, health or public safety.
6.4.4 Schemes like special bonded warehouses and export processing zones, complemented
by factors such as quota under the Multi Fibre Arrangement (MFA), GSP and an innovative
financing scheme (back-to-back LC), facilitated the growth of RMG exports, currently the
principal commodity export of Bangladesh for foreign exchange earnings in gross terms.
However, the failure of backward-linkage industries to grow limits its potential contribution
to foreign exchange earnings as well as to value added.
6.4.5 Several Export Processing Zones (EPZs) have been established and more are being set
up. Law for the establishment of private export processing zone has been enacted. Specific
incentives for foreign private investment have been provided to increase the inflow of such
investment.
6.4.6 Legal reforms: Judicial and legal reforms are necessary to support the emergence of a
liberalised economy. Such reforms are essential for the creation of an enabling environment
for the private sector to flourish and maximise its contribution to sustained growth. The
present legal system can not adequately support the efficient growth of the private sector and
several laws need to be redrafted and modified to make them more supportive of the present
development strategy. Further, the judicial process is observed as cumbersome and time-
consuming. Steps have already been taken to rectify the situation. Bankruptcy law has already
been enacted, A Law Reforms Commission has been constituted which will identify the
anomalies and weaknesses in the existing laws and legal system and will recommend
necessary reforms. A Judicial Training Institute has been set up for manpower development in
the judiciary. Objective of such legal reform will be to ensure settlement of trade and
industrial disputes through speedier disposal of cases and to simplify the cumbersome legal
procedures as is observed at times and which impose cost on private business.
6.4.7 Impact of reforms: The reforms undertaken, so far, show that the overall impact has
been marginally positive. These reforms have raised the rates of savings and investment in the
economy in general, though recent experiences show some fragility in the growth of savings.
The scope of private sector has widened significantly by raising its share in investment
though the scope for rapid increase in private investment remained quite wide and unfilled.
The economy now seems to be on the threshold of breaking out of the low growth situation.
The average growth rate of GDP went up to 5.65 per cent in FY97 from 5.35 per cent in
FY96 and 3.40 per cent in FY91. Similarly, the investment rate went up to 17.37 per cent in
FY97 from 12.80 per cent in FY90. The export/GDP ratio also grew from 8.33 per cent in
FY90 to 14.16 per cent in FY95 and 15.21 per cent in FY97. The inflation rate of 5.22 per
cent in FY95 declined to 4.07 per cent in FY96 and 3.91 per cent in FY97, compared to the
high inflationary period (average rates of 13.38 per cent during 1980-84) before the
government's structural adjustment policies were initiated.
 119

6.4.8 The progress of privatisation has been slow on account of various factors, the primary
ones being low response from the private sector with respect to abiding by the contractual
obligations, poor co-operation from the labour unions and opposition by vested interests, non-
payment of instalments by the new owners and delay in disposal of legal disputes. This has
also been inhibited by the too cautious an approach taken by the banks and financial
institutions to provide financial accommodation in case of overdue loans. Efforts are being
made to strengthen and speed up the process of privatisation with the appointment of a
Chairman with the rank and status of a State Minister and revamping the board with
membership of elected public representatives at the national level.
6.4.9 In the financial sector, reform measures aimed at (a) deregulation by the government;
(b) supervision and monitoring of banks and financial institutions by the Bangladesh Bank;
(c) widening scope for competitive determination of interest rate; and (d) deepening the
finance in terms of institutions and instruments.
6.4.10 The spread between advance and deposit rates has grown significantly since 1988/89
(Table 6.7). The high level of spread continues to reflect inefficiency of the banking sector
in terms of risk management which, in turn, discourages both savings and investment. This
incompatibility of savings and investment is a serious impediment to acceleration of private
investment and GDP growth.
Table 6.7
Interest Rates on Deposits and Advances 1989-95
Years Interest Rates Interest Rates on Growth Rates of Spread between Real Rates of
on Deposits Advances CPI Advances and Interest on
Deposits Advances
1988/89 8.88 14.68 8.02 5.80 6.66
1989/90 9.06 14.99 9.33 5.93 5.66
1990/91 9.11 15.12 8.85 6.01 6.27
1991/92 8.11 15.12 5.08 7.01 10.04
1992/93 6.51 14.39 1.38 7.88 13.01
1993/94 5.34 12.78 1.77 7.44 11.01
1994/95 4.86 12.22 5.22 7.36 7.00
Source : Bangladesh Bank and BBS.
6.4.11 The issue of tariff reduction and rationalisation will be reviewed from time to time
keeping in view the international trade scenario, balance of payments position, international
commitments and national interest. The introduction of full convertibility of Taka will also
depend on necessary supportive macro economic measures which will be undertaken during
the Fifth Plan.
6.5 Foreign Direct Investment (FDI)
6.5.1 Foreign Direct Investment has played an important role in accelerating the pace of
development in developing countries as evidenced in the Newly Industrialised Economies
(NIEs). Role of foreign private investment has assumed greater importance in recent years in
this region as the level of ODA has been declining. In fact, the share of ODA received by the
developing countries as a whole has also been declining in recent years. The prospect of ODA
in the future is also becoming uncertain. There is a general consensus on the need for larger
flow of FDI to help reach the desired level.
 120

6.5.2 With a view to improving the environment for private foreign investment, several EPZs
have been established under the Bangladesh Export Processing Zones Authority (BEPZA)
which was created in 1980. The BEPZA has already established two EPZs, the first one in
Chittagong and the second at Savar near Dhaka. The third one is being established at Comilla.
The EPZs at Chittagong and Dhaka have 96 operational enterprises. Two more EPZs will be
established, one each at Mongla and Pakshey. Besides, the areas under EPZ at Savar and
Chittagong are being expanded. Laws have been enacted enabling the setting up of private
EPZs under which a Korean company has been given permission to set up an EPZ in
Chittagong.
6.5.3 Investment totalling US $ 236.56 million has been made in the two operational EPZs
upto 1996. These zones employed 46,507 persons in their enterprises and the cumulative
exports till 1996 amounted to around US $ 1.30 billion.
6.5.4 The Board of Investment (BOI) is promoting private domestic as well as foreign
investment with support services. Potential investors, both Bangladeshi and foreign, may
register their project proposals with the BOI for facilitating provision of utilities. Previously,
prior permission was required from the government for setting up industrial units in the
private sector. From FY90 through FY96, the BOI registered 597 units for foreign investment
involving a sum of Tk.175.94 billion. Foreign investment has been showing a rising trend.
6.5.5 The Government of Bangladesh, in principle, has approved the creation of Special
Economic Zones (SEZs) in Bangladesh on the basis of a study report. The first SEZ will be
established at Chittagong and three more SEZs in Dhaka, Khulna and Sylhet respectively in
phases.
6.5.6 Foreign investment is being encouraged in almost all sectors of the economy, with
special emphasis on the following areas:
a. export-oriented industries (textiles, leather, chemicals, gems-cutting and polishing,
jewellery, etc.);
b. industries of high technology (engineering, electronics, computer software and data
entry, etc.);
c. industries based on natural resources (chemicals, power generation and distribution,
exploration of oil and gas, etc.);
d. industries based on local raw materials and agro-based food processing industries,
etc.; and
e. infrastructural facilities.
6.5.7 Important incentives for the foreign investors have been identified and will be
provided in terms of:
a. protection of foreign investment from nationalisation and expropriation;
b. abolition of ceiling on investment and equity share-holding by foreigners;
c. tax holiday of 5-10 years depending on location of industries and 15 years tax holiday
for private power generation companies;
d. avoidance of double taxation with different countries on the basis of bilateral
agreements;
e. tax exemption and duty free importation of capital equipment and spares for 100 per
cent export-oriented industries;
f. facilities for easy repatriation of invested capital, profit, dividend, royalty, technical
fees, etc. by the foreign investors;
 121

g. tax exemption on royalty, technical know-how and technical assistance fees and
salaries of foreign personnel working in Bangladesh;
h. provision of banking facilities and other utility services on equal footing with local
investors;
i. keeping taka freely convertible for international payments in the current account ; and
j. treatment of re-investment of repatriable dividend as new investment entitled to all
these incentives.
6.5.8 The level of foreign private investment which was rather insignificant in the past has
been rising these days. The volume of FDI registered with BOI rose from US $25 million in
FY91 to around US $1.05 billion in FY96.
6.5.9 Since 1996, enormous interest has been shown by the foreign investors in power
generation as well as in oil and gas exploration sector. Large investment is expected in these
sectors and other areas of infrastructure development in the Fifth Plan period.
6.6 Financing of Private Investment
6.6.1 Both commercial and development financing institutions (DFIs) are involved in
providing both short and long term credit to finance private investment (Table 6.8).
Table 6.8
Term Loan and Working Capital Financing by Scheduled Banks and DFIs
(in million Taka)
Year Term Loan Working Capital Disbursed Term
Loan as % of
Sanction Disburse- Disburse- Sanction Disburse- Disburse- Disbursed
ment ment as % ment ment as % of Working Capital
of Sanction Sanction
1990-91 3,965.30 3,580.10 90.29 19,393.00 19,051.40 98.24 18.79
1991-92 3,453.10 3,282.40 95.05 23,053.80 22,913.30 99.39 14.33
1992-93 10,746.70 7,191.90 66.92 28,837.30 28,310.20 98.17 31.39
1993-94 22,123.70 13,881.70 62.76 41,942.40 40,711.80 97.07 34.10
1994-95 34,906.70 22,140.30 63.42 43,712.00 42,251.30 96.66 52.40
1995-96 16,212.00 11,338.10 69.95 39,528.70 41,320.30 114.58 27.44
Growth 32.53 25.93 - 15.31 16.75 -
Rate
Source : Bangladesh Bank.

6.6.2 Over the period 1990/91 to 1995/96, disbursement of term loans increased at 25.93
per cent per annum, while that of the working capital grew at a rate of about 16.75 per cent. In
fact, since 1992/93 the term loans sanctioned and disbursed annually doubled and tripled
respectively. Credit (both term loan and working capital) boom reached its peak in 1994/95
but subsequently subsided dramatically. Such a decline may be attributed to measures to
combat inflationary pressure arising out of an over extension of credit. Despite rise in
disbursement of institutional credit to the private sector in the early 1990s, conflict of
interests stood in the way of efficient allocation of resources. The weakness in financial
system precluded it from playing its due role efficiently allocating credit for a healthier
private sector growth and investment. Along with the growth of institutional term loan, the
capital market did not grow. Actual cost of term credit turned out to be quite high. Term
credit more often than not was not matched by credit for working capital. Because of these
 122

inadequacies and lopsidedness of the financial system the need of the private sector could not
be met adequately.
6.6.3 During the 1990s, the share of credit to the private sector has ranged between 66 and
73 per cent of the total credit. The total quantum of credit appears to be adequate but because
of the aberrations in the functioning of the financial sector, the credit was not always
channelled to the deserving investors.
6.6.4 The banking system has occasionally suffered from periods of excess liquidity and
shortages which are symptoms of response weaknesses and fundamental imbalance in the
financial system. Non-payment of loans turned out as a serious problem affecting the sector.
The amount of overdue loan in the banking sector as on 31 February 1997 was Tk.140 billion
of which about 8 per cent of defaulters accounted for about one-third (Tk. 50 billion) of the
liability. About 90 per cent of the over-due loan (Tk.126.28 billion) amounted to 41 per cent
of the total loan and advances by the commercial banks implying a locked-in-rigidity of the
system as a whole. A continuance of such a situation has come to threaten recycling of funds
and has become an enormous impediment to resource mobilisation. Besides, the issue is
latent with serious equity implications having elements social destabilisation.
6.6.5 Efforts are being made to introduce financial discipline in the banking sector since
1996. Tk.15.92 billion was recovered from the defaulters during January-March, 1997. The
government has constituted a Bank Reform Committee for streamlining the operation of the
banking sector. A Bankruptcy Law has been enacted and Financial Loan Courts strengthened
to recover overdue loans from the defaulters. The Bangladesh Bank is monitoring the
recovery programme. A task force has been set up in the Bangladesh Bank as well as for each
nationalised commercial bank to oversee collection of overdue loans. It appears that loan
recovery rates are higher amongst the small borrowers in contrast to rates accounted by the
large borrowers.
6.6.6 Financing of private investment in rural areas has been a major focus of lending policy
in recent years. Historically, the financial sector has failed to provide adequate credit to the
private enterprises in both farming and non-farming sectors of the rural areas. In recent years,
the rural credit disbursement has picked up with the Grameen Bank playing a pioneering role
in the area of collateral free banking in the rural area.
6.6.7 Capital market : Funds are mobilised through the capital market through floatation
and trading of listed shares, debentures and mutual fund certificates. Historically, the stock
market has not played a significant role in the mobilisation of resources for financing
investment in Bangladesh. The bulk of financing for long term investment has been provided
by the commercial banks and DFIs as term loans. Raising resources through floating of
shares, however, is usually cheaper than borrowing from banks because such floatation saves
the cost of intermediation. In practice, this is available only to very large scale enterprises.
The smaller or green field enterprises usually do not find the capital market, as it is now, a
cost effective source of capital.
6.6.8 There are at present two stock markets in Bangladesh, one in Dhaka and the other one
in Chittagong. The Securities and Exchange Commission (SEC) was established under the
SEC Act, 1993. It is a central regulatory agency overseeing the activities of the entire capital
market including issue of capital, monitoring the issue of stocks and operation of the stock
markets. The SEC has also a mandate to protect the interest of investors in order to speed up
the industrialisation process, and to this end, new measures are underway to strengthen the
 123

role and capability of the SEC. The Commission constituted to investigate the activities and
irregularities of the SEC during 1997 has submitted its report. Such actions including steps
taken to inject professionalism and transparency into the working of the SEC will build up
trust and confidence of the investors and help raise funds for investment.
6.6.9 Steps have been taken to set-up a National Stock Exchange (NSE) recently. Provision
will be made to integrate the operation of two stock exchanges with NSE. Riding in a bullish
wave in 1996, the stock markets turned fairly bearish at the end of 1997.
6.7 Development of Private Sector During Fifth Five Year Plan
6.7.1 Introduction: During the Fifth Plan, the private sector will be the main engine of
growth. The public sector will act both as a promoter and as a partner rather than just as a
regulator and will facilitate the growth of the private sector by providing improved physical
and socio-economic infrastructure through regulatory and effective policy support measures.
6.7.2 Basic approach to private sector development: The Fifth Plan provides a broad
canvas and a framework in which the private sector can play an effective role in the
development process for which an indicative guideline is given. The government will take
steps to ensure the creation of an enabling environment through legal and administrative
measures and infrastructure support so that the private sector can function and contribute
according to its potential. The impressive growth registered by many high performing
economies including that of East Asian ones has brought into focus some essential
ingredients for development, namely the need to have a liberal market oriented export led
strategy along with the involvement of the government to provide necessary catalytic and
effective support. The government may, where it is considered necessary, also participate in
investment projects along with the private sector. Such ventures will normally be limited to
areas where private sector is not forthcoming or where the government's presence is desirable
as a support to the private sector.
6.7.3 Efforts will be made through adoption of a comprehensive and meaningful training
programme to increase the level of efficiency in management, marketing and operation.
Public awareness of this important ingredient of development will be generated through
intensive public campaign and involvement of educational institutions. In potential export
areas, special programmes for technology development and diffusion will be undertaken by
technical institutes like textile, leather and ceramics, jointly supported by the government and
the private sector.
6.7.4 The process of reform will be further intensified with the focus being sharpened on
essential aspects. Since continuity of reforms along with adjustment of policies, is essential
prerequisites for development and investment, the government will endeavour to forge
consensus on basic and contentious issues. The process will involve meaningful interaction
with the various chambers of commerce and industries and associations including FBCCI and
public representatives. This will provide confidence and help businessmen and investors to
plan for a longer period.
6.7.5 Steps will be taken to ensure that goods and services which are marketed conform to
certain acceptable standards so as to protect consumer interests. To this end, the technical
capability of the Standard Institute will be raised and the role of the regulatory bodies
strengthened.
6.8 Agenda for Action for Development of Private Sector
 124

6.8.1 During the Fifth Plan, provision of stable macro environment for efficient operation of
the private sector will be high on the agenda. Monetary and fiscal policies will be so moulded
and reformed as to maximise incentives to the private sector. Financial sector reforms will be
accelerated to establish a viable financial sector. Trade policy will aim at reducing protective
barriers for exports and enchancing incentives to exporters. The government will increase
infrastructural support to the private sector.
6.8.2 Domestic market distortions will be removed to promote competition in both
commodity and factor markets. For this, process of privatisation will be accelerated. Reforms
of various macro and trade policies, industrial regulations, labour laws, institutions (such as
trade unions) etc. will be undertaken to bring about flexible commodity and factor markets so
necessary for growth of the private sector.
6.9 Macro Policy Reforms During Fifth Plan
6.9.1 Policies during the Fifth Plan will be designed to ensure a stable macro economic
environment conducive to the development of the private sector. The fiscal regime will be
further reformed keeping in view the twin objectives of reduction in government current
consumption and increasing efficiency of resource allocation. Evidence from the
neighbouring countries shows that appropriate resource allocation policy can also ensure
resource mobilisation. As such, during the Plan period, the objectives of the fiscal policy will
be to involve, through dialogue, the private sector so as to improve the efficiency of resource
allocation and in the process, contribute to the mobilisation of domestic resources.
6.9.2 During the Fifth Plan, improvement in tax administration will be accelerated.
Research oriented technical assistance for the NBR will be provided and improvements will
be monitored using performance indicators. In particular, the corporate income tax rates will
be lowered in order to maximise incentives to private investment, functioning of Duty
Exemption and Drawback Office(DEDO) will be improved and tariff regime fully
rationalised to remove anti-export bias.
6.9.3 A system of overall low tax rate will be complemented by specific investment
incentives such as accelerated depreciation or tax holidays. Tax administration will be
reformed to increase the confidence of investors. Extension of the coverage and improvement
of collection of taxes will also be made so that further trade liberalisation and tariff
rationalisation may not reduce the contribution to the exchequer. The coverage of VAT will
be expanded after due study and anomalies will be removed to avoid any cascading effect.
6.9.4 Monetary, fiscal and trade policies are interlinked and need to be co-ordinated in order
to ensure that targeted rate of growth is reached. Improved interaction and co-ordination of
these policies amongst the Ministries of Finance, Commerce, Industries, NBR, Planning
Commission etc. will be a definite steps to this end. This will also give a objectives as well as
to positive signal to the private sector. The monetary policy will be reviewed to ensure
supportive role in terms of investment facilitative monetary aggregates in reaching the
targeted objectives. Bangladesh Bank will foster the development of secondary capital
market, improve auction mechanism for its bills and also take measures to ensure efficient
management of reserves.
6.9.5 With a view to encouraging private enterprise the government will provide
infrastructural facilities. To attract more private investments in infrastructures, their
operational problems will be reviewed and steps taken to mitigate them. More specifically,
during the Plan period. the government will:
 125

a. continue and accelerate telecommunication sector reforms to allow greater

participation of the private sector in telecommunication;
b. accelerate reform in the power sector to enable private sector investment in power
generation and distribution;
c. continue and accelerate reforms in the oil and gas sector including divestiture of
share of gas companies and development of gas fields by the private sector;
d. allow private investment not only to develop new port infrastructures, but also to
allow handling within the existing port facilities and to come forward for air cargo
handling; and
e. encourage private sector investment in physical infrastructures such as roads,
highways, bridges, tunnels, flyovers, housing and real estate, etc.
6.9.6 During the Plan period, the government will press ahead with reform measures so as to
raise the rates of savings and private investment through efficient allocation of resources. For
this purpose, spread between the cost of fund and lending rate will be reviewed early in the
Plan period. Policies will be adopted to make the money market more competitive so that the
spread is commensurate with efficient operation in the money market. With the completion of
the first phase of the FSRP, the government will consider reform measures in areas such as
Bangladesh Bank’s monitoring and supervision capacity, loan classification and provisioning
guidelines, loan defaults; bank restructuring, procedural improvements and training needed
to establish the viability of publicly owned and private commercial banks; non-performing
SOE loans, development of investment companies and innovative financial instruments. The
process of rationalisation and consolidation of the NCBs will be continued and their
unprofitable branches will be replaced with viable alternative banking services. The
Bangladesh Bank will ensure, through regulatory means, better internal governance in private
banks. The issue of providing autonomy to Bangladesh Bank within a framework of
accountability will be addressed during the Plan. The government will establish a separate
development financing institution (DFI) in the northern region of Bangladesh as well as a
bank for financing and supporting self employment. The major objective of reforms in the
financial sector will be directed at financial deepening of the economy, creating transparency
and sustaining accountability and augmenting confidence of the people in the financial system
and institutions.
6.9.7 In the Plan period, diversification of savings instruments will be encouraged. Savings
and loan associations and investment and leasing companies will be encouraged to be set up
in the private sector. The roles of DFIs such as BSB, BSRS and BKB will be strengthened
during the Fifth Plan. ICB will also be strengthened for bridge financing. In this regard,
commercial banks will be encouraged to provide syndicated loans. Industrial credit and
agricultural credit funds will be created up at the Bangladesh Bank to provide refinance.
Venture capital institutions will be encouraged to be established. Bangladesh Bank Credit
Guarantee Scheme will be continued and expanded. This scheme will be used to extend
credit to professional groups such as engineers, doctors, academicians etc. for setting up
enterprises/institutions for both manufacturing and services industries. Bangladesh Bank
will establish an Export Credit Fund to operate on a matching grant basis to support
upgrading of export product lines. Capital market will be further developed during the Plan
period. Investment in all types of financial instruments will be made tax free. At the same
time, strictest measures will be taken to eliminate the propensity to default. To this end,
amongst other steps, a special task force will be set up in the Bangladesh Bank to deal with
the top 100 wilful defaulters. Simultaneously, measures will be taken to ensure the
 126

elimination of transaction costs which increases the actual cost of funds and to free bank
management from the stigma of such allegations.
6.9.8 The issue of privatisation of nationalised commercial banks will be reviewed during
the Plan period. Specialised institutions such as the Grameen Bank and Palli Karma Shahayak
Foundation (PKSF) will expand their scope of operation during the Plan period for which
government will provide adequate support.
6.9.9 Microcredit: The Fifth Plan recognised that the poor are assets rather than liabilities
and, if ensured access to vital inputs like credit, they can contribute substantially to the
growth process. As such, there is a necessity for implementing the philosophy of microcredit
concept. The importance of micro lending has now been recognised world wide leading to
World Microcredit Summit in February 1997. The declaration of the Summit called for the
creation of an institutional capacity to reach the very poor in the developing countries by
strengthening existing microcredit, savings and business development institutions through
networking and exchange of experience. The Summit estimated that 21.6 billion dollars will
be required to meet the needs of the poor all over the world upto the year 2005. Microcredit is
a major means of financing private sector investment in the rural areas in Bangladesh.
Grameen Bank, Government institutions such as BRDB, PKSF etc. and several NGOs such as
BRAC, PROSHIKA, ASA and MIDAS are involved in this process. The recovery rate for
institutions such as Grameen Bank and BRAC are commendable. However, the impact of
these institutions on the economy as a whole is still limited. Grameen Bank has been able to
develop a successful delivery mechanism for provision of microcredit, mainly for the
development of non-crop farming and off-farm activities. Bangladesh Krishi Bank is another
specialised financial institution delivering credit for farming activities. Several other
parastatals are also involved in extending credit mostly to the agricultural sector.
6.9.10 In the Microcredit Programme during the Fifth Plan, one of the major priorities of the
government will be to reinforce its efforts to generate employment opportunities and self-
employment at the grassroot level, particularly in the rural areas through nation wide
campaign and provision of support services for development of small and micro enterprises.
The Plan envisages to develop a productive micro-enterprise sub-sector to provide profitable
self-employment to the rural people supported by public and private sector institutions.To
attain these objectives in the Plan period steps will be taken to:
a. establish a separate credit line in the banks and financial institutions for the micro
enterprises and entrepreneurs and to develop sustainable programme of services to
meet the credit needs of micro entrepreneurs and to facilitate their access to
financial resources for investment in micro enterprises;
b. establish viable micro enterprises through rural family entrepreneurs by providing
counselling and other advisory services from the relevant government and non
government institutions and organisations;
c. undertake programmes for skill development through training and dissemination
of technologies at the grassroot level;
d. establish private sector financial intermediation services to develop the market for
credit to micro entrepreneurs; and
e. develop replicable models for micro enterprises which can be disseminated for
adoption throughout rural Bangladesh.
6.9.11 The Fifth Plan seeks to create enterprise ownership and employment opportunities to
enable the rural and urban poor and the unemployed to break through the vicious circle of
 127

poverty. The target group for ownership/operation of micro enterprises will cover, but not be
limited to, the following:
a. Owners/operators of existing micro-enterprises who have proven managerial and
technical skills in self-employment and who wish to expand, upgrade or diversify
their business;
b. Family entrepreneurs interested in starting a micro enterprises;
c. Persons who have acquired the capacity to operate micro enterprises through
apprenticeship or working as skilled labourers and who will like to start their own
business;
d. Persons capable of running poverty alleviation schemes like those supported by
different institutions including NGOs in related sectors and interested to expand
their ongoing small income generating activities; and
e. Unemployed graduates of universities, polytechnics, and monotechnics, or of the
youth training institutions seeking self-employment in preference to wage
employment and who are interested and capable of starting commercially viable
micro enterprises.
6.9.12 Trade policy reforms: The Fifth Plan will follow an outward looking development
strategy with export as an engine of growth. Import liberalisation will continue within an well
defined time-frame in order to accelerate economic growth. For this purpose, the reforms in
the trade policy, which have boosted exports in the recent past, will be further intensified
during the Plan period. Protection will be provided through tariff adjustment rather than
import control which will be phased out within a practicable time-frame. The tariff schedule
will be reviewed and the rate and structure determined by government’s overall objectives
including the need to generate resources, encourage competitiveness and efficiency and to
ensure supply of raw materials at world prices to promote local industries. The Import and
Export Policies will henceforth be formulated for five years instead of two years with
provisions for annual review to provide stable long term perspective for investors and the
business community.
6.9.13 The government will create an enabling atmosphere for the growth of local industries
by rationalising the tariff structure, encouraging their adoption of quality control measures
such as ISO 9000 and ISO 14000, safeguarding them from unfair foreign competition through
actions compatible with WTO trade regime and providing incentives to raise overall
efficiency and productivity in the industrial sector. Measures will also be taken to protect
consumer interests by maintaining adequate supply through import of goods.
6.9.14 Export credit will continue to be provided and steps will be taken to increase its
coverage and intensity. The need to set up an EXIM bank along with facilities to disseminate
information pertaining to trade will be examined. The support given for the export sector will
be reviewed periodically and further measures consistent with WTO regulations will be
adopted. These will include a variety of concessions including simpler duty drawback system
so as to provide exporters with imports at world prices.
6.9.15 An appropriate policy regime will be created for exchange rate management with the
objective of maintaining adequate reserves and competitiveness under the flexible exchange
rate policy.
6.9.16 Privatisation of SOEs : The process of privatisation will be accelerated during the
Plan period and will involve the main stakeholders so as to realistically determine the goals
and strategies for privatisation including various options (e.g. open tender, worker buy out,
 128

sale to strategic investors, liquidation, etc.) and arrangements for protection of labourer’s
interest and severance payment. Institutional reforms such as revision of the mandate and
improvement of technical capabilities of the Privatisation Board will ensure achievement of
such objective. A comprehensive privatisation law, taking care of the legal rights and
obligations in so far as they relate to the privatisation process including indemnification of
personnel for acts carried out in pursuit of their assigned responsibilities, will be enacted. The
process will be completed by the year 2000 with intermediate annual targets. A special
cabinet sub-committee will be set up to deal with and decide on privatisation issues. The
policies will be adopted to ensure that the units to be privatised are sold outright rather than
under instalment system. There will be progressive unloading of shares of the SOEs on the
stock market and the workers of the privatised enterprises will be given the option to own and
manage such units. The intensification of reforms relating to macroeconomic stability, legal
system etc. during the Plan period is expected to contribute to the privatisation programme.
6.9.17 Provision of incentives to private sector: In addition to the supportive measures
indicated the government will continue and provide and also examine the possibility of
strengthening the incentive package for the development of the private sector during the Plan
period taking into account facilities and incentives provided by other countries in the region.
Steps will be taken to speed up establishment of special bonded warehouse facilities and to
develop the existing export processing zones, which eventually will be integrated into the
economy of the country. Improvements will be made in the functioning of the DEDO and
new and revised flat rates will be introduced in response to demand. Further, such duty
drawback will also be made available for those who supply inputs to exporters. No tax will
have to be paid on amount which is reinvested from income of earlier investment. Any
investment in manufacturing and investment in R&D will be made tax free. The export
diversification will be encouraged through a professionally managed scheme for product and
market development. The Export Promotion Bureau (EPB) will be streamlined so as to make
it less regulatory and to increase its supportive role. In this context, formation of an Apparel
Board will also be considered.
6.9.18 Legal reforms: The Fifth Plan recognises that an important pre-condition for greater
private sector involvement will be the maintenance of the law and order. Creation of national
awareness of this precondition and adoption of appropriate measures to fulfil this will be
given priority by the government during the Fifth Plan. Law enforcing agencies will be geared
up and strengthened during the Fifth Plan so as to create a safe and conducive environment
for the private sector.
6.9.19 For development of an effective private sector, the legal system has to ensure the
private property rights and enforcement of contractual obligations. For this, the adjudication
process of commercial disputes will be quickened and bilateral settlement and arbitration
rather than court based adjudication will be encouraged. Small causes courts will be set up to
facilitate quick disposal of cases of small investors and traders. The work of the Law
Commission will be expedited during the Plan period. The Commission will be asked to
expedite recommendations, amongst others, on strengthening the legal and regulatory
framework including improvement in business related laws, improving the alternate dispute
resolution mechanism and drafting and vetting capacity of the relevant Ministries.
6.10 Projection of Private Investment During Fifth Plan
6.10.1 In view of the intensification of private sector oriented reforms, it is anticipated that
the private investment will increase substantially during the Plan period. An amount of
 129

Tk.1100.58 billion (56 per cent of the Plan outlay) has been projected as private investment in
the Fifth Plan (Table 6.9).

Table 6.9
Projected Private Investment During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Sector 1996/97 Plan Projection Percentage Share
(Bench mark)
Agriculture 16,029 119,864.31 10.89
Manufacturing 33,431 298,776.16 27.15
Power, Gas and Natural Resources 2,749 37,726.07 3.43
Housing and Construction 23,814 180,017.61 16.35
Transport and Communication 18,777 118,876.80 10.80
Trade and Others 44,422 345,321.15 31.38
Total of All Sectors 139,222 1100,582.10 100.00

Note: The projection of private investment is indicative only. Sector wise private investment has been made
on the basis of past trend of investment and its prospect during the Plan period

6.11 Private Investment in Agriculture

6.11.1 The bulk of the investment in agriculture sector is expected to be in the private sector.
The basic thrust during the Plan period will be to increase the growth of private investment in
both crop and non-crop sub sectors. For this purpose, provision of strategic inputs like credit
through the banking system as well providing information on market and technology through
the public extension services will be ensured. Some specialised extension activities such as
those related to fruits and vegetables enterprises will be transferred to the private sector.
6.11.2 The public sector will provide infrastructure and support services including promotion
of access to foreign markets, technology and capital. The government’s major contribution to
the development of infrastructure in the agriculture sector will be in the area of research and
extension, provisions of quality seeds and creation of large scale irrigation works and
barrages during the Plan period. One of the major efforts in this area will be the construction
of the Ganges barrage. However, such activities in the irrigation sub-sector will depend on
riparian agreements. Agreement on water sharing of the Ganges has already been signed with
India. Efforts are underway to conclude more of such agreements in respect of the remaining
53 common rivers. Private investment in small irrigations will increase as and when such
riparian agreements are reached and major flood control and irrigation works are completed
by the public sector.
6.11.3 The main thrust of private investment in agriculture during the Plan period will be the
attainment of food self-sufficiency, crop diversification and acceleration of investment in the
livestock, fisheries and forestry sub-sectors. Special attention will be given to the
development of poultry. Mechanisation of agriculture will be encouraged through tax
incentives. Development of food storage and marketing facilities will receive priority through
proper incentives and support. Adequate technical, material and financial support as well as
training on various activities of these sub-sectors will be provided. The production of seeds
 130

and feed, streamlining marketing, increasing credit and strengthening disease control, etc. will
also be given to the private sector so that the growth of agriculture can be raised significantly.
The technology packages so far developed will be implemented during the Fifth Plan. About
10,000 entrepreneurs will be trained in the Plan period. Some productive livestock farms set
up in public sector will be transferred to the private sector. In the area of forestry, investment
in agro as well as in social forestry will be encouraged.
6.11.4 Particular attention will be given to the improvement of the delivery system for
distribution of strategic inputs, especially micro credit. Of the support services, government
will particularly focus on provision of marketing assistance to the farmers. Building of
storage facilities will considerably benefit those, particularly the poor farmers, who are
involved in the crop sub-sector. Participatory approach will be followed during he Plan period
in the implementation of the public programmes with full participation of local government
bodies. Unemployed youths will be trained in installation and maintenance of small irrigation
equipment.
6.11.5 Co-operatives have been working in rural development drawing inspiration from the
success of the Comilla Academy approach. While there are many success stories, the co-
operative system has, however, not expanded to the desirable extent nor the objectives have
been reached. Failure to give due priority to such institutions as well as their management are
the major reasons for such shortfall in performance. The present government intends to focus
substantially on the development of co-operatives during the Plan period. The strengthening
of such institutions will enable them to spur the growth of private investment in the rural
economy and help attain poverty alleviation.
6.11.6 Several NGOs are also working in the field of agriculture, specifically in the areas of
livestock, fishery and forestry. Many NGOs- such as BRAC, PROSHIKA, ASA, IIRD and
GSS are at present providing microcredit to the people in the remote areas of the country for
investing in income generating activities. These NGOs have achieved commendable success
in service delivery. During the Plan period, attempt will be made to co-ordinate the activities
of the government, NGOs, and co-operatives in order to minimise overlap of efforts of the
various relevant institutions. Comprehensive participatory local level plan will take into
account the linkages between these programmes.
6.11.7 The poor and the disadvantaged groups who are to be organised by the local
government bodies, co-operatives and NGOs are going to be the main agents as well as the
main beneficiaries in the local level participatory planning process. In order to assist the poor
and the landless to benefit from such programme aimed to integrate them with the market
process, government resources like khas land and jal-mahal will be distributed among them.
6.11.8 The issue of falling profitability (as revealed in the IBRD Report of 1995) in the crop
sector will be addressed during the Plan period. An Agricultural Price Commission will be
formed to formulate price policies. At the same time, the feasibility of agricultural insurance
will be explored in order to minimise the impact of natural calamities in the volatility of
income in the agriculture sector and welfare of rural households. Such measures are expected
to contribute to the growth of private investment in the sector and reduce the risk of the
banking sector as well.
6.11.9 In view of the success of the privatisation of agricultural input distribution during the
past plan periods, efforts will continue in the same direction during the Fifth Plan. While
privatising any activity or enterprise, special attention will be given to the workers/employees.
 131

They may be involved in management and ownership of the privatised enterprises. Proper
studies will also be undertaken in order to determine the time-frame for the implementation of
privatisation in the sector. As a result of government policies, private investment in
agriculture is projected to be around Tk.120 billion during the Plan period.

6.12 Private Investment in Manufacturing

6.12.1 During the Fifth Plan, highest priority will be accorded to the development of private
investment in manufacturing. At the same time, efforts will be intensified to reduce the direct
involvement of the public sector in production activities. For this purpose, the privatisation
process will be accelerated and further extended to some other areas. Intense efforts will be
continued to encourage FDI in manufacturing.
6.12.2 Government's role will be limited mainly to that of a facilitator and creator of an
enabling environment wherein the private sector can operate and flourish. As discussed
below, various institutional improvements will be made in the organisations like BOI, EPB,
BSCIC, etc., to facilitate private investment. The government will strongly stress on the
acquisition of information on market and technology and disseminating them to the private
sector. Adoption and adaption of technologies through R&D efforts will be focused.
Feasibility study for setting up of an institution like Korean Institute of Advanced Science
and Technology (KIAST) will be undertaken during the Plan.
6.12.3 Thrust sub-sectors have been identified within the overall framework of an industrial
strategy emphasising export-oriented and efficient import-substituting industries. In this
context, private investment will be encouraged amongst others in the following sectors:
a. Textile industries: Private investment in the textile industries will be encouraged
with particular emphasis on improvement of quality through technological
improvement. This will be done not only with a view to maximising the backward
linkage of ready made garments (RMG) manufacturing but also to enabling the
exports of fabric and yarn. In view of the impending phasing out of MFA, efficiency
of the private sector has to be increased through providing information and training,
access to developed technology and effective marketing strategy. A new important
dimension of RMG will be production and export of high value garments. For this
purpose, necessary incentives, including import of specialised fabrics and materials,
will be provided. Private investment will be encouraged in fashion industries and the
government assistance will be provided in organising fashion shows of Bangladeshi
products abroad. Setting up of schools of textile design teaching computer aided
design (CAD) and computer aided manufacturing (CAM) will be encouraged in the
private sector during the Plan period.
b. Leather and leather goods industries: Investment in the form of foreign direct
investment and joint ventures in this sector will be encouraged on a priority basis
because of its tremendous export potential. Like textiles, this sector is closely linked
to the international market. Similar assistance, as given to the textile, will also be
extended to this industry.
c. Computer software development data entry and data processing industry: In view
of large international trade volume in the area of software development, data entry and
data processing, private investment will be encouraged and accorded priority. This
industry has an enormous potential for generating foreign exchange and employment.
 132

In order to facilitate private investment in this area, steps such as development of

appropriate manpower, extension of telecommunication services, including leasing
out of V-SAT channels at reasonable costs, provision of bank loans and fiscal
incentives, etc., will be pursued during the Plan period. To facilitate rapid investment
in these activities, exclusive zones will be established in selected locations within a
short time. Guaranteed infrastructural facilities such as electricity and
telecommunication will be provided in these zones.
d. Electronics industry: Investment will be encouraged in electronics industry in view of
its import substitution as well as export potential. Many such industries have been
relocating from developed regions of the east, particularly Japan in labour abundant
country. Semi-conductor is a large industry and is relocating. The strategy for
encouraging FDI will take such factors into account. Planned efforts will be made
during the Plan period to attract FDI to this sector. Electronics industry is quite
amenable to sub-contracting. Hence, during the Plan period, linkages will be
developed between small enterprises and large industries. This will be important from
the point of view of poverty alleviation objectives.
6.12.4 Selected agro-based industries, relating to fish, vegetables, fruits and flower, etc., will
be developed in view of growing international demand for such products. As these are
perishable goods, exports of these will benefit from recent decision to privatise air freight.
Deregulating air freight services will allow private cargo carriers to compete with the national
carrier and ease the constraints on transportation of high-valued but fragile agricultural
exports.
6.12.5 In view of their export potentials, growth of jewellery, printing and publishing,
handicrafts, etc. will be encouraged.
6.12.6 Because of lack of an enabling environment as well as other reasons including
inappropriate policies in the past and economic changes, many industrial units have become
economically sick. Some of the industries affected are: steel, leather, chemical, jute, food and
allied, rubber, pharmaceutical, textiles industries and handlooms. The issues pertaining to
sick industries constitute an important element in the context of industrialisation of
Bangladesh. Steps will be taken to rehabilitate those industries which are likely to become
viable through reasonable investments. The possibility of creating a Sick Industry Fund for
the purpose will be examined.
6.12.7 During the Plan period, strong emphasis will be given to the development of small
and cottage industries with the objective of achieving balanced regional development. It is
anticipated that such industries will also contribute to export. BSCIC will be strengthened to
facilitate such development.
6.12.8 In view of the emphasis placed on industrial development, it is projected that the
private investment in manufacturing sector during the Plan period will be around Tk.299
billion in which the share of small and cottage industries will be 40 per cent of the sectoral
total.
6.13 Power Gas and Natural Resource
6.13.1 Power, gas and natural resources sector has been basically in the public domain in the
past. Recently, the government has decided to involve the private sector in the development
of hydro-carbon resources on a large scale through participation of international oil
companies (IOCs) under production sharing contracts. Several contracts and MOUs have
 133

been signed with the private sector for the exploration of gas and for expanding power
generation. Although activities of the local investors in this field will be limited and be
mainly in distribution, they will gain experience during the period. In view of the government
efforts, it is anticipated that private investment, particularly foreign private investment, will
increase substantially during the Plan period and it is projected that in this sector such
investment will be around Tk. 38 billion.
6.13.2 South Asian Triangle has huge potential for development of power and natural
resources. However, collective efforts are needed to harness this potential. The leaders of all
the neighbouring countries have already recognised the role of sub-regional cooperation in the
development of this sector. Efforts will be made to undertake joint venture projects in this
context.
6.14 Housing and Construction
6.14.1 In view of large population, intensification of growth process and growth of
population, the pace of private investment in housing and construction is going to increase
during the Fifth Plan. During the Plan period, the involvement of the private sector/NGOs
will be expanded to include slum improvement, waste management, sanitation, roads, water
supply, flood control, development of markets for district towns and thana centres. Private
sector participation in both the urban and rural housing. particularly low cost housing, will be
encouraged through incentives, targeted loans and infrastructural support. Private investment
will be encouraged in the production of construction equipment and materials, sanitary
fittings including latrines by providing credit and technological support. Private sector/NGOs
will be encouraged to develop and run tourist sites and other facilities.
6.14.2 The role of the commercial banks and financial institutions including House Building
Finance Corporation(HBFC) has been quite significant in the past. The HBFC has provided
considerable amount of credit in urban areas. Its programme in this direction will be
continued during the Plan period. These institutions will be further strengthened so as to
facilitate private investment. In view of the Plan's objective of maximisation of social
welfare, low cost housing will receive priority in credit disbursement by such institutions.
Private sector will be encouraged to invest in housing estates to ease housing shortages.
Greater investment in turn, will enable families with modest means to purchase such dwelling
units. Improvement of quality through technological improvements without increasing cost
will be the prime objective of governmental efforts in this sector. Private investment in
research on building technology will be encouraged. The government is going to evolve and
enforce a uniform code for house building in the Plan period.
6.14.3 In view of expected high growth of the economy during the Fifth Plan and successful
involvement of the private sector in housing in the recent past, it is anticipated that the private
investment in this sector will be around Tk. 180 billion during the Plan period.
6.15 Transport and Communications
6.15.1 Although the transport sector is dominated by the private investors, adequate
investment has not been forthcoming except in the road and water transport sectors. During
the Plan period, steps will be taken to remove the obstacles to such investment in road and
water transportation.These steps will cover militant labour groups, shortage of credit and
inefficiency and corruption in traffic administration. An inter-ministerial task force will be
formed and steps will be taken on a priority basis to eliminate the negative impact of these
forces on private investments in this sector.
 134

6.15.2 In the past, air transportation was in the public sector. The government has now
opened up domestic and international routes to the private investors and deregulated the air
freight so that domestic private companies can compete with international ones. This is vitally
linked to the growth of export.
6.15.3 During the Fifth Plan, amongst others, the private sector will be involved in the
development of appropriate regulatory framework and incentive packages for its increased
participation in port development, establishment of container terminals, setting up ferry
services and procurement of container feeder vessels and mother tankers. Use of private
equipment for handling cargo will also be allowed. The possibility of forming a joint venture
between Chittagong Port Authority and a private company for operation and maintenance of a
Dredger Authority will be explored. Besides, private sector participation will be encouraged
in the following areas :
a. construction and operation of container terminals as well as bulk, break-bulk,
multipurpose berth and specialised cargo berth out-side the port protected area;
b. leasing of equipment for private handling ; and
c. construction of a deep-sea port.
6.15.4 Private sector will be encouraged to set up inland container depots(ICD). Besides, the
transportation of containers from sea ports to Dhaka will be opened to the private sector and
private investment will be encouraged.
6.15.5 At present, there are no restrictions for private companies to own and operate ocean-
going ships. Moreover, 12.5 per cent share of BSC is now owned by the private sector. There
is a programme for divesting 49 per cent shares of BSC to the private investors.
6.15.6 In the inland water transport, private sector will be involved in the following areas :
a. operation and maintenance of ferry ghats;
b. development of rural launch stations/landing stages; and
c. providing aid to navigation in inland water ways.
6.15.7 In the road transport sector, the private sector will be encouraged to invest in the
construction of road and other related infrastructures also.
6.15.8 Historically, communication has been an area dominated by the public sector and the
role of private sector in development and operation of communication has been negligible.
Since mid-eighties, initiatives were undertaken to bring private sector participation in the
telecommunications services. First private operator licence was issued in July, 1989. During
the last couple of years, the telecommunication sub-sector has been opened up for increased
private sector participation . As a result, three more private telecommunication operators were
given licenses for providing digital cellular mobile telephone services all over the country. In
November 1996, licenses for digital mobile cellular radio telephone services were issued to
three private operators in addition to the only existing cellular mobile telephone operator, to
increase competition in the sector. All these are joint venture companies between Bangladesh
and foreign partners. In addition, six private companies have started providing internet and
electronic mail (e-mail) services in the country. During the Plan period, a telecommunication
policy will be designed and formulated so as to attract more direct foreign and local
investments for building a fully digital telecommunication infrastructure in the country and
providing competitive and cost-effective services. This will include value added services like
high speed transmission cellular mobile phones, internet, e-mail, cable TV, etc. Necessary
programmes and policies will be undertaken to facilitate the development of export oriented
data entry/data processing and software industry in the private sector.
 135

6.15.9 Further steps will be taken to encourage private investment in the communication sub-
sector in terms of (a) competition for services among private cellular operators and between
the private cellular operators and the Bangladesh Telegraph and Telephone Board (BTTB);
(b) new investments creating competition between wired and private radio-based net-work.
6.15.10 In view of the privatisation efforts as well as other polices to be undertaken by the
government, the private investment in transport and communication sector is projected to be
around Tk.119 billion during the Plan period.
6.16 Private Investment in Trade and Others
6.16.1 Investment activities in these sectors include investment in trade and commerce,
educational services, health services and professional services, etc. In line with the overall
strategy to follow a private sector led-growth during the Fifth Plan, and in tune with the
tradition of the private sector's involvement in such sub-sectors, efforts will be intensified to
encourage private investment in these sectors.
6.16.2 The government will, amongst other areas, encourage private sector involvement in
trade, education and health. Further, some activities including food procurement will be
shared with the private sector. However, where welfare considerations are involved, it will be
ensured that certain acceptable standards are met through framing of appropriate rules and
regulations and their enforcement.
6.16.3 Steps will be taken during the Plan period to encourage institutes of higher learning
such as universities, medical colleges, etc. in the private sector. These institutions must
conform to acceptable standards and provide access to the poor but meritorious students.
Academicians will be encouraged to set up educational institutions in order to ensure quality
of education. To encourage private investment in education services, incentives such as
credit, land, etc. will be provided through the credit guarantee scheme currently being
operated by the Bangladesh Bank and allocation of appropriate government land by the
Ministry of Housing and Public Works and urban development organisations like Rajuk.
6.16.4 In the area of health, establishment of private hospitals, clinics, diagnostic centres, etc.
will be encouraged through deregulation and provision of incentives including reduction of
tariff on imports of medical equipment, appliances, essential medicines and chemicals for
surgery and complicated diseases. In the area of sports and culture, the involvement of the
private bodies and individuals will be encouraged through financial grants and awards and
other incentives. The affluent citizens will be encouraged to sponsor sports and cultural
activities. In the area of mass media, private activities will be further expanded through
opening such activities for investment and operation by the private sector.
6.16.5 In order to encourage tourism, development of hotels and other physical facilities in
the private sector will be given high priority. Establishment of more investment banks and
insurance companies in the private sector will be encouraged.
6.16.6 It is anticipated that due to intensification of efforts to encourage private investment in
trade and others service sectors, the total investment will be around Tk. 345 billion during the
Plan period.
6.17 Institutional Issues
6.17.1 To increase the efficiency of the labour force appropriate policies will be framed to
develop necessary skill and knowledge. The government will take the lead in initiating a
proper programme and will encourage greater participation by the private sector, as this is
expected to reflect the demand for such training more effectively. Such training programme
 136

will be adopted in consultation with trade associations, industries as well as educational

institutions including the universities. The programmes will be aimed at raising skill and
knowledge of existing personnel as well as that of the prospective additions to the labour
force. The industries or relevant trade associations likely to benefit should be made to defray
a part of the cost so as to ensure relevance and prevent wastage. A proper certification system
reflecting the proficiency acquired will be introduced and efforts will be made to ensure their
universal acceptance.
6.17.2 As the policy of privatisation will be pursued vigorously, the BOI and the Privatisation
Board will have to shoulder greater responsibility. As such, the BOI will be restructured and
staffed with additional professional personnel who will be appropriately trained. The mandate
of the BOI has to be broadened and backed by necessary regulation and administrative orders
so that its decisions are accepted as that of the government. BOI will be better equipped to
supply information and data to potential investors and has also to facilitate, through the
establishment of One Stop Cell, speedier decisions and implementation relating to the supply
of power, water and telecommunications and to ensure basic infrastructural facilities. The
Privatisation Board and the BOI will monitor implementation of the on-going projects. A
"Wing" will be set up in the General Economics Division of the Planning Commission to co-
ordinate the activities of the private sector and to review and support its performance.
6.17.3 EPB will be reorganised to enable it to play a more pro-active and supportive role for
increase of exports. This will involve collection and dissemination of information on market
and technology including providing technical assistance for new export products, carrying out
market research and support for diversifying exports both in terms of products and
destinations. There will be greater representation and involvement of the private sector in the
management of EPB.
6.17.4 Bangladesh Standards Testing Institute (BSTI) and other specialised standards setting
agencies will be strengthened to provide prompt professional services in order to ensure
quality of export to the satisfaction of buyers.
6.17.5 Institutions involved in research and development such as BCSIR, BRRI, BARC,
BIDS as well as Bangladesh College of Leather Technology, Bangladesh Institute of Glass
and Ceramics, etc. will be strengthened with the object of facilitating the development of the
private sector by undertaking relevant research and ensuring dissemination of such knowledge
promptly and efficiently. An Institute of Biotechnology will be set up to facilitate research in
various aspects of agriculture in general and food crops in particular. Further, an Institute of
Oceanography will be established to explore the ways and means of harnessing sea resources
more widely and effectively.
6.17.6 The Government will adopt measures ensuring linkages and contribution by the
different chambers of commerce and industries and associations to R&D activities.
6.18 Partnership Between Government and Private Sector
6.18.1 The Fifth Plan will develop an effective mechanism for linking various chambers of
commerce and industries and trade associations with the planning and implementing process.
The present arrangement of having dialogues with these chambers and associations will be
reviewed and joint consultative committees will be established in the relevant Ministries, for
exchange of views to review policies, projects and programmes. These committees will
resolve problems, identify bottlenecks in implementation of programmes and projects and
suggest follow up measures.
 137

6.18.2 Each ministry will prepare a plan delineating the role of the private sector in
implementing the plan objectives in its relevant sectors and will also draw up, in consultation
with the private sector representatives, the nature of government support needed to harness
resources and to enable the private entrepreneurs to play their expected roles.
6.18.3 A Council of Private Enterprises will be constituted under the chairmanship of the
Prime Minister with representatives from the private and public sectors. Minister of
Commerce and Industries will be the alternate chairman of this council. The council at the
highest level will advise the government to take such measures as will be needed over time to
bloom out private enterprise and its creativity.
6.18.4 Skill development in the private sector is a sine-qua-non for speedy development and
along with governmental efforts the private sector will also be supported to expand its
activities in this area keeping in view international and national needs. Policies will be framed
for proper certification of training received reflecting the standard of acquired proficiency and
for helping the expansion and strengthening of such institutions. Attention on adoption of
standards and quality control measures so as to keep pace with international requirements will
be given.
6.18.5 The transformation of the role of the state from one of a regulator to that of a partner
and facilitator will necessitate changes in the nature and content of the training of the civil
servants. Such changes will reflect the new dimensions that have emerged as a result of the
sharper focus on the private sector and adoption of market economy. Representatives of
private sector should regularly participate in such courses both as resource persons and as
participants.
6.18.6 The government, as a partner as well as promoter of the private sector, will reorganise
its foreign missions so that they can assist the local private investors in marketing their
products abroad. They will also provide information about market and opportunities in
Bangladesh to the prospective foreign investors.
 138

CHAPTER VII

PARTICIPATORY RURAL DEVELOPMENT AND LOCAL

GOVERNMENT INSTITUTIONS
7.1 Introduction
7.1.1 In spite of two and a half decades of economic development, Bangladesh is still
regarded largely as a rural economy. Agriculture contributes about one-third of its gross
domestic product and about 80 per cent of its people still live in the rural areas. Further, most of
the rural people are poor and disadvantaged. Their sufferings stem not only from low income
but also from illiteracy, ill-health, ignorance and various kinds of deprivations. They are
particularly vulnerable to calamities, both natural (cyclone, flood, drought, etc.) and man-made
(black marketing, hoarding, etc.). Development planners recognise that the upliftment of the
poor and backward masses is a pre-condition for the overall development of the country.
Successive five year plans of the country, therefore, emphasised rural development with a focus
on the rural poor, in one way or another. But in the implementation of this objective, the success
was rather limited due to some constraints, at the top of which was the lack of participation by
the stakeholders - the poor themselves, who hardly had any influence and control over
development initiatives.
7.1.2 Participatory development embodies collective effort by the very people, who are the
beneficiaries of development. In a well defined framework the people pool their efforts and
whatever other resources they decide to pool together to attain the objectives they set for
themselves. Participation is an active process through which stakeholders influence
development initiatives and take action that is stimulated by their own thinking and deliberation,
and over which they can exert effective control. Participation, thus, may be viewed as the
exercise of people's power in thinking and acting and, thereby, realising the essence of
democracy in conformity with the constitutional dictum that all power belong to the people.
Implicit in this concept of participation is the concept of self-reliance, if not self-sufficiency.
7.2 Some Innovative Experiments in Participatory Rural Development in Bangladesh
7.2.1 The Comilla approach in the 1960s provided the first systematic opportunity for the
small and the marginal farmers to participate effectively in the process of promoting agricultural
revolution in this country. It had four basic strategies: (a) organisation of the village people into
primary co-operatives (KSS) of their own; (b) the integration of these primary co-operatives into
the Thana Central Co-operative Association (TCCA) for credit support; (c) an extensive
extension training system through Thana Training and Development Centre (TTDC); and (d)
development of water resources (along with other inputs) for agricultural development through a
Thana Irrigation Project (TIP). Later, this institutional mechanism was modified to organise also
the poor women and the landless (in their own co-operatives) for income generating activities.
7.2.2 Based on its initial success the Comilla approach in its second phase, developed a
comprehensive thana/union development planning format with focus on optimal land utilisation
and crop diversification. The exercise was to be initiated at the village level, to be consolidated
at the union level and co-ordinated at the upazila level. During 1965-70, hundreds of officers,
people's representatives and other social workers were trained in this format. In the absence of
appropriate motivation, the system later degenerated into one dominated by the bureaucracy and
the efforts could not be consolidated and applied in full for the benefit of the poor. The Comilla
Academy has now developed another format for rural development called "Comprehensive
 139

Village Development" (CVD) programme. Under it, the village is considered as an integral
whole and all its inhabitants are brought under one umbrella co-operative for comprehensive
bottom up development. Since 1984, it has spread into 40 villages (15 in Comilla, 10 in Sylhet,
7 in Sonargaon and 8 in Burichang Thana) as an experiment of local level planning.
7.2.3 In the late 1970s, the "Swanirvar movement", like the Comilla approach, attempted (a)
to organise different interest groups at the village level; (b) represent them in an informal village
based organisation; and (c) then link them informally with the union parishad on the one hand
and the thana officials of the various ministries/agencies, on the other. Its differences with the
Comilla approach was that (a) while Comilla approach paid more attention on the small and
marginal farmers, the Swanirvar movement tried to bring all the interest-cum-functional groups
(large farmers, small and marginal farmers, the landless labourers, the women, the youth, etc.)
first under their own informal organisation and then bring them together under a village
development committee with approximately two representatives from each group. It had two
varieties: under the Sadullahpur model, the local ward member of the union parishad would
become the head of this village development committee; under the Kushtia model, the villagers
would select (on the basis of consensus) the chairman of this committee. As a model in its two
variants, it did not survive beyond early 1980s.
7.2.4 A more successful experiment in poverty alleviation that attracted attention of all in the
1980s was the Grameen Bank. Its main hypothesis was that the poor were bankable. If credit
could be advanced to them through an innovative process, they would not only repay the credit
fully as per schedule, but also simultaneously generate a dynamic process of production savings
and investment that could eventually lead them to graduate to self-reliance. More important, 95
per cent of the clientele of the Grameen Bank turned out to be women.
7.2.5 Role of NGOs at Grassroot Level Development: During this period, the number of
non-government organisations (NGOs) also increased throughout the country. The process was
helped by easy availability of donor funds for NGOs. The donors supported the NGOs to
supplement the government’s delivery system to reach the poor and to play a more creative role
to consciencetise them. This argument created an indirect pressure on the government to make
its delivery system to be more efficient. The resultant competition between the GOs and NGOs
to reach the poor brought the questions of cost-effectiveness, transparency and accountability of
using public fund under sharper focus.
7.2.6 The major activities of the main NGOs in Bangladesh can be enumerated as follows:
a. rural physical infrastructure building (food for works, canal digging): mainly by
CARE;
b. agricultural development by CARE, CARITAS, CCDB, BRAC, PROSHIKHA;
c. non-agricultural development programmes for promoting employment by the local
level organisations;
d. health, population control and family welfare programmes of FPAB, BAVS, BRAC,
Swanirvar Bangladesh, National Youth Federation and a number of women
organisations; and
e. training and education and consciencetisation programmes of BRAC, FPAB, BAVS,
IIRD, etc.
7.3 Main Constraints to Rural Development
7.3.1 In the light of experience gained in the past, the main constraints to rural development
seem to be the following:
 140

a. Although "village" was the basic geographic unit and constituted the bottom-most entity
for identification of development needs in rural areas, there was hardly any "effective
development organisation" in it. Frequently, it was held that an average village in
Bangladesh was too small to be regarded as a formal organisational unit. On the other
hand, without such an organisation, the villagers, particularly the rural poor, found it
difficult to effectively participate in the development process.
b. There are a number of government agencies for service delivery at various tiers of local
government (district, upazila and union) but, in the absence of effective "clientele"
organisations, the delivery structure had remained somewhat inaccessible and
inefficient. In particular, this system did not reach the poor and the disadvantaged in all
cases.
c. The various efforts to organise the people at the grassroot level through local
government bodies also did not succeed, as in the absence of democratically elected
government, these bodies were used to serve political interest of the power that was in
the central government. As a result, local government bodies in Bangladesh proved to be
more of an extended arm of the Ministry of Local Government and Rural Development
and Co-operative and, as such, they could not grow on their own. In particular, they
remained heavily dependent on the government for their resources and initiative.
d. The government personnel who were sent to the rural areas to work for the poor, largely
proved to be inadequately motivated for participatory local level development (for
various reasons such as inadequate training, incentive structure, logistics, etc.)
e. No effective mechanism could be developed for co-operation and co-ordination at
various tiers of administration (district, upazila and union). The need for effective co-
ordination increased overtime in response to the expansion of development activities in
the rural areas.
f. The understanding of the decision makers of the need for and effectiveness of
"participatory local level planning" was rather poor. Most development planners
(including bureaucrats and technocrats) thought that such participation was unnecessary
mainly because of ignorance and illiteracy of the poor. The usual emphasis was on the
need for educating the poor before they could effectively participate. For the intervening
period, therefore, the preference was for a top down decision making process.
g. Although there was a broad consensus that Bangladesh being a labour abundant country
should convert its surplus labour into productive capital, in practice, the decision makers
could not clearly prescribe the process through which this goal could be achieved.
h. The banking system expanded in the rural areas quite rapidly in the 1970s and 1980s, yet
heavy dependence of the rural poor on the informal sector (e.g. money lenders who
charge high interest rates) continued strangulating their creative potential to contribute
more to the national growth.
7.3.2 The inability to clearly formulate effective strategies to overcome the constraints made
the provisions of "safety net" (e.g. food for works programmes, vulnerable group development
programme, rural maintenance programme, etc.) a necessity rather than taking effective
measures for income generating activities as the main vehicle for poverty alleviation. In the
1980s, however, the poverty alleviation efforts through income generating activities of some
government agencies and NGOs multiplied but in most cases, their coverage and cost
effectiveness remained low.
 141

7.4 Strengthened Local Government Institutions

7.4.1 The present government, in compliance with the relevant fundamental principles of state
policy, in pursuance of its commitments to the nation and in following generally the
recommendations of the Local Government Commission, will establish a four-tier local
government institutions at the village, union, upazila and zilla level. These institutions will be
known as Gram Parishad (GP), Union Parishad (UP), Upazila Parishad (UzP) and Zilla Parishad
(ZP). GPs will be established in each of the 9 wards of every union of the country, while UzPs
and ZPs will be also established respectively in every upazila and zilla of the country; except
that in the three zillas of the hill-tracts area where existing ZPs will, subject to some
modifications following signing of the Peace Agreement for the hill tracts, continue to function.
UPs have been strengthened following the recent fair and impartial election. City corporations
and paurashavas have been functioning without interruption.
7.4.2 In fulfilling the commitment of the democratically elected government, each of the local
level institutions will have well-defined and extended functions to carry out. The gram
parishads, for instance, will participate in the preparation of development programmes/projects
to be undertaken for increasing production; maintenance of rural infrastructure (e.g. feeder
roads, bridges and culverts); development of local natural resource base; supervision of primary
schools, madrashas and maktabs and motivation of guardians to send their wards to schools;
creation of awareness about health and health care; implementation of drinking water supply
projects, especially regarding the selection of sites for sinking tubewells; establishment of co-
operatives/associations for carrying out socio-economic activities; collection and preservation of
vital statistics like dates of birth and death, marriages, etc.; maintenance of law and order in the
locality; undertaking socio-economic survey of households in all villages; etc. The gram
parishads will keep the union parishads posted about their functions and problems. The local
government institutions at other three levels will be entrusted with similar functions at varying
levels of responsibilities and authorities, including the authority to raise resources for financing
local level development activities.
7.4.3 Standing Committees for such fields as (a) law and order, (b) health and family
planning, (c) agriculture, irrigation and environment, (d) education, social welfare, development
of women and children, (e) sports, culture and youth development, (f) fisheries and livestock
and (g) other fields as felt necessary will be established to assist the local government bodies at
all levels in conceiving, designing, formulating and implementing local level development
programmes/projects. Priority areas of development and resource mobilisation responsibilities
and authorities will be indicated for the local level bodies.
7.4.4 Development of local government in this country brings in the concept of "devolution"
vis-a-vis "deconcentration" of decision making power into sharp focus. Under a system of
"decentralisation" based on deconcentration, the central government retains the decision making
powers; only some responsibilities for implementation of the central decisions are given to the
local authorities. In contrast, under a system of decentralisation that is based on devolution, it is
the "decision making power" that is handed over to the local government institutions by the
central government. Devolution establishes reciprocal and mutually benefiting relationships
between central and local government implying that the local governments are not subordinate
administrative units but exclusive authorities in their areas to be able to interact reciprocally
with other units of government in the political system of which they are integral parts.
 142

7.4.5 Genuine devolution must vest in various tiers/spheres of local government clearly
following delineated administrative, judicial, financial and developmental roles as envisaged in
Article 59 of the Constitution. Such devolution will not only contribute to good governance
through rational sharing of powers and responsibilities between the central government and the
local government bodies, but also lead to greater success in the management of development
programmes/projects and better delivery of services through more efficient discharge of
respective functions. Moreover, people's vote will be seen to be bearing fruits and democracy
will be seen to be functioning at the door steps of the voters when they will witness that the
representatives elected by them to the various tiers of local government are in fact contributing
to the upliftment of their lot. Needless to say, such visibility is very vital for democratic culture
to take desirably deep roots.
7.4.6 Enhanced Developmental role of Municipalities and City Corporations: In the
context of its new vision of local government, the present government will entrust the
municipalities and city corporations with enhanced developmental roles in their respective areas
of jurisdiction. In providing civic amenities to citizens, these bodies, more often than not,
depend on other agencies for building up infrastructural facilities and generation of utilities and
other services. In a departure from this age-old practice, the present government will encourage
and empower the municipalities and city corporations to undertake increasingly more
development programmes/projects for catering to the needs of citizens. They will be called upon
to monitor and oversee educational institutions as well as health and family welfare services
facilities. To enable them to meet their increasing financing needs, these bodies will be
empowered to mobilise and raise additional resources through broadening the existing base of
taxation and issue of innovative saving instruments, including bonds and debentures. They will
also be given the role of co-ordinators to co-ordinate amongst different service producers and
service providers. Towards these objectives, a substantial share of powers and authorities of
relevant ministries/divisions of the government will be delegated to the municipalities and city
corporations.

7.5 Strategies for Participatory Planning During Fifth Plan

7.5.1 Alleviation of poverty and employment generation are the central objectives of the Fifth
Plan. Given the market failure, the public sector must play the role of a catalyst in associating
the vast segment of the populace who are under privileged and often are left out of the
development process. Local level participatory planning, therefore, will start with building a
mechanism where people, at large, specially in the vast expanse of the rural areas, will provide
inputs to the planning process of the country; and people at the grassroot level, through
consciencetisation, consultation and participation, will get the scope to determine the local
needs and priorities and integrate them into an overall planning exercise of the country through
their elected local bodies.
7.5.2 Local government bodies, therefore, will be vested with roles and responsibilities with
particular focus on (a) how these institutions can be made participatory so that they will enable
the people in the local areas to provide inputs for planning; and (b) how through a process of
bottom up planning the development programmes/projects of various tiers of local government
as well as of the central government will be integrated. Towards these ends, the following
strategies will be pursued:
a. First of all, selection of an appropriate local level planning unit, either Zilla or Upazila
will be made on a careful analysis of planning capacity available at such levels.
 143

Following the decisions, Zilla Parishad or Upazila Parishad will assume responsibilities
for preparing local level development plans spreading over time as well as drawing up
annual resource use plans in line with the exercise done at the national level during the
preparation of annual development programmes. One approach which may merit
consideration is to take Zilla as the planning unit, Upazila as the key implementing
agency for local level development programmes/projects and union parishads as the
local operational and supervisory agency for projects implemented at local ambits.
Functionaries of relevant government ministries/divisions/departments posted at the local
levels will be placed at the disposal of Zilla Parishad/Upazila Parishad to provide
necessary support and assistance in these exercises.
b. Standing committees of local bodies formed at the relevant levels will be made
operational. These committees will represent the various functional-cum-interest groups
in village, union, upazila and zilla levels. They will be given the responsibility to initiate
local level plans and programmes. The outline of the village plan will be prepared by the
villagers themselves with focus on eradication of poverty among the hard core poor and
generation of employment including self-employment. The members of the village
committee may divide responsibilities of different sectors of development (education,
agriculture, tree plantation, family planning and population control, etc.) among
themselves according to the skills and clientele representations.
c. The development actors, belonging to the four spheres of local government, may be
suitably trained by academicians as well as development practitioners. The Academy for
Rural Development at Comilla, the Academy for Rural Development at Bogra, the
National Institute of Local Government (NILG), the Academy for Planning and
Development of the Ministry of Planning as well as the Planning Commission can be
pressed in to this end.
d. The process of integration of the village, union, upazila and zilla plans will be as
follows:
i. by December, Union Parishad will collect from Zilla and Upazila Parishads the
list of expected projects/programmes of the central government and of NGOs
which are relevant for the concerned areas;
ii. by March next, Union Parishads will integrate their own programmes and
projects, based on the needs and priorities of the villages under the respective
unions, with the projects and programmes of the central government and the
NGOs through a series of consultative meetings with the local functionaries of
the government and other concerned persons;
iii. at the upazila and zilla levels, these projects/programmes will be further
scrutinised to fill up the gaps in both plan formulation and implementation
strategies; and
iv. the actual implementation of these projects/programmes will start with a
participatory process from July which is the beginning of the financial year.
e. The process of organising the rural people and training them for development
activities will be reinforced by legislative support where necessary (an example of
such legislative action for development was embodied in the debt settlement
legislation in the late 1930's that substantially freed the poor peasants from the
clutches of the money lenders). For this purpose, the members of the Parliament can
take initiative on their own or Gram Parishads, through respective Union Parishads,
can give them a list for such actions.
 144

f. Preparation of local level development programmes/projects will be backed up by

supportive studies/surveys such as; (i) preparation of inventories of manpower
resources -- skilled and unskilled, with particular focus on women; (ii) preparation of
medium and long-term employment plans based on available land, capital, fiscal and
material resources for the respective locality/region; (iii) local level industrialisation
plans with emphasis on small and cottage industries; and (iv) drawing up
local/regional level resource use plans, with special attention to optimising the use of
land, within the framework of the national resource use plan.
g. The process of project preparation at the national level under the annual development
programme will be guided by the constitutional mandate for ensuring basic needs
(food, clothing, education, health and housing). Initiation of the local level planning
with Union as the focal point, on the line suggested above, will lead to the integration
of the bottom up and top down planning process.
h. A number of monitoring and evaluation teams will be set up at appropriate levels of
the planning and administrative tiers to monitor and evaluate the local level
development programmes/projects with respect to their impact and cost effectiveness
so that their qualities and implementation efficiencies can be improved in subsequent
periods.
7.5.3 The process outlined above will be refined through a process of trial and error. At the
beginning, the following steps will be in order to make the process more effective:
a. Identify the reasons for failure of self-governing local government institutions in the
past.
b. Accept Union Parishad as the focal point of local government institutions as a
necessary but not the sufficient condition for promoting bottom up planning. To meet
sufficient conditions, steps will be taken to:
i. promote devolution of decision making power in favour of the local government
bodies in areas that concern them most and make them simultaneously accountable
to their electorates;
ii. support this process through a system of social mobilisation, consultation and
training that will enable the people at the grassroots to prepare and also implement
(where possible) a bottom up plan through popular participation and community
organisations; and
iii. provide a mechanism through which this process of preparing and implementing
the bottom up plan can be linked/integrated with the different tiers of development
administration so that the local level development plans are functionally integrated
into national level sectoral plans.
c. Allocate more resources to the restructured and reoriented local government bodies
from the development budget of the central government with focus on human resource
development and poverty alleviation.
d. Understand that there has to be an effective equalisation of opportunities in favour of
the relatively poor, if the group is to be brought into the mainstream of economic
activity.
e. Reorient all financial institutions and the government and non-government agencies
involved in credit intervention in favour of the poor so that the poor receive adequate
resources through innovative programmes at reasonably easy terms for required time
 145

period; a reorientation of financial institutions and credit agencies will (i) make the
monetary sector more responsive to societal needs ; (ii) ease the present excessive
reliance on fiscal measures for resource mobilisation; (iii) motivate and activate the
informal sector for greater contribution to development; and (iv) raise the growth rate
through additional capital formation in the economy. Promotion of local level
planning is expected to facilitate the process of this orientation of financial institutions
and agency in a mutually reinforcing manner.
f. Undertake massive training of government officials, peoples' representatives and other
social workers in participatory bottom up planning.
g. Institutionalise the process of conflict resolution particularly in important fields of (i)
top down versus bottom up processes of planning; (ii) deconcentration versus
devolution of power in favour of the local government bodies; (iii) allocation of
development funds through sectoral plans versus district plans; (iv) incentive
structures favouring the relatively more efficient versus inefficient groups and sectors;
and (v) promotion of growth through structural adjustment reform programme without
disregarding social responsibility. The most optimistic element in the field of conflict
resolution is expected to be the "strategy of popular participation" because if it is
allowed to find its own course, it is expected to generate its own dynamics of conflict
resolution through a continuous process of dialogue and consensus.
 146

CHAPTER VIII
POVERTY ALLEVIATION EMPLOYMENT AND
HUMAN RESOURCES DEVELOPMENT

8.1 Introduction
8.1.1 The economy of Bangladesh with a large and rapidly growing population and low per
capita income reveals conditions of abject poverty for the majority of the people. The task
of poverty alleviation with the ultimate aim of its eradication is a challenging one.

8.2 Trend of Poverty

8.2.1 Broadly speaking, poverty refers to forms of economic, social and psychological
deprivation occurring among people lacking sufficient ownership, control or access to
resources for minimum required level of living. The low level of human resource
development in Bangladesh is a serious constraint to the development process of the country.
Measured in terms of the Human Development Index (HDI) by UNDP in 1996, out of 174
countries Bangladesh ranked 143rd in 1993. It gave a value/score of 0.365 for Bangladesh.
For some of our neighbouring countries the scores were 0.698 for Sri Lanka, 0.442 for
Pakistan, 0.436 for India, 0.451 for Myanmar, 0.332 for Nepal and 0.307 for Bhutan. Thus
among the neighbouring countries the HDI for Bangladesh was slightly better than Nepal and
Bhutan.
8.2.2 The profile of human deprivation (UNDP, Human Development Report, 1996) for
1993 revealed that 47.5 per cent of the people of Bangladesh were income-poor (head count
index) while 76.9 per cent were capability-poor (capability poverty reflects the percentage of
people who lack basic or minimally essential human capabilities considered as the capability
to be well nourished and healthy, capability for healthy reproduction and capability to be
educated and knowledgeable). This report posited that 52.85 per cent of people were without
access to health services, 63.35 per cent were without sanitation and 26 per cent of children
were not attending primary school. Regarding the trend in human development in Bangladesh
this report revealed that life expectancy at birth was 39.6 years in 1960 and 55.9 years in
1993; infant mortality rate per thousand live births, 156 in 1960 and 106 in 1993; under-
weight children as percentage of children under 5, 84 in 1975 and 66 in 1990; adult literacy
rate, 24 per cent in 1970 and 37 per cent in 1993 and gross enrolment ratio for all levels (age
6-23), 30 per cent in 1980 and 32 per cent in 1990.
8.2.3 There have been discernible improvements in some of these social indicators in very
recent years. In 1995 life expectancy was 58 years ; gross primary enrolment ratio, 92 per
cent; adult literacy 47.3 per cent; infant mortality rate per thousand live births 78; and death
of children per thousand before reaching the age of 5, 9.7 compared with 14 in 1991.
8.2.4 Narrowly defined, poverty is generally measured by the percentage of population
having income below the minimum expenditure required for meeting the basic needs. A
benchmark of the poverty situation in rural Bangladesh was worked out in 1977 classifying
absolutely poor as those who could not take more than 90 per cent of the recommended
calorie intake and extremely poor as those who could not take more than 80 per cent of the
requirement (A. R. Khan, 1977). Poverty line - I is defined as daily intake of 2122 k. cal per
person and poverty line - II which is extreme poverty is defined as daily consumption of 1805
k. cal per person.
 147

8.2.5 Poverty is widely recognised as a multi-dimensional problem involving income,

consumption, nutrition, health, education, housing, crisis-coping capacity, insecurity, etc.
However, with the exception of income (consumption) measure, long-term trend in other
dimensions of poverty is difficult to measure due to paucity of data. Focus is therefore on the
income dimension of poverty supplemented by available evidences relating to its other
dimensions.
8.2.6 The Household Expenditure Survey (HES) shows a modest improvement in poverty
by head count since the early eighties. The incidence of poverty at the national level has
declined from 52.3 to 49.7 per cent during 1984-92. The urban head count of the poor has
declined from 40.9 to 33.6 per cent, while the corresponding figure for the rural area dropped
from 53.8 to 52.9 per cent. This suggests a faster poverty reduction rate in urban areas than in
the rural. Data officially collected for a Poverty Monitoring Project (BBS) indicate that the
incidence of rural poverty stood at about 48 per cent in early 1995 which was about 5
percentage points lower than the level prevailing in 1991/92 as per HES.
8.2.7 The declining trend in income-poverty during the first half of the nineties is
corroborated by other sources of data. Panel data collected over 1987-94 for a large scale
survey ( BIDS) show that the proportion of rural poor fell from 57.5 per cent in 1987 to
51.7 per cent in 1994. An important factor behind the improvement in rural economic
conditions has been the reduction in growth of rural population due to rapid rural-urban
migration coupled with the reduction in natural growth of population. It reveals a spatial shift
in the incidence of poverty.
8.2.8 The early nineties has also witnessed improvement in terms of alleviating extreme
poverty (BIDS). The incidence of hard-core poverty (corresponding to less than 80 per cent
of minimum calorie needs) has registered a decline from 26 to 23 per cent during the 1987-94
period. This is in line with other evidences in respect of household access to bare necessities
such as shelter and clothing. The proportion of rural households living in extreme vulnerable
housing, i.e., jhupri, has fallen from 9 to 2 per cent during 1990-95. Those without minimum
clothing (having less than two sets of clothing) has declined from 15 per cent in 1990 to 4 per
cent in 1995. The proportion of rural population without winter clothing also dropped from
22 to 7 per cent during the same period.
8.2.9 Such trends notwithstanding, several areas of medium and long-term policy concerns
can be identified. First, the pace of improvement in the poverty situation is rather slow. The
average annual reduction in head count poverty was about one percentage point since the
mid-eighties which is much lower than the comparable record of 2-3 percentage points
achieved in East and South East Asian countries. This suggests the need for not only
targeting a much higher and sustained growth rate in average incomes, but also making the
growth process sufficiently broad-based, i.e., facilitating the active participation of the poor
as agents of growth. Second, the measure of progress recorded in income-measure of poverty
has not been equally matched by concomitant improvement in several crucial dimensions of
poverty such as crisis-coping capacity, improved access to quality health care, etc. Average
annual income erosion per rural household arising out of various crisis-events (such as natural
disaster, health hazard, death of earning member, etc.) constitutes about 16 per cent of
household income; for the extreme poor, the corresponding figure is as high as 27 per cent.
Lack of adequate risk-insurance mechanism coupled with limited public health care underlies
such a high burden of income erosion on the poor. This is true for the urban poor as well. The
 148

urban poor who move up the income ladder after migrating to urban areas may actually
experience deterioration in other dimensions of poverty such as lack of adequate shelter,
sanitation, personal security, active community life, etc. Third, after every statistical
adjustment has been made, the challenge of poverty in Bangladesh remains a monumental
one with nearly 50 per cent of the rural population living in poverty of which approximately
half are in extreme poverty . The sheer magnitude of poverty, particularly extreme poverty is
staggering. More concerted efforts need to be undertaken in this regard involving direct
capability-raising programmes through public education and health as well as safety net
programmes, particularly for the poorest.
8.3 Movement In and Out of Poverty
8.3.1 All poverty alleviation efforts have been singularly concerned with the poor over time.
The dynamic process of impoverisation is however more complex than caring for the poor.
There are movements across the poverty lines (BIDS: 1996). In fact, relatively more people
moved into the extreme poverty level from above than from the latter group, apparently
resulting in polarisation of the non-poor and the extreme poor in the rural areas. In 1989/90,
BIDS sample shows that the extreme poor group constituted 16.7 per cent, excluding
households (18.3 per cent) who fluctuated between moderate poverty and extreme poverty,
while 44.6 per cent were non-poor. In 1994, 17.6 per cent were in extreme poverty
(excluding fluctuating group). The corresponding percentage of the non-poor was 45.6 per
cent. Relatively more people also crossed into the group of the non-poor with the moderate
poor being proportionately less (20.4 per cent in 1989/90 to 18.3 per cent in 1994). This
movement from the moderate group is indicative of improvement in absolute poverty, while
extreme poverty seems to be growing.
8.3.2 This movement has been caused by unredeemed pressure on land due to inadequate
non-farm employment opportunities, consequent increase in marginal farming, frequent
natural calamities and above all, fluctuations in sluggish economic growth.
8.4 Causes of Poverty
8.4.1 The major causes of poverty in Bangladesh are low economic growth, inequitable
distribution of income, unequal distribution of productive assets, unemployment and under-
employment, high rate of population growth, low level of human resources development,
natural disasters and limited access to public services.
8.4.2 Low economic growth: High growth rate is conducive to efficiency and poverty
alleviation, as is evident from the experience of the high performing Asian economies which
have consistently achieved annual growth rates of 7 to 8 per cent. In contrast, during the past
two decades, Bangladesh economy has suffered from low GDP growth of 4 to 5 per cent.
This was too low a growth to lift the population, particularly the poor, to a higher level of
living. According to a 1996 CPD (Centre For Policy Dialogue) study if per capita income
were to grow at a rate of 4 per cent per year then it would take an average poor person 13
years to be lifted out of poverty. For an extremely poor person the time will be 23 years.
Many may hasten to add that growth per se is not poverty-reducing. But it is a necessary
condition though not sufficient. Growth, poverty and inequality are consequences of public
policies. If growth is based on appropriate policies inclined towards poverty alleviation, it has
the potential to reduce poverty. Participating in and contributing to such development/growth
processes, the poor may improve their situation.
 149

8.4.3 Inequitable distribution of income: The pattern of income distribution in the rural
areas of Bangladesh reflects deteriorating economic situation of the poor. It indicates that the
share of income accruing to the bottom 40 per cent of the rural households deteriorated
slightly in 1991/92 (18.96 per cent) compared to 1983/84 (19.24 per cent). The income
distribution pattern also indicates that the top 5 per cent of rural households enjoyed 17.8 per
cent of the income in 1991/92. The income distribution is presented in Table 8.1.

Table 8.1
Bangladesh: Income Distribution
Residence 1983/84 1985/86 1988/89 1991/92
1 2 3 4 5
Income accruing (per cent) to bottom 40 per cent households
Bangladesh 18.95 19.35 17.53 18.44
Rural 19.24 19.95 18.02 18.96
Urban 17.87 19.20 17.52 18.68
Income accruing (per cent) to top 5 per cent households
Bangladesh 18.30 21.36 20.51 18.85
Rural 18.14 21.36 19.81 17.80
Urban 16.93 18.04 20.02 19.42
Gini ratio
Bangladesh 0.36 0.37 0.38 0.39
Rural 0.35 0.36 0.37 0.36
Urban 0.37 0.37 0.38 0.40
Source : BBS, 1993

8.4.4 Unequal distribution of productive assets: Since land constitutes the main
component of the physical capital of the economy, particularly in the rural areas, and is one of
the major determinants of rural income, unequal ownership of, and access to land is of
particular relevance to analysing rural poverty. Available data (BBS) indicate the presence of
considerable inequality in the distribution of rural land ownership. In 1983/84 according to
the Agricultural Census, 79.88 per cent of the rural households were in the group of small
farms (0.05 - 2.49 acres of land), 16.27 per cent in the medium group (2.5 - 7.49 acres) and
3.85 per cent in the large group (7.5 + acres). In 1991/92 according to HES (BBS) the figures
for these groups were 66.64 per cent, 12.66 per cent and 3.13 per cent respectively. These
show some improvement in land ownership distribution. About access to land which is
defined in terms of operating size of farms, in 1983/84, 70.34 per cent of the total farm
households were in the small farm group covering 28.98 per cent of the total farm area; 24.72
per cent, in the medium farm group covering 45.09 per cent of the total farm area; and 4.94
per cent, in the large farm group with 25.93 per cent of the total farm area. Thus while less
than one-third of the farm households (medium and large farms) operated more than two-
thirds of the farm area, more than two-thirds of the farm households (small farms) operated
less than one-third of the total farm area. But access to land through tenancy arrangement was
very limited in 1983/84. Only 8.26 per cent of operating farm households were accounted by
households who owned no land, but most of them operated very small farms. About 86.24 per
cent of them operated less than half an acre and 91.7 per cent less than one acre. Though land
is the most valuable physical capital for the rural economy, non-land resources like
 150

technologies, skills and credit are gaining importance. But the poor have limited access to
these for lack of education.
8.4.5 Unemployment and under-employment: Unemployment and under-employment are
essentially at the root of poverty. The unemployment and under-employment situation is
presented in Tables 8.2 and 8.3.
Table 8.2
Unemployed Population Aged 10 Years and Over
Locality Both Sex Male Female
No. of Unemployment No. of Unemployment No. of Unemployment
unemployed* rate unemployed rate unemployed rate
population (‘000) population population
(‘000) (‘000)
Bangladesh 1417 2.5 931 2.7 486 2.3
Urban 455 4.5 324 4.4 131 4.6
Rural 962 2.1 607 2.2 355 1.9
Source : BBS, Labour Force Survey (LFS) 1995/96
*A person of age 10 years and over is considered as unemployed if he/ she did not work at all during the
preceding week of survey and was actively looking for work or was available for work but did not work due to
temporary illness or because there was no work available.

Table 8.3
Under-employed Population Aged 10 Years and Over
(million)
Category Bangladesh Urban Rural
Both Male Female Both Male Female Both Male Female
Sex Sex Sex
Employed persons* 54.5 33.7 20.8 9.7 7.0 2.7 44.8 26.7 18.1
Employed persons (<35 hrs/week) 18.9 4.2 14.7 1.9 0.7 1.2 17.0 3.5 13.5
Under-employment rate** 34.6 12.4 70.7 19.6 10.0 44.4 37.9 13.1 74.6
Source : BBS, Labour Force Survey (LFS) 1995/96
* Employed person is a person who was either working one or more hours for pay or profit or working without
pay in a family farm or enterprise or organisation during the reference period or found not working but had a
job or business from which he/she was temporarily absent during the reference period.
** Those who worked less than 35 hours per week as percentage of the total number of employed population.

8.4.6 The total civilian labour force (10 years and over) in Bangladesh was 56 million in
1995/96 (male 34.7 million, female 21.3 million; rural 45.8 million, urban 10.2 million).
Considering the size of the labour force, the number of unemployed population vis-a-vis
unemployment rate may not appear significant. What is significant is that more than one-third
of the employed persons both at the national and rural levels are under-employed. It is also
highly significant that under-employment is much higher in the female population than that
in the male population at both the national and rural levels.
8.4.7 Unemployment among the educated youth is one of the major problems in Bangladesh.
The educated labour force in 1995/96 was 24.7 million and educated unemployment rate
about 4.4 per cent (LFS, 1995/96).
8.4.8 Besides unemployment and under-employment, an understanding about the employment
and wage situation is necessary for formulation of a strategy for improving the situation of the
 151

poor. Employment opportunities constitute a major factor in determining income-status of a

household. Average days of employment per household may be similar across income groups
though they vary in terms of type of employment. It was noticed in a BIDS report that wage
employment accounts for only 26 per cent of total employed days among the non-poor
whereas for the extreme and moderate poor group it stands at 59 and 44 per cent respectively.
Self-employment accounts for the remainder.
8.4.9 Positive changes in income status increase economic opportunities. A BIDS report of
1996 indicated that employment increased by 36 per cent for the non-poor relative to 27 per
cent for the extreme poor and only 22 per cent for the moderate poor. The poor still work a
lesser number of days in self-employment than the non-poor and wage rate of the non-poor is
higher than that of the poor. The extremely poor households increased their share of self-
employment over time which should have meant an improvement of their situation. But
indirect evidence suggests that the shift may have been to low productivity jobs because of
lack of access to capital, technology, credit and capacity to invest in education. It caused
substantial erosion of earning for many extremely poor persons over the early nineties.
Productivity increases as well as better employment prospects are necessary for improving the
situation of the poor.
8.4.10 High rate of population growth: The size of the population would not have been a
major concern if sufficient development were achieved to improve the quality of life. But the
slow growth of the economy in the past coupled with relatively high rate of population growth
and high dependency ratio of population exerted a direct and negative pressure on
development and poverty alleviation. The latest census (1991) shows an annual population
growth of about 2.17 per cent (1981-91) which is an improvement on the annual growth of
about 2.35 per cent during 1974-81. Although the current growth rate is below 2 per cent, it
is still high as there is a lack of complementary resources with which the growing labour
force can be productively utilised. The success in controlling population growth in recent
years will have little impact on the growth of labour force in the short and medium run as the
new entrants into the labour force during the next five years are already born.
8.4.11 Low level of human resources development: It is now recognised that human
resources development through education, better health and family welfare makes important
contribution to poverty alleviation. Even with low calorie intake, the provision of these
services and facilities can make the poor better-off and facilitate their graduation from
poverty.
8.4.12 Education is considered as the best investment in human resources development. Low
income countries get high rates of returns by investing in education. Female education, family
planning and welfare services contribute to decline in infant and maternal mortality and
improve maternal and child health by allowing spacing of births. Better sanitation and access
to clean water reduce infection, boost nutritional status and contribute to better health. A
healthier population can be more productive and generative of higher income which can lead
to improvement in the quality of life of the people.
8.4.13 As a result of increasing emphasis on human resources development and increased
allocation in recent years some improvements in human resources development have been
achieved as can be seen in Table 8.4.
 152

Table 8.4
Improvements in Human Resources Development

Indicator Year
1991* 1995
1 2 3
Total fertility rate per woman 4.3 3.4
Crude birth rate per thousand population 32 27.5
Crude death rate per thousand population 13 9
Infant mortality rate per thousand live births 92 78
Maternal mortality rate per thousand live births 4.7 4.5
Contraceptive prevalence rate (%) 40 48
Life expectancy at birth (National) 56.1 58
Access to safe drinking water (% of population) 80 96
Population per hospital bed 3205 3453
Population per physician 4526 4870
Access to sanitary system of latrines (% of population) 9 35.3
Adult literacy rate (National) 35.3 47.3
Gross primary enrolment ratio (6-10 years, National) 76 92
*BBS

8.4.14 There still remains a great necessity for substantial improvements in various aspects
of social/human resources development which will provide substantial economic benefits
over the long term by improving labour productivity and accelerating the adoption of
improved technologies. Achieving these objectives, however, requires a long term
commitment to allocate more funds to human resources development programmes to make
them sustainable.

8.4.15 Natural disasters: Natural disasters like floods, cyclones and droughts aggravate
poverty in two ways : through destruction of food stocks and whatever meagre assets the
households on the margin of poverty have and by making employment opportunities scarce.
While natural disasters of a moderate proportion in limited areas tend to cause or aggravate
impoverishment, disasters of severe magnitude covering larger areas may cause famine.
Furthermore, diseases, injuries and afflictions immediately after disasters drastically reduce
the capacity of the poor to cope with adverse circumstances. The frequency and magnitude of
natural disasters in Bangladesh have been more unfavourable to the economically
disadvantaged than to others. In the absence of safeguards against these sudden shocks, rural
households above the threshold poverty line are prone to be pulled down and those who are
already below it experience further slippage. Cyclone in Bangladesh is almost a regular
feature. The entire coastal belt as well as inland areas experienced cyclones, which often
produced surges or high tidal waves causing severe loss of lives, standing crops and other
properties.
8.4.16 Access to public services: One of the major reasons of poverty is limited access to
public services. There are a number of government agencies for service delivery at various
tiers of administration and local governments (divisions, districts, thanas and unions). The
 153

public service delivery system suffers from inadequate allocation and supplies, lack of
accountability, lack of motivation on the part of the service providers, on the one hand and
from the absence of effective ''clientele'' organisations on the other. As a result the public
service delivery structure has remained largely ineffective and inefficient. The World Bank
Study on Poverty and Public Expenditure shows that benefit of expenditures in social sectors
largely accrue to the poor people but since the level of expenditure is not high, benefit is
limited. The recent trend for higher allocation for health and education will definitely help the
poor. Access to public services can increase on a sustained basis through properly functioning
representative government. The basis for this was laid through setting up the democratically
elected government in June 1996.

8.5 Past Efforts

8.5.1 The problem of acute poverty caught the attention of successive governments and
programmes were chalked out to tackle the problems. The scheme for intervention in the
First Five Year Plan envisaged both production and institutional programmes for
development with special focus on rural development and equitable distribution of benefits of
development. It visualised a need for restructuring institutions to meet the problems of
organising the rural people, utilisation of resources and development of local planning
system. The Second Five Year Plan aimed to reduce poverty through participation of the rural
poor within an expanded programme for development. However, certain major constraints
impeded the institutional development in this respect. The Third Five Year Plan also aimed at
reducing poverty by ensuring better access of the rural poor to the means of production
through providing facilities in such areas as development of agriculture, basic physical
infrastructure, employment and production programme for the rural poor at the micro-level
and social service needs. All these programmes met with limited successes. The Fourth Five
Year Plan intended to pursue an employment oriented growth policy to promote employment
opportunities for the rural poor in both farm and non-farm sectors of the economy. Human
resources development was also given high priority during the Fourth Plan .
8.5.2 In order to overcome crises and to get sustained long term growth Bangladesh started
implementing wide ranging reforms under Structural Adjustment (SA) package since 1980s.
But alongwith promotion of flexibility and efficiency Bangladesh needs to take care of the
initial adverse impact of the structural adjustment policy on the poor. Higher levels of
investment in macro-economic growth process affected the disadvantaged group as there is a
trade-off between faster growth and distribution.The government started promoting targeted
income and employment generating programmes as a 'development safety net' for the poor
who survived below market level and are left out of market-based production and distribution
processes.
8.5.3 Annual Development Programmes (ADP) used to finance a good number of projects
in agriculture, rural development and social sectors to alleviate poverty. Bangladesh Rural
Development Board (BRDB) is the most prominent and potential government organisation in
respect of poverty alleviation. BRDB operates micro-credit funds for poverty alleviation.
Upto March, 1997 BRDB enrolled 1.553 million poor and disbursed Tk.6,643.7 million as
credit under the poverty alleviation programme for production and employment for the rural
poor.
8.5.4 Palli Karma Shahayak Foundation (PKSF) was set up by the government in 1990 and
its revolving credit fund created through ADP allocation and grant from Revenue Budget
 154

provides income generating employment opportunities, particularly for the rural poor women.
PKSF disbursed total loan amounting to Tk. 1099.59 million covering 9229 villages in 51
districts of the country upto June 1996. Besides these, wide ranging packages funded from
ADP include credit programmes, training, counselling, infrastructure development, health
services, etc. Also specific programmes on rural poverty and urban poverty have been taken
up in ADPs.
8.5.5 Safety Net Programme of Food for Works (FFW) provides employment to the rural
poor during lean periods through construction of rural infrastructure. Six thousands FFW
schemes generating employment of over 70 million man days were implemented since late
seventies. More recently, a Food for Education Programme was launched with the aim to
encourage the distressed families to keep their wards in primary schools. Vulnerable Group
Development Programme (VGDP) which is predominantly a relief operation was also
introduced. This programme is designed to reach over 85,000 beneficiaries exclusively
headed by destitute females. In recent times this programme for destitute women is trying to
move from its role of relief provider to a larger development role like providing agriculture
and health care training to women beneficiaries. However, the volume of foodgrains
channelled through FFW and VGD declined in absolute terms from 716 to 640 thousand tons
during the period between 1991/92 and 1995/96. This had a negative impact on the extreme
poor. Another important poverty alleviation project named Rural Maintenance Programme
(RMP) is being implemented through the monetisation of Canadian food aid since 1983.
RMP (phase-III) is now being implemented by LGED, Ministry of Local Government, in
collaboration with CARE. Under this programme approximately 82,000 kms. of rural earthen
roads will receive year round routine maintenance in 4,100 unions and provide employment
to approximately 41,000 destitute women.
8.5.6 Besides government programmes, a large number of NGOs are also engaged in
activities for socio-economic upliftment of the rural poor. Some of these NGOs, in terms of
both beneficiary coverage as well as investment, have the ability to reach the poor and address
the issues of poverty alleviation effectively. Among the NGOs major ones are BRAC,
PROSHIKA, ASA, GSS, RDRS, etc. A number of commercial banks (Sonali Bank, Janata
Bank, Agrani Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank) have also
participated in poverty alleviation programmes through providing micro-credit to the landless
and small farmers. Grameen Bank has so far disbursed Tk.72.45 billion (as in Feb. 1997)
inclusive of general and collective loan of Tk. 66.87 billion and housing loan of Tk.5.58
billion. As in March 1997, total number of beneficiaries of Grameen Bank figured at over 2
million people.
8.6 SAARC and Poverty Alleviation in Bangladesh
8.6.1 The Dhaka Declaration for Poverty Eradication under the Seventh SAARC Summit
Meeting of the Heads of State/Government of SAARC countries held in April, 1993,
stipulated that each SAARC country would prepare a pro-poor plan and an action programme
for implementing it for eradicating hard-core poverty by the year 2002 A.D.
8.6.2 In the light of Dhaka Declaration (1993), a Task Force for Preparation of a National
Pro-poor Plan and Action Programme was set up by the Government of Bangladesh.
8.6.3 The Task Force started its work with the following directions embodied in the Dhaka
Declaration :
 155

a. Each SAARC Country should produce a national poverty eradication plan to eradicate
poverty in the country, preferably by the year 2002.
b. The main agenda of action under the national poverty eradication are :
i. the strategy of social mobilisation involving the organisation of the poor and
their empowerment through appropriate national support mechanism;
ii. a policy of decentralised agricultural development and sharply focused
household level food security for meeting the basic nutritional needs;
iii. a policy of decentralised small scale labour intensive industrialisation with the
choice of efficient and cost-effective technology; and
iv. a policy of human development directed towards the enhancement of social
role and status of the poor women, protection of children, provision of
universal primary education and primary health care and shelter for the poor.
c. The above endeavours are to be supported by adequate financial resources.
d. Finally, the national pro-poor plan has to be harmonised with the open economy and
structural adjustment strategies.
8.6.4 The Task Force held a series of meetings and critically examined a number of poverty
alleviation activities and found that there are at present 36 projects under different
Ministries/Agencies specifically for poverty alleviation and human development which can
reach the poor, particularly the hard-core poor.
8.6.5 The pro-poor development effort was re-inforced subsequently by the
recommendations of the Eighth SAARC Summit Meeting at New Delhi in May 1996. The
Delhi Declaration provided opportunity to link the efforts for poverty eradication through
social mobilisation with the experiences of different SAARC countries. Bangladesh
responded positively to the challenge of organising the poor through a process of social
mobilisation as the poor were accepted to be efficient and creative. In this process it accepted
private organisations as desirable partners in such efforts that bring creativity of the poor in
the mainstream of development planning.
8.7 Social Summit
8.7.1 Poverty alleviation was also the main issue of the Social Summit held in Copenhagen
in March, 1995. As a follow-up to the Summit, the Government of Bangladesh established a
37 member national committee to provide leadership in the formulation and implementation
of the National Programme of Action aiming at fulfilling government's commitment towards
the Declaration of the Summit within the framework of the country's next Five Year Plan
(1997-2002). The committee chaired by the Secretary, Planning Division, has drawn
representatives from all sectors of society including representatives from relevant ministries,
departments, directorates, NGOs, research organisations, women organisations and
Federation of Bangladesh Chambers of Commerce and Industry. This committee has been
charged with the responsibilities to formulate a co-ordinated National Programme of Action
in line with the Copenhagen Declaration and to monitor the implementation thereof.

8.8 Micro-credit Summit

8.8.1 In the World Micro-credit Summit held in Washington during February 1997 micro
lending was endorsed as the right answer to the problem of rural poverty. The micro-credit
campaign has succeeded in focusing world attention to the fact that the scale of poverty in the
developing world is so deep and widespread that nothing short of a ''missionary approach'' can
alleviate it. While this has also created world-wide awareness about the importance of
 156

institutional lending to the poor for creating self-employment opportunities, the financial
resources required to fund the micro-credit programmes on a large-scale need to be raised
through joint efforts at both the national and international levels. Bangladesh has conceived
the idea of micro-credit as an efficacious instrument of poverty alleviation and has
successfully implemented the scheme through Grameen Bank, BRAC, PROSHIKA and a
number of other NGOs and government organisations recognising that the poor are not
liabilities but assets; they can save and contribute creatively even with their low income
when organised. Grameen Bank concept developed in Bangladesh has been replicated in as
many as 45 countries including the United States. The commitment announced in the micro-
credit summit for international co-operation in this field can make significant contribution to
further strengthening and sustaining the ongoing programmes of Bangladesh by augmenting
the required credit fund.

8.9 Pro-Poor Plan for Alleviation of Rural Poverty

8.9.1 Objectives: The factors that facilitate poverty alleviation are by this time widely
known. At the same time the efficacy of various institutional frameworks, their limitations
and the extent of complementarity are also becoming common knowledge. The aim of a pro-
poor plan is to improve the economic conditions of the poor and human resources
development. Given the magnitude of the problem the pro-poor plan envisages that the pace
of poverty eradication will accelerate and there will be significant reduction in poverty
during the Plan period. The objectives of the pro-poor plan will be to:
a. develop democratically elected local government bodies with appropriate
representation of women;
b. develop human resources with adequate provisions to expand and strengthen
education, health, population planning and family welfare facilities, measures and
services;
c. link the rural poor with basic social services/institutions in the fields of education,
health, population planning, family welfare, drinking water supply, sanitation, etc.;
d. increase gainful income generating activities and employment opportunities on a
sustained basis for the rural poor;
e. strengthen small scale and informal sector production;
f. promote social mobilisation defined in terms of building organisations of the poor at
grass-root level to enable them identify their problems themselves, make their own
development decisions, particularly in areas which concern them most, and articulate
these with the relevant government agencies for necessary economic, technical,
administrative, financial and other supports in form of projects;
g. improve technology and skill as significant elements of human resources development
for productive activities of the rural poor;
h. upgrade technical skills to enable workers to adapt to rapidly changing international
conditions;
i. provide the rural poor with better access to resources, especially to micro-credit
which is critically important and has high poverty reduction potentials;
j. raise savings/capital formation by the poor to a greater volume so as to stimulate and
enhance growth from the bottom;
k. give particular attention to the development of hard-core rural poor and poverty-
depressed rural areas ;
 157

l. promote participation and development of the poor and disadvantaged women and
female- headed households alongwith males;
m. empower the poor through affirmative activities and participation in the local
government institutions;
n. maximise impact of the pro-poor plan through an efficient delivery system minimising
administrative and organisational expenditure; and
o. review policies and regulations that affect the poor and reform the same, if necessary,
based on the review.
8.10 An Indicative Strategy for Poverty Alleviation During Fifth Plan
8.10.1 Growing reliance on the market in resource allocation is the main characteristic of the
Fifth Plan. The Plan, however, recognises that because of market failures there is a need for
government intervention in the area of poverty alleviation.
8.10.2 Human resources development: In the Fifth Plan period allocation to social sectors
will be adequately increased, while maintaining the necessary financial and fiscal discipline.
Programme coverage will be increased through expansion of existing successful projects and
launching new projects in education, health, family planning, family welfare, social services,
women development, youth development, drinking water supply, sanitation, etc. Measures
will be taken to improve the quality of services in these sectors so that additional expenditure
will be utilised in a cost-effective manner. Alongwith general education, there will be
emphasis on technical education and skill training to produce a greater number of skilled
workers. Export oriented industries such as electronics, garments, dolls, computer data entry,
etc. will be set up in rural areas to provide large scale employment opportunities.
8.10.3 Economic development of the poor: The basic element in the programme towards
poverty alleviation is creation of employment opportunities. One of the major objectives of
the Fifth Plan will be generation of substantial gainful employment opportunities with
increase in productivity through an optimal choice of traditional labour intensive and new
generation technologies. The Fifth Five Year Plan envisages to increase total employment
from about 50 million persons in 1996/97 to 56.3 million persons. The employment
projection of the Fifth Five Year Plan is given in Table 8.5.

Table 8.5
Employment Projection for Fifth Plan
(thousand persons)
Sector 1996/97 2001/2002
Agriculture 31,500 33,382
Industry 3,700 5,847
Power, Gas, Natural Resources 105 215
Physical Planning, Housing and Construction 1,034 1,196
Transport & Communication 2,238 2,626
Trade & Other Services 11,423 13,079
Total 50,000 56,345

8.10.4 The pro-poor plan will create self-employment opportunity for the rural poor, mainly
through targeted production and employment programmes and increase in wage employment
opportunities through rural infrastructure building and maintenance.
 158

8.10.5 In the Fifth Plan rural development has been accorded priority (more than 10 per cent
of the total public sector outlay) for reduction of rural poverty. The major objectives of the
production and employment programme for the rural poor will be (a) increase in production
in both farm and non-farm sectors; (b) generation of self-employment opportunities;
(c) increase in income through productive income-generating activities; and (d) human
resources development, mainly through training.
8.10.6 The production and employment programme will be developed as a package
consisting of (a) organisation/social mobilisation of the targeted poor into formal and/or
informal groups; (b) dissemination of technology and training; (c) micro-credit for income-
generating activities; (d) capital formation through shares/savings; and (e) market information
and promotional activities.
8.10.7 The assetless/landless and functionally landless, owning not more than 0.5 acre of
land and small farmers owning land upto 1.5 acres will be the target groups under the
production and employment programme. Both men and women will be covered at an
approximately equal ratio. Besides them, the non-poor who are marginally above the poverty
line with the risk of sliding down the line as a result of any sudden economic pressure will
also be included in the production and employment programme for enhancement of their
economic conditions.
8.10.8 The major focus of poverty alleviation programme in the urban areas will be as
follows: (a) education, as studies show that it has a positive impact on income generation,
particularly in the case of non-slum households; in the case of permanent migrants, skill
training will be a major means of income generation; (b) access of the urban poor to non- land
assets will be improved through targeted public/NGO programmes as well as through
generation of self-employment opportunities; and (c) improvement of living conditions in the
slums by providing facilities for pure drinking water, electricity, gas, etc.
8.10.9 During the Fourth Plan the average GDP growth rate was 4.1 per cent. This was too
low a growth to lift the population, particularly the poor, to a higher level of living. A higher
growth has, therefore, been targeted for the Fifth Five Year Plan. To achieve the target there
is a necessity to make the growth process broad-based. In view of this, more resources will be
diverted to the poor. The past experiences in Bangladesh have established that the poor are
efficient and relative to their income they have a higher rate of savings; if they are organised
into functional groups and are given financial supports through simplified procedures, they
will generate a dynamic process of capital accumulation ( e.g. Grameen Bank’s experience).
The diversion of more resources to the poor will facilitate their active participation as agents
of growth.
8.10.10 Existing successful targeted poverty alleviation programmes/projects will be
continued and expanded. Coverage will be quantitative as well as qualitative. At the same
time in the expanded phases care will be taken for corrective measures in their institutional
arrangements, if warranted, for more effective implementation.
8.10.11 Among major programmes, safety net programme of FFW will need to be reformed.
Besides, its focus on lean season survey results show that economically poor areas still do
not get preferential access to these programmes. Such programmes will need to be adjusted to
make their operation sensitive to special needs of the poor areas.
 159

8.10.12 Evidences suggest that safety net programmes do not reach the poor during period of
most acute need i.e. September-October period which is the wet post-monsoon season. The
current portfolio of FFW projects will need to be changed in favour of a mix that allows
greater flexibility in selecting projects during this season. A shift towards maintenance project
and environment protection are feasible options. It may also be useful to move from
providing Food for Works to Cash for Work, to provide greater flexibility over both the
choice of projects and commodities for consumption .
8.10.13 In addition to the successful existing projects, new targeted pro-poor production and
employment projects based on social mobilisation will be taken up. The new projects will
pay particular attention to the hard-core poor. The new projects will aim at poverty reduction
of the rural poor by sustained increase in productive employment, particularly self-
employment opportunities in nutrition-oriented activities like animal husbandry, fisheries,
poultry, horticulture and in various non-farm activities having potentials of better economic
returns.
8.10.14 The pro-poor projects will create linkages/accessibility for the target group members
with various social and economic facilities and services locally available under various nation
building agencies.
8.10.15 Local resources such as government khas land, jal mahals and khas ponds, land by
the side of embankments, railways and roads, deforested areas/land, etc. will be made
accessible to the poor for productive purposes/activities by them on long term lease through
adequate institutional means decided upon by the government in consultation with the
relevant stakeholders.
8.10.16 Some new pro-poor projects will specially address the poverty of vulnerable groups
with additional allocation of resources, with particular reference to: (a) nutrition supplement
for malnourished children and women in distressed areas, (b) development of areas which are
prone to flood , drought and salinity experiencing seasonal or periodical food scarcity, (c)
credit, housing, schooling, health and sanitation for people in the distressed areas, including
the urban slums, and (d) provision of old age allowance.
8.10.17 Some of the new projects will have to address the issue of risk insurance (with
respect to natural disaster, health hazard, etc). Aggregate burden of various risk events has
been estimated as 16 per cent of household income. For the extreme poor it is as high as 27
per cent. For minimising risk, effective risk pooling, risk sharing institutions (including
market institutions) will be developed. In the case of health related risk key responsibility lies
with public health intervention.
8.10.18 Adequate funds for the pro-poor production and employment programmes/ projects
will be channelled from the government, donors and other sources, e.g., the commercial
banks. The bulk of the funds will be given to the poor as micro-credit to enable them take up
productive income generating activities in both farm and non-farm micro enterprises.
8.10.19 Generating savings by the group members will be stressed in the pro-poor production
and employment projects. The savings deposit will be channelled into the investment
stream/fund for income generating activities of the respective groups when they decide to do
so. This will gradually reduce their dependence on institutional credit.
 160

8.10.20 Over time a wide range of technologies with different applications have reached
Bangladesh; their dissemination however has been poor. Arrangement will be made for
dissemination of available technologies with necessary training.
8.10.21 As the poor are efficient in most cases, it is unlikely that any major conflict between
the structural adjustment programme and the social mobilisation movement will take place
provided that the market is sufficiently responsive and friendly to the poor. This however, is
not the case at present. The production and employment programmes/projects will therefore
put adequate thrust on promotion of better accessibility of the poor to market and fair prices
for their products. Market promotion cells will be constituted in relevant agencies. The
activities of these cells will include, among others, publicity through mass-media for
popularising the products of the poor, establishment of display and sales centres in important
places, motivation of the businessmen through chambers of commerce and industry and
various organisations of the business community to promote and purchase the products of the
poor and liase with the Export Promotion Bureau to create foreign markets for the quality
products of the poor. The products of the poor and the self- employed may carry a seal of
pride and honesty.

8.10.22 The basic elements of the sustainability of pro-poor projects will be self-reliant
groups. The project activities will continue over a sufficient length of time to permit the
groups/beneficiaries to successfully graduate from the poverty level. On graduation, the
groups/beneficiaries may remain linked to the agencies sponsoring the projects for minimum
support, if required, but the bulk of the credit support to them will be ensured through
linkages with institutional sources of credit like the commercial banks, the PKSF and the self-
generated fund, if any, created in the project.
8.10.23 Under the production and employment programme each project must cover an area,
compact but as large as is necessary to ensure the economy of scale.
8.10.24 The NGOs will continue to expand their pro-poor and rural development projects.
An effective government and NGO collaboration will be necessary. The fields in which such
collaboration is feasible will be determined by mutual consultations.
8.10.25 Gainful wage employment for the rural poor will be generated through rural
infrastructure development and maintenance programmes of the government and local bodies.
They will be implemented with financial resources and food-aid. The infrastructure
development work will comprise construction of rural roads, embankments, bridges, culverts,
development of growth centres and markets, re-excavation of ponds and canals, repair and
maintenance of roads, construction of community buildings and cyclone shelters, etc. These
projects will be implemented through involvement of the landless groups or individuals
including women as workers. Labour-intensive construction methods will be followed. These
schemes will include awareness-raising and skill development training. The local government
bodies will implement the infrastructure development and maintenance projects with
technical and financial support from the central government.
8.10.26 From the view point of productivity enhancement as well as poverty alleviation,
establishment of the right of the sharecroppers and fixation of minimum wages of agricultural
labour are important issues that still await a determined action of the government. The Land
Reforms Ordinance, 1984 provides, among others, the right of the sharecroppers (Bargadars)
and the Agricultural Labour (Minimum Wages) Ordinance, 1984 calls for immediate action
 161

as insecurity over occupancy and tenancy rights and exploitation of labour by the landed
gentry in respect of wages to the labour not only adversely affect the poor tenants but they are
also inimical to efficient use of land. The Land Reform Ordinance, 1984 provides that every
land owner who intends to give land to another for cultivation will have to execute a 'barga
contract' for 5 years during which the bargadar or his able heir will have continuous and
undisturbed possession on the land. The produce or crop will be divided into 3 shares--one
third will go to the land owner, one-third to the bargadar for his labour and one-third to the
owner or the bargadar or to both in proportion to the cost of cultivation borne by them. The
bargadar will have a prior right to purchase land under barga cultivation provided that he will
negotiate the price of land with the owner and purchase the land on such terms as may be
agreed upon between them. A ceiling of 15 bighas has been provided for barga cultivation by
a single bargadar. The above ordinance also (a) prohibits acquisition of new agricultural land
by an owner or his family over sixty standard bighas by transfer, inheritance, gift or any other
means, (b) prohibits benami transactions of immovable property, (c) prohibits eviction from
homestead land in the rural areas, and (d) gives preferences to landless farmers and labourers
in settling khas land fit for use as homestead in the rural areas. The Agricultural Labour
(Minimum Wages) Ordinance provides that the minimum daily wage of agricultural labour
should be 3.27 kg of rice or its equivalent market price. It should be stated here that
alongwith implementation action the above ordinances/laws will be reviewed by the
government to see if they can be made more friendly to the poor in the light of the efforts for
poverty alleviation.
8.10.27 The land record and revenue system in Bangladesh is vast and complex with over 30
million land holdings which must be mapped, recorded, verified and updated. The
conventional system prevailing in the country is not adequate for the task. Litigations and
violences due to back-dated and erroneous records of rights, holding demarcations, etc. are of
great social concerns. For poverty alleviation the most important implication of land record is
that due to erroneous/bad records the legal right of the poor is not always protected. This is
one of the reasons for dispossession of a poor farmer from his land. Modernisation of land
administration and management system for an efficient and responsive land surveying,
documentation and recording system will provide a rapid and transparent land administration
service. Towards this end, measures will be taken to (a) modernise the printing system for
printing and updating Mouza maps and Khatians by using computer technology, (b) introduce
modern equipment in land survey for maximum precision/accuracy in survey output, (c)
modernise record maintenance system by using modern technology like micro
filming/computer recording which will create quick access of the people to land records and
prevent tempering with records, and (d) develop human resources for technical and other
services for land administration and management. These measures will be first taken at the
central level and will gradually be followed up with a comprehensive modernisation
programme covering different land administration units in the country.

8.11 Institutional Development at Local Level for Implementation of Pro-Poor

Projects
8.11.1 The new production and employment projects will be based on social mobilisation of
the poor for implementation. Under the social mobilisation strategy the poor at the grass-roots
will be enabled to organise themselves, identify their own problems, make their own
development decisions particularly in areas which concern them most. This process will be
 162

helped by government functionaries, NGO’s, other community organisations, people’s

representatives, local leaders and local government bodies.
8.11.2 Over years the co-operatives have lost attraction due to complexities and rigidities of
hard laws and by-laws, rules and regulations, mismanagement, and by-passing of the interest
of the poor. On the other hand, small informal group approach has proved successful under
NGO programmes. Therefore, presently preferences of the poor as well as the planners and
administrators are in favour of mobilising the poor in small informal groups rather than in
formal co-operatives. In conformity with the recent experience the new production and
employment projects will put emphasis on social mobilisation of the poor in small informal
groups. However, considering that the institution of co-operatives can also be important for
implementing poverty alleviation projects, the government in collaboration with the
representatives of the co-operatives will review the co-operatives laws, by-laws, rules,
regulations, management system/structure, etc. for necessary modifications/changes to make
the institution fully pro-poor oriented and suitable for taking up poverty alleviation projects.
8.11.3 The groups will go through a process of social development including conscientisation,
development of group cohesion and solidarity, group discipline and leadership, and group
capability to interface with the development agencies. Training, credit and other support
services will follow group development. The project personnel will serve as social animators
or facilitators for social development of the groups and they will help the target groups to take
up income-generating activities. This process of social mobilisation will be an integral part of
the government’s efforts to institute local level participatory planning. It will also link the
micro policies with macro policies arising from the need for short term stabilisation and the
long term movement to a higher growth path.
8.11.4 Local government bodies in rural areas will be involved in different stages of the pro-
poor projects as facilitators and will be integral parts of local level participatory planning
structure. Their roles in this respect will be decided upon by the government when the new
local government system is instituted.
8.12 Basic Support/Services Required by a Poor Person
8.12.1 A poor citizen of Bangladesh requires some basic support/services for satisfaction of
certain essential needs in different cycles of his/her life for poverty alleviation. In broad and
generalised terms these are presented in the following list:

Essential needs in different

cycles of life Basic support/services required
Ante-natal cycle
Ante-natal medical care, -- Ante-natal health education and medical care for the
nutrition. mother at her residence through periodical visits by
trained medical personnel
-- Ante-natal health education through mass-media
-- Ante-natal health education and medical care for the
mother at local level medical institutions
-- Ante-natal medical care at higher level medical
institutions, when necessary
 163

-- Nutrition awareness-raising
-- Education on nutrition, specially on low cost food
nutrition, preservation of food value and quantum of
intake for the well-being of mother as well as the
expected baby
Natal cycle
Safe delivery, immediate post -- Trained birth attendants
delivery care for the mother -- Local level medical institutions
and her baby, registration of -- Higher level medical institutions
birth and death. -- Supply of medicines from the above institutional sources

Infancy cycle
Medical care (including -- Baby health education and health care at the
immunisation/vaccination), community/local level through trained personnel and
nutrition, safe drinking water. mass-media
-- Local level medical institutions
-- Higher level medical institutions
-- Immunisation and vaccination
-- Supply of medicines from institutional sources
-- Nutrition awareness-raising
-- Education on nutrition, specially on breast feed-milk and
other low cost food nutrition, preservation of food value,
quantum of necessary intake and water purification
-- Tube-wells at the neighbourhood/ community level for
safe drinking water
Childhood
Health and medical care, -- Trained health workers
nutrition, clothing, safe -- Health education
drinking water, schooling, -- Local level medical institutions
recreation. -- Higher level medical institutions
-- Supply of medicines from the institutional sources
-- Immunisation and vaccination
-- Nutrition awareness-raising
-- Education on nutrition, specially on breast feed-milk and
other low cost food nutrition, preservation of food value,
quantum of necessary intake and water purification
-- Installation of tube-wells at the neighbourhood
/community level for safe drinking water
-- Primary school at the village level
-- Secondary schools
-- Playground, parks etc. provided by the community
-- Orphanages
 164

Adulthood
Education, employment, -- High schools
housing, food security, -- Colleges and universities (for those who would pursue
clothing, transport and higher education)
communication, health -- Technical and vocational educational institutions
services, family planning and -- Non-formal education
family welfare, safe drinking -- Free studentships, compensation for lost working hours
water, community facilities, in the cases of family unpaid labour, subsidies, stipends,
social security, relief and scholarships, free books, free school dresses, etc.
rehabilitation (after severe -- Long term lease of government khas land and ponds, jal-
natural calamities), local mahal, road side land, etc.
government institutions. -- Creation of employment opportunities for self-
employment and wage-employment both in the farm and
non-farm sectors
-- Motivation and organisation into groups (social
mobilisation)
-- Legal provision for minimum wage
-- Extension services for improved methods of production.
-- Supply of different production input and equipment etc.
at fair prices
-- Training for skill/human resources development
-- Micro-credit for productive income-generating activities
-- Grant of government khas land (in small pieces) for
house building purposes to the rootless/assetless
-- Consumption and house-building loan alongwith micro-
credit for productive activities
-- Development of appropriate technology and diffusion
-- Product marketing facilities both domestic and
international
-- Product development for better return
-- Foodstuff price support
-- Regular flow of foodstuff in the market at fair prices
-- Effective enforcement of law against artificially created
scarcity of foodstuff
-- Food support during the lean agricultural season
-- Procurement of foodstuffs at fair prices during the peak
season
-- Development of roads and navigable water ways
-- Development of rural transport
-- Health and family planning education and supply of
contraceptives
 165

-- Hospitals, qualified physicians and nurses and other

trained medical personnel
-- Tube-wells for safe drinking water
-- Knowledge on water purification
-- Hygienic/sanitary latrines
-- Community centres with facilities like library,
newspaper, TV, radio, indoor games, etc., playgrounds,
clubs, places of worship, graveyard, etc.
-- Legal protection against maltreatment of women and
unjustified divorce
-- Priority to the female headed households for economic
and other support relating employment
-- Centres for economic activities and social interaction for
the physically and mentally disabled/handicapped
-- Police to control anti-social activities and maintain
normal law and order situation
-- Disaster preparedness, safe shelter, relief and
rehabilitation
-- Local government bodies to render support/ services (to
the poor) in respect of social mobilisation, micro-
credit distribution and realisation, community
participation, creation of adequate access to the locally
available medical care, economic and social institutions,
distribution and management of khas land/jalmahals/
road side land, regular supply of food stuff in the local
market, control of anti-social activities and
maintenance of peace
-- Co-ordination among village-union-thana-district level
pro-poor plans and programmes, co-ordination between
government and non-government/private sector pro-
poor plans and programmes
Old Age
Light economic / income -- Centres for old people with facilities for light
generating activities, income economic/income generating activities, geriatrics
subvention, geriatrics care medical and social welfare services, income subvention
and services. for the poor and the aged.

8.12.2 This list is indicative of various fields of programmes and actions needed to help the
poor. For alleviation of poverty and blooming out of the poor programmes and actions in all
these fields will have to be co-ordinated and cohesed. For the needed social planning and
engineering stipulated in the Fifth Plan period, this will remain a challenge as this will be an
area of opportunity for application of creativity.

CHAPTER IX
 166

WOMEN IN DEVELOPMENT AND CHILD DEVELOPMENT ISSUES

9.1 Women in Development

9.1.1 The goal of economic development of a country is to increase the well-being and
quality of life of the population through growth with social justice. This includes women as
well as men. Women are nearly half of the population. They represent a half of the country's
human resources and thus a half of its potential. Continuing disparities between women and
men in life expectancy, health status, employment and income opportunities, education,
control over assets, personal security and participation in the political process demonstrate
that development investments and programmes do not benefit women equitably. Inequitable
distribution hinders the process of women’s development. It also limits the country's ability to
achieve its full potential.
9.2 Constitutional Provisions
9.2.1 Women's rights to equality and affirmative action in respect to equality are guaranteed
in the Constitution. According to the Constitution of Bangladesh, all citizens are equal before
the law and are entitled to equal protection of the law (Article 27); the State shall not
discriminate against any citizen on the grounds of religion, race, caste, sex or place of birth
[Article 28(1)]; women have equal rights with men in all spheres of the State and public life
[Article 28(2)]; nothing shall prevent the State from making special provision in favour of
women or for the advancement of any backward section of the population [Article 28(4)].
9.2.2 The Constitution further advances and incorporates the principle of special
representation of women in local self-governing bodies (Article 9). Three women members
are elected to the Union Parishads and Municipal Councils. Provision has also been made to
reserve thirty seats for women in the Parliament (Article 65).
9.2.3 The pursuit of equal opportunities for women and men is an important goal in its own
right. It is also increasingly recognised that development objectives such as accelerated
economic growth, poverty alleviation, family well-being and employment creation cannot be
achieved without the contribution and participation of women. The benefits of action on
issues of women's equality and development are generally accepted in principle. However, in
practice, initiatives have been limited and progress has been slow. The Fifth Plan aims at
realising the constitutional goal of equality between all citizens - women and men. Thus a
major thrust of the Fifth Plan will be integration of WID concerns and gender issues in the
mainstream of development.
9.3 Situation of Women
9.3.1 Women constitute about 49 per cent of the population. Various indicators reveal that
the status of women is much lower than that of men. Traditional socio-cultural practices limit
their opportunities in education, skill development, employment and participation in the
overall development process. Their literacy rate is only 38.1 per cent, much lower than that
of men (which is 55.6 per cent); life expectancy is 58.1 years for men and 57.6 years for
women. Excessive mortality among women due to discrimination has resulted in a sex ratio
in the population whereby there are 105 men for every 100 women. Nutritional status of
women and girls is marked by sharp differences with that of men and boys. Health care for
women is often restricted to their reproductive health. General health of women at all ages is
often neglected. Women are married at a much lower age than men; mean age at marriage of
 167

women is 20.0 while that of men is 27.6. Early marriage, repeated pregnancy, and long child
bearing spans have serious implications for women's low nutritional status and high maternal
mortality rate (4.4 per 1000 live births).Violence against women is alarmingly on the
increase. The Bangladesh Bureau of Statistics, in a special report in 1993, revealed that death
due to unnatural causes (suicide, murder, burn, snake bite, poisoning, accident and drowning)
is almost three times higher for women than pregnancy related causes.
9.3.2 Despite the Constitutional mandate that women cannot be discriminated in respect of
any employment or office of the State (Article 29), women's visibility in the public service
has been negligible. Their participation in institutional development and decision making is
also minimal. Wage differentials between men and women are very high in case of wage
employment. The incidence of divorce, desertion and widowhood has been growing; 15 per
cent of all rural households are female-headed and 25 per cent of all landless households are
headed by women showing strong links between gender disadvantage and poverty. Female-
headed households earn 40 per cent less income than male-headed households.
9.3.3 As per LFS 1995/96, of the total 56 million labour force, 34.7 million are males and
21.3 million are females. However, women are generally pushed into the unskilled labour
force, primarily because of the obstacles women and girls face in acquiring marketable skills.
The climate is still adverse for accelerated entry into the formal labour force by women with
vocational and management skills.
9.4 Women in Development Plans
9.4.1 Women have been considered as a distinct target group in the development plans of
the country. The First Plan (1973-1978) emphasised a welfare oriented approach and focused
on rehabilitation of war-affected women and children. The Two Year Plan (1978-1980) was
characterised by a shift from welfare to development efforts. The Second Plan (1980-1985)
emphasised creating a congenial atmosphere for women's increased participation in
development through expanding opportunities for skill development, credit and
entrepreneurship development programmes. The Third Plan (1985-1990) had specific
objectives to reduce disparity between development of men and women. The Fourth Plan
(1990-1995) placed women within the context of a macro framework with multi-sectoral
thrust and focused more on the development of poor and disadvantaged women. However,
women's development issues were not made an integral part of the process of formulating,
implementing and evaluating development programmes across all sectors. Some sectoral
projects incorporated an understanding of differences between women and men in situations
and opportunities as a means of seeking a fair distribution of project benefits and a reduction
of gender disparities, while some projects included specific targets or objectives for women's
development.
9.4.2 During this long period, no significant shift has been visible in terms of addressing
women's needs and interests. No tangible progress was made due to lack of a comprehensive
integration of WID aspects in development planning and inadequate co-ordination and
monitoring in various sectors. The need for coherence in the government's thrust on WID
among different sectoral agencies, as well as between government and NGOs was not clearly
perceived.

9.5 International Perspective and National Framework

 168

9.5.1 Bangladesh ratified the UN Convention on the Elimination of All Forms of

Discrimination Against Women (CEDAW) in November 1984. Within the overall framework
of the CEDAW and as a follow-up to the United Nations Fourth World Conference on
Women held in 1995, Bangladesh Government has adopted a National Policy for Women's
Advancement (NPWA). It sets the goal of eliminating all forms of discrimination against
women by empowering them with the ability of being equal partners of development. The
national policy aims at promoting and protecting women's human rights; ensuring equal
rights to have access to politics, administration, sports, culture and socio-economic activities;
reflecting positive image of women in the media; eradicating persistent burden of poverty on
women; ensuring equal access to health and nutrition care; prioritising education and skill
training for women; emphasising protection from environmental hazards; supporting
measures for the security of abandoned, deserted women in need of special protection
measures including elimination of trafficking of and violence against women, and
rehabilitation of women affected during natural calamities; and, facilitating participation of
women in all the national and international bodies and fora. Based on the findings of the
institutional review and sectoral needs assessment studies of 12 ministries conducted during
1996, a National Action Plan (NAP) for Implementation of the Beijing Platform for Action
has been formulated. The NAP emphasises the incorporation of gender dimension and
concerns such as gender equality, gender desegregated information, gender specific allocation
of programmes and projects to the sectoral ministries, special resource allocation for gender
responsive programmes towards achieving gender equity in key social and economic
indicators. The NAP, therefore, aims at translating the policy statements made in the NPWA
into concrete programme packages and project components to be implemented and certain
policy adjustments to be made within a specific time-frame.
9.5.2 The shared responsibility for women's equality and development is strongly
emphasised in the Beijing Platform for Action which was endorsed by the Government of
Bangladesh in September,1995. Various studies in the institutional review of the
government’s ‘WID Capability’ carried out during 1995-97, considered the formulation of
long-term and annual plans and the process by which these plans were translated into projects
by sectoral ministries. The institutional review identified many gaps in institutional
mechanisms, professional skills and information resources in various agencies of the
government. The review has found that initiatives for women's development are ad hoc and
uncoordinated. Attention to women's development issues is largely compartmentalised in the
women's development sector. There have been inherent constraints in addressing gender
concerns through development intervention, primarily because of not reaching the socially
and economically vulnerable women. Overall, there is a limited understanding of the
requirement of a mainstreaming approach. All ministries and agencies of the government
have responsibility for women's development. Accordingly, all agencies have responsibilities
for ensuring that their policies and programmes respond to the needs and interests of women
as well as men and distribute benefits equitably between women and men. These are the
basic elements of the mainstreaming approach of the government. It seeks to move beyond
isolated and marginal programmes for women to consistent and systematic efforts in all
sectoral plans, programmes and projects. Thus, gender issues are to be addressed cross-
sectorally and horizontally.

9.6 Co-ordination and Monitoring

 169

9.6.1 Both the institutional review and the NAP have focused on institutionalisation and
implementation of sectoral gender-accounting system by setting time-bound and quantifiable
targets to achieve gender parity in all the development sectors. Necessary co-ordination will
be maintained through various institutional arrangements. The Fifth Plan will establish a
national monitoring mechanism to review the status of women at regular intervals.
9.7 Macro Framework of Women’s Development
9.7.1 The Fifth Plan will be people-centred, with equitably distributed allocations and
environmentally and socially sustainable projects. No meaningful development can be made
without equal and equitable progress of women who constitute nearly half the population.
Left to themselves, market forces will not be able to remove the gender disparity; government
intervention will be necessary. Attainment of a reasonable growth rate, reduction of poverty
through generation of production, self-employment opportunities, especially in non-formal
sector energised with micro credit input and increased self-reliance are inextricably linked
with increasing participation of women in the development activities during the Fifth Plan
period. The main aim of the Plan is to integrate women's development into the macro-
framework and to reduce gender disparity in all sectors through integration of women into the
mainstream development efforts. This may be achieved through the adoption of a multi-
sectoral thrust targeting women's increased participation in all sectors, at all levels.
9.7.2 A major thrust of the Fifth Plan will be on developing skills of women with the aim to
yield substantial increase in productivity of existing women labour force and opening up new
windows of opportunities for future entrants into the labour force. This will be supportive of
the Fifth Plan macro-objective of poverty reduction and human resource development.
Gender perspective will be integrated within the context of the macro-economic framework.
Women's needs and interests will be incorporated with quantifiable, time-bound targets for all
the major social and economic development programmes.
9.8 Goals and Objectives
9.8.1 In the Fifth Plan period, the set goals and objectives for development of women and
children will be to:
a. promote equality between women and men in the sharing of power and decision
making at all levels;
b. bring about changes in attitudes, structures, policies, laws and practices in order to
remove obstacles to achievement of human dignity and equality in society, including
the family, the community and the state;
c. ensure equal rights of women and men in all spheres of development, including access
to information, skills, resources and opportunities;
d. enhance the participation of women in political, civil, economic, social and cultural
life;
e. promote economic self-reliance for women and generate economic policies that have
positive impact on employment and income of women workers in both formal and
informal sectors;
f. establish and transform state structures and practices to enhance gender equality and
improve the status of women;
g. create appropriate institutional arrangements with necessary financial and human
resources and authorities at all levels to mainstream women's concerns in all aspects
and sectors of development;
h. identify obstacles faced by members of disadvantaged groups in availing opportunities
 170

and services, in particular those suffered by women members of these communities,

and take necessary steps to mitigate such barriers;
i. formulate and implement specific economic, social, agricultural and related policies
and programmes in support of poor female-headed households;
j. review existing discriminatory legislations and make recommendations for
progressive elimination of such laws;
k. take necessary steps for implementation of CEDAW, the National Action Plan for
Implementation of the Beijing Platform for Action and the recommendations of the
Institutional Review of the government’s WID capability;
l. mainstream women's concerns in agriculture and rural development, industry and
commerce, basic services, e.g., health, education, drinking water supply and
sanitation, and in the informal sector;
m. ensure the visibility and recognition of women's work and contributions to the
economy;
n. reduce the gap in male-female labour force participation rates;
o. promote support services for working women, e.g., child-care and transport facilities,
accommodation, etc.;
p. increase women's representation in governance and administration, including in all
tiers of local government;
q. reduce the gender gap in literacy rates and in access to educational opportunities,
including skill development and technical training;
r. promote women's full access through the life cycle to health and related services under
the goal "Health for All";
s. adopt appropriate measures towards the reduction of insecurity faced by women and
girls, the elimination of all sorts of violence against women and for the treatment and
rehabilitation of violence survivors;
t. eliminate trafficking of women and girl children;
u. ensure participation of women in national and international peace negotiations;
v. recognise women's role and concerns in environmental and natural resource
conservation and management;
w. promote the positive portrayal of women and girl children in mass media; and
x. institutionalise a national monitoring mechanism to monitor progress in achievement
of plan targets on WID.
9.9 Strategic Concerns
9.9.1 The attainment of these objectives requires a conscious pursuit of a gender
redistributive orientation to the broad strategies adopted by the Plan. The following strategic
concerns are highlighted for their potential direct impact on reducing gender disparity and
contributing to the advancement of women:
a. Poverty reduction : The most significant approach towards supporting women’s
development is to alleviate the persistent and increasing burden of poverty on
women; public sector policies should, therefore, pursue sound policies that are
gender sensitive, designed with the participation of women and based on
development strategies that are centred on people.
b. Public expenditure : Public sector expenditures in general, and public
administration budgets in particular, need to be restructured and targeted to address
the basic needs of women; mechanisms to ensure that resource allocations at the
macro, sectoral and project levels reflect the social costs and benefits of women’s
 171

work need to be established; public expenditure programmes will have to explicitly

provide women with access to employment, credit and productive resources.
c. Public employment : Measures will be taken to accelerate the integration of women
into public service. For example, priority will be given to women for jobs of primary
and secondary school teachers, health assistants, family welfare workers; quotas for
women in policy level positions will be maintained; and preference in appointive
positions such as in the judiciary will be given.
d. Education : Steps will be taken to support a gender sensitive educational system
and to increase participation of women in education policy formulation and
administration; public education programmes designed to raise awareness on
women's rights will be pursued.
e. Health : Provision will be made for health interventions and services designed to
take into account women’s special health needs, including women's reproductive
health, as well as women's multiple roles and responsibilities. The doctor-nurse and
doctor-population ratios will be improved to ensure better health care services.
f. Legal protection : Support for the promotion and protection of women's rights
through more effective enforcement of law and public education will be extended.
g. Security : Mobilisation of relevant organs of the state machinery at all levels for
prevention and redress of violence and crime against women will be aimed at.
h. Institutional infrastructure and/or capacity building : Appropriate institutional
development from grass roots to national level, co-ordination of activities among
different sectoral agencies, and upholding of women's interests in all spheres will be
planned for. The planning capability of the Ministry of Women and Children
Affairs, and other line ministries/agencies to take systematic account of gender
issues will be increased.
i. Support services for women's employment : Employment support for women,
especially child-care, work-place security, accommodation and transport, as
necessary prerequisites to women's ability to sustain the gains made through
employment, will be prioritised.
j. Research and data base development : Adequate research capability on gender
issues to create a reliable knowledge/data base on the situation of women will be
developed. Generation of sex-desegregated data in all national data collection
systems and use of such data in planning and programming of development
activities will be ensured.
k. Institutional arrangements : The Ministry of Women and Children Affairs
(MWCA) as the lead ministry on WID has to act as a catalyst for action by various
government agencies, and for the promotion of a better understanding of and a more
consistent response by all government agencies to the needs and priorities of
women. Different ministries/agencies of the government will undertake and
implement their respective sector-based projects/programmes to achieve the goals
and objectives for the advancement of women. MWCA, being the lead agency, will
play a vital role to facilitate, co-ordinate, plan and monitor social development
programmes that will be implemented through the sectoral ministries/departments as
well as provide critical inputs to the overall development planning process.
An Inter-Ministerial WID Programme Implementation and Evaluation Committee,
chaired by the Minister, MWCA will be formed to review, evaluate and co-ordinate
WID activities. Thus the nodal ministry will be strengthened with increased
competence and technical resources. The Inter-Ministerial Advisory Committee for
 172

the Prevention of Violence Against Women, chaired by the Minister, MWCA will
continue to review reports on violence against women and monitor the functioning
of the district, upazila and union level committees, set up under the Central
Nari Nirjatan Protirodh Cell in MWCA.
The National Council for Women's Development (NCWD), chaired by the Prime
Minister, has been set up to provide overall policy guidance, oversee inter-
ministerial co-ordination and promotion of WID and monitor WID activities across
the sectors.
WID focal points have been established in 32 ministries and agencies to co-ordinate and
take care of gender aspects in respective sectors. A focal point mechanism within
the Ministry of Planning/Planning Commission, especially in the Implementation,
Monitoring and Evaluation Division, and the General Economics Division will be
evolved in order to develop a common approach and to specify a strategy for more
consistent action on women’s development. Training of WID focal points to
increase specific competence on gender analysis will be undertaken.
A Parliamentary Standing Committee for Women's Development may be constituted to
advise the government on necessary steps for effective implementation of the
National Policy for Women's Advancement. Legal reforms such as inheritance,
parental responsibility may be the main areas of attention of this Committee.
l. Administrative measures : The government will attach priority to gender analysis,
training and sensitisation of key personnel in public and private sectors. A
comprehensive training programme on gender issues will be set up through major
government training institutions. Measures will be adopted to expedite quota (for
jobs) fulfilment by women, including adoption of affirmative action in recruitment.
Service conditions and working environment for women in the public sector will be
improved. Positive measures will be adopted to expedite the increase in the number
of qualified nurses and the number of women school teachers at all levels, especially
at primary, secondary and higher secondary levels.
m. Participation in development planning : Recognising the critical role of women in
development planning, conscious efforts will be made to facilitate women's
participation in the planning and formulation of sectoral programmes/projects at all
levels (union, thana, district and national). Necessary attention will be paid to the
enhancement of skills of planners and implementors in incorporating participation
of women at all stages of the planning cycle.
n. Awareness/public education : A massive programme will be undertaken to create
public awareness of women's legal rights, and where necessary, legal support will
be provided to women survivors and victims of violence. The government
will undertake programmes for political education and awareness among women.
o. Allocation of public resources : Steps will be taken to integrate gender issues into
the budgetary process and to evolve a methodology whereby all budgetary actions
and related policies are desegregated to ensure that the government's distribution of
resources contributes to the reduction of gender disparity and to the advancement of
women. Women's priorities in public investment programmes for economic
infrastructure, such as, water and sanitation, transport, markets, etc., will be
included. Poor, assetless and homeless families, specially female-headed families,
will be allotted government lands, ponds and other water bodies to assist them in
securing a sustainable livelihood. In case of married couples, allocations will be
made in names of both husband and wife.
 173

p. Provision of basic services : Women's access to basic services such as child-care,

education, transport, health, water and sanitation will be prioritised and promoted.
Time-bound, quantifiable targets for reaching women, particularly disadvantaged
women, will be set in each sector and implementation monitored.
q. Skill development training : Women's access to all skill development training
opportunities will be prioritised, and special programmes for women and girls on
the development of traditional and non-traditional skills will be supported.
r. Financial services : Women's access to financial services at all levels, and in
particular, to micro credit for investment into small-scale production and
undertaking entrepreneurial activities will be actively encouraged in both
government and private sector financial institutions.
s. Consideration of women in need of special measures : Steps will be taken to
reach socially and economically disadvantaged and vulnerable groups, such as
abandoned, destitute and homeless women and girls, women with disabilities,
women engaged in commercial sex work, women victims of violence and
trafficking, etc., and to take appropriate measures for their welfare.
t. Data base : Steps will be taken to ensure that Bangladesh Bureau of Statistics
(BBS), henceforth, adopts data collection and analysis methods that result in a sex-
desegregated national data base. Particular emphasis will be given to staff training
on design and analysis of data from a gender perspective, so that a gender sensitive
statistical data base, and information and monitoring system can be developed.
u. GO-NGO co-operation : Instances of co-operation between government and NGOs
have been encouraging. NGOs will be encouraged to complement and/or
supplement activities undertaken by the government towards enhancement of
women’s situation and government-NGO co-operation will be strengthened,
particularly in reaching the disadvantaged women. A GO-NGO Consultative
Council has been formed to provide a forum for dialogue between the government
and NGOs and to suggest modalities for creating an enabling environment for
greater involvement of NGOs in national development.
9.10 Child Development Issues
9.10.1 The integration of child development as a cross-sectoral theme throughout social
development programmes is of critical importance. Issues concerning children's interest cannot
be confined to a single sector. Thus, key social development sectors will be responsible for
implementing programmes related to protecting children's rights and ensuring children's full
development. Children constitute a large number of the population with 16 per cent under 5 and
44 per cent under 15 years of age. Investment in them will, thus, bring a better future not only
for the children but for the whole country.
9.10.2 The United Nations General Assembly adopted the Convention on the Rights of the
Child (CRC) in November 1989 (UNGA Resolution 44/25) and it came into force in September
1990. The World Summit (September 1990) for Children, which strongly endorsed the
Convention, was the first major global action for its implementation. The Declaration and the
Plan of Action of the World Summit for Children and the Convention together constitute the
global agenda for the well-being of children. The guiding principle adopted globally is that the
essential needs of children should be given high priority in allocation of resources at national
and international levels.
 174

9.10.3 The Government of Bangladesh has demonstrated its support for human development
by signing the CRC in 1990 with reservation in respect of children’s religious rights and right
for adoption making it one of the first 22 countries to do so. Decisions on these 2 reservations
are slated for revision soon. The ratification of the Convention and the commitment to achieve
the goals of the World Summit were critical steps towards recognising the importance of
placing the well-being of children at the forefront of the social and economic development
agenda in Bangladesh. The National Plan of Action (NPA) for the children (1990-1995) was
prepared by the government to accelerate progress on children's issues. The NPA set 1990 as
the benchmark year to measure and achieve World Summit goals.
9.10.4 According to the Constitution of Bangladesh, "Nothing shall prevent the State for
making special provision in favour of women and children, or for the advancement of any
backward sections of citizens" [Article 28(40)]. In pursuance of the fundamental principles of
the Constitution and the Convention on the Rights of the Child, and in order to
harmonise government actions, a National Policy on Children (NPC) was formulated. Under the
policy, all children of Bangladesh, irrespective of caste, creed, colour, sex, language, religion or
opinion, social and economic status, wealth or birth, shall enjoy equal rights and opportunities.
As envisaged in the NPC, a National Children Council (NCC) was set up as the highest policy
making body under the chair of the Minister-in-charge of the Ministry of Women and Children
Affairs. High level representatives from concerned ministries, as well as NGO representatives
and child welfare activists from civil society are members of the NCC which is expected to
give a real inter-sectoral thrust on the children's programme. As the supreme body in the
country, it is responsible for monitoring enforcement of the legislation towards protection of
child rights and all sectoral social development activities for the benefit of the children. The
Ministry of Women and Children Affairs (MWCA) acts as the secretariat of the NCC.
9.10.5 The Ministry of Women Affairs has been re-designated by the government as the
Ministry of Women and Children Affairs to emphasise the special focus on children. Therefore,
the MOWCA is the lead agency to co-ordinate and monitor the progress on child development
programmes implemented through various sectors. Bangladesh Shishu Academy was founded
with the aim of undertaking special programmes for moral, psychological, cultural and
recreational upliftment of the children and to imbibe a spirit of self-confidence among them
towards blooming up their talents.
9.10.6 There has been a steady decline in the infant mortality rate from 110 per 1000 live births
in 1988 to around 78 per 1000 in 1995, and under-5 mortality rate per 1000 from 162 in 1988 to
128 in 1995. Much of this has been due to tremendous success in immunisation coverage and
oral rehydration therapy. There have also been some forward strides in nutrition, water supply,
sanitation and primary education. Various legislations related to issues concerning children have
been enacted and revised.
9.10.7 Some other actions initiated by the government, both at the policy and implementation
level, include: (a) increased budget allocation for the development of social sectors, including
primary education and adoption of a comprehensive non-formal education policy; (b) free
education for girls upto class X and a policy announcement to make education free for girls upto
Class XII; (c) observance of Child Rights Week annually with participation from all concerned
as a sign of corporate social commitment under the leadership of the government; (d)
institutionalisation of Multiple Indicator Cluster Survey (MICS) methodology within the
Bangladesh Bureau of Statistics to monitor progress towards achievement of the World Summit
goals and an annual publication of Progotir Pathey that includes national and sub-national data
 175

on each major child development indicator, allowing implementors to track progress and take
corrective measures; (e) support to private sector and NGOs to develop a model for phased
elimination of child labour in the garment sector by providing educational opportunities; (f)
launching of Bangladesh Integrated Nutrition Project to address children's nutrition needs; and
(g) examination of existing laws to identify inconsistencies with CRC and revision and
enforcement of existing legislations.
9.10.8 To implement the Fifth Plan objectives within the overall framework of CRC and the
National Policy on children, a National Plan of Action (1997-2002) will be formulated by the
Ministry of Women and Children Affairs.
9.11 Situation of Children in Bangladesh
9.11.1 The actions taken so far are still inadequate in terms of needs and concern. Children in
Bangladesh continue to lack basic amenities and opportunities of life. One-third of the babies
are born with low birth weight. Infant and under-5 mortality rates are still very high, 78 and 128
respectively per 1000 live births. About 70 per cent of all children under five years of age are
malnourished and 11 per cent children are severely malnourished. One in every seven children
born in Bangladesh dies before their fifth birthday. Although sanitation coverage has increased
significantly, only 40 per cent of the children have access to sanitary latrines. Over 80 per cent
of the school-going age group children enrol in the formal schooling system, about half of them
attend regularly and almost 40 per cent of them drop out. From this precious fifty per cent,
approximately 60 per cent reach completion level of primary education and a mere 5 per cent are
able to pass the Higher Secondary School Certificate examination. In every social indicator,
the female child fares worse than the male child. Child labour has been a major
concern for Bangladesh. Laws regulating child labour exist but implementation is not
adequate. Around 11.7 per cent of the total civilian labour force constitute child labour in the
age-group of 5-14 years. Although the mean age at marriage is rising, almost half of all girls are
married before the age of 18, leading to early and frequent pregnancies. With the fast growing
urban population, 20 per cent of the total population now live in the urban areas. Of them, about
one-third belongs to the hard-core poor group. A considerable proportion of children of these
families is hard-to-reach and grow up uncared for, deprived of the basic needs and opportunities.
These children hardly have any family support. Urban poor children are generally victims of
neglect and exploitation; girl street children are particularly vulnerable to coercion and
exploitation.
9.12 Goals and Objectives
9.12.1 Giving due emphasis on the World Summit goals, Convention on the Rights of the Child,
SAARC (1996) and the declared National Children Policy, the Fifth Plan will make a co-
ordinated approach towards overall development of the children. This will be complementary to
the Fifth Plan macro objective of the human resource development. Considering the situation of
children in Bangladesh, availability of resources and national commitment to enable them to
grow to their full physical, mental and social potential, the following goals and objectives will be
pursued to :
a. make conscious efforts for ensuring children's rights to basic services such as education,
health and nutrition, water and sanitation and social services;
b. adopt appropriate measures for providing equal opportunities to all children for
development of their personality, talent and mental and physical abilities to the fullest
potential through the local government structure at various levels as well as other
institutional arrangements including NGOs;
 176

c. open up opportunities such as global information systems like internet, distance

education and electronic reporting systems towards ushering a child-friendly
environment;
d. improve the health status of children by reducing infant and child mortality rates by 2002
to half of the 1990 level;
e. reduce severe and moderate malnutrition among under-5 children by half over the bench
mark of 1990;
f. provide a favourable environment to children through the universal access to safe
drinking water and sanitary means of excreta disposal;
g. provide universal access to basic education and completion of primary education by at
least 80 per cent of primary school-age children;
h. promote secondary school enrolment and non-formal education with focus on vocational
education and skill development to meet the growing demands;
i. protect children from economic exploitation, hazardous occupations and to reduce
child labour in a phased manner;
j. take measures for delaying the age of marriage of girls and prevent early pregnancy;
k. take necessary steps for children, requiring special protective measures such as urban
slum children, children without shelter, children exposed to sexual exploitation and
violence with particular focus on adolescent girls, disabled, destitute and displaced
children and those caught up in armed conflicts;
l. adopt appropriate measures towards elimination of trafficking of children, including
immoral trafficking of female children;
m. expand early childhood-development activities, including appropriate low-cost family
and community-based interventions; and
n. fully implement CRC in all its spirits and contents.
9.13 Strategies : The Plan will emphasise on the public sector intervention in promoting,
supporting and protecting the children's rights to create an enabling environment for a better
world for the children. The 'First Call for the Children' and addressing their best interest will be
the guiding principle in developing their strength and potential. The Fifth Plan will thus, focus
on preparing the children to face the challenges of the new millennium. Keeping these in view,
following strategies will be adopted during the Plan period.
9.13.1 Inter-sectoral Approach : Strategies for child development will have a multi-sectoral
approach involving the key social development sectors, such as education, health and nutrition,
water and environmental sanitation, urban basic services, labour law, and justice, social services,
etc. The sectoral ministries will be responsible for implementation of programmes with
measurable, time-bound targets relating to tasks allocated to them. As the lead agency, the
Ministry of Women and Children Affairs will provide overall policy guidance, build up
information-base, co-ordinate with relevant ministries, review and monitor progress in the child
development programmes, and develop and sustain effective inter-sectoral linkages as important
strategic interventions.
9.13.2 Advocacy : On child development related issues, advocacy will form part of all the
programme activities at all levels to make people aware of the rights and needs of the children.
The dimension and magnitude of child development is so extensive that collaborative efforts of
the government, NGOs, civil societies and private sectors will be essential. Effective
communication for attitudinal change is necessary for the attainment of goals as well as for
development of an appropriate structural and social environment for bringing about these
changes and sustaining them. The focus will be on optimal mix of advocacy, social mobilisation
 177

and programme communication with NGOs, private sector and the civil society's involvement.
Declaration of Bangabandhu’s birthday (March 17) as children’s day will be acted upon to carry
the advocacy of children’s rights and potentials.
9.13.3 Decentralisation : With the active participation of concerned departments, particularly
the local government at city/town, district, thana, union and village levels, a decentralised
planning and programming for child development and welfare will be initiated. An effort will be
made to intensify child development activities and allocate more resources in the low performing
areas. Efforts will be made to build up a harmonised mechanism for decentralised programme,
planning and implementation.
9.13.4 Capacity Building : Capacity strengthening for the child development programmes at
national, sub-national and community levels will be emphasised through all the programme
sectors. Strengthening the government's institutional capacity and the creation of new
opportunities in the private and NGO sectors, particularly in the areas of training, research,
product development and social innovative technologies, will be emphasised.
9.13.5 Community Participation : Demands for children's basic services will be generated at
the community level by empowering social groups, particularly parents, with necessary
information on child survival, protection, participation and other related development issues.
This will have positive impact, both directly and indirectly on consumer behaviour that will lead
to increase beneficiary participation in terms of leadership development. NGOs will be
encouraged to work in co-operation with the government towards providing basic services,
particularly in reaching the under-served children.
9.13.6 Co-ordination and Monitoring : Co-ordination among the participating ministries will
be strengthened through the National Children Council. The forum of the Joint Government-
UNICEF Advisory Group will also continue to be used for this purpose. Effective field level
co-ordination will be enhanced by strengthening professional capacity of the local government
institutions, delegation of responsibility to the field level government functionaries and
involvement of NGOs and local communities. National and local planning and monitoring
mechanism will be strengthened through various government institutions. The NCC will provide
overall supervision in terms of monitoring child development goals. As the lead agency,
MWCA will monitor the progress on the child development programmes implemented by the
line ministries.
9.14 Major Strategic Interventions
9.14.1 For achieving the objectives and the goals, the following major strategic interventions
will be made:
a. Time-bound, quantifiable targets will be set and monitored for child development
activities, and these will be made explicit within the key sectoral social development
plans and programmes, particularly in education, health, nutrition, water and sanitation;
b. Convergence of essential services (e.g. health, nutrition, safe water, hygiene and
sanitation) will be promoted and strengthened at the community level through the local
government structures and partnership with NGO and private sectors;
c. A co-ordinated information campaign will be undertaken to apprise people about child
survival, protection, participation, development and child right issues to enhance
awareness and commitment, and to create a broad partnership;
d. Data-base on children's issues will be improved: registration of birth, death and other
important events will be acted upon;
 178

e. Monitoring mechanisms to review progress on the child development and welfare

activities will be established and strengthened at national and sub-national levels;
f. Due emphasis will be given to enforcement of the existing laws, rules and regulations.
Existing legislation relating to child welfare and development will be enforced, reviewed
and necessary amendments made. State machinery will be mobilised at all levels to
prevent violence and trafficking of children;
g. Voluntary organisations/NGOs/civil societies will be encouraged to supplement
government efforts in creating facilities for the development and welfare of the deprived,
disadvantaged, and disabled children as well as for urban poor children;
h. Appropriate welfare measures will be adopted to reach the socially-disadvantaged
children such as disabled, destitute, abandoned, shelterless and the children who are
victims of violence and trafficking; and
i. Activities of the Shishu Academy will be extended in order to provide favourable
conditions for full exploitation of latent and potential talents and abilities of the children.
9.14.2 Children represent one window which enables a society to gaze into the kaleidoscopic
composition of the near and the distant future of its shape in the next millennium. Therefore,
outlay in terms of planned, adequate investment in this crucially sensitive area will provide the
parameter of our ability to intervene in terms of social engineering for a rapid, planned and
positive change in preparation for the next century. The ability of the children to climb out of
the present morass and in creating an enabling and participatory environment for them will
indicate the success of the political will and the commitment of the government to prepare the
children to face the challenges of the Twenty First Century.
179
 180

CHAPTER X

ENVIRONMENT AND SUSTAINABLE DEVELOPMENT

10.1 Introduction
10.1.1 The Constitution of Bangladesh asserts that ‘it shall be a fundamental responsibility of
the state to attain, through planned economic growth, a constant increase of productive forces
and a steady improvement in the material and cultural standard of living of the
people’(Article-15). In pursuit of this goal of prosperity of the people through planned
development, the individual and the society come to interact with the environment and have
to take care of it, lest not to speak of global warming, excessive use of natural resources like
land, water and forest turn this land into a ‘dust bowl’ with ‘individuals scratching a living
like a scrawny hen’.
10.1.2 With the awareness of the above potential threat, Bangladesh has so far signed, ratified
and acceded to 22 international conventions, treaties and protocols related to environment.
The important ones, among them, signed at the UN Conference on Environment and
Development (UNCED), held at Rio de Janeiro, Brazil in 1992, are the Agenda 21, Climate
Change Convention and Biodiversity Convention. The Agenda 21 is a basis to attain
sustainable development through policies initiated and co-ordinated at the national level. The
second phase of the Bangladesh National Conservancy Strategy (BNCS), the Forestry Master
Plan and the National Environment Management Action Plan (NEMAP) all reiterate
Bangladesh’s commitment to implement the international conventions and treaties signed
from time to time.
10.1.3 As a signatory of these international and regional treaties/conventions/protocols, and in
fulfilling the constitutional obligation, further efforts will be continued to chart the course to
prosperity ensuring that no irreparable damage is inflicted on the environment and prosperity
is sustained in the long run.
10.2 Major Environmental Issues in Bangladesh
10.2.1 Environment, as per the Environment Protection Act, 1995 includes water, air, land
and physical properties and the inter-relationships which exist among and between them and
human beings, other living creatures, plants and micro-organisms. The environment is thus
the sum total of all social, physical, biological and ecological factors. Social environment is
centred round human beings. It is their institutions, group behaviour, habitation and
interaction in production and consumption of their wealth. The human activities entail using
natural resources and interfering with natural environment, increasingly with the increase in
growth. Environmental concerns have, therefore, assumed vital importance. It is now widely
accepted that there must be an integrated approach between environment and development.
As such, there is a need for integration of environment into development planning and
activities. Environment is where we live and development is what we all do in attempting to
improve our standard of living. Bangladesh has many environmental problems, natural or
man-made, such as frequent natural disasters, industrial pollution, poor health and sanitation,
deforestation, desertification, changes in climatic conditions, salinity, deteriorating habitat of
flora and fauna, etc. which we have to face, solve or compensate for.
10.2.2 Agricultural resource base : The vast majority of the population depend on
agricultural and natural resources for a large part of their food and income. Thus, a more
 181

dynamic agricultural sector, better use of natural resources and increased concern for
environment are essential. No growth or poverty alleviation strategy can bring success
without a healthy agricultural sector. Land and water are the two natural resources for
agricultural development. One of the difficult strategic issues is how to allocate limited
supplies of water to its uses for agriculture, salinity control, fisheries, navigation and a
growing urban population for sustained development. There is also competing demand on
land from non-agricultural uses of land. As a result, agricultural resources in Bangladesh are
already under severe pressure and environmental strain. It is essential to reverse this trend and
rebuild, and where possible, augment the productive capability of scarce and essential
agricultural resource base. To produce enough food for an increasing population, it is
necessary to maximise the benefits that can be derived from the existing technologies and to
maintain the sustainability of the food production system beyond the medium term of the
Fifth Plan, it is essential that Bangladesh continues to make all out efforts to bring about a
major breakthrough in agricultural technology.
10.2.3 Biodiversity : In making a breakthrough in agricultural technology, it is necessary to
preserve the variety of life, i.e. biodeversity. The preservation of biodiversity is both a matter
of insurance and investment, necessary to sustain and improve agriculture, forestry, livestock
and fisheries production systems in order to keep future options open as a buffer against
harmful environmental changes and as a raw material for scientific and industrial innovations.
Moreover, we must conserve biodiversity as a matter of survival. The variety of life helps
make the earth fit for balanced enjoyment of life. It plays an important role in all major life-
support services, from maintaining the chemical balance of the earth and stabilising climate to
protecting the watershed and renewing soil. Maintaining a nation’s biodiversity is integral to
maintaining its wealth. The Plan, therefore, attaches due weight to the development of our
biological resources. The importance of species and ecosystems will be considered in the
formulation of development policies and programmes. Institutions assigned responsibility for
conserving biodiversity will be supported by necessary financial and organisational resources.
The species and ecosystems on which our survival depends will be clearly identified and
appropriate technology applied to make our survival worthy of human beings.
10.2.4 Biomass: In Bangladesh, especially in the rural areas, where about 80 per cent of
people live, biomass plays an important and complex role. The problem is not merely the
supply of wood or of fuel or of food. These products are linked by competition for land and
by different product’s end uses that may compete with, or complement one another. Thus
shortage of any form of biomass will affect the quantity and composition of different end-
uses. At the moment, there is an acute crisis of biomass fuel, which constitutes 73 per cent of
total energy consumed. The per capita supply of biomass fuel is declining. There is an
increased use of crop residues and dung as fuel which is depriving soil of valuable nutrient
and organic matter.
10.2.5 Impact of chemicals : Modernisation of agriculture has led to an extensive use of
fertilisers and pesticides. Although production of foodgrain and other crops has increased
significantly by the use of fertilisers and pesticides, quality of land has suffered due to
indiscriminate use of chemicals. Farmers spraying pesticides and using fertilisers, in many
cases, are suffering from heart and skin diseases. Cows, goats and other domestic animals
eating fertiliser-fed and pesticides-affected grasses are also suffering from diseases. Fish
population in the rivers and other water bodies have drastically decreased due to water
pollution by chemicals including fertilisers and pesticides.
 182

10.2.6 Industrial pollution: The growth of industries in the country has generally been
unplanned without keeping the issue of environmental protection in careful consideration.
There are many industries in the residential areas causing air and water pollution through
smoke emission and dumping of untreated effluent. Industrial wastes have polluted the water
of the Buriganga, the Shitalakhya, the Karnafuli and the Rupsha rivers. Effluents from
tanneries are extremely harmful to human beings since they contain high concentration of
chromium compounds. About 250 tanneries in Hazaribagh area within the Dhaka city are
causing serious environmental pollution and health hazard making the area unsuitable for
human habitation.
10.2.7 Deforestation: Bangladesh has a classified natural forest area of around 6-8 per cent
of the total land area which is far below the desired level. According to a study, 50 per cent of
destruction of forests took place during the last 20 years affecting top soil and causing land
erosion. Such deforestation could not yet be compensated by social forestry and backyard
plantations.
10.2.8 Wetland and fisheries: Bangladesh has a high proportion of wetland area, which has,
of late, been declining. Rivers, canals, beels, lakes and haors are the open wetlands while
baors, dighis, ponds and ditches constitute the closed ones. They are significant sources of
sweet water fishes. The decline in fish production has been attributed to a general
deterioration of the wetlands, characterised by silting up of bed levels, water logging as well
as water pollution.
10.2.9 Mangrove ecosystem: The Sundarbans, located in the south-western part of
Bangladesh is the largest single expanse of mangrove forest in the world. It is a dynamic,
fragile and complex ecosystem in delicate balance with land and water. It is a good habitat for
offshore fisheries and onshore shrimp cultivation, a natural coastal protection, a highly
valuable forest resource and a recreational resort. But a gradual degradation of environment in
the Sundarbans has been taking place due to rapid deforestation, top-drying, saline water
intrusion, killing of wild lives, inadequate reforestation and lack of efficient conservation
programmes.
10.2.10 Coastal and marine water: Disposal of chemical fertilisers, insecticides and
industrial effluent into water are leading to a severe pollution of the coastal and marine
environment. Rare species living in these areas will disappear if they are not preserved.
10.2.11 Salinity: Diversion of the Ganges water has thus far drastically reduced the down
stream flow of its distributaries. Consequently, saline sea water entered into the mainland
rivers. It has adverse effects on agriculture and sweet-water shrimp cultivation and also on
availability of sweet water for domestic and other uses. Following signing of the long term
treaty on sharing of water of the Ganges with India on December 12,1996, there has been an
improved inflow of water down the Ganges in Bangladesh. This seems to be having an
improving effect, which needs to be further improved through building a barrage across the
Ganges.
10.2.12 Sanitation: In order to benefit from the increased coverage of water supply, the
vicious cycle of bacterial contamination has to be broken by introducing some form of safe
disposal of domestic waste including human excreta. The present state of affairs in this area is
quite unsatisfactory particularly in the rural areas. Only 36.9 per cent of the population have
acceptable sanitary system for safe disposal of excreta.
 183

10.2.13 Urbanisation: Serious problems of environmental degradation resulting from

unplanned urbanisation need to be evaluated in terms of (i) land use alterations, (ii)
inadequate shelter, water/sanitation, and other facilities in slums and other urban poor areas,
(iii) degradation of community ambient environment, and (iv) little control of industrial waste
emissions, which often greatly compounds the problem of environmental pollution due to
inadequate management of human and domestic wastes. Provision of water, sanitation and
other environmental infrastructure will adequately improve urban life.
10.2.14 Inter-sectoral linkages: Rapid economic development will put ever increasing
pressure on natural resources such as land, water, energy, etc. and tend to increase the
discharge of pollutants to the environment. It is, therefore, essential to choose the future
pattern of development in such a way that environmental degradation is minimised through
judicious use of resources on an inter-temporal basis and development is sustained.
Moreover, the access of the poor and the disadvantaged, especially women, to common
property resources is to be appropriately looked into to promote sustainable management of
the environment. Such developmental efforts must focus on the creation of an “efficiency and
quality culture” in our planning process. Along with the increase in capital and labour
efficiency, the contribution of other factors to growth has to be maximised through measures
like development and application of appropriate and/or modern technology, inter-sectoral
linkages, internal and external economics in production, etc.
10.3 Goals and Objectives
10.3.1 In order to promote, nurture, protect and expand nature and natural resources and to
link all developmental activities with environment for improving the quality of life, the Fifth
Plan aims at the following objectives:
a. promoting sustainable environment management in pursuit of quality livelihood and
to alleviate poverty;
b. promoting participatory, community-based environmental resource management and
environmental protection (considering the poor’s access, equity as well as gender
issues);
c. ensuring active participation of the poor, especially women, in environment protection
activities;
d. promoting environment-friendly activities in development interventions;
e. preserving, protecting and developing the natural resource base;
f. strengthening the capabilities of public and private sectors to address environmental
concerns;
g. controlling and preventing environmental pollution and degradation related to soil,
water and air;
h. creating public awareness for participation in environment promotion activities; and
i. conserving non-renewable resources and sustaining auto and eco-generation of
renewable resources.
10.4 Policy Outline
10.4.1 Sustainable environment management has emerged in response to the need for new
co-ordinated approach and practices which can accommodate diverse realities, yet not so all-
encompassing as to be vague and ineffective for leading to action. Such action must still
flow from institutional arrangements, policy making, resource mobilisation and initiatives by
the society’s major actors such as government at all levels, NGOs, leaders of business and
 184

civil society and groups. The flow must, however, be within an interactive and dynamic
framework which has the promotion of sustainable environment for all the people as its goal.
10.4.2 Sustainability is based on decision making which reflects a balance among long term
economic growth and efficiency, ecological unity and human well-being including equity.
More specifically, the concept seeks to offer an alternative approach to redress the failures of
the past development strategies to contain growing inequality and deprivation of decent
living. It builds on the lessons learnt in ‘delivering development’ and the challenges of
today’s world due to changing nature of work and its multiplicity and the desire for
sustainable well-being and environmental security. The sustainable environment management
concept allows the integration of social, gender and environmental equity issues in the search
of a better living in a sustainable state.
10.4.3 National Environment Management Action Plan (NEMAP) of Bangladesh provides
the policy framework of an action plan for environmental development in combination with a
set of broad sectoral guidelines which emphasise, inter alia, the following:
a. maintenance of the ecological balance and overall progress and development of the
country through protection and improvement of the environment;
b. protection of the country against natural disasters;
c. identification and control of all types of activities related to pollution and degradation
of environment;
d. undertaking environmentally sound development programmes in all sectors;
e. sustainable long-term and environmentally congenial utilisation of all natural
resources; and
f. active association with all environment related national and international initiatives.
10.4.4 Government has its forestry policy and the 20-year Forestry Master Plan in operation.
National Conservation Strategy (NCS) is in its final stage of approval. National Environment
Management Action Plan (NEMAP), finalised recently, is a government plan prepared by the
Ministry of Environment and Forest in consultation with people from all walks of life.
NEMAP is the product of a pro-active public consultation process, where the concernd people
had the opportunity to define the environmental concerns, priorities and problems and
suggest solutions. It is a synthesis of perceptions of the government, NGOs and the people on
environmental issues and actions required to address them.
10.4.5 There are other sectoral plans and policies with emphasis on environment and its
conservation. They are: Flood Action Plan, Bangladesh Water and Flood Management
Strategy and National Energy Policy.
10.4.6 A range of parallel/sequential interventions will be necessary to help promote
sustainable environment. The actual range, combination, sequencing and methods of
implementation will be determined in the local contexts. The interventions will include:

a. policy: eco-tax reforms, subsidy shifts, land tenure, licensing arrangements, credit,
incentive schemes, education, health, macro-micro linkage, especially a bottom-up
feed-back for policy-making;
b. governance: strength of the democratic process and institutions, accountability and
transparency of the government, local government autonomy and capacity, people’s
democratic institutions, participatory decision-making, independent judiciary and law
enforcement;
 185

c. technology: identification of opportunities for synergy between local and outside

technologies in agriculture, industry, environmental services, telecommunications,
energy, etc. and promoting such synergy; and
d. finance, investment and private sector development: debt relief, micro-credit,
entrepreneurial development, etc.
10.5 Strategies
10.5.1 Strategies will include the following :
a. National Environment Council will be activated;
b. Environment Committees at district and thana levels with people’s participation will
be formed and activated;
c. Ministry of Environment and Forest will be strengthened in the light of the existing
Environment Policy and Action Plan in order to co-ordinate, monitor and oversee all
NEMAP implementation activities by various sectoral ministries and agencies;
d. Rules, regulations and guidelines under the Environment Protection Act (EPA), 1995
will be finalised earliest in order to ensure effective enforcement of EPA;
e. Sectoral legislation are to be reviewed and formulated in the light of Bangladesh’s
commitment to international conventions and protocols on environment;
f. ‘Polluters Pay Principle’ will be followed in order to ensure strict compliance of
environmental legislation;
g. Incentives in the form of tax rebate, tax holiday, etc. will be provided and the
incremental cost incurred by the environment-friendly entrepreneurs will be met in
various forms;
h. ‘National Environment Fund’ will be established in order to provide assistance to the
victims of environmental degradation caused due to natural disasters and
anthropogenic activities; and
i. Environmental impact analysis will be continued in processing development projects
for approval of the government.
10.6 Financial Management
10.6.1 Implementation of NEMAP, Forestry Master Plan, National Conservation Strategy
and a number of development activities related to environment will require adequate
financing. The shared responsibility for improvement of the environment by all partners in
development including various government organisations, local government bodies, NGOs,
research and training institutes will be strongly emphasised. Private sector will be
increasingly involved in providing support to the environment protecting programmes under
the Fifth Plan.
10.7 Government-NGO Co-operation
10.7.1 Growing instances of co-operation between the government and NGOs have been
witnessed on the issues like environment, resettlement and disaster management, education,
health, population, women and youth development, livestock and fisheries. The participation
of the poor in these sectors is increasingly high. By and large, the government acknowledges
the effectiveness of the NGO approach in reaching the target groups, while NGOs enjoy
widening (scaling-up) of their impacts as a result of such co-operation. Till now, it has been
more prevalent in project implementation than in project formulation and design with a
broader perspective.
 186

10.7.2 The increased involvement of NGOs in forestry and fisheries programmes is a step in
the right direction. GO-NGO co-operation at local levels in project formulation and
implementation has a high potential for conservation of environment.
10.8 Disaster Management
10.8.1 Bangladesh faces many natural hazards. The environment in Bangladesh is adversely
affected by severe floods which erode lands and by cyclones which destroy natural
vegetation. Bangladesh is also in the seismic zone. Man-made hazards like over-use of land
and over-exploitation of forests and unrestricted burning of fossil fuel by industries are no
less important to be aware of in securing national well-being by averting environmental
degradation.

10.8.2 Previously, people reacted to the situation after a disaster had taken place. The
concept has changed in recent years. People need to be prepared in advance to face a disaster
through information and motivation and by adequate structural and nonstructural measures, to
mitigate the impacts of a natural disaster. Advance preparedness which reduced the loss of
life to the barest minimum during the devastating cyclone of 19th May,1997 is a success story
that might be cited here. In the light of experience gained from this success disaster
management committees have been formed at national, district, thana and union levels. A
national programme in line with International Decade for Natural Disaster Reduction
(IDNDR) objectives and resolution is being implemented to minimise the adverse impacts of
disaster on population and environment in Bangladesh. The government has undertaken a
massive programme to train people living in the disaster prone areas in order to improve their
capability to cope with natural disasters. Development partners and NGOs are also working in
this field. The government has issued a new set of standing orders for disaster management
and necessary legislation are being processed. A National Disaster Management Plan is also
being prepared.
10.8.3 The impact of cyclone can be reduced by massive afforestation and construction of
appropriate housing and cyclone shelters in the coastal belt. Afforestation also helps diminish
chances of drought and desertification. Strong embankments in the coasts and islands can
reduce devastation by tidal bores and salinity. An effective early warning system may alert
people against natural disasters and help them take precautionary measures in time. Cyclone
shelters in the coastal areas and raised earthen platforms in the flood prone areas can save
lives and properties. Incentives and awareness creation at the grassroots level can help
develop coping mechanisms of disaster victims. Strongly built structure (houses in cluster
having low heights, roads, bridges, culverts, sluice gates, etc.) can better withstand onslaught
of disasters.
10.8.4 The Fifth Plan will accord priority to disaster preparedness, warning system, response
and rehabilitation. Appropriate resource allocation will be made for measures to mitigate
impact of disasters and prevent environmental degradation.
10.9 Implementation
10.9.1 Major thrusts for environment protection will include the following:
a. training of technical personnel for control of pollution;
b. environment education in schools, colleges and universities, and creation of
environmental awareness among people;
c. land use planning;
 187

d. optimum utilisation of water resources;

e. coastal and social afforestation;
f. conservation of genetic resources;
g. wildlife preservation;
h. development of agricultural resource base through biodiversity and soil conservation;
i. conservation of coastal and marine resources;
j. industrial pollution control;
k. preservation of living aquatic resources; and
l. disaster mitigation measures.
10.9.2 Environmental concerns encompass all sectors of the economy. A multi-disciplinary
approach is, therefore, needed for the formulation of policies and implementation of
programmes related to environmental issues. Poverty, environmental degradation and
sustainable livelihood, all interact in a complex way. A comprehensive approach is also
needed for implementation of policy measures. A distinguishing feature of the Fifth Plan is
the explicit attention given, inter alia, to environmental issues. Public sector involvement in
encouraging, supporting and protecting environment is manifest in all government sponsored
development efforts. In addition to the specific measures for protection of environment
through active monitoring, enactment of enabling laws will be actively pursued.
10.9.3 A two-fold approach in the public sector will be adopted to create an environment
friendly society all over the country for improving the quality of life. The first is an inter-
sectoral one which requires perceiving the sectoral impact on environment, collecting
appropriate and relevant information, carrying out assessment of impact and suggesting
remedial measures. The second is the adoption of direct measures to prevent environmental
degradation. Review, amendment and implementation of laws for the protection of
environment will be actively pursued under the Fifth Plan. While the responsibility of
establishment of the institutional arrangement for development of environment will remain
with the government, in view of the success of NGO programmes on environment issues,
formal mechanisms allowing for the exchange of information as well as undertaking joint
programmes will be encouraged.
10.9.4 NEMAP will require continuing efforts and multiple strategies. It will require close
monitoring, supervision and evaluation of implementation of various programmes and
measures with swift course of corrections in government approaches, process and skills from
time to time.
10.9.5 Implementation of NEMAP as a follow-up of the Agenda 21 as well as needed
institutional and administrative supports for the purposes mentioned above, require
participation of many different ministries and agencies of the government. To this end, and
for the various steps to be harmonised, in-house leadership role is the precondition to attain
the desired goals and objectives of the Plan. MOEF will be in a better position to pursue a
cohesive strategy, apply clear priorities, select appropriate programme/project activities, and
to monitor/co-ordinate effectively with all other concerned ministries/agencies to maintain
ecological balance.
10.10 Public-Private Sector Co-operation
10.10.1 In recent years, industrial pollution as well as urban environmental condition has
been worsening. In this regard, co-operation between the public and private sectors is an
important input needed for environmental protection. There are four main areas, in principle,
 188

where public and private sector co-operation in industrial and urban pollution management is
possible:
a. Policies and guidelines : New policy initiatives will be duly introduced to curb the
current levels of industrial pollution and to bring it to a satisfactory level. This
package of new policy initiatives will contain a blend of improved guidelines and
standards; improved monitoring and enforcement of those guidelines and standards;
and the introduction of newer market-based policies such as changes in relative
prices; tax swaps and tradable discharge rights. The private sector will be vigorously
persuaded for its strenuous involvement in the shaping of these guidelines and
policies.
b. Information, technology and financial programmes to support pollution
abatement : Under the possible umbrella of the public and private sector co-
operation, encouragement will be given for unhindered dissemination of new
technologies to enterprises of all sizes. This may involve specific programmes to
promote clean technologies, improved energy efficiency through access to
information, and training and credit. Also, in the international arena, increasing
pressure to comply will be exerted on firms through inspection of quality standards,
since export companies who do not abide by the environmental standards will be
exempted from large export markets. Some form of cushion such as concessionary
credit requiring public funds may be needed for smooth adaptation of the change to
market solutions of pollution abatement.
c. Privatisation: Increased managerial and technical efficiencies as well as increased
environmental accountability to the public can possibly be obtained by the
privatisation of SOEs. This is likely as this will end the conflict of interest inherent in
SOEs in relation to their self-assumed regulatory roles. In turn, these changes will
provide incentives for SOEs to lower pollution intensities.
d. Municipal service delivery: Through the possible commercialisation, or even
privatisation of the concerned sector, more efficiency will be ensured in the delivery
of municipal services such as solid waste disposal, water supply and sanitation.
Across Asia, contractual use of the private sector services is becoming wide-spread in
all of these municipal service areas. Also in Bangladesh, new management approaches
involving the private sector will be scrutinised. However, in general, relevant policy
and legal issues will be within the realm of the public sector, whereas the actual
service delivery can increasingly be procured under competition.
10.10.2 The tools to achieve increased public-private sector co-operation are briefly
mentioned below with an eight-fold modality of programme implementation:
a. Environmental standards and guidelines: From 1995, series of consultations took
place among the Department of Environment (DOE), and representatives of public
and private sector firms. Consequently, a forum for dialogue was initiated.
Continuation of this mode of work is vital, and hopefully, this attitude can further be
strengthened during the elaboration of the remaining set of sector-wise rules and
regulations. Moreover, the role of the Bangladesh Standard and Testing Institute
(BSTI) will be enhanced commensurate with its capacity to provide necessary
certification.
b. Incentive-based policies: A review of the present environmental policy framework
should be undertaken. This is to be done to see how a system of incentives, operating
 189

through the price and tax system, can be designed to expedite compliance with the
Environmental Protection Act and NEMAP. The government will establish close
contacts with its counterparts in other Asian countries to compile examples of
effective and efficient market-based policies. A framework for a joint government and
private sector review will be set up to lay out feasible solutions to distribute the cost
of pollution abatement and adoption of cleaner technologies in a rational way.
c. Access to information: While a more incentive-based environmental policy will be
developed, the government will emphasise to ensure continuous updating of basic data
on pollution levels, and perhaps, even firm-specific compliance, and that information
on these are available to the people. In this regard, close studies of recent experiences
from Indonesia, the Philippines and China will be undertaken for applicable lessons.
d. Awareness: For productive discussions on the industrial pollution issues, the
prerequisite for the private sector is to educate itself in replicable, common and
international practices on the subject. To achieve this, the private sector should spring
up a set of internal activities on environmental topics. These activities should be
designed to prepare the private sector for its role as a partner with the government in
policy formulation and implementation. Some of the issues to be studied and
discussed are : (i) the net financial implications of pollution abatement and improved
waste management; (ii) the need for information and incentives regarding investments
in cleaner technology; (iii) ways to introduce ISO 9000/9001/14000 into Bangladesh
ensuring compliance, and (iv) new business opportunities emerging from improved
environmental management. More concretely, since many firms will be required to
invest in cleaner technologies, both general awareness of the issues and specific
information on available options will be required. The Federation of Chambers of
Commerce and Industry and the other business groups should consult with their
international counterparts to establish a data-base in environment-related actions and
investments, including the following :
i. ways to conduct environmental audits;
ii. improving factory house-keeping;
iii. models for process modification;
iv. examples of smart product design and its adaptation in Bangladesh;
v. consolidation of inefficient units;
vi. methods for conservation and recycling of inputs; and
vii. methods for upgrading of energy systems.
Companies that want to get access to updated information on the international agenda
can also establish links with various green business networks such as ‘The Natural
Step’ and similar groups. The government assistance will be mobilised for work in
this area.
e. Voluntary compliance: Once firms become more aware of international efforts at
voluntary compliance, the process of modernisation should begin. Any company can,
and usually should, start with a simple EMS which reflects the character and
sophistication of that enterprise in relation to environment. As an enterprise gains
experience and upgrades its operations, it can seek ISO 14000 certification to
demonstrate that it has a high quality EMS in place. In many cases, this issue of
certification is critical or controversial and is at the very heart of discussions on trade
implications. It is possible that ISO 14000 certification may eventually become a
practical requirement for success in trading in a small number of sectors and markets,
 190

and it may also be a useful marketing tool for companies to demonstrate their
commitment to environmentally sound behaviour.
f. Financial incentives: Both large and small companies will need financial concessions
to afford necessary pollution abatement or process-change technology. Even access to
capital, whether or not at subsidised interest rates, may help some firms as commercial
banks may not be willing to lend for investments in pollution control equipment. In
these cases, the government will facilitate investment in clean technology through the
establishment of a ‘Green Fund’. The fund may ideally be handled through the
existing banking system, whereas, the screening of applications should be shared
between the public and the private sector. The screening criteria should seek to ensure
that the funding goes to companies that will have difficulty in finding regular bank
credit for environmental investments. The financing facility should be for a limited
time, say for five years. Several examples for such schemes can be found in SAARC
countries, drawing on both the World Bank and the Japanese support.

g. New business opportunities : Environmental concern does not only incur costs for
the private sector, it also opens up new business ideas. In the short run, various types
of environment-related services to manufacturing companies such as environmental
audits, engineering, import/export of environmental technology, environmental
assessment, and ISO certification are all expanding. In case of urban pollution,
possibilities for municipal service provision such as through the privatisation of
collection and management of solid waste can be promoted. The case of increasing the
application of renewable and more energy-efficient resources has a strong
environmental impact, but is generally unexplored in Bangladesh. In this backdrop, at
least five areas may be suggested for further studies and actions:

i. preparation of renewable energy development programme;

ii. a feasibility study and assessment of wind energy;
iii. a socio-economic survey of the photo-voltaic pilot project for the Rural
Electrification Board;
iv. assistance to Grameen Shakti’s photo-voltaic market development project; and
v. field visits and training of staff involved in renewable energy development.

This is another area where constructive co-operation between the public and private
sectors may yield important results. A public-private and donor cost-sharing approach
to technology demonstration and dissemination may be explored.

h. Cleaning-up of hot-spot pollution areas:

The operation of the Hazaribagh tanneries in Dhaka is considered a major provocateur
of environment pollution. In the path to improved co-operation, the government and
private sector will take this problem up as a test case. Rather than completely
relocating the tanneries, attempts will be made to set up one or more common
treatment plants. The prescribed actions to clean up Hazaribagh are :

i. The government
a. acknowledges the importance and relevancy of leather industry;
b. condemns the existing pollution levels i.e. leather industry;
c. directs the concerned ministries to produce a feasible solution to the problem;
d. ensures that, possibly through the Green Fund, part of the investment for a common
treatment plant will be financed;
e. recommends a practical financing arrangement defining public and private sector
burden-sharing in conjunction with the main stakeholders in the leather industry.
 191

ii. The leather industry:

abhors the existing production environment;

pledges full co-operation in the common plant solution;

accepts the binding financial responsibility, i.e. paying the waste charges necessary
to finance the running of common plant(s); those who cannot afford the charges
should probably shut down ;

seriously assesses the cost of cleaner technology and take a longer term view in
the profitability of the industry;

informs and trains management staff and workers in environmental management.

iii. Media:

shed light on the present situation, its health impact and ways to improve the
situation;

mobilise the local community (residents, workers) to take active part in the
process to clean up the area.

Steps along these lines will encourage collaboration, prove both political and private
intentions and provide valuable experience for tackling other important, although perhaps less
urgent, pollution management issues in Bangladesh.
10.11 Areas of Special Concern
10.11.1 A special note has to be taken of the environmental damage caused recently at
Magurchara while exploring gas. Attention needs to be intensified on drilling for gas and oil
in offshore areas. Following ensuing exploitation of coal deposits in Barapukuria, Jamalgonj
in Khalispir, hardrock in Madhyapara, and limestone at Joypurhat, special attention will have
to be given to avoid environmental loss or degradation. Similar attention should be there right
from now while extending roads and highways into the remote areas of the hill tracts
following establishment of peace in the area and setting up of tourist resorts in places like
Kuakata, Mujibnagar, Madhabkundu and Teknaf. Conscious preventive steps in all these
areas and cases will be in order in stead of mitigation of degradation after it takes place
because of implementation of projects prima facie designed in public interest.

10.12 General Remarks

10.12.1 There is feeding frenzy in the present global economy to ascertain higher exploitation
of resources, superior technological innovation, bigger markets and exponential profits.
Monetary and psychological pressures are pushing people in the developing and developed
parts of the world alike towards a blind profitability bereft of social costs or consideration.

10.12.2 There is a little opposition to a unified global economy but a little realisation about
its social and environmental disadvantages. The concept of unity has a symbolic. The ideals
of universal harmony and coming together have been accepted by all countries and have
come to fleet high goal of humanity. ‘One market’ implies community of mutual exchange
and co-operation and the ‘global village’ sounds like a healthy place of tolerance and living in
prosperity.

10.12.3 There is almost no recognition that economic unification and technological

uniformity are actually causing environmental destruction and the disintegration of
 192

communities. Rather than bringing people together, economic unification is fostering

divisiveness and creating a gap between the affluent and the lesser beings.

10.12.4 Information about the long-term effects of everything from uses of antibiotics to
dependence on fossil fuels tend not to reach the least developed areas. And the alluring
images in the media and advertising that are not accompanied by warnings about toxic
wastes, erosion of grove lands, acid rain, or global warming, nor do they secure rights to
choose - between the beneficial and the harmful.

10.12.5 As things stand now, we need to regain a balance between the local and the global
positions. Even though the phrase ‘think globally, act locally’ is uttered frequently these
days, the thrust of modernisation is mostly in the direction of globalization. Local cultures
and economies are disappearing at faster rate, taking animal and plant species with them.
Finding a sustainable middle path will necessarily involve active steps toward realisation of
these effects and decentralised production and decision making.
 195

CHAPTER XI

IMPLEMENTATION AND MONITORING

11.1 Introduction
11.1.1 Like any other Plan, the success of the Fifth Five Year Plan will depend on the proper
implementation of its programmes and projects, implementation monitoring and post-
implementation evaluation. This is particularly important in view of the fact that it is a
flexible plan and plan projections will be revised based on evaluation of actual performance.
Annual Development Programme (ADP) is the operational document of a Five Year Plan in
respect of the public sector. It is basically a list of all public sector development projects
undertaken during a fiscal year. While ideally, it should be a list of approved projects duly
appraised by appropriate authorities, the list in reality consists of projects at different stages of
approval including unapproved ones. The implementation of the public sector part of a plan
involves the implementation of these projects in ADPs and policies supporting them. While
for all practical purposes, plan implementation was essentially viewed as the implementation
of the public sector projects, monitoring and evaluation of the projects, policy planning and
policy implementation have received less attention. But with the reorientation of the economy
towards a free market, the private sector will assume greater role and public policies, greater
significance. So monitoring of their impact on the private sector and on the economy as a
whole will demand greater attention.
11.2 Implementation of Plan/Projects
11.2.1 In the project cycle, project implementation is the most critical phase as it is
determined by realities and contingencies. It is further determined by the initial conditions
such as project approval status and timely commitment of fund. As mentioned above, ADP is
traditionally composed of many unapproved schemes which affect project implementation.
Project implementation consists of the following main stages which may overlap with one
another:
a. Feasibility study;
b. Appraisal of project and acceptance by development partner
(for aided project);
c. Approval of projects and assigning responsibility of implementation
to an agency;
d. Appointment of project director (PD) and project staff;
e. Setting up of project office (where applicable);
f. Appointment of consultants (where applicable);
g. Allocation and release of fund;
h. Land acquisition (where applicable);
i. Procurement of goods and services;
j. Execution of projects;
k. Evaluation of completed projects; and
l. Impact evaluation.
11.2.2 Project approval : Strictly speaking, approval of projects should pre-date its
implementation. However, due to delays in processing of projects or exigencies, sometimes
implementation of a project begins even prior to its formal approval. In the recent past, there
has been a marked improvement in the process of approval of projects. The government is
also seriously considering delegating more power of approval to administrative ministries in
 196

order to expedite implementation. This will, however, require further strengthening of the
planning wings of some of the ministries for ensuring quality of project formulation and
evolving an alternative institutional procedure for co-ordination.
11.2.3 Assigning responsibility of implementation to an agency : While there is no bar
against ministries directly implementing projects, this is generally left to their subordinate
agencies like autonomous bodies (e.g. Water Development Board for irrigation projects),
directorates and departments. Usually, project formulation and preparation are also the
responsibility of the implementing agencies in so much as they conceptualise most of the
projects in line with the policy parameters given by the relevant ministries.
11.2.4 Appointment of project director and project staff : Once a project is approved, the
relevant agency appoints a Project Director with the concurrence of the administrative
ministry. The PD then has to appoint the project staff some of whom may be seconded from
the ministry and/or the agency. The selection of a suitable PD is crucial to the project's
success. Project implementation suffers frequently due to the selection of a wrong type of
PD. Project implementation also suffers from frequent transfer of PDs and absence of PDs at
project sites during implementation. Forward planning to complete the preparatory works of a
project may help in partly resolving this problem. This issue needs serious attention of
implementing agencies.
11.2.5 Allocation/Release of fund : The procedure for release of fund has become simpler
than before. Yet it still remains one of the major causes of slow utilisation of financial
resources for project implementation. Every year a new circular detailing procedures for fund
release is issued by the Finance Division. The delay in its circulation along with occasional
changes in the provisions make it difficult to get early release of funds. Release procedures
for approved and unapproved projects are different and are more stringent in case of the
latter. Financial powers delegated at different levels need to be re-examined and where
necessary, may be enhanced. Standard procedures of fund release will also be put in place.
11.2.6 Land acquisition : Land acquisition, particularly in case of infrastructure projects has
remained a sore point in project implementation. The legal procedures are cumbersome and
delay the implementation of projects. The social cost due to displacement of people from the
project land is sometimes high. Recently, however, large development projects like the
Bangabandhu Bridge Project has put in operation the resettlement/rehabilitation of people
affected by land acquisition. The government is also considering a set of guidelines for land
acquisition and resettlement for private sector infrastructure development. All these
procedures need to be made uniform and a clear legal and institutional framework will be
introduced during the Fifth Five Year Plan. An important way to minimise social cost of land
acquisition is to involve the beneficiaries of a project at the project formulation stage through
formation of advisory committee. Quantum of land will be determined judiciously so that no
land is acquired which will remain unutilised.
11.2.7 Procurement of goods and services : Delay in procurement of equipment and hiring
of consultancy services are major problems affecting project implementation. The problem is
particularly intractable in case of aided projects because the multi-lateral and bi-lateral
development partners tend to pursue their own standards for procurement of goods and
services. Such diversities compound the problems of procurement at the users end. The
problem may be further confusing in case of co-financing (from more than one sources). To
overcome these problems, after a careful study in the late 1980s, new procurement guidelines
were issued by the Economic Relations Division (ERD) in 1992. Project directors and agency
 197

officials need to be trained in the use of these guidelines. The effectiveness of the new system
should also be reviewed and problems which may still persist should be resolved.
11.2.8 Construction management : Most investment projects entail construction of physical
facilities like buildings, roads and embankments. But weather condition of Bangladesh tends
to limit the construction season and so the pace of physical work varies over seasons. This
together with the programme of mobilising financial and physical resources need to be
spelt out in a time-bound critical path. Some components may be time-specific while others
may float. A critical path analysis must identify both, while some flexible work may be
delayed. In the sphere of physical works building codes are needed in order to speed up
implementation. More importantly, in construction of public buildings, the role of the Public
Works Department should be one of providing technical support to the project authorities in
respect of design, tender evaluation and verification of work quality and the project authority
should get the work done through private contractors. When a Ministry has a large number of
building works like the Ministry of Education it may contract out designing works in a time-
bound frame.
11.2.9 Execution of projects : Project implementation means strict adherence to design
specification, approved cost, time-schedule and quality. Project authority should prepare a
work plan for project implementation including a bar chart, critical path analysis,
synchronisation/programming of various activities, identify milestone decisions,
implementation procedures and techniques, review and monitoring mechanism. A project
launching workshop, particularly in big and complex projects, should be held before the
project starts and all rules, procedures and systems for implementation and monitoring should
be discussed and agreed upon.
11.2.10 Evaluation of completed projects : In a real sense project implementation cannot
be deemed to have been completed without its evaluation. The executing agencies are
required to furnish to Implementation Monitoring and Evaluation Division (IMED) in a given
proforma certain information. On the basis of such information and also field verification,
project completion reports are prepared and submitted to NEC. At present a very limited
number of projects are taken up by IMED for ex-post evaluation. Some ministries/agencies
carry out impact evaluation of some of their activities through consulting firms. Efforts
should be mounted to get an increased number of programmes/projects evaluated about their
impact on the society at large.
11.3 Monitoring of Projects
11.3.1 Monitoring implementation of development projects is a relatively new idea. Many
developing countries undertook large number of projects under their development
programmes since the middle of the century. But no institution was created to monitor the
implementation and evaluate the results of those development projects until recent years.
Bangladesh experienced monitoring problems after independence and new institutions had to
be built up. The primary responsibility of monitoring of projects rests with the sponsoring
ministry/agency itself. Along with the officials of the executing agencies officers of the
ministry, particularly in the development and/or planning wing, should undertake regular field
visits to keep abreast of the progress of work and to help resolve bottlenecks of
implementation. Monitoring by Implementation Monitoring and Evaluation Division in its
present form cannot be all-embracing. This Division has neither the resources, nor the time to
look into the details of some 1200 projects being implemented annually. In fact IMED was
initially conceived to monitor critical projects in order to expedite their execution, not to
obviate sectoral responsibilities.
 198

11.3.2 For the purpose of effectively carrying out monitoring and evaluation activities several
institutions and practices have developed in Bangladesh. From the government side these
have emerged both at the central level as well as at the levels of corporations and
departments. The development partners in Bangladesh also introduced their own monitoring
and evaluation system. Although both of these systems operate fairly independently in the
country, institutional linkages are often set up and used.
11.3.3 Besides, IMED and the planning wings of the administrative ministries, monitoring
cells of some executing agencies, project implementation units (PIU) of some large projects,
etc. Planning Commission, Statistics Division, Economic Relations Division, etc. also
undertake some sectoral reviews of performance.
11.3.4 Monitoring arrangements
a. Planning wings in administrative ministries : Planning wings of the administrative
ministries were created to strengthen their project planning and monitoring
capabilities. Except for the planning wings of the Ministry of Agriculture, Fisheries
and Livestock, Irrigation and Flood Control and Education, most of the other
planning wings in other ministries are understaffed and ill-equipped to carry out the
planning, monitoring and evaluation functions effectively. Monitoring is carried out
mainly through obtaining progress reports from the project management, field
inspections and monthly review meetings in the ministries. Representatives from
Ministry of Finance, Ministry of Establishment, Planning Commission, ERD and
IMED attend these meetings.
b. Economic Relations Division of Finance Ministry : ERD is responsible for aid
mobilisation and also for programming of external resources for projects. They
undertake quarterly and annual reviews of fund utilisation, especially foreign aid.
Development partners also maintain constant liaison with ERD and inform them of
disbursement situations from time to time. A cell to keep track of the issues related to
aid line-up and utilisation is functioning in the ERD. The information collected and
collated by this cell provide important inputs for the policy makers.
c. Finance Division : With the assistance from UNDP, the System for Autonomous
Bodies Reporting and Evaluation (SABRE), as a computerised database is in
operation at the Autonomous Bodies Wing of the Finance Division. The objective of
the system is to provide standardised financial information on autonomous and semi-
autonomous bodies which are regularly required for budgetary and financial control,
economic planning and performance evaluation. SABRE envisages to cover all
autonomous and semi-autonomous bodies as well as their units or enterprises falling
under the budgetary control of the Finance Ministry. The Development Wing monitors
progress of claims and disbursement of Reimbursable Project Aid (RPA).
d. Development Partners : Most of the development partners have developed their own
system of progress monitoring, namely Tri-partite Review Meetings (TRM mainly by
UNDP), Review Meetings, Review Mission Reports, Consultants' Progress Reports
and Local Mission Reports, etc. Except for UNDP, the World Bank and the Asian
Development Bank who pursue intensive monitoring techniques, the other
development partners rely more on consultant's progress reports and review meetings
with the government.
11.3.5 Monitoring by IMED : IMED is involved in the entire life cycle of a project - pre-
project appraisal, monitoring during implementation and reporting on completion of projects
as well as ex-post evaluation as discussed below.
 199

a. Pre-project stage : Identification, formulation and appraisal of projects are

undertaken at this stage. During pre-project stage IMED contributes as under:
i. Undertakes cost rationalisation prior to submission of the PCP for approval
(This has been discontinued from February 1997);
ii. Involves in the preparatory stage of ADP;
iii. Represents in the NEC/ECNEC/SPEC/DPEC/DSPEC;
iv. Checks rationale of estimate of costs;
v. Checks reliability of implementation schedules;
vi. Checks duplication, overlaps, if any, with other projects;
vii. Compares with experience of similar project(s) implemented before; and
viii.Checks manpower size, reliability and also the suitability of institutional
framework planned for implementation of the project.
b. Monitoring during implementation: IMED monitors progress during
implementation of projects through :
i. Periodic Reports/Returns;
ii. Field inspection; and
iii. Co-ordination/Review meetings.
i. Periodic reports/returns: IMED has introduced a system of progress reporting
for collection of various information on project implementation. The system
attempts in translating the work schedule of projects into quantifiable work
components and to relate the physical performance with the financial
expenditure. In fact, the system follows 'PERT' (Program Evaluation and
Review Technique) management system which the government desires to
introduce in case of all development projects in the country. IMED presently
uses different proforma for the purpose of collection of information about
physical and financial progress of projects/programmes for their evaluation.
The reports on the progress of implementation are examined by IMED
and consolidated into Ministry/Agency-wise reports on physical and
financial achievements vis-a-vis targets. Various implementation problems are
identified on the basis of these reports and information collected by the
officers of IMED during their inspection. These reports are then placed before
the National Economic Council (NEC), Executive Committee of the National
Economic Council (ECNEC) quarterly/periodically along with the
recommendations of IMED for removal of bottlenecks in order to speed up
the implementation of slow-moving projects. The NEC/ECNEC takes
decisions on major issues which become binding on all concerned.
ii. Field inspection : On-site inspection of progress of implementation of projects
is one of the basic responsibilities of the IMED. All the officers of IMED visit
projects to identify problems/bottlenecks of the projects. In fact every month
each sector officer is to inspect at least three projects grouped as follows :
• Project targeted for completion;
• High priority projects;
• Sick projects; and
• Other aided projects.
Projects targeted for completion during a financial year are generally inspected
every quarter, high priority projects twice a year and other aided/sick projects
once a year. Bottlenecks identified during inspection are conveyed through
 200

inspection reports to the concerned Project Director/Agency/Ministry for

corrective action.
iii. Co-ordination/review meetings: IMED officials hold Co-ordination
/Review meetings with the ministries/ divisions/agencies at appropriate
levels and attempt to resolve problems/bottlenecks standing on the way of
smooth implementation of projects. The unresolved problems are taken up
by the Secretary/DGs with the concerned heads of ministries/
divisions/agencies. Some problems are required to be attended to at the level
of the Ministers. Problems of more intricate nature which cannot otherwise
be resolved are placed before the ECNEC/NEC for their decisions which are
followed up by IMED until those are implemented.
c. Reporting on completed projects : A project management is required to submit
certain information through the administrative ministry to IMED as soon as a
project is completed. Generally this takes place at the end of a financial year. IMED
completes reporting on the projects completed in the preceding year in about 3/4
months of the following year. The findings form a part of the annual report
presented to the NEC about overall implementation of development projects in the
country.
d. Ex-post evaluation : IMED also carries out ex-post evaluation of a few selected
projects on a limited scale. The Population Development and Evaluation Unit
(PDEU) of the Planning Commission was transferred to IMED. The personnel of
this Unit are being used to gear up ex-post activities of IMED.
11.3.6 Monitoring of post-implementation operation
(Sustainability monitoring)
a. Sustainability monitoring is a recent concept. In Bangladesh, institutional
arrangements for sustainability monitoring has not yet developed in most of the
agencies. Some agencies undertake this function in a very limited way. These are
Bangladesh Water Development Board, Bangladesh Rural Development Board,
Bangladesh Academy for Rural Development, Bangladesh Institute of
Development Studies, etc. The Ministry of Finance through SABRE made efforts
to install performance evaluation of public sector agencies with limited success.
IMED undertakes sustainability monitoring function on an ad hoc basis on
assignments from the ECNEC, the Planning Commission and upon request from
the ministries/agencies.
b. Sustainability monitoring, though a very necessary tool in the development process,
has not yet taken its desired shape in Bangladesh. The government is aware of this
fact and this is emphasised in the Fifth Five Year Plan.
c. The Environmental Impact Assessment that needs to be carried out during
formulation of projects should be observed by all the concerned agencies and
truthfully followed up during and after implementation. It is high time that
adequate attention is focused on the issue of environment in the formulation and
implementation of all development activities.
11.4 Project Evaluation
11.4.1 Formative or on-going evaluation : Formative or on-going evaluation or diagnostic
study is undertaken both by the executing agencies as well as IMED. This type of evaluation
is done during the implementation of large projects which are of programme nature and
implemented over many years on a continuous basis. The projects are selected from major
 201

sectors facing implementation problems. ECNEC and the Planning Commission sometimes
ask IMED for undertaking on-going evaluation. In addition, agencies also request IMED for
undertaking such evaluation. Data collection is done through field visits, discussions with
project implementation authorities and study of the project document, previous reports,
inspection reports. review papers, etc. These data are compiled and analysed and the
evaluation report is prepared. A simple format for such evaluation is used. It contains
information on objective of the project, approval status, date of actual commencement,
expected date of completion, original and latest implementation period, original and latest
estimated/approved cost, cumulative and component-wise latest physical and financial target
and progress, existing implementation problems, general observations with suggested
solutions/recommendations etc. These reports are published as a part of the Annual Report
prepared for review by the National Economic Council. The NEC directs all concerned to
implement the recommendations made in these evaluation reports. IMED follows up the
implementation of the recommendations. Some agencies also undertake on-going evaluation
of their respective projects, e.g., Population Control & Family Planning Department, Rural
Electrification Board, Bangladesh Rural Development Board, etc.
11.4.2 Summative or terminal evaluation : Since 1983/84 IMED started evaluation of
completed projects on a limited basis immediately after its implementation is declared
complete by the executing agency. Subsequently, from 1986/87, all the projects declared
complete during a particular FY are being evaluated. Evaluation of projects immediately after
its implementation is complete, is termed as "terminal evaluation". Data collection procedure
for terminal evaluation is similar to that of on-going evaluation. Collected data are collated,
compiled and analysed for preparation of the evaluation reports. A simple format for terminal
evaluation is used which contains mainly information on project's latest approved estimated
cost and implementation period, actual expenditure and implementation period, cost and time
over-run analysis, component-wise planned physical target and actual achievement, planned
objective and actual achievement, etc. Measurement of "outputs" as against the PP targets is
mainly emphasised in these evaluation reports including the reasons for non-completion or
partial completion, if any, of any component as per project document. Problems faced during
implementation of the projects are analysed and possible measures for avoiding such
problems during planning and implementation of similar future projects are identified and
incorporated in these evaluation reports. These reports are also prepared as a part of the
Annual Report for review by the National Economic Council. Ministries/ divisions/ agencies
prepare a project completion report (PCR), designed by IMED, for each of the projects
declared complete by them. These reports contain information on seven major areas : (a)
Project Description; (b) Implementation Position; (c) Financial and Physical Program (d)
Achievement of Objectives of the Project; (e) Benefit Analysis; (f) Monitoring and Auditing;
and (g) Descriptive Report.
11.4.3 Ex-Post or impact evaluation :
a. Impact evaluation studies are comparatively a new activity in Bangladesh. As per
the current monitoring and evaluation practices, the lead agency in this area is
IMED though the basic responsibility of such evaluation lies with the respective
administrative agency of projects.
b. The IMED could not take the function of ex-post/impact evaluation on a systematic
and regular basis owing to lack of well-trained manpower in the techniques of ex-
post evaluation and other logistic support. However, since 1983/84, IMED started
ex-post evaluation of selected projects and incorporated them in the Annual
Reports. In the recent past IMED also implemented a pilot project with the
 202

assistance of ADB, to strengthen evaluation capabilities of the division. More

comprehensive technical assistance projects for enhancing evaluation capability of
IMED and the relevant ministries are required to be developed during the Fifth Five
Year Plan period. It is hoped that IMED will be in a position to undertake the
function of ex-post evaluation in a more systematic manner on regular basis after
the evaluation capability of IMED is increased through extensive training of the
existing manpower, increasing the existing manpower strength and other logistic
support. It may be mentioned that intensive impact evaluation has been carried out
in the population sector since 1992. However, in a limited scale within the existing
manpower of IMED, ex-post evaluation work has been taken in hand for all
sectors.
c. Some agencies also undertake impact evaluation. Among them Bangladesh Institute
of Development Studies (BIDS), Bangladesh Rural Development Board (BRDB),
Bangladesh Academy for Rural Development (BARD), etc. may be mentioned.
Some of the development partners also undertake independent impact evaluation of
their aided projects.
11.5 Monitoring and Evaluation Experiences
11.5.1 Pre-project appraisal
a. IMED was assigned from FY 93 the function of rationalisation of cost estimates of
development projects before the Project Concept Papers (PCPs) are finalised for
submission to the Planning Commission for processing the PCPs for approval. The
exercise was being carried out through discussion meetings. Cost rationalisation by
IMED was recently discontinued. IMED, however, strongly feels that cost
rationalisation is a very useful tool in project appraisal and must be carried out
diligently by whatever agency entrusted with the task.
b. IMED is represented in the different levels of project appraisal before investment
decisions are taken. Officers at the minimum of Director level are to attend such
meetings. But officers of appropriate level can not always represent IMED in these
meetings owing to a limited set-up. Other organisations also are not always
represented appropriately. This tells on efficient decisions.
11.5.2 Monitoring during implementation
a. Project inspection : On-the-spot inspection of physical progress of a project is the
most effective tool for monitoring its implementation. It has been observed that
higher physical progress was achieved in the years with greater field-level
inspections. With a view to achieving higher achievement of physical target,
IMED inspection program needs to be intensified. The IMED inspection reports
are sent to all concerned with foreseen identified problems and suggested solutions
thereof. Recommendations made in the inspection reports do not always get
proper attention of concerned quarters. Many senior officials including the
Finance and Planning Ministers observed on various occasions that if IMED
recommendations were implemented, there would be no obstacle to achieve
desired progress in development programmes. Inspection of projects by the
concerned administrative ministries and the executing agencies is also reported to
be inadequate.
b. Review meetings : Review of progress of implementation of development
projects/programmes at the Ministers'/Secretaries' level has established to some
extent a system of management accountability and closer interactions and mutual
 203

appreciation of problems between the decision makers and project implementers

facilitating actions and on-the spot decisions. It has been experienced that review
meetings at higher levels contributes greatly to the progress of implementation. It
is important to mention here that some ministries lack proper administration of
monthly review meetings. They take long time to record and communicate
decisions which jeopardise the subsequent corrective actions.
c. Special monitoring : In order to improve the progress of implementation, initially
40 projects were identified as high priority projects and are being intensively
monitored since January '92. To utilise the project aid allocation to the maximum,
some 16 ministries/ divisions having large share of ADP allocation of budget
(around 80%) have been identified and their projects are also being monitored
very intensively since July '92. IMED also monitors progress of large
procurements under development projects (above Tk. 20 million for goods &
works and above Tk. 5 million for consultancy services). These measures of
special monitoring are showing improvement in the case of high priority projects
and the selected large aid utilising ministries/ divisions thereby showing improved
overall performance under ADP.
d. On-going evaluation : IMED undertakes on-going evaluation as diagnostic studies
in a very limited way. This is mainly due to (i) inadequate knowledge of such
evaluation techniques on the part of the IMED officials and (ii) want of adequate
manpower. This aspect of monitoring during implementation needs more
attention. It is hoped that IMED will try to have improved on-going evaluation of
development projects.
e. Overall absorption capability of ADP : ADP implementation capability has
improved significantly from 56 percent of total ADP allocation in 1972/73 to 96
percent in 1995/96. But it is also observed that except for 4 years (FY'78, FY'81,
FY'89 and FY'90), during the remaining 19 years ADP allocations could not be
utilised fully. In case of PA, the allocation was utilised fully only in FY 1988/89.
It may be mentioned here that, during the recent years, ADPs have been reduced in
revised budgets. This situation of under-utilisation of even reduced ADP
allocations may be attributed to over or un-realistic programming. In pursuance of
an NEC decision a separate list of projects where foreign aid could not be lined up
is inserted in the ADP.
f. Identification of implementation problems : Identification of implementation
problems and recommendation of measures for their solutions are very important
aspects of monitoring of projects during implementation. It has helped reduce the
number of implementation problems as well as the number of projects affected by
those problems. As against 33 different implementation problems in FY'82, the
IMED's 1995/96 annual report identified only 10 major problems as follows :
i. Delay in approval of project/revised project;
ii. Delay in release of fund;
iii. Delay in land acquisition and handover;
iv. Delay in lining up of project assistance;
v. Delay in calling tender and observing formalities;
vi. Delay in appointment of consultant;
vii. Delay in executing agreement with donor country/agency;
viii. Delay in completion of civil works on deposit fund;
ix. Delay in appointment of project personnel; and
 204

x. Delay in fulfilment of conditions precedent for loan effectiveness

and disbursement.
Effective steps and decisions will be taken by the government to resolve these problems
during the Fifth Five Year Plan.
11.5.3 Ex-post evaluation : The function of ex-post evaluation is very limited in Bangladesh
as has already been discussed earlier. However, IMED undertakes evaluation of all completed
projects immediately after those are declared complete. But impact evaluation function is still
insignificant both in volume and in quality. This is attributed to the fact that there are very
few officials in the IMED with necessary skill and experience to undertake impact evaluation.
This area needs immediate attention in the interest of sustainability of development projects.
IMED has recently taken up an expansion program for its organisation and hopes to undertake
this function more systematically and effectively in future.
11.6 Monitoring of Private Sector Projects
11.6.1 Private Sector is visualised to be the engine of growth during the Fifth Plan. The
government policy is to pave the way for rapid expansion of the private sector for
transformation of the economy into a more effective market economy. The government will
play "promotional" rather than "regulatory" role for the private sector and act as a catalyst
through the sponsoring agencies, i.e. BSCIC for small and cottage industries, BEPZA for
industries located in export processing zones and Board of Investment for all other cases. To
facilitate the process, a Privatisation Board has been set up in order to review the
performances of the public sector enterprises and to privatise them in order to sustain
efficiency in operation. There is an Industrial Development Council under the chairmanship
of the Minister for Industries. The concerned sponsoring agencies collect information and
data on quarterly and yearly basis and furnish them to all sanctioning/registering authorities.
11.6.2 The Fifth Five Year Plan envisages 56 per cent of the Plan outlay to be in the private
sector. It is, therefore, imperative that monitoring of the private sector projects be given
proper importance. The Development Financing Institutions (DFIs) have their own system of
monitoring the progress of their own financed projects. But so far, the national monitoring
agency, IMED, has not covered private sector projects in its monitoring system. Considering
the importance of the private sector, IMED should devise a system to monitor the
implementation of the private sector projects also. In the process, Bangladesh Bureau of
Statistics, Board of Investment, Privatisation Board, Export Promotion Bureau, Bangladesh
Bank, BIDS, etc., may be involved.
11.7 Strengths and Weaknesses of Monitoring and Evaluation System
11.7.1 Strengths
a. Through IMED a system has been institutionalised and integrated for project
monitoring, information gathering and dissemination, problem solving, etc.
b. IMED's linkages with the planning processes of the country provides it with the
necessary planning-implementation feedback which is very vital for proper monitoring
of projects.
c. IMED's assessment of inherent weaknesses of the project managers in planning and
implementation techniques finally culminated in the creation of the Academy for
Planning and Development imparting regular training to managers in the techniques of
project preparation, implementation and management.
d. The system of field inspection and holding of review meetings at the
minister/secretary level has established to some extent management accountability and
 205

closer interactions and mutual appreciation of problems between the decision-makers

and project implementers facilitating actions and on-the-spot decisions.
e. In sum, the benefits of the central monitoring system have been manifold such as
establishment of some management accountability, improvement in implementation
and identifying institutional linkages between planning and implementation.
11.7..2 Weaknesses : In spite of the aforementioned contributions of the present monitoring
system, the following weaknesses may be recognised which affect its operational
efficiency :
a. The need and importance of efficient monitoring and evaluation(M&E) activities is
yet to be fully understood by the rank and file in the system;
b. The lack of proper and prompt response from top managers on monitoring reports
often frustrates the reporting authorities and agencies who then neglect the importance
of quality reports. This results in inconsistent reports, which in turn, affects accurate
decision-making;
c. Implementing officers often consider the problems as personal failures, and thus
instead of seeking help in solving these, try to hide them. They only report
achievements and sometimes put the deviations and delays in the dark. Top
management's lack of sensitivity and failure to appreciate problems and difficulties
faced by the lower functionaries have to a great extent, contributed to this situation;
d. Quality control of progress reports is absent or neglected at the project, agency and
ministry/division levels;
e. There are too few people in the central monitoring organisation to manage the
monitoring of large number of projects efficiently;
f. There is a lack of updated knowledge and techniques for efficient monitoring and
evaluation both at the centre as well as in the ministry/agency levels;
g. IMED's own lack of authority and at times inability to initiate problem-solving actions
seriously demoralise the project managers who in turn lose interest in reporting
problems. This also contributes to low quality and lack of accuracy of the reports.
h. Monthly project review meetings in some ministries are not held regularly and others
lack proper administration. It takes a long time to distribute decisions thus
jeopardising the subsequent corrective actions.
i. Submission of project completion reports after a project is declared complete by the
ministries/divisions has not yet been developed as a regular practice.
j. Physical units of measurement are sometimes not mentioned in the project documents
as also in the progress reports from projects, thus rendering any meaningful
interpretation of progress monitoring a difficult task.
k. Even large projects do not always have full-time PDs.
l. Sustainability monitoring lacks proper attention at all levels making investment
ineffective.
m. Monitoring and evaluation of private sector development activities have not been
developed.
11.8 Policy Measures for Implementation of Fifth Five Year Plan
11.8.1 In order to achieve a successful implementation of the Fifth Five Year Plan,
weaknesses mentioned in the previous sections will be removed. The following are some of
the steps which will improve the situation:
 206

a. Capacity building
i. There must be increased capacity building in executing agencies, planning wings
of ministries and IMED on project preparation, cost analysis and implementation
techniques.
ii. Monitoring and evaluation capability at agency/ministry level as well as at IMED
will be strengthened by providing specialised training to the relevant officers both
at home and abroad. Training institutions like the Planning and Development
Academy, Bangladesh Institute of Administration and Management, Bangladesh
Institute of Management, etc., may be conveniently used for this purpose.
iii. Planning wings in the ministries/divisions will be strengthened with appropriate
officers from the economic cadre so as to make them well equipped to handle
monitoring and in-house evaluation of projects.
iv. The administrative ministries/executing agencies will carry out close monitoring of
projects under their jurisdiction so that IMED can concentrate more on selected
priority projects.
b. Project preparation
i. Project preparation with correct identification of components, appropriate design
and specification, cost analysis, site selection, implementing agency,
implementation strategy/mechanism including review, monitoring and evaluation
procedure will be ensured.
ii. Donor and the government requirements for project preparation need to be
synchronised.
iii. Strategic objectives will guide development planning.
iv. Manpower requirement after completion of a project will be standardised and
incorporated in the P.P. In cases where fresh decision is required as to the actual
number of manpower to be retained it will be resolved jointly by Ministry of
Establishment and Ministry of Finance within 3 months of project completion.
c. Approval of projects/Revised projects
i. All unapproved projects in the ADP will be approved by September every year.
ii. ECNEC decisions will be communicated immediately and preferably within a
week after the ECNEC meeting for their speedy implementation.
iii. Approval of revised projects : More authority will be delegated to the
implementing Ministries to approve revised projects involving :
• cost increase up to 25 per cent without exceeding sectoral/sub-sectoral
allocation;
• In case of approved projects, inter-project reallocation (upto 25%) without
exceeding sectoral allocation;
• however, project revision involving additional sectoral allocation, change of
site, change of objectives, impact on environment, large-scale displacement of
people will need Planning Commission's/ ENCEC's approval irrespective of
cost involved; and
• In case of aided investment projects decision on implementation issues arrived
at tri-partite meetings will be considered as the basis for future project
revision, if necessary.
iv. A maximum time-limit of 3 months for approval of revised projects by competent
authority will be adhered to.
d. Execution of projects
i. Manual for procurement of goods, works and services for non-aided projects will
be prepared by the Cabinet Division.
 207

ii. Building codes will be updated and administered properly.

iii. Strict adherence to existing specified time limit in case of procurement of goods,
works and consultancy services will be ensured.
iv. Following time limit will be observed against respective activities :
• Appointment of PD's and project personnel during appraisal/ preparatory
stage;
• Setting up project office within 3 months of approval of the project;
• Fulfilment of conditions precedent for loan effectiveness and
disbursement as specified in PRODOC/Credit Agreements;
• Land acquisition/purchase: 3-6 months;
• Examination of bills : 7-10 days;
• Decision on payment of bills: maximum 2 weeks from the
date of receipt; and
• Submission of claims for RPA : maximum 2 weeks from the
date of receipt.
v. Project director/evaluation committee must strictly follow evaluation criteria/
procurement guideline of the government and donors for bid evaluation. Any
irregularity or deviation on the part of PD/evaluation committee will be penalised.
Likewise, any bidder trying to influence the decision of the project
director/evaluation committee or any other authority will be summarily
disqualified.
vi. Any complaint or allegation against bid evaluation or procurement decision will be
disposed of within 2 weeks at the maximum.
vii. Existing Secretaries' Committee on Finance and Development will be used where
necessary to resolve serious inter-ministerial issues.
viii. Immediate hand-over of completed projects for operation and maintenance will
be ensured.
e. Project Director
i. All large projects will have full-time PDs and their continuity in office will be
ensured even in promotion cases by upgrading their existing positions, if
necessary.
ii. Irrespective of their belonging to government or an autonomous organisation, all
PD's will be delegated the same financial and administrative power.
iii. Experienced persons will be appointed on contract as project directors in
accordance with the ECNEC decision.
iv. PD must promptly bring to the notice of his administrative ministry/higher
authority any shortcoming/problems in project implementation which he himself
cannot solve and the administrative ministry must promptly resolve the issue
either on its own or through the appropriate Secretaries' Committee depending on
the scope and nature of the subject.
v. Training of PDs and project staff is a critical input in efficient project
implementation. Appropriate measures will be initiated to promote institution
building, hold regular courses on project implementation procedures and
techniques, as well as refresher courses for PDs and to prepare handbook on
project implementation.
vi. A system for reward for good performance and punishment for unsatisfactory
performance will be introduced. Risk-taking and initiative will be encouraged.
 208

f. Monitoring
i. Monthly project implementation review meetings in all the ministries/division will
be held regularly and chaired by Minister/Secretary. Regular stock-taking of assets
and level of utilisation will also be carried out.
ii. Recommendations made in the IMED inspection/evaluation reports will be
regularly reviewed in the monthly meetings of the ministry/division concerned and
corrective actions taken.
iii. Head of executing agency and PD when not resident at site will regularly visit
project site and thoroughly supervise the work of consultants and contractors to
ensure adherence to design/specification, cost, time-schedule and quality of work.
iv. Joint field visits by the Planning Commission, IMED, concerned Ministry and PD
will be undertaken from time to time, particularly in respect of important projects/
programmes.
v. Planning wing officers will inspect projects as per government decision regularly.
vi. There will be frequent interaction with donors as soon as problems are identified.
Donors' review missions may coincide with the quarterly co-ordination meetings
of concerned ministries/division.
vii. Micro-management of projects/programmes by any second agency other than the
relevant one should be avoided. Donors also will be discouraged from micro-
management of individual projects/programmes.
viii. General Economic Division of the Planning Commission and Bangladesh Bank
and BOI will develop a working mechanism for monitoring implementation of
private sector projects : a Private Enterprise Council of the Prime Minister
composed of businessmen may be appointed to this end.
ix. There will be a standing liaison committee between the government and private
sector to resolve problems encountered by the private sector investors as practised
in the Ministry of Agriculture; BOI will be revamped and strengthened to this end.
x. An effective system for penalisation of consultants/contractors for bad performance
will be reviewed for either continuation or cancellation.
xi. Small projects, within Tk. 100 million, if not started within 3 months of approval
will be reviewed for either continuation or cancellation.
xii. Seminars on monitoring and evaluation for senior managers and decision-makers
will be arranged for effective functioning of the system.
11.8.2 Other measures : The Planning Commission will continue to oversee the
implementation process and to co-ordinate with the relevant ministries and agencies to
solve any problem that may arise. Special attention in this context will be given for
delegation of implementation responsibility to local government bodies and to devise
an institutional procedure to co-ordinate implementation in relevant administrative
units of the country.
11.8.3 Operations and maintenance : Following implementation adequate attention will be
given to operate and maintain the project. Needless to say, ICVR of the project will
suffer if operation and maintenance are not proper. Involvement of beneficiaries and
local government institutions will be the cornerstone of measures directed to this end.
Besides, adequate funds will be made available and contracts to the private enterprise
given in suitable cases for operation and maintenance.
 209

CHAPTER XII

RESOLUTION OF CONFLICTS
12.1 Introduction

12.1.1 Development or growth implies change in the relevant field. Any such change affects
the status quo in terms of position, entitlement, benefit or loss and expectation of the relevant
people. The relevance is connotive of their roles or ambits of work as producers, consumers,
change-agents or interested citizenry. In addition, change initiates, carries and at times
completes transformation of the environment and the eco-system. Control of river flow, use of
ground water, mining of hard rock and coal, building roads through hills and forests, use of
insecticides and pesticides, and other manifestations and ramifications of the development drive
transform the natural backdrop and the environment hitherto untouched, unexploited,
unmoulded out of quiet serenity and stately tranquillity acquired over years of motivational and
technological stasis and so much adored by the naturalists.

12.2 Need For Resolution of Conflicts

12.2.1 The resulting change in the status quo, the environment and the eco-system has to be
accepted and supported by those who are affected or benefited, touched or hurt. As the theory
has it, a change is justifiable when benefits emanating out of it are socially assessed to be more
than costs or hurts it imposes. In the process those who benefit may do well by carrying with
them those who may be adversely affected or are indifferent. Non-acceptance of, and opposition
to changes yield conflict, which may ,at times and on occasions, lead to rebellion. The process
of acceptance and gaining support is a process of resolution of conflicts. If conflicts are not
resolved yielding acceptance of, and support for the change, the scope of the latter does not
widen desirably, and its rate immerses back into the status quo, the unchanged environment and
the undisturbed nature or even worse. On the other hand, if conflicts are resolved institutionally
and without disruptive societal abrasions, stability in socio-economic management is attained
and sustained, the role players in all relevant fields of production and consumption are provided
with an enabling environment and motivation to contribute their best and the desired change
takes place to the end of socio-economic development of the society. All these contribute to
increase of capital accumulation or creation of productive capacity and increase in efficiency of
resource use. In the context of participatory planning, resolution of conflicts, around the
planned change in the status quo, the environment and the nature is important in as much it
defines, lays out, widens and sustains the conduit of change or development. Indeed, resolution
of conflicts is the spirit of participatory planning.

12.3 Existing Elements of Conflict

12.3.1 In the situational context of Bangladesh, a number of elements contributing to the

process of resolution of conflicts exists: contiguous location (excepting a few small enclaves) of
the country, linguistic unity (excepting some areas in the hill districts), constitutionally accepted
democratic ideals and commitment to prosper in freedom and rapid improvement in roads and
tele-links throughout the country in recent years and demonstrated public support for them have
brought the constituents of our society closer and made it more cohesive. To the end of
sustaining and strengthening solidarity these positive elements ought to be further applied and
used. Opening up of remote areas in hilly districts by roads and telelinks, signing of peace treaty
 210

with the insurgent tribals in hill tracts, connecting the offshore islands with regular water
transports, and out reaching tribal communities in Mymensingh and Rajshahi regions through
spread of education and communication facilities will have definite contributions in removing
conflicts latent in some regional differences and disparities. The opening of the Bangabandhu
Multipurpose Bridge in June ’98 will serve as the single most unifying bond between the
southern and the northern regions of the country. Despite these well identified positive
elements, in a number of areas, especially in the process of formulating and implementing
planned socio- economic change, possibilities of conflict need to be recognised and steps
delineated to resolve them over time.

12.4 Conflicts in Objectives and Mechanics

12.4.1 To start with, by way of enumeration, there may be conflicts while determining the Plan
objectives. Conflicts on this count may arise in terms of both vision and mechanics. The vision
of the society 15 or 20 years hence is likely to be different to different persons or groups. The
enterprising and the rich may like to work for a society different from the one aspired by the
labour or the poor. The expectations of the landless are likely to be different from that of the
land-rich. The consumer's views of societal interest may be different from that of the producer's
seeking protection. The difference in mechanics may centre round relative emphasis to be given
on relevant indicators as well as variables of growth: this may demand answers to questions like
those pertaining to, for example, employment creation or productivity generation, protection or
liberalisation, generation of surplus in agriculture for financing investment in industrial
development and others.

12.5 Constitutional Guidelines

12.5.1 The basic objectives of planned growth is constitutionally defined in Bangladesh. In

Article 15 of the Constitution, provision of basic needs in terms of food, clothing, shelter,
education, health service, gainful employment, reasonable recreation and social security to the
citizenry through planned economic growth is accepted as a fundamental responsibility of the
state. In this process, the state is to pursue (a) emancipation of the toiling masses, the peasants
and the labour, and the backward communities from all exploitations (Article 14), (b) gradual
removal of disparity in standard of living of the rural and urban areas through promotion of an
agricultural revolution, provision of rural electrification, development of cottage and other
industries and improvement of public health (Article-16),(c) adoption of free and compulsory
education and removal of illiteracy (Article-17), (d) equality of opportunity and removal of
social and economic inequality between man and man, equitable distribution of wealth and
uniform level of economic development in all areas (Article-19), and (e) creation of conditions
in which unearned income cannot be enjoyed (Article-20).

12.6 Promoting Consensus

12.6.1 Determined constitutionally as aforesaid, the objectives of planned growth have to be

taken as given by all role players. In other words, the vision that we all have is the vision of a
society meeting the basic needs of the people in an exploitation-free informed environment
encompassing social, economic and opportunistic equality. Within their broad frame, discourses
and deliberations in the parliament, political parties, professional associations, local government
bodies and research institutions are likely to build up consensus on components of these
objectives and relative emphasis to be given to them in changing contexts. In this process the
 211

parliament may serve as the apex deliberative body taking into account deliberations and
discourses in other bodies. Deliberations in the parliament will yield legislative decisions on
policies, projects and programmes and manifest as contributions of the relevant political parties
to the national strive at planned economic growth for meeting the basic needs of the people as
mandated by the constitution.

12.7 Mechanics of Growth

12.7.1 There are two main components of mechanics for attaining the set objectives of planned
development. In the first place, the constitution has laid down a set of premises. These are: (a)
affirmation of the national will to prosper in freedom (preamble); (b) recognition of the people
as the source of all powers of the Republic (article-7) and owners and controllers of all
instruments and means of production and distribution (article-3); (c) meeting basic needs of the
citizenry through attaining a constant increase of productive forces' (article-15); (d) return to
individuals on the principle of `from each according to his abilities to each according to his
work'; and (e) taxation and authorisation of expenditures under the authority of the parliament
(articles-83 and 90). Secondly, subject to the conditions set by the constitution, causative
process of change in one sector because of changes in the inter-related ones is to be taken into
account. Elsewhere, aggregatively these intersectoral relations have been spelt out in their
composition and effects, changes and ramifications. In the present context, these, in turn, are
implicative of gains or losses for individuals and groups and thus need to be understood,
evaluated and accepted. The question centring round distributive justice vis-a-vis incentives for
productive investment, or increase in defence expenditure vis-a-vis investment in education, for
example, will have to be answered in this context.

12.8 Parliamentary Conduit

12.8.1 For continuous resolution of conflicts and differences in the process of attaining these
objectives, subject to the constitutional mandates, the most effective conduit again is the
parliament. Exogeneously, free, fair and regular elections to the parliament coupled with the
freedom of information media will strengthen the parliamentary process. The other important
contributing element in this process will be freedom of speech, conscience, movement,
association and assembly for all citizens as guaranteed by the constitution. Endogeneously,
from the functional point of view, for an in-depth analysis of issues and realistic delineation of
the paths to be taken, strengthening of the relevant standing committees in the parliament seem
to be in order. Open hearings and deliberations in these committees working throughout the year
will contribute to transparent, accountable and responsive policy directions and decisions in this
regard. Dialogues and deliberations instead of boycott and confrontation are likely to facilitate
and converge at answers to issues at hand.

12.9 Role of Public and Private Sectors

12.9.1 Pertaining to this process, the parliament at the present time is expected to decide on two
major issues. These centre around the choice of the public sector in complementation or
supplementation of the instrumentality of the private sector as the major vehicle of growth. In
recent years, there has been a relative relegation of the public sector as the constituent of
`commanding heights' usable by the state to regulate and to promote the economy. All sectors of
the economy have been opened up for investment, production and operation by the private
sector. Despite such an opening, the role of the public sector in development of infrastructure is
acknowledged. Even in such an area, given the constitutional mandate to meet the basic needs
 212

of the people through planned economic growth based on 'a constant increase in productive
forces', choice between public and private sectors as a conduit for attaining productivity should
centre around considerations of relative capability and efficiency in production and equity in
distribution. If for building infrastructure facilities in certain areas or sectors, private enterprise
lacks in capacity, the public sector may be deployed. If following setting up a public utility by
the public sector, inefficiency in operation creeps in, a case for privatisation is built-up. For
directly productive investment in agriculture, industry and in services, if the private sector has
built-up capacity, generally public sector has no reason for deployment of additional resources
or for interference unless social circumstances warrant it in the interest of both producers like
small farmers and poor consumers. A consensus built on these principles will definitely
contribute to constrain as well as to rationalise roles of public and private sectors to the societal
benefit. Such a consensus will facilitate expeditious privatisation of the bloated and unprofitable
state owned enterprises. The process, in its all constituent parts will contribute to shape up ethos
involving market-orientation of the economy in support of democratisation of the political
system.

12.10 Market Failures and Government Failures

12.10.1 Related to the choice between public and private sectors, general questions centring
round market as well as government failures in the economic realm need to be answered. As the
recent theory has it, the market may fail in cases of (a) externalities, (b) public goods, (c) poor
information and (d) monopoly. Failure in this context in all these cases is connotive of inability
or incapacity to attain the desired allocative efficiency. Each case of market failure provides a
potential opportunity for government action garnering benefits in excess of costs. Consequences
of market failure in case of poor information and monopoly are well understood; inherent
conflict of interests that remain to be resolved through reformative measures in these two cases
are also well-articulated, though each requires public interventions of its own kind more
involved when information on market of future goods are non-existent. Such resolution may
not, however, call for supplementation of the market mechanism. Externalities, in terms of
costs, manifests in harmful effects of an individual's or a group's action on the welfare of
non-involved secondary persons. In such an event, social costs exceeds private costs. In terms of
benefits, externalities manifest in beneficial effects of group or individual action on the welfare
of non-paying secondary parties. In such a case private return is less than the social return
resulting in lower investment in the relevant ambit of production and consequent missed
opportunities if left to the private enterprise alone. In the situation involving externalities the
policy makers may carefully consider (a) the magnitude of external costs/benefits relative to the
cost of government action; (b) the ability of the market to devise means of dealing with the
problem without government intervention; and (c) the possibility that the political majority may
take the intervention too far if the external costs imposed on the minority are not fully
considered. Consumption of public goods result in spill-over benefits to secondary parties. It is
costly or impossible to withhold such a good (e.g. national defence) from persons who do not
pay for it. In such a case the market system breaks down as everyone gets an incentive to
become a free rider. And when everyone tries to get a free ride, production of public good
dwindles calling at times for intervention by the government. Private sector philanthropic and
entrepreneurial solutions to certain public goods problems show us that the government action is
not the only corrective way. In resolution of conflicts in such a field this limitation has to be
considered.
 213

12.11 Weaknesses in Public Sector Intervention

12.11.1 At least four factors weakening the case for public sector intervention or operation may
be identified. First, possibility of voter ignorance and inability to recognise costs and benefits of
public sector operation fully is quite high. In a representative democratic system, voters are the
originators of public sector intervention and operation. The applicable self-interest postulate of
free enterprise based democracy assumes propensity of voters to elect representatives offering
greatest personal gains relative to personal costs. The group decision - making delinks outcome
of an issue to the choice of the individual. Voters, as a result, are likely to remain uninformed on
many such issues. They may make their evaluation of representatives on the basis of subset of
issues that are of greatest importance at personal levels. In such a situation, legislative decisions
are not always expected to pass the economic tests of productivity or efficiency. Second,
working in the aforesaid backdrop, the politicians find it profitable to support special interests
reflective of rent seeking and individual or group advantage at the expense of others. This
follows from a postulate of public choice theory that pursuit of votes is the primary stimulus
shaping the behaviour of politicians. More often than not, interests of bureaucrats may
complement those of the interest groups in such cases. Bureaus may have propensities to expand
their programmes to deliver benefits to special interest groups who in turn may work with the
politicians to expand their bureau budgets and ambits and career prospects and pursuits.
Constitutional provisions in respect of equal treatment of all under law, removal of exploitation
and regional disparity, ensuring religious, racial and gender equality and their strict adherence is
one definite way to limit the power of special interests in using the political process at the
expense of others. Third, in the public sector, where decision-makers do not have private
property rights over the resources they control, the short-sightedness is another source of
conflict between good politics and sound economics. In the public sector, voters, politicians and
bureaucrats may support projects and programmes that promise eye-catching short-run benefits
at the expense of not easily-identifiable future costs. In such a situation, there is always a bias
against legislation that involves projects with immediate and easily identifiable costs and high
future returns. Finally, economic incentive for operational efficiency in public sector enterprises
is small. This does not indicate that employees in the public sector are necessarily incapable. It
means that in public sector operation there is no direct relation between work and creativity on
the one hand and public compensation on the other. No individual or group of individuals can
capture relatively small profits yielded by improved operational efficiency in the public sector.
Research over the last several years have shown that private enterprise, compared to public
ones, has provided goods and services in the same field more economically or efficiently.

12.12 Need For Developing Institutions

12.12.1 Public choice theory, in recent years, shows that political action or government
intervention can and, at times, does reduce economic inefficiency emanating from market
failure. At the same time it also indicates that unconstrained intervention may result in
programmes that waste resources. Understanding the shortcomings of both the market and the
public sectors is important if we want to improve our present economic organisations. In
delineating reform of the system, the challenge before us is to develop political, social and
economic institutions, capable of bringing, to the fullest extent possible, the interests of
producers, politicians, bureaucrats and voters into harmony with the general welfare of the
society. And this challenge can be taken up by the parliament functioning in a milieu of
democratic environment and partnership within and around. Likewise the challenge can be met
 214

better by the political parties and various interest groups through adequate awareness and
dialogues across the relevant income classes and voters.

12.13 Supporting Private Enterprise By Public Sector

12.13.1 Taking all these into consideration, as of now, the public sector will do well if it is
geared up and pressed into supporting the private enterprise in all productive sectors of the
economy. To this end, building up infrastructures, especially for flood control and large scale
irrigation and generation and transmission of power, will be important steps. Given the
preponderance of small and marginal farms throughout the country, large investment and
multisectoral approach are needed, and the riparian dimension of water management, flood
control and large scale irrigation are likely to remain as areas of selective and major intervention
by the public sector. Small scale and minor irrigation involving utilisation of ground and surface
water by individual or group of farms will be better accounted by the private owners and
operators. The other important area of intervention by the government seems to be the financial
sector in its parts meeting the needs for long term investment in capacity creation in the private
sector and targeted lending aimed at poverty alleviation. The structure of deposits as is prevalent
now may not allow the system to meet the need for long-term credit for industrial development.
Besides, there are requirements for sponsoring, if not setting up, venture capital institutions and
investment companies for deepening the finance. Credit for the poor, like wise, in the current
situational context of widespread assetlessness and pauperisation, needs innovative credit
support for amelioration and guarding against large scale social discontent. Added to these will
be provision for facilities for health care and human resource development. Private sector
enterprises are not likely to provide these in most and remote areas. All these will be taken up as
definite items in the agenda of action of the government. And finally, there remains quite a large
room for public investment in adaptive research and development in both industry and
agriculture. In this context governmental sponsorship and intervention may be well suited in
such fields as development and export of computer softwares, CAD and CAP, biotechnology,
genetic engineering, survey and exploration of natural resources, etc.

12.14 Organisational Reforms in Public Sector

12.14.1 Related to the governmental intervention in these and other areas in support and
supplementation of the private enterprise, is the issue of making organisational reform of the
public sector agencies. As experience has it, most of the public sector agencies (BADC, WDB,
PDB, BFIDC, etc.) were set up to attain objectives laid down at the time of their setting up. Due
to changes in circumstances and generations of demand for services or products in newer ambits
or areas, the objectives as well as the size and the nature of the relevant organisations warranted
change or modifications. As has been observed, such changes were not brought about in most
cases. This has made some parastatals somewhat aimless and ineffective in public estimation.
The recent decision to abolish or down-size BADC is a case in point. In order to sustain the
government's capacity to make the right kind of intervention in changing circumstances, such
organisational changes and modifications should be slated for. The process may create
discomfort or generate protests on occasions and at times. But despite that, a charted course is
likely to be cost-effective in the relevant field of service, regulation or promotion and
consequently, eliminative of avoidable conflicts.
 215

12.15 Fast Track in Public Sector

12.15.1 The other important area of reform in this field will comprise creating scope for fast
tracks in careers of employees serving the government and the parastatals. As of now, the track
is the same for all irrespective of merit and performance. As a result service and product
emanating out of the public sector as a whole are almost always inept and sluggish and often
unsatisfying. Really meritorious and ambitious people are not attracted into the government and
the parastatals these days. To attract the best and the brightest into public service and to obtain
the most out of them in their creative years, setting up a different and fast track for the best
performers and the standard setters will have to be evolved on the basis of logical analysis and
through consensus of the relevant role players. Service rivalry, postponement of reforms,
politicised and indisciplined conduct as have manifested out of the malaise thus far, testify to
both the extent of inherent conflicts and the urgency to resolve them expeditiously.

12.16 Relation Between Central and Local Governments

12.16.1 In Bangladesh context elements of conflict are existent in the relationship between the
central and the local governments. Despite a clear constitutional mandate to promote local
government institutions with special representation of peasants, workers and women (article -9),
no consistent programme has thus far been undertaken to this end. As of now, zilla parishads at
district level are without elected heads; union parishads so far formally delinked from political
affiliations at national levels are still not adequately heard and attended to; co-ordinating roles of
elected representatives at thana level are yet to be defined in legal and functional terms; and
local government bodies in three hill districts need to be organised to give shape and meaning
to the recently concluded peace treaty with the insurgent tribals. The local government as a
system have inadequate sources of locally raisable resources. As a result, responsibility,
responsiveness and accountability to the local people cannot be cherished very much as uniform
principles of administration and management at various levels and throughout the country. This
inadequacy has placed a limitation on the process of participatory development as is envisaged
now.

12.17 Needed Reforms of Local Government

12.17.1 Promotion of local government institutions, in the present context, may call for reform
in at least four areas. The process of reform in these areas, in turn, will require resolution of
conflicts, explicit and implicit, amongst the relevant role players. In the first place, appropriate
organisations headed by elected public representatives capable of management as well as
development at thana and district levels have to be set up. These bodies along with union
parishads and pourashavas should be given more functions (e.g. in fields of primary health care
and education and local irrigation infrastructure) and adequate co-ordinative and cohesive
authorities. Action along these lines may be conflictive with the current situation wherein local
MPs and officers of the central government tend to interfere and dominate. Secondly, all local
bodies should be made responsible to the local people. To this end, the relevant law should
provide for recall or removal of chairmen or members following passing of no-confidence
motions against them by the local constituents or other members of the local bodies. As of now,
even if a no- confidence motion is passed, chairman of a local body is removable only by or
under the authority of the central government. In such a situation, the representatives elected to
the local bodies tend to forge allegiance to the power that be at the central government vitiating
the principles of responsibility, responsiveness and accountability to the local constituents.
 216

Reform along these lines may not be implicative of erosion of the authority of the central
government; on the contrary, such reforms will yield desired societal gains for the local people
and in the process reinforce the central government in the mechanics of development. Thirdly,
all these bodies excluding city corporations and pourashavas may be given wider fields of
taxation or alternatively keeping their current fields of taxation unchanged, a pre-determined
percentage share, say 12% of all revenues raised by the central government. If decision to share
the revenues of the central government with the local bodies is taken, a principle for their
equitable distribution on the basis of, inter-alia, (a) population, (b) development needs, and (c)
level of local resource raising may be adopted to stave off exogenous considerations in
distributing the pie. Also, periodic finance commission may be set up and used in a
continuously changing context for determining the over all share of the local bodies in the
central government's revenue and its distribution amongst the relevant local bodies in
accordance with appropriate principles. This may imply a transient erosion of power and
authority at various levels of the central government. This is likely to be more than made up
through strengthening realistically the local government bodies for providing more and better
civic services and higher utilisation of physical and social capital in their respective areas. An
overriding adherence to the constitutional mandate by the legislators together with a strong
commitment of the executive organ of the state for obtaining the maximum yield out of a given
investment in physical infrastructure and social investment is likely to result in actions in right
directions and resolution of conflicts in this regard. The recently completed report of the Local
Government Commission has delineated actions and steps to these ends, which needs
expeditious consideration by the government and the parliament.

12.18 Functional Delegation

12.18.1 Finally, following the tradition built up in Japan, the central government may do well
by delegating responsibility for implementing selected local projects planned and funded by it to
the local government bodies. Primary schools within an union, health centres or bridges within a
district, for example, may be given to the relevant union parishad or zilla parishad for
implementing out of project specific grants made by the central government. This way the
technical capability of the local bodies may be enhanced as well as local participation and more
efficient use of resources ensured. In some cases, established facilities in fields of health care,
education, relief or welfare funded and implemented by the central government may be given to
the relevant local bodies for operation and maintenance. This way the delivery mode of services
may be desirably improved.

12.19 Local Government and NGOs

12.19.1 In recent years, quite a number of NGOs -private voluntary development organisations-
based largely on grants and assistances from external sources - have come up to cover almost
the entire country. Management of all these NGOs, excepting a few set-up by religious orders, is
in the hands of Bangladeshi nationals. They have come to cover disaster relief, education,
health, children's welfare, care of the old and infirm, afforestation, environment improvement,
consciencetisation and even election monitoring and voter's education. Most of them are
registered under the Society's Act; a few have been incorporated as non-profit making
companies under the Company Act as well. In all cases responsibility for management and
accounting are well defined and laid out under the relevant laws and by-laws as conditions for
receipt of external support. Given the traditionally weak functioning of the local government
bodies vis-a-vis rather resourceful operation of NGOs and their relative success in the fields of
 217

education, health care and consciencetisation in a few local areas, some seem like having an
idea that NGOs may over years make the need for local government bodies minimal or even
unfelt. In some local areas, seething conflicts as between the relevant local government body
and operating NGO apparatus have also been noticed.

12.20 Supplemental Role

12.20.1 In the future course of development such perception of conflict may not have a room
for serious consideration. NGOs in their resourceful and innovative operation in local areas may
supplement efforts of the central and the local government in the relevant fields; they cannot,
however, be projected or prepared for supplanting or substituting the formal bodies of the
central and the local governments. In fields of health care and education, innovative processes
and procedures developed by some NGOs may as well call for emulation and replication by the
relevant bodies of both central and local governments. Consensus, based on assessment of
needs, performance and resources need to be built up on canalising the efforts of NGOs and
vamping up the roles of local government bodies in this backdrop. Discussions and
deliberations across various fora and relevant organisations for example, in the recently formed
government-NGO Consultative Committee will be called for to fine tune the calling from time
to time in this regard.

12.21 Private Property Contractual Rights and Obligations

12.21.1 Use of the private enterprise as the main vehicle for development demands delineation
and enforcement of (a) private property rights and (b) contractual rights and obligations
expeditiously, firmly and at minimum costs to the parties or the disputants. As experience has it,
scope and span of economic transactions amongst multitudes of private producers, suppliers and
consumers cannot widen smoothly till these demands are met institutionally. The institutional
components in this field are: (a) the laws defining property rights and contractual obligations
and prescribing penal measures for their violations and (b) the administrative-judicial system
enforcing these rights and obligations and awarding penalties for their violations.
Knowledgeable observers in this field opine that the set of laws enacted till date and in force
now, despite their need for some marginal modifications, is adequate. The major problem,
however, lies in their enforcement. The administrative - judicial system seems to have wide
scope to improve upon its present level of performance in this regard. The procedure followed
and the pace maintained in enforcing this set of laws adjudicating disputes that arise in relation
to them are cumbersome, time consuming and costly. Shortfall in enforcement is perceived as a
weakness of the system and erodes public confidence on the system. This perception limits the
span of suo moto acceptance of legal rights and obligations by a large number of economic
transactors. It will remain yet another challenge for the leadership to reform the system and to
account for speedier, firmer and economic enforcement and adjudication to limit if not, to
remove, conflicts in the transaction process pursued by multitude of producers, suppliers and
consumers. Commitment at highest levels of the executive and judicial organs of the state
together with close monitoring and periodic target-oriented training of the relevant personnel
seem to be in order to this end. For supporting newer and smaller producers, suppliers and users
in this regard, setting up of small causes courts in selected urban centres is likely to be helpful
also. Adjudication of small disputes among small but budding entrepreneurs expeditiously and
economically makes the business environment beautiful for spurring small activists into larger
ambits of innovation and production. Obviously, the magnitude of the problem of enforcement
as a whole may appear somewhat awesome at the start. Initial success in this field, however,
 218

will make the relevant role players to take their rights as granted and obligations invariably
dischargable by the society. Following initial steps in a time-bound frame this realisation by the
majority is likely to lessen down conflicts and extend the scope and the span of economic
transactions in the free and primarily private enterprise system.

12.22 Modifications of Laws on Property Rights

12.22.1 The laws on property rights that need modifications, in order to meet the changed
circumstances, call for an in-depth examination and delineation. This will be undertaken by the
recently constituted law commission composed of legal experts and practitioners in the field.
The work of the commission and implementative actions on its recommendations will be a
continuous process.. In the interim period, a number of areas, however, may be identified for
immediate attention and correction for exuding confidence all around and spurring economic
activities across various classes of producers and entrepreneurs spearheading the free enterprise.
These areas are:
a. land tenancy and tenure, particularly in respect of definition of family/household,
agricultural use and agriculturist, subsoil or subterranean rights of 'maliks' (owners),
cognisance of offences and penal provision for violation;
b. vested lands and properties in the plains and common land in hill districts and tribal
areas;
c. copy rights, particularly in relation to the Berne Convention 1954, patent rights vis-a-vis
the Agreement on Trade Related Aspects of Intellectual Properties (TRIPs),
administered by the WTO and penal provisions for violations;
d. insolvency and liquidation of business firms and industries, particularly, in relation to
jurisdiction, cognisance, and expeditious processing and disposal;
e. execution of decrees in relation to money suits;
f. protection of minority shareholders of public limited companies and employer-employee
relations in formal or organised sectors;
g. strikes and lockouts and civil commotions; and
h. unfair or inequitable access to or treatment by public utilities.

12.23 Marketisation and Control of Private Property

12.23.1 Earlier, in the heat of the drive at development based primarily on collective efforts and
the public sector, the emphasis, clearly unexpressed though, was on the control of private
properties. Recognition of the people as owners and controllers of the instruments and means of
production as in the constitution, in the current context of marketisation should be understood as
an enabling provision for using private property rights as an effective spurrer of production and
commerce i.e. promoter of `constant increase of productive forces' throughout the country for
the benefit of people as mandated by the constitution. This understanding seems to have already
converged out of deliberation within major political parties. The labour in the organised sector,
however, still seems to remain largely outside this understanding.

12.24 Administration of Criminal Justice

12.24.1 Apart from the laws relating to property rights and contracts, administration of criminal
justice is another conduit for resolution of conflicts amongst individuals. In recent years as a
litany of the neglect and partisan administration in the past crimes did not decline. The crime
combating machinery of the government has definite scope for improving upon their present
 219

level of performance. Socio-economic development cannot be accelerated in a situation pegged

by frequent and widespread crimes and criminality. Observers point out that the current crime
situation is yielded by (a) eroded values; (b) inadequate and inequitable opportunities for
livelihood and social mobility; (c) anticipation of criminals based on past experience that
criminality is condoned for political partisans; and (d) loss of confidence in the establishment.
Erosion of values is partly the resultant of emphasis on individual effort or private enterprise
propelled by forces of greed and profit. There is no denying that greed and profit are the very
forces that propel private enterprise. In a value system conducive to private enterprise, greed is
satisfied and profit earned by savings, hardwork, and creativity, and not by peddling of
patronages centring around influence over, and access to the power that be at various levels of
the society or the government. In this context, greed and profit-centred values need to change
emulating of virtues of austerity, hard work and creativity. Seeming erosion in current values
may thus be corrected by including, sustaining and cherishing these positive elements of the free
enterprise system. Such an acquisition may come over time through the educational system and,
following cues and examples given by leaderships in respective ambits of production and
management, may enter into the cultural norm of the society as an important constituent.

12.25 Ad-interim Steps

12.25.1 In the interim period, however, a number of steps seem to be in order for attaining and
sustaining equal opportunity and social mobility. These are :
a. quickest possible spread of primary education and health care;
b. relatively more emphasis on scientific and technological education and training;
c. merit-based and need-blind admission into higher educational and training institutions
followed by need-based extensive and full financial support by central and local
governments and private bodies and endowments;
d. depoliticised merit-based affirmative recruitment, and performance-based promotion
and deployment in government and parastatals and other organisations receiving public
financial support or lawful recognition;
e. equitable access to public utilities and credit institutions; and
f. enactments enjoining, promoting, and compelling non-discrimination on grounds of
gender, religion, race or political affiliation in all public and private organisations.

12.26 Role of Political Leadership

12.26.1 Confidence in the establishment may be sustained and cherished by the

administrative-judicial system. The process is likely to be accelerated through provision of
positive cues by the political leadership both within and outside the government. Within the
government, the political leadership should always encourage dispensation and decision-making
within the formal structure and following the formal procedure of the government. Informal
structures and procedures may be used to supplement the formal ones - not to supplant them as
has been the case in the past. All concerned may note, loudly and clearly that if in the process of
governance informal structures and procedures supplant the formal ones, the state as an
organisation, as the theory has it, ceases to exist. Likewise, the political leaderships outside the
government has to be conscious of the societal requirement to correct the process of governance
as constructive critics, and not to supplant it in their drive towards political ascent and power.
 220

12.27 Impartial and Fair Dispensation

12.27.1 Impartial and fair dispensation by the administrative and judicial systems without fear
or favour is a major building-block of public confidence. An apprehension of partial or unfair
dispensation may make an accused, even if he is innocent, flee off as a fugitive or drive him out
of the society as a rebel. Similar apprehension will encourage people at various levels or local
areas to dispense out immediate justice as perceived by them without taking resort to the
institutional course. The other important building-block is expeditious dispensation.
Inexpeditious and cumbersome dispensation tantamounts to denial of decision or service desired
by the people from the establishment. This makes them avoid and ignore the establishment and,
at times, to take law in their own hands, thus undermining the establishment. Making
dispensations and decisions expeditiously at all levels need, therefore, be aimed at as a conflict-
preventive measure.

12.27.2 Three Needed Steps: At least three steps seem to be in order in transforming the
administrative-judicial system in the right direction. First, as mandated by the constitution
(article-77), the office of ombudsman should be set up. With powers to investigate any action
taken by executive organs of the state, this will provide an important input to make the decision-
making in the government appropriately transparent and create ethos cherishing accountability
and responsibility in public service by all public servants and authorities. Second, parliament
may expeditiously enact laws regulating service conditions of persons in the service of the
republic as mandated by the constitution (article-133). Till such time an appropriate legislation
follows, the constitutional recognition of the traditional government servants as persons in the
service of the republic, dispensation of services and decisions by them may not be as impartial
and fair as desired. Needless to mention, partiality and unfairness in this process are likely to
generate discontents, protests and other manifestations of social conflict. Third, the most
important conduit for resolving inter-personal and inter-body conflicts is an independent judicial
system. At levels where adjudication by the judicial system touches, affects and benefits the
multitudes, constituents of its independence, at times and on occassions may be lacking. To
obviate discontents and conflicts arising as such, the founding fathers enjoined in the
constitution separation of the judiciary from the executive organs of the state (article-22).
Despite rhetorics over years, this has not been done in relation to the lower judiciary. The task of
separating the judiciary from the executive organs of the state warrants completion for
sustaining amity and consequent stability of the societal frame.

12.28 Corruption

12.28.1 The administrative and judicial systems are usually perceived as responsible for
combating corruption. Corruption is a crime committing of which results through collusive
arrangement between committing persons and persons legally and morally responsible for
combating such crimes. When persons legally responsible for combating the relevant crime
abets such committing they also commit the same or similar crime. Viewed as such, prevalence
of corruption is indicative of not only scale commission of crimes but also erosion of the state
apparatus legally and morally responsible for combating crimes and punishing the criminals.
Corruption, as of now, is generally believed to be quite widespread. It is perceived as a societal
disease impairing the vitals of the society. This, in turn, is ramifiable in obfuscating and
limiting the process of socio-economic development of the country. Such an impairment and
obfuscation make people lose confidence in the system and breed conflicts as between those
 221

who are parties to and gainers from corruption and those who are not and as such stand to
suffer or lose from corruption.

12.28.2 Categories of corruption: Analytically, corruption may be grouped into four

categories. First, corruption may creep into the formal decision-making process of the state at
high levels. The constitution, the laws in force under the constitution, the state organs and the
authorities set up under the constitution or laws under the same, delineate the formal structure
and the procedure for decision making in the state. If in this process informal structures and
procedures supplant the formal ones, vital state decisions may not be taken in public interest.
Decisions in such cases are either reflective of abuse of formal power or extension of authority
not required or warranted under the relevant law. In such cases state decisions are the resultants
of access, influence and patronage and serve vested interests of groups or quoteries of the
decision-makers. As theory has it, these are the cases of state corruption or corruption at high
levels. Second, corruption creeps in administering regulations and providing services in non-
economic fields of state activities or operations. This may be categorised as departmental
corruption in non-economic fields or transactions. Undue and underhand payments for
correcting land records, servicing or avoiding warrants and summons issued by lower courts and
quasi-judicial authorities, issuing passports, admitting patients into hospitals or students into
better schools or colleges and getting driving licenses or fitness certificates for vehicles are
examples of corruption of this category. More often than not, such payments are made to
expedite the process of certification in respect of conformity with the relevant regulation or
receiving the needed administrative service. These do not result in giving benefits or services
which the underhand payers are not entitled to; these merely expedite or smooth out the arcane
or otherwise ineffective administrative process. The resulting transaction costs in such cases of
corruption is relatively lower. Third, there are cases of under-hand payments to departmental
decision-makers for economic transactions benefiting the payers at the cost of their competitors
or peers. These may be categorised as departmental corruption in economic fields or
transactions. Making specifications of a set of work or a plant in conformity with advantage to a
chosen contractor, supplier or manufacturer in preference to others, award of contracts for or
work orders to those having under-the-counter connections, false certification of works done or
materials received are examples of corruption of this category. In most cases such payments
yield direct pecuniary benefits to the payers to which otherwise they may not be entitled. The
transaction cost involved in such cases is relatively high. As observers perceive, such cost
usually accounts for a portion of pecuniary benefits accruable to the first party to the collusive
arrangement. Finally, corruption manifests in avoidance of lawful pecuniary obligations and
liabilities in collusion with those entrusted to enforce or adjudicate these. Evasion of tax
payment, over-invoicing of imports and under-invoicing of exports, usurpation of other's
properties, concealment and use of public properties for personal use, etc., are examples of
corruption of this kind. In one way or other, these are cases of misappropriation of public
resources or funds.

12.28.3 Corruption at High Levels: Of all these, corruption of the first category i.e. state
corruption seems to be the most destructive. Corruption of this type, as already indicated,
manifests in taking basic or vital decisions of the state on considerations other than public
interest. Constitutionally, all powers of the republic belong to the people and their exercise on
behalf of the people has to be effected only under and by the authority of the constitution
(article-7). Exercise of these powers has to be thus in, and in furtherance of public interest by
constitutionally defined authorities following constitutionally laid down procedures.
Considerations other than public interest in decision making in such cases or levels may centre
 222

round personal or group interest. Serving personal interest may yield pecuniary benefits to the
decision-maker; serving group interest may strengthen the position of the decision-maker in the
group to the detriment of others outside the group. The basic decisions emanate out of the well-
defined organs of the state: the executive, the legislature and the judiciary. In case of
Bangladesh, a sudden announcement of an erstwhile Minister for Foreign Affairs recognising
the government of an intermittent rebel group in Cyprus or appointment of a junior officer as the
head of our permanent mission in New York on the basis of his relationship with the head of
the government in the 1980s or giving away unaccounted amounts to MPs of the ruling party
out of the Prime Minister’s Relief Fund as was done in the past may be cited as examples of
state corruption originating from the executive organ; legislation providing for tax-exempt
import of automobiles for the law makers themselves borders on being an example of not a
very good law originating from the law makers themselves. Formation of a special tribunal
outside the normal courts for trying persons allegedly committing offences under the ordinary
law of the land as was done for the so-called Agartala conspiracy case and willing association of
judges at the highest level of the judiciary in such a kangaroo court in the late 1960s may be
cited as the other example of state corruption pertaining to or involving a few members of the
judiciary. If basic decisions of the state by the executive, the judiciary or the legislature are taken
on personal or group considerations, or sold to the highest bidders, then the very social contracts
underlying the formation of the state are violated and the public trust reposed on state authorities
or organs, betrayed and eroded. Entrenched behind the power of the state and its resources,
corruption of this category is the most difficult to combat and contain. Despite the difficulty,
given its serious destructibility, this type of corruption calls for utmost attention of all
concerned.

12.28.4 Corruption in Non-economic Fields: Corruption involving administering regulations

and providing services in noneconomic fields may be considered from the view points of both
the collusive parties. From the side of those administering the relevant regulations and services,
(a) low remuneration package (b) ineffective hierarchical supervision and (c) inadequate public
vigilance are the propelling inputs into this collusive arrangement. From the side of those
gaining or benefiting from administration of the relevant regulation or provision of the needed
service (a) scarcity and consequent large size of the perceived or the realised value accruing
from affirmative administration of the relevant regulation or expeditious receipt of services
needed, (b) mad rush for competing out other potential receivers of benefits or services, (c)
absence of group unity or action against unethical conduct of the relevant administrators,
regulators, service providers and peers and (d) inadequate public vigilance are the originating
elements. To combat corruption of this category, these propelling and originating elements need
to be controlled or eliminated. Of these one important step will be to increase the remuneration
package of the administrators of regulations and providers of services. In case of corruption in
such a field, social cost (legal fees payable to the state + payments made to the collusive
functionary for obtaining a service or a regulatory benefit) is more than the prima facie legal
cost. A part of this divergence may be captured for increasing the formal remuneration package
of the relevant regulators and service providers while giving the relevant benefits or service in a
corruption-free way. This may be supplemented by decreasing the bloated size of the relevant
organisation. The other important step will be in terms of reducing the scarcity value. This may
be done by dismantling the unneeded regulation and increasing supply of the needed services.
Opening of a clinic in the capital city for instance, may be made to require registration by one
authority instead of permission from as many as 3 as is reportedly the case now. All citizens
except insolvents and fugitives from the law may be made entitled to passports as a matter of
right. Likewise, more schools, hospital beds and street lights may be set up in areas of scarcity
 223

under well publicised programmes. Admission into publicly supported better colleges may be
made contingent on merit alone encouraging the gifted students to converge to centres of
excellence as a matter of course as is the case in Singapore.

12.28.5 Corruption in Economic Fields: Similarly, corruption involving economic

transactions may be considered from the sides of both supply and demand. Underhand payments
or gratifications may be demanded by a departmental decision maker only when he has sizeable
control over pecuniary benefits of the potential gratification provider. By pursuing (a) vigorous
deregulation, (b) expeditious privatisation, and (c) promotion of competition in all sectors of
production and consumption in appropriate cases or areas such a position of control can be sized
down to canalise departmental operations into promotion of economic activities. Likewise
illegal gratification may be supplied or provided by a producing or consuming person or unit
outside the government when such a supply is likely to (a) yield high pecuniary benefit, (b) goes
unprotested by competitors and (c) is not noticed by the relevant supervisors of the gratification
receiver. Promotion of competition in the relevant ambits of production and consumption
coupled with internal and external vigilance on transparency or otherwise in decision-making
obviously are the steps that are in order in this respect.

12.28.6 Other Corruptions: Corruption involving avoidance of lawful obligations and

liabilities is indicative of inadequate adherence to the rule of law and prevalence of elements of
a weak state or a banana republic. In such cases, avoiders reach collusive arrangements with the
administrators and adjudicators of the relevant laws defining and executing pecuniary
obligations and liabilities. Here again, from the side of demand (a) poor remuneration package,
(b) lack of professional pride, and (c) inadequate internal and external vigilance are the collusive
elements. From the side of supply, (a) ability to influence the enforcing agencies, (b) non-
imposition of tax on unhonoured pecuniary liabilities and restrictions on further asset
acquisition before meeting lawful pecuniary obligations and (c) inexpeditious adjudication by
the relevant courts contribute to the miasma. To make the matter worse, the malaise has its
lopsidedness: mostly the rich avoid meeting lawful obligations and liabilities while the poor
face stiff enforcement. The widespread loan default in development financing institutions and
nationalised commercial banks relative to default of small agricultural borrowers of the 2
agricultural development banks and almost no default in the Grameen Bank is indicative of this.
The recent infusion of additional capital in the nationalised commercial banks through bonds
guaranteed by the government has shown acquiescence of the state apparatus to absorb the loan
default of comparatively big borrowers through permanent transfer of the burden on the
shoulders of common tax payers. The legislation debarring candidacies of the loan defaulters for
election to the local government bodies and non-imposition of similar restrictions on
candidacies for election to the parliament is indicative of a not-very-well-appreciated
discrimination breeding discontent in the society. To combat corruption of this category, the
contributing factors both from the sides of supply and demand, need to be corrected.
Commitment of the government in particular and the society in general will be the basic
propellers to account for the needed corrections of the norm and associated circumstances.

12.28.7 Syndication of Corruption: As ardent observers in the field have it, corruptions in all
these areas tend to acquire elements of syndication. Syndication in collusive crime committing
yields benefits, pecuniary or otherwise, across hierarchies of relevant organisations responsible
for providing services or enforcing cleansing in accordance with law. Needless to say when
syndication covers the relevant segments of such an organisation, corruption becomes an
inseparable procedural element in it in-as-much as it is supported and encouraged across the
 224

relevant hierarchies. This makes it very difficult to combat. In such a situation, the sincere and
honest in their minuscule minority fades out as nonconforming and inefficient. This means, in
other words, corruption needs to be confronted at the beginning and, in the inherited situational
context, right now.

12.28.8 Public Awareness and Vigilance Against Corruption: Ultimately, public awareness
and vigilance turn out to be the price of a clean and corruption-free state. While building up
public awareness and vigilance as components of a tradition sustaining and promoting
democratic governance may take time beyond a life time, freedom of information and media and
independent judiciary have much to contribute in the interim span of time. Fortunately for
Bangladesh, the supreme court seems to have come up with effective guardianship in this
respect. The recent justifiability of judicial proceedings against a former president and a number
of ministers on charges of corruption irrespective of their future outcome in terms of innocence
or guilt, as upheld by the higher judiciary of the country has set up a tradition of adjudicatible
public accountability at highest levels. Freedom of press, following recent amendments of laws
relating to press and publications and special powers of the government and setting in of an
environment of tolerance for views have also come as important bases of vigilance against such
corruption. These need to be followed up by an enactment for and in favour of freedom of
information entitling and enabling the citizenry to obtain information on matters relating to
personal or public interest. Additionally, in the light of experience of other countries, full
verbatim recording of deliberations and decisions of meetings of the cabinet, its subcommittees
including the purchase committee and taking these outside the cover of secrecy or
confidentiality (except in case of security matters) will be helpful. Such procedural reform will
impart justifiability of executive decisions following the principle of open adjudication pursued
by the judiciary. Formation and operation of an ethics committee in the parliament along with
continuous functioning of standing and adhoc committees and open public hearings and
deliberations in them will provide restraining elements against possible corrupt conduct at all
levels. In addition to the public accounts and public undertakings committees, there should be a
standing committee on finance and budget in the parliament. Arrangement should be made for
holding more frequent sessions of the public accounts committee and providing adequate staff
support for investigation and analysis. All budgetary measures comprising revisions in budget
passed and supplementary appropriation should be processed through the committee on finance
and budget deliberating and deciding through hearings open to the public. Needless to say, the
legislative control over the budgetary expenditures of the executive may become meaningless in
functional terms if statements of such expenditures are placed before the parliament after these
have already been incurred as has been the inherited practice. To an extent these measures will
desirably limit perceived interference of the legislators into executive actions and decisions at
national, regional, and local levels vitiating the lawful procedure based on the principle of
separation of powers for discharge of executive responsibilities at various levels of the
government.

12.28.9 Two Other Steps: In addition to the measures specific to the type, at least two other
steps of general nature and to an extent, overlapping with others already mentioned, need to be
delineated to combat corruption. First, the political leaderships at various levels may provide
cues to the bureaucracy and the society for discharging duties and responsibilities honestly and
legally. Such cues should also encourage the political activists and the people to adopt the
desired values sustaining and cherishing legal and moral incorruptibility. In this context one
may cite examples of political leaderships in Singapore and Malaysia. It needs to be noted,
corruption in its various categories will be impossible to combat successfully unless the political
 225

leaderships at various levels of the government can and actually give cues in the right directions.
Second, following provision of conducive cues from the political leaderships, the risk of the
parties involved in corruption has to be demonastratively made higher than the pecuniary or
other benefits accruing to them from the collusive arrangement. This is largely the
responsibility of the administrative and judicial systems of the country-having a large scope to
improve upon the current level of performance.

12.29 Gender Question

12.29.1 In recent years, questions centring round gender equality have become important and
demand to be answered expeditiously. Women comprise 48 percent of the population of the
country. Of this, 86 percent live in rural areas. The average age of women at marriage is less
than 18 years; on average a woman produces four children in her life time. Social norm against
remarriage of widows coupled with an average age gap of 10 years between men and women in
wedlock result in 90 percent of widowed population being females. Likewise, women comprise
94 percent of the divorced population of which 54 percent are below 24 years of age. As of now,
participation of females in labour force amounts to over 12 percent; in the manufacturing,
female participation is over 34 percent; and over 20 percent of all households of the country are
functionally female headed. Constitutionally, women in Bangladesh have equal rights with men
in all spheres of the state and of public life; they cannot be discriminated against or subjected to
any disability or restriction with regard to access to any place of public entertainment or resort
or admission to any educational institution on grounds of being women; they are entitled to
special provisions in their favour to be made by the state (article 28); they cannot be
discriminated against in respect of any employment or office of the state (article-29). In addition
to these fundamental rights, prevention of prostitution (article-18) and ensuring participation of
women in national life (article-10) are constitutionally accepted as two fundamental principles
of state policy. Further, guaranteeing of fundamental human rights and freedom and respect for
the dignity and worth of the human person is adopted as a principle fundamental to the
governance of the country (article-11).

12.29.2 Situational Considerations: Despite these constitutional rights and entitlements,

women across both classes and religions, have quite a scope to improve upon their status and
condition in terms of equality with men. If progress in this respect is not made or slowed down,
conflict breeding out of gender inequality as already observed, will increase in intensity with
fuelling from the borderless information media and fast changing economic circumstances.
Specific to the conduits for making progress are the following considerations:
a. Women's lives are organised, (particularly in rural areas) within a framework of
biological, labour and social reproduction of a society in which management of female
sexuality is central to the dominant male interest; in this frame high value is attributed to
female sexuality; this makes females acutely insecure, requiring a cultural norm of
isolation and protection to avoid possible female violation; in this cultural norm, a
violated female irrespective of causes or manner of violation, is treated as a female
fallen from virtue and left to earn her livelihood in any way she can; in this process,
resort to the oldest profession or prostitution by her is acceptable without its being much
stigmatic on male customers and patrons.
b. Under changing economic conditions, the aforesaid cultural norm breaks down, a
continuous deviancy from the acquired cultural norm about womanhood starts to win
over degradation of women as human persons; to accentuate such a break-down,
dynamics of those who break the norm, those who tolerate the breaking and those who
 226

uphold the norm need to be assessed and understood; as is perceived such a breaking
down has its class dimension; for the poor material or economic circumstances may
make men encourage women to break the norm and come out of chains of isolation and
protection.
c. As women come out of isolation, veils and chains into a working and pulsating lives,
they are likely to confront the 'double day' and consequently even 'double exploitation'
through the interplay of gender and class relations; the prevailing gender relations do not
usually release them from the primary responsibility for homestead chores even when
and after they enter the formal work place or the job market. Thus an extension of
female participation in male dominated work-world needs to be accompanied by
changes in traditional codes of household duties enjoining amongst others, cooking of
meals and rearing of children on females alone.
d. Evidently, there is male bias in the set of family laws in force; women across both
classes and religions have to struggle over their (i) inheritance rights in natal family; (ii)
rights to choose husbands; (iii) sexuality and pregnancies in marriage; (iv) rights to the
dowry which usually accompanies her at marriage; (v) property rights in the event of
husbands' death; (vi) rights over property and to subsistence in the event of divorce or
desertion; (vii) custody rights over children, their subsistence and education; and (viii)
procedure of separation and divorce. The laws relating to nationality in marriage,
equality of pay, maternity leave, protection against sexual harassment at work places,
etc., are either absent or unenforced.
e. Equality apart, research across countries in recent years shows that female education has
marked negative relation with fertility and infant mortality and strong positive relation
with life expectancy; likewise schooling is found to have important influence on choice
of number and quality of children; these are effects that influence long term growth of a
society. Specific to Bangladesh, equality of women with men is likely to have positive
effects on poverty alleviation. The female headed households constituting over 20
percent of all rural households are about the poorest reflecting widowhood, divorce and
abandonment, all virtually uncared for by the society.

12.29.3 Policy Measures: These five considerations point out as many mutually reinforcive
policy measures fraught with elements of social and economic conflicts:
a. Breaking the cultural norm centred round high valuation and consequent protection of
female sexuality: this is likely to create and even intensify conflict with the
fundamentalists and uneducated male chauvinists; widespread liberal arts education,
female literacy and collective effort by conscious and educated women to break the
traditional gender codes are likely to limit such conflict down to its ultimate winning
over by the forces favouring gender equality;
b. Providing women access to power through access to material resources: to this end some
definite ways are: (i) credit support following the principles developed by the Grameen
Bank and some NGOs working in the field; (ii) adopting a system or norm for joint
registration of properties by married couples during marriage; (iii) reform towards
equitable inheritance law; (iv) affirmative female employment policy; and (v) election of
women members of the parliament and local government bodies (against seats reserved
for women) by universal adult franchise of the relevant constituencies;
c. Changing the traditional gender code of division of duties of males and females: this can
be done through education, orientation and consciencetisation; NGOs working in the
field have already shown ways following which an initial and widespread break-through
can be made; public debates, open dialogues and affirmative actions by women
 227

organisations are likely to have positive effects; opening up all modes of employment in
the government and parastatals to women is likely to provide the needed pilotage in this
regard;
d. Making appropriate reforms in laws relating to family, inheritance, parental
responsibility, work place equality and nationality in marriage; these have to be taken up
by the parliament in conformity with the constitutional provisions and mandates; and
e. Extending education and health facilities with an effective and affirmative bias towards
women: to this end, the recently adopted subventions and supports to female education
in secondary schools and physically extended health care and family planning facilities
are steps in the right direction; these steps need to be strengthened through curricular
reform and improvement of the health and related service delivery system.

12.30 Structural Adjustment

12.30.1 In the economic realm, Bangladesh has already set its course on structural adjustment.
The starting point on this course - macro-economic disequilibrium - has largely been corrected
and already been almost passed. At this time, restructuring calls for (a) expeditious deregulation
and privatisation in keeping pace with trade liberalisation and reform in the financial sector; (b)
increasing savings and investments by linking them to high returns and profits; (c) decreasing
the bloated size of government and parastatals and state owned enterprises and (d) increasing
exports through more efficient use of labour. These are fully consistent with broad based growth
sharable across all income groups and capable of reducing poverty over time. In the short run,
programmes aiming at these objectives have elements of conflict; existing distortions and
privileges are likely to be defended by politically powerful groups, e.g. protected industries and
organised and politicised labour; domestic demand-reducing measures like withdrawal of
subventions and subsides are likely to hurt the poor; cuts in public spending at least in the short
run may limit down social services, transfer payments and safety nets. Given the commitment
for adjustment, these elements of conflicts may be sized down in terms of adverse effects, by
carefully designing the adjustment programmes in the light of poverty profile and its short term
indicators. These profile and indicators may be used to establish a base line for monitoring
poverty so as to associate the structural adjustment programmes with the socially corrective
measures aimed at target groups directly and by widening access to the relevant public services.

12.31 Areas of Attention

12.31.1 Specifically, three major areas call for attention in this context. First, reduction in the
size of the government will call for shaking off redundant employees, mostly at lower levels and
freezing the size of organisations in areas where marginal productivity is low or zero (e.g.,
defence and regulatory areas after some points). The pains in the process may be turned into
gains by encouraging and attracting the thrownouts and fresh employment seekers into directly
productive self-employment through opening up access to technology and credit and cherishing
higher productivity through increasing the size of return envelope for the remaining productive
ones. This can be facilitated through reaching an understanding among major political parties
and labour groups accepting structural adjustment as an economic sine qua non in the present
situational context. Second, the problem of landlessness and assetlessness has to be addressed in
the short and medium terms. The long term growth potential may not be justification enough to
postpone ameliorative measures at the initial stages. At these stages, extensive investment in
flood control and irrigation is likely to increase the labour component of agricultural production.
In the process, intensity of land utilisation coupled with the spread of water-seed-fertilizer
 228

technology will increase farm employment. Added to that will be required firmer enforcement
of the provisions of Land Reform Act, 1984, prescribing the shares of the landlord and the
sharecropper. At the same time, opening up opportunities for off-farm employment and
providing access to credit and technology to this end will have to be targeted in order to obviate
discontinuity in the social frame in the country side. And third, investment in social sectors will
have to be increased. To an extent this will be possible through reduction in or freezing of
unproductive expenditures in the government and parastatals. But even then, it needs to be
noted, investment in social sectors can be increased sizeably only on the basis of deep political
commitment of, and firm consensus amongst major political parties and interest groups.

12.32 Dictates of Comparative Advantage

12.32.1 In an opened-up competitive economy, following the postulates of structural

adjustment, production for consumption within and export abroad can continue and expand on
the strength of comparative advantage. Potentially, we have 3 elements of such advantage: (a)
gas-based cheap power; (b) abundant and cheap labour; and (c) efficient and economic
management. For keeping unit price of power lower in comparison with that charged, say, in
Mayanmar, India, Nepal or Srilanka, enormous system loss that pervades power distribution in
this country has to be arrested. This will bring the policy makers in serious conflict with the
robbers and suckers of the system-unscrupulous users of power and predatory workers. Given
the importance of power and its required cheap availability, an iron-fisted action is called for to
eradicate the malaise. Any softening down in this regard will pose a threat to the nation's
survival in the current globalised context. Likewise, despite rhetorics and platitudes poured out
or used in the realm of labour relations, economic necessity will require us to keep labour cost
in relation to a unit of production comparatively lower than that in other competitor countries.
Given this starting point, wages of labour should be monitored and promoted so as to allow
increase in them only in sync with increase in labour productivity. To attain and sustain societal
success on this front, consensus will have to be built up among the major political parties and
labour groups around the aforesaid postulates or principles. To this end, segmented collective
bargaining within the bounds of the relevant laws instead of politicised control or manipulation
at national levels as is the practice now, should be encouraged. This will yield higher wages in
sub-sectors as will be permitted by increase in productivity without disrupting cost of
production elsewhere. Considered currently, unquestionably management in private as well
public sectors has wide scope to improve upon. This can be done over time through revamping
the education system in terms of directions as well as quality of management. The newer and
needed directions may include extensive facilities for turning out more MBAs and BBAs and
lesser MAs and BAs in literature and culture, for example, emphasising newer fields like
process engineering, construction management, quality assurance, technological development,
informatics and even educational and health administrations. Besides a management culture
based on hard work, sincerity, creativity, innovative attitude and hands-on approach to problems
at hand need to be created, sustained and cherished. Various professional bodies may be
encouraged as catalysts in the process. The advantage that a manager in Bangladesh equally
productive on the floor as one in a developed country, for example, can be hired and retained at
one-fifth of the modal cost in the latter has to be secured and turned into a continuous process of
making profit and expanding production within and without.
 229

12.33 Caveat in Population Control

12.33.1 Nutrition and Education: The country has already attained marked success in
population control measures. This success is not, as observers in relation to experiences in other
developing countries point out, without caveats. First, birth rate accounted by affluent families
has gone quite down in relation to that accounted by the poor. One result of this is manifested in
malnutrition of the majority of the nation's children. As an estimate has it, out of every 4
children born this minute in Bangladesh, given the continuance of the current nutrition pattern,
only 1 will be physically and mentally healthy person in 15-18 years from now; the remaining 3,
for want of nourishment and continuance of wastage will be physically and mentally
handicapped or retarded. The possibility of the nation's becoming a collection of retarded lesser
beings in its majority looms rather large. This needs to be attended through delineating long
term general programmes as well as short-term target-oriented measures. Second, more children
produced and reared by the poor seems to have put up a social demand on continuance and
extension of the public education system. As experience has it, cost-based education in a private
system mostly meets the needs of children of the relatively affluent. In this context, while
encouraging setting up and operation of private schools and institutions for higher education,
extension of education by the central and local governments and increasing their utilisation for
overall human resource development will have to be provided for.

12.34 Promotion of Social Tolerance

12.34.1 Conflict in the process of socio-economic development is generated out of social

intolerance as well. As tradition of tolerance needs to be created, sustained and cherished to
accelerate and stabilise the process and as experience has it in other countries, educational
system perhaps provides the most significant input for creating ethos sustaining and cherishing
tolerance, freedom of thought and non-conforming attitude required to break though the
frontiers of knowledge and technology. The inherited emphasis on madrasha education, in
relation to religious education otherwise pursuable by other religious communities on their own
and consequently, at the expense of scientific and technological pursuits in general, may be
latent with elements of discomfort in this context. The education system on this ground needs
moulding and reforming. In the absence of liberal arts based education and science-centred
pursuit of knowledge, the system in its parts may degenerate into springboards of
fundamentalism, intolerance and consequent conflicts. All relevant role players - politicians,
educators, social opinion leaders and intelligentsia will do better by debating these issues for
arriving at a consensus.
230
 231

CHAPTER XIII

AGRICULTURE WATER RESOURCES AND RURAL DEVELOPMENT

Agriculture

13.1 Introduction
13.1.1 Agriculture plays a vital role in the growth and stability of the country’s economy as is
indicated by its share in GDP, employment and export earnings. At present, it accounts for
about one-third of GDP and employs about two-thirds of the labour force. Exports of
agricultural primary products accounted for about 12 per cent of total exports in 1996/97 and
if exports of agriculture based intermediate and industrial products (leather, jute) are taken
into account, its contribution comes to nearly 24 per cent. If the newly emerged ready-made
garments which contribute as much as 51 per cent of export earnings is viewed in domestic
value added terms, agriculture is the main source of export earnings of the country. Apart
from these, the role of agriculture is unique for food security and nutritional status of people.
However, as industrialisation proceeds, the output of agriculture will represent a declining
share of the gross output of the economy while the share of manufacturing and services
sectors will increase. Although the contribution of agriculture to the economy is likely to
decline, it will continue to be the single largest contributor to income and employment of the
rural population in the foreseeable future.
13.1.2 Crop agriculture represented a share of about 24 per cent in total GDP and about 73
per cent in agricultural GDP during 1996/97. Within crop sub-sector, foodgrain, particularly
the rice crop dominated the country’s agricultural scenario in respect of both cropped area and
production claiming a share of 74 per cent and 54 per cent respectively in 1996/97. Thus,
development of rice crop has substantial impact on the sector’s performance. There has,
however, been shift in the composition of agriculture over the past few years as indicated by
gradual decline in the share of crop agriculture and increase in the share of non-crop
agriculture (NCA) which consists of livestock, fisheries and forestry. The NCA, particularly
the livestock and fisheries, have, of late, taken off largely through private sector initiatives
showing robust growth of 7.98 per cent and 8.60 per cent respectively in 1996/97. Hence, it
is envisaged in the Plan to develop an integrated agriculture including crops, along with food
management, livestock, fisheries, forestry and environment through more efficient utilisation
of available land and water resources for sustainable agricultural growth.

A. Crops

13.2 Review of Past Performance

13.2.1 Bangladesh made steady progress in crop agriculture in the post-Independence period.
The cropping intensity increased from 148 to 179 per cent and foodgrain production almost
doubled during the period from 1969/70 to 1992/93. Contributing about 75 per cent of the
value added, crops form the largest sub-sector of agriculture. Rice is the dominant crop and
largely determines the rate of progress in the agriculture sector and to a significant extent, that
of the non-agricultural sectors. It covers about 75 per cent of the cropped area and accounts
for about 70 per cent of the value of crop output. In fact, the entire growth in crop production
is due to the growth in foodgrain production, particularly rice. Yield of other non-cereal crops
such as pulses, oilseeds and vegetables almost stagnated, while that of wheat did not increase
markedly.
 232

13.2.2 In 1993/94 and 1994/95, foodgrain production declined as a result of depressed prices
and natural disasters, particularly floods and droughts in the north-west, which is the
country’s surplus grain production region. The average foodgrain production during these two
years dropped to 18.71 million metric ton (mt) from the average of 19.31 million mt during
the preceding three years from 1990/91 to 1992/93. While drought conditions prevailed
during these years, the decline in rice production in 1993/94 also was due to both damages by
floods and the farmers’ response to the fall in the price of rice in the preceding year as
evidenced by more than 4 per cent decline in fertiliser consumption, more than 2 per cent
reduction in area sown and similar decline in irrigation command area. In 1994/95, total
foodgrain production was only 18.17 million mt as against the expected production of 20
million mt. This trend started improving from 1995/96 with a foodgrain production of 19.14
million mt. The year 1996/97 witnessed an all time high foodgrain production of about 20.43
million mt. Foodgrain production, though continues to depend on the vagaries of nature,
increased substantially over the years, following the introduction of high yielding varieties
(HYV) and application of modern inputs like fertilisers and pesticides; but its dependence on
weather continues resulting in fluctuations in production. Wide fluctuations in production
leads to large instability in foodgrain prices having serious implications for household food
security and also for the welfare of the people.
13.2.3 Production of jute fibre reached as high as 8.66 million bales in 1985/86. The
production level declined to 4.92 million bales in 1992/93 and hovered around this level since
then. Sugarcane production has remained more or less around 7.50 million mt since 1987/88.
Production of potatoes has shown a steady increase. It increased from 0.89 million mt in
1975/76 to 1.47 million mt in 1994/95. Other crops like pulses and oil seeds have shown only
marginal improvement nationwide. However, implementation of a crop diversification
programme (CDP) during 1990-95 in 125 thanas gave promising results in terms of yield per
hectare of maize, pulses, oilseeds, potatoes, vegetables, etc.
13.2.4 As regards performance of modern inputs, the irrigated area increased to about 4.00
million hectares in 1996/97 from the level of 2.65 million hectares in 1990/91. Ground water
irrigation covered 68.5 per cent of the total irrigated area while the surface water irrigation
was only 31.5 per cent in 1996/97. The ground water irrigation witnessed significant
expansion during the last two decades. Use of chemical fertilisers increased from 2 million mt
in 1990/91 to 3.02 million mt in 1995/96. Public sector seed distribution (mainly rice and
wheat) occupies only about 5 per cent of the total requirements. The large part of the seed
requirement is met by the private sector.
13.2.5 The reforms of the agriculture sector have been quite pronounced and visible. For over
a decade, a wide range of policy reforms have been implemented in the agricultural sector.
Few of these are privatisation of input distribution, withdrawal of input and food subsidy,
import liberalisation and a broadening of the scope of private investment in agriculture. In
recent years, the coverage of policy reforms in the agriculture sector has substantially
expanded to include minor irrigation equipment, agricultural machinery, seeds and
agricultural trade.
13.3 Fifth Five Year Plan
13.3.1 Sustainability of high yield and environmental protection remain the principal concern
in recent years. Loss of soil fertility followed by unbalanced use of chemical fertilisers, lack
of adequate quantity of water in some areas as well as their appropriate conservation and
management are the major factors causing divergence between potential and actual output of
 233

major agricultural commodities. Various studies indicate that the yield potential of the
existing HYVs of rice is more than 4 mt/ha, whereas the average yield of most of the other
varieties of rice is around 2 mt/ha. Major tasks during the Fifth Five Year Plan will be to
address these issues. The specific objectives of the Plan will be to:
a. increase productivity and real income of farming families in rural areas on a
sustainable basis;
b. attain self-sufficiency in foodgrain production along with increased production of
other nutritional crops;
c. encourage export of agricultural commodities, particularly vegetables and fruits
keeping in view domestic production and need;
d. promote adoption of modern agricultural practices in dry land, wetland and coastal
areas;
e. ensure sustained agricultural growth through more efficient and balanced utilisation of
land, water and other resources; and
f. encourage comparatively large farm to graduate into commercial farming.
13.3.2 Policies and Strategies : In order to achieve the objectives, the strategies/policies will
be evolved and adopted to bring about necessary technical change. The following will be the
specific policies and strategies:
a. improvement of the quality of seeds, particularly HYV and hybrid seeds and
increasing their quantity;
b. development of modern, irrigated and least-risk agriculture with greater reliance on
competitive markets through supply of agricultural inputs at low cost; making public
investment more effective and keeping it limited to key areas as required to
supplement private initiatives;
c. strengthening of the agricultural research and extension systems in order to develop
new technologies relating to crop varieties, integrated farming system, organic
farming, improved agronomic and agro-processing technologies, and for diffusion of
the proven technologies;
d. development and dissemination of ecologically sound and sustainable technologies
such as integrated pest management (IPM) techniques, and organic and bio-fertiliser
use;
e. increasing profitable production of minor crops and thereby maintaining a balanced
crop production and improving the nutritional status of the people;
f. development of suitable technologies in rain-fed, dry land and wetland farming system
to enhance the productivity;
g. restoration/improvement of soil fertility through better management of the organic
matter of soil to improve yields of crops; towards this end, production and use of
bio-manure will be encouraged;
h. assistance to small and marginal farmers in forming groups and associations which
can (i) enhance production and productivity, (ii) sustain agro-business enterprises on
their own, (iii) absorb more credit fund and (iv) adopt/disseminate technologies;
i. participation of NGOs in the agricultural development process;
j. improvement and conservation of plant and genetic resources through collection and
conservation of germ plasm;
k. facilitation of access to markets and the promotion of efficient marketing system;
l. formulation of integrated land use policy conducive to optimum use of agricultural
resources;
 234

m. implementation of measures to cushion and minimise the damage to agriculture and

rural economy brought about by natural calamities;
n. development of the capabilities of rural women and the youth to contribute more to
agricultural and rural development;
o. restructuring of the existing institutional set-up to cope with the changed need;
p. development of human resources through education, training and motivation;
q. development and dissemination of appropriate location-specific and cost-reducing
production and post-harvest technologies for reduction of post-harvest losses and the
removal of transport bottlenecks; and
r. adoption of policies and regulations that will ensure sustainable agricultural
development;
13.3.3 Major areas of public sector promotional activities : The crop production strategy
of Bangladesh will be based on the following central thrusts: (a) increased distribution of high
quality HYV seeds by the public sector; (b) accelerated transformation into irrigated
agriculture to increase and stabilise crop yields; (c) intensification of the cropping systems;
(d) decreased dependence on draft power through mechanisation and bridging of the yield
gaps in irrigated areas; (e) improvement of productivity and minimisation of production risks
in the rainfed, wetland, high land and coastal farming system; (f) diversification of farming
systems to take advantage of favourable agro-ecological conditions; (g) responding to
changing consumer demands and developing a more sustainable agricultural system; (h)
vertical co-ordination of the production, harvesting and marketing chain; and (i)
strengthening of extension, research and other support services.
13.4 Crop Production
13.4.1 Projection of crop production during the Plan has been worked out keeping in view the
production possibilities, agronomic consideration, availability of production inputs and
farmers' accessibility to resources and willingness to increase production within the prevailing
agro-economic condition. Emphasis will be put on increasing yield per hectare rather than
increasing cropped area and shifting from local variety to the HYVs. The purpose of
foodgrain production, in addition to attaining self-sufficiency, will be to provide nutritious
food for the entire population.
13.4.2 Bangladesh is endowed with favourable climate and soils for the production of a
variety of crops throughout the year. The winter crops are greater in number than the summer
monsoon crops. The production of major and minor crops lost balance in recent years due to
greater emphasis given on cereals, especially rice and wheat. The situation needs to be
improved for balanced diet of the people.
13.4.3 The production of minor crops such as pulses, oilseeds, vegetables, fruits, spices, etc.,
is currently inadequate to provide required nutrition in the daily diet of the people. Such
situation will not be allowed to continue. Accelerated production of minor crops,
complementary but not competitive with major food crops production as per requirement for
reducing pressure on cereals, will be pursued during the Fifth Plan period. This will improve
the daily diet of the people, generate rural employment by intensive cropping with improved
technologies, increase farm income and thereby increase the purchasing power of rural
masses. It will also improve the balance of payments by promoting import substitution and
export oriented crops.
 235

13.4.4 Fruits and vegetables are important sources of minerals and vitamins and provide a
part of calorie requirement in the daily diet of the people. They also provide most of the food
roughage which contributes to prevention of disorder of digestive system. Besides, vegetables
protein appear to be superior to animal protein. The nutrition status of the Bangladeshi diet is
on a declining trend due to low intake of vegetables, fruits and spices. The increased
production and intake of vegetables by the people will help compensate for debilitating
nutritional deficiencies.
13.4.5 The foodgrain production in the terminal year of the Fifth Plan has been projected to
be 25.12 million mt. Out of this, rice production is expected to be 23.40 million mt as against
the production of 18.88 million mt in 1996/97. The estimates of wheat and other coarse grain
production have been made at 1.60 million mt and 0.12 million mt respectively in the
terminal year of the Plan. The projected production of important crops have been shown in
Table 13.1
Table 13.1
Projection of Important Crop Production During Fifth Plan
(area in million hectare
and production in million m. tons unless otherwise noted)
Crops 1996/97 (Benchmark) 2001/2002 (Projection)
Area Production Area Production
1 2 3 4 5
Rice 10.40 18.88 10.11 23.40
Wheat 0.71 1.45 0.70 1.60
Sub-Total 11.11 20.33 10.81 25.00
Other coarse grain 0.10 0.10 0.12 0.12
Total Foodgrain 11.21 20.43 10.93 25.12
Potato 0.15 1.85 0.16 2.43
Sweet Potato 0.05 0.50 0.05 0.66
Oilseeds 0.50 0.37 0.70 0.76
Pulses 0.65 0.53 0.78 0.85
Spices 0.15 0.33 0.22 0.50
Vegetables 0.25 1.45 0.30 1.82
Fruits 0.19 2.14 0.26 3.54
Jute (million bales) 0.51 4.87 0.57 7.24
Cotton (million bales) 0.04 0.10 0.11 0.26
Sugarcane 0.18 8.10 0.18 12.37
Tea (million kg) 0.05 54.00 0.05 60.00
Tobacco 0.03 0.04 0.03 0.04

13.4.6 Maize and other coarse grains: Maize is now considered as a substitute for both
rice and wheat since it can be grown in all seasons. From maize one may get food, oil, fuel,
and fodder and feed. The present yield potential is too low. It can be increased to the level of
HYV wheat provided adequate demand is created and fair prices to the growers can be
ensured. The genetic yield potential of maize is very high. Bangladesh Agricultural Research
Institute (BARI) has already developed five high yielding medium duration maize varieties
with grain yield potential of 5-7 mt/hectare, suitable for flood prone areas. The maize
production is planned to increase by 250 per cent to 12,500 mt in 2001/2002 from the
benchmark production of about 5,000 mt. Besides maize, other coarse grains consisting of
barley, sorghum, bajra, and millets have considerable importance from the point of use of
water resource and development of agro-industries. Considering the increased importance of
these minor crops as supplementary food, cattle feed and industrial raw materials, increased
production programme for these crops will be taken up during the Fifth Plan period.
 236

13.4.7 Fruits vegetables and horticultural products: Environment in Bangladesh is quite

rich for production of a large variety of fruits and vegetables. Some fruits such as mango,
banana, pineapple, jackfruit, etc., have world demand. The main problem of fruit production
is its seasonal nature. Year-round production variety is yet to be evolved. Special efforts will
be made during the Fifth Plan to produce at least major fruits and vegetables on a year-round
basis and commercialisation of their production through appropriate research and
development programmes. At the same time, emphasis will be given on the qualitative and
quantitative improvement of various fruits and vegetables production, including production of
mushrooms, flowers, orchids and shrubs, etc., Production of fruits and vegetables has been
projected to be 3.54 million mt and 1.82 million mt respectively by the end of the Plan period.
13.4.8 Potato : Potato is suitable as a security crop in times of rice shortages due to its high
carbohydrate content contributing to improved food security. This is also used as a vegetable
by various income groups of the country. Since it is a short duration crop, its increased use
can reduce the pressure on rice and wheat. Considering the production potential of the crop,
potato production is projected to grow to 2.43 million mt in 2001/2002. The increased
production is expected to come from expansion in cropped area and increase in yield per
hectare. To this end, true potato seed technology will be encouraged and adopted.
13.4.9 Sweet potato : Sweet potato is considered as a subsistence as well as a poor people’s
food. Hence, its production will be encouraged on marginal lands, homestead areas, road
sides and elsewhere as a low input crop to ensure its continued availability to, and
affordability by low income consumers. Sweet potato production is projected to be 0.66
million mt in the terminal year of the Fifth Plan.

13.4.10 Pulses: The pulses of Bangladesh comprise of six major crops, namely, lentil,
khesari, blackgram, mungbean, chick-pea and pigeon pea. Cowpea occupies an important
place in the Chittagong area. The cropped area and production of these pulses have been on
the decline over the past few years mainly because of the increased emphasis on HYV rice
and wheat. But pulses are very important because of protein supply to the human diet and
nitrogen fixation for soil nutrition. Since improved technology can increase per hectare yield
of pulses substantially, pulse production is projected to grow to 0.85 million mt in the
terminal year of the Plan as against the benchmark production of 0.53 million mt.
13.4.11 Oilseeds: Vegetable oil from oilseeds are the main sources of fats in the average
Bangladeshi diet. Its present level of consumption is only 25 per cent of FAO/WHO
recommended level. Efforts will be made to increase oilseeds production to 0.76 million mt
by the terminal year of the Fifth Plan. Groundnut, sunflower and soyabean have been included
in this projected production. New seed varieties are being used in the defined area to avoid
cross-pollination. Production of foundation and certified seeds of improved varieties and
demonstrations of modern technology are important strategies to increase oilseeds production
of the country.

13.5 Cash Crop Production

13.5.1 Jute: Jute is the major fibre crop of the country. Despite the relative decline in
importance of jute in agriculture, potential still exists for the fibre to increase its contribution
to the economy through productivity increases and diversification. The share of raw jute and
jute goods in the total exports of the country has been declining but this still remains
significant. In this situation, special measures will be taken during the Plan period to
 237

encourage farmers to further intensify jute production in order to satisfy domestic and export
demand. To enable jute to compete with synthetics, emphasis will be given to related
agricultural and technological research efforts. The raw jute production is projected to go up
to 7.24 million bales in 2001/2002 as against 4.87 million bales in 1996/97 through per
hectare yield increase, availability of better quality seeds, improved provision of extension
and credit support to growers.
13.5.2 Tea: Tea is one of the most dynamic agro-based, labour intensive, export oriented
industries of Bangladesh. It plays a vital role in the national economy in both export earnings
as well as in employment generation. Plantation and production of processed tea are the two
main activities in the private sector. In the public sector, green leaf production was promoted
through development projects implemented by the Bangladesh Tea Board. With the
introduction of high yielding varieties, quality planting materials, timely application of
production inputs and installation of modern machinery, tea has undergone further
improvement and enabled Bangladesh to compete more effectively with other exporting
countries. Increased production is expected to come from higher yields and by reducing tea
vacancies now existing in the garden.

13.5.3 Tobacco: Tobacco is one of the important cash crops of the country. The crop grows
well in sandy, well-aerated, well-drained soils and cool climate. Hence, it is grown as a rabi
crop and most of the area is concentrated in the greater districts of Kushtia and Rangpur.
Due efforts to expand tobacco cultivation since 1973/74, through support from big cigarette
manufacturing firms, made it possible to achieve self-sufficiency in tobacco production by
1980/81. However, recognising tobacco’s adverse effects on health, policies will be adopted
to limit its production with gradual reduction of cropped area in favour of cotton and pulses.
The production of tobacco has been projected to be 0.04 million mt by the terminal year of
the Fifth Plan.

13.5.4 Cotton: Cotton has played a very important role in improving the socio-economic
conditions of the farmers during the previous Plan period. The production has gone up from
45,800 bales in 1983/84 to about 1,00,000 bales in 1996/97. The yield of seed cotton per
hectare has reached a reasonably high level; yet the yield of cotton in the country is low
compared to world standards. The major constraints to increased production are inadequate
ginning capacity and seed multiplication programme, insufficient expertise and material
resources, inefficient system of management and ineffective extension and marketing
organisation. Textile mills should encourage commercial plantation through co-operatives in
suitable cotton belts. During the Plan period, efforts will be made to provide loans to farmers
to ensure supply of improved seeds, fertilisers, plant protection measures, irrigation and credit
facilities to the growers along with the practising of improved technologies in the cotton
fields. The cotton production has been projected to be 0.26 million bales by the terminal year
of the Fifth Plan as against 0.10 million bales in 1996/97.

13.5.5 Sugarcane : Sugar is the country’s most important agro-industry and sugarcane is
one of the important cash crops. Sugarcane is grown as a 12/15 month crop in a two year
rotation with aus rice crop during the monsoon season followed in the dry months by oilseeds,
wheat, or vegetables. Sugarcane yields in the country are low by world standards and the
quality is poor. The average yield of sugarcane is about 6.1 mt per hectare with a sugar
recovery rate of 8-10 per cent. Sugarcane is grown on about 0.18 million hectares of land. Of
this, about 0.95 million hectares are in the sugar mill zone areas and the rest in the non-mill
zone areas which produces sugarcanes mostly for making gur consumed by the rural people.
 238

Research efforts will be strengthened to raise yield per hectare through varietal improvement,
better management of water resources, fertilisers and other inputs, improved cropping
systems and development of sugarcane delivery system from farms to mills. Considering the
past consumption trend, milling capacity and possible growth rate of production, sugarcane
production is projected to be 12.37 million mt in the terminal year of the Fifth Plan as against
the benchmark production of 8.10 million mt.
13.5.6 Crop diversification : Bangladesh is endowed with a favourable climate and soil for
the production of a variety of crops all the year round. Thus, ample opportunities exist for
crop diversification balancing the production of major crops with that of minor crops. The
minor crop production has substantial potential, if seasonal fallow land is brought under
cultivation with seed-fertiliser-irrigation technology packages. Crop rotation, i.e., exhausting
crops followed by recuperative ones, shallow rooted crops by deep rooted ones, legumes
followed by non-legumes, etc., is envisaged to enrich and maintain soil fertility. Besides,
diversification of cropping pattern, particularly towards the production of high value crops,
will contribute to enhance farmers’ income and to help maintain a better soil structure for
long term sustainability. Efforts will be made to explore the possibility of introducing a non-
rice crop in between aman and boro through adoption of shorter duration rice varieties and
shifting of the timing of crop establishment and harvesting. Lack of technological
advancement is the main constraint to diversification of crops. In order to accelerate
technological advancement, possible strategies will be to:
a. develop HYVs and use hybrid technology and genetic upgradation of non-cereal crops
and strengthen seed production programmes, particularly in the private sector;
b. introduce diversified cropping systems in order to free upland areas in winter season
for non-rice crops so as to facilitate introduction of third crop on the land and under
irrigated condition; short duration mustard can be introduced in between boro and
aman seasons; and
c. introduce extensive extension services, improve drainage and water management,
ensure timely planting and soil fertility management, develop infrastructure and post-
harvest processing and provide marketing facilities.
13.6 Special Agricultural Zones
13.6.1 Apart from plain land agriculture, there are special agro-ecological zones which have
quite high growth potentials. Specific development policy, strategy and programmes for
these zones are needed to exploit the existing potentials of the areas: (a) the upland in the
hilly areas of Chittagong, Chittagong Hill Tracts and Sylhet, (b) the wetland in greater
Mymensingh, Sylhet, Jessore, Pabna, Rajshahi, etc., and (c) the coastal areas of southern part
of Bangladesh. Each requires distinct set of policies, strategies and programmes because of
differences in agro-ecological environment. Research, extension and input delivery will be so
designed as to meet the specific requirement of these special agro-ecological zones.
13.6.2 Rainfed farming: Crop production in Bangladesh is predominantly monsoon
dependent. Of the total rainfed areas, about 3 million ha is estimated to be prone to severe
drought. The entire Barind and Modhupur Tracts constituting about 12 per cent of the total
arable areas are characterised by shallow soil depth having low moisture holding capacity and
heavy sub-surface clay. Crop production in these areas and in the Gangetic flood plains is
mainly dependent on rainfall and on the inundation from the Ganges river and its tributaries.
However, for the whole of the Ganges belt, including the Barind and Modhupur Tracts, no
rainfed farming practice specially suited to the prevailing soil and agro-climatic condition has
 239

yet been developed. There is, thus, an urgent need to develop drought tolerant crop varieties
and drought mitigating technologies that will make maximum use of the land resources of the
rainfed farming systems. Rainfed farming practices will also include supplementary irrigation
which will help increase crop production during the kharif season.
13.6.3 Wetland farming: Large areas of wetland commonly known as beels, baors and
haors in the greater districts of Sylhet, Mymensingh, Jessore, Rajshahi and Pabna hold quite
high potentials for the development of crop agriculture and fisheries, in particular. Crop
agriculture and fish production can grow simultaneously. Besides, preservation of bio-
diversity of the wetland will be given high priority. Greater attention will be given during the
Fifth Five Year Plan to exploit the potentials of crop agriculture and fisheries through
provision of situation specific package of development programmes for research, extension,
input supply, etc.
13.6.4 Coastal farming: Coastal areas in the southern part of Bangladesh constitutes a
specific ecological zone having its specific problems and possibilities. Cyclones, tidal bores,
salinity, etc., visit these areas frequently affecting agricultural output. Therefore, there is need
for developing salinity resistant variety of rice, for example, for these areas. Coconut, betel
nut, palm and mangrove are major cash crops in these areas. Location specific research,
extension and other programmes will be developed and provided for the purpose of exploiting
the potentials.
13.6.5 Hill farming: The upland in the hilly areas of the greater Chittagong district,
Chittagong hill tracts and Sylhet district constitute a special agricultural zone requiring
location specific services and programmes. High potentials exist for production of fruits and
vegetables in these areas. Agricultural development potentials in these areas are quite
substantial. Resources will be provided to develop appropriate technology that are suitable for
upland agriculture.
13.6.6 Cropping intensity : Bangladesh has, by 1996/97, achieved an estimated cropping
intensity of about 185 per cent. Out of the net cropped area of 7.60 million hectare, about 55
per cent is double cropped and approximately 15 per cent triple cropped. However, about 30
per cent is still single cropped. Since all the suitable land is already under cultivation, raising
the intensity of land use is needed. It is expected that cropping intensity will reach 192 per
cent by the terminal year of the Fifth Plan. Cropping intensity from 1992/93 to 2001/2002 is
shown in Table 13.2.
Table 13.2
Cropping Intensity From 1992/93 to 2001/2002
(area in million hectare)
Net Land Area Total Cropped Area Cropping Intensity
1992/93 7.64 13.70 179
1996/97 7.60 14.08 185
2001/2002 (Projection) 7.50 14.41 192

13.7 Agricultural Inputs

13.7.1 Fertilisers: In Bangladesh, despite manifold increases in fertiliser consumption, per
hectare use of it is still one of the lowest. With the privatisation policy of the government,
fertiliser distribution programme has fully been handed over to the private sector. Total
fertiliser consumption during 1996/97 was about 3.45 million mt — urea 2.41 million mt,
TSP and SSP 0.69 million mt and MOP 0.35 million mt. These are projected to increase in
aggregate to about 4.50 million mt, of which urea will be 2.90 million mt (64%), TSP and
 240

SSP 1.00 million mt (22%) and MOP 0.60 million mt (13%) by the end of the Fifth Plan.
Actual application of various types of fertilisers is disproportionate to standard NPK ratio of
1 : 0.5 : 0.5. Fertiliser use at farmer level is dominated by urea (about 70%) followed by TSP
and SSP (20%) and MOP (10%) causing damage to soil structure and thereby constraining
per hectare production of various crops. Following withdrawal of explicit subsidy from
phosphatic and potash fertilisers and also transfer of its trade to private hands, relative prices
of these items have gone up, while urea is reported to be sold at below the cost of production.
The price of urea was reduced in July, 1994 and early, 1995. This distortion of relative price
of urea is said to have aggravated unbalanced use of fertilisers in favour of nitrogenous
fertilisers or inadequate application of non-nitrogenous fertilisers such as TSP and MOP.
Therefore, in view of actual field position and experiences gained so far, it is realised that the
public sector interventions might be required in case of market failure for (a) ensuring
balanced use of fertilisers, (b) maintaining a buffer stock of fertilisers to meet emergency
needs, (c) distribution of fertilisers in the remote areas, (d) encouraging increased use of
organic and bio-fertilisers, and (e) training the farmers by the extension people in using
appropriate doses and combination of fertilisers.
13.7.2 Seeds: Quality seeds in right quantity are recognised to be one of the key elements
for enhancing agricultural production. At present, BADC, as per seed policy 1992,
concentrates its efforts on the production of HYV seeds of paddy, wheat, potato, jute and
sugarcane in the seed farms and also uses farmers to multiply seed on contract basis.
Production programme of all other crops beyond foundation seed will be done by contract
growers. With the introduction of seed policy, emphasis has been given to private seed
growers development. However, the public sector will conduct basic scientific research,
support or conduct breeding work for self-pollinated and minor crops for greater suitability to
divergent agro-ecological zone. Public sector will also carry out programmes for training and
support services for private research and development, variety testing and registration, plant
material inspection and maintaining germplasm, supporting seed associations and promotion
of farmer or community-based seed programme. The concerned agencies under the MOA will
be further strengthened in order to ensure quality of seed at all stages of its production —
breeder, foundation and certified seed. Emphasis will be given on creating facilities and
infrastructure support for hybrid seed research, marketing and development. Farmers will be
given training and technical assistance to extend improved methods of seed production,
testing and storage. Total production of all types of certified and foundation seeds has been
around 45,000 mt during 1996/97. This is expected to reach 62,000 mt by 2002. At present,
only about 5 per cent of total certified seed requirement is met from BADC sources. This
needs to be raised to at least 10 per cent to match 25.12 million mt of foodgrain production
as projected in the Fifth Plan. To this end, BADC seed wing will be strengthened and
restructured. Agricultural Research Institutes (ARIs) along with other research organisations
under National Agricultural Research System (NARS) will upgrade and strengthen research
in order to give full support to augmenting breeder seeds of new varieties. Seed development
accounts for about 28 per cent of total financial provision for the agriculture sector during the
Fifth Plan.
13.7.3 Irrigation: Availability of appropriate quantity of irrigated water from (a) surface
water through gravity flow and LLP, (b) ground water through DTW, STW, HTW FMTW,
DSSTW and VDSSTW, etc., and (c) other sources will be the main factors behind the
growth of agriculture during the Fifth Plan. Total coverage of irrigation through all these
sources in 1996/97 is estimated to have been around 4.00 million ha which is projected to
increase to 5.04 million ha in 2001/2002. This is about 67 per cent of total potential irrigable
 241

areas of 7.56 million hectare. In addition, flood control and drainage facilities are projected to
cover 4.90 million ha during 2001/2002 as against the estimated coverage of 4.20 million ha
in 1996/97. Flood control and drainage programmes will support and assist increased
agricultural production during the Fifth Plan.
13.7.4 Plant protection: Actual plant protection activities are in the private hands. However,
the public sector programmes are confined to qualitative and quantitative aspects of plant
protection: pests surveillance, monitoring and early warning against pest attacks, advisory
service to farmers, traders and others dealing with pesticides and quality control of pesticides
marketed by the private sector. In the Fifth Plan period, the integrated pest management
(IPM) programme will be intensified and expanded in order to safeguard crops from pest and
combat environmental degradation due to pesticide uses. Agricultural extension workers are
responsible for providing advice to the farmers on appropriate plant protection measures.
Collaboration among the local government representatives, extension workers and the NGOs
will be sought to expand IPM programme. Farmers will be given training in the use of
different pesticides through demonstration.
13.7.5 Agricultural credit: Till recently, the major part of agricultural credit to farmers has
been channelled by informal sources catering to the needs of short term credit. Semi-formal
institutions, NGOs, Grameen Bank, etc., also provide target groups credit in the rural areas.
The third source in terms of credit volume is the formal sources comprising the nationalised
commercial banks and agricultural and specialised banks, i.e., Bangladesh Krishi Bank
(BKB), Rajshahi Krishi Unnayan Bank (RAKUB) and Bangladesh Samabaya Bank (BSB).
During the Fourth Plan, the total volume of agricultural credit increased by 150.20 per cent;
the highest increase being for fishery (831.50%) followed by livestock (341.30%), crop sub-
sector (214.30%) and others (93.40%). However, in recent years, there has been a significant
cut in the share of crop sub-sector in the total credit delivery to the agriculture sector from
formal sources. The share declined from 46.38 per cent in 1994/95 to 42.29 per cent in
1996/97. A major reason for this is the serious problem of low repayment due to weak
lending and recovery operations, inappropriate use of loans, frequent occurrence of natural
calamities and loss of crops and weakening of the public price support policy. The low
interest rate to this priority sector dissuades financial institutions from further lending to
agriculture. Moreover, since 1991/92, central bank discontinued its refinance facility for
extending agricultural credit except for the BKB, RAKUB and the Sonali Bank. These factors
dampened the expansion of agricultural credit. In the Plan period, agricultural credit,
especially for marginal and small farmers will be geared up in order to encourage steady
expansion of agricultural output supported by appropriate public policies to ensure fair prices
to farmers. Otherwise, over 6 million farm households will be exposed to uncertainty. In
addition to the existing programme, special credit programme will be launched aiming at
providing credit, particularly to the small and medium farmers. The commercial banks will be
encouraged to provide funds to large farms to enable these to operate on a commercial basis.
Keeping this in view, the Fifth Plan envisages to increase yearly agricultural credit
disbursement. An amount of Tk.30,000 million is projected to be delivered as credit to
agriculture in the terminal year of the Plan.
13.7.6 Mechanisation of agriculture: There is a serious dearth of animal draft power to
cater for the growing needs of an expanding modern agriculture. The available animal draft
power is inefficient and unreliable. As against this, agriculture mechanisation can help in
improving productivity, reducing cost of production, increasing efficiency, increasing inputs
use (water, seed, fertiliser, labour) and achieving timeliness of crop production operations.
 242

Agricultural mechanisation is needed for quick turn-over time and high input use efficiency.
Land preparation, irrigation, insecticides spraying, threshing, crushing and shelling, husking
and milling have been partially mechanised and their magnitudes are expanding gradually
throughout the country. There is a need for continuous development of more efficient and less
costly equipment so that farmers can benefit. Since agriculture is still the mainstay of the
economy, promotion and development of agro-related metal working industries to provide
support to agricultural production is a major concern. Selective mechanisation based on the
traditional devices conducive to productivity will be adopted. In the context of market
economy, emphasis will be given to the collaborative role of public and private sectors in
technology development and its diffusion. An appropriate policy framework for sustainable
development of farm machinery manufacturing will be pursued in the Fifth Plan period.
13.7.7 Agricultural Insurance: Agricultural insurance has been recognised as an important
component of agricultural development strategy. It seeks to protect farm investment through
indemnification of losses to crops, forestry, livestock, fisheries and other farm resources that
are vulnerable to natural hazards and other insurable perils and thereby provides security to
farm income. It can also be significant to the agricultural credit agencies in times of natural
calamities with insurance policies standing as collaterals for loans. With this end in view,
crop insurance programme was at first launched in Bangladesh in 1977. Being entrusted with
it, Sadharan Bima Corporation (SBC) carried out a pilot project to provide multi-peril
coverage to major cereal crops (aus, aman, boro and wheat) as well as to major cash crops of
jute and sugarcane for stabilising farm income. Livestock component was included in 1981.
But, for various reasons, the performance of the project, particularly in respect of crop
insurance was quite poor. Due to weak loss assessment system, indemnity payments far
outstripping premium incomes resulted in mounting losses to SBC. In the absence of any new
initiative to revamp the crop insurance programme, it was discontinued with effect from mid
1995. Livestock insurance has, however, been retained as it has continued to perform
relatively well. During the Fifth Plan, efforts will be made for the development of a
comprehensive agricultural insurance programme.
13.7.8 Agricultural marketing and prices: With a more intensive system of crop
production and the increasing emphasis on diversification, marketing problems, particularly
with perishable crops, have already multiplied and are likely to multiply further unless the
needed remedies are introduced. Marketing costs are already high because of inadequate
infrastructure, high price risks and the lack of credit to traders for marketing activities.
13.7.9 Among the vast number of primary and secondary markets in the country (about
7,800), the Department of Agricultural Marketing (DAM) is responsible for fixing market
charges in 393 markets only. The market centres are under the control of the Ministry of Land
which owns the land and collects marketing fees from sellers. The DAM, during the Fifth
Plan period, will be strengthened to provide improved marketing services with a view to
ensuring fair returns to the growers for their produces and adequate supply to the consumers
at reasonable prices through the improvement of market conditions, reduction of marketing
costs, regulation of market practices and market promotion for agricultural crops like maize,
soyabean, potato, sunflower, etc. Wholesale market development, promotion of agro-
processing industries, market management, creation of MIS in DAM, classification, grading
and standardisation of agricultural products, improvement of storage facilities, particularly for
marginal and small farmers, setting up an Agricultural Price Commission to make price
forecast, production estimate and to make recommendations on the economics of productions
and marketing are some of the specific programmes that will be undertaken during the Fifth
 243

Plan in order to ensure (a) fair price, (b) quality of agricultural products both for domestic
consumption and export and (c) increased production with stable price.
13.8 Agro-processing
13.8.1 Bangladesh experiences seasonal surpluses in several agricultural commodities of
perishable nature. Development of agro-processing facilities can prevent post-harvest losses
and enhance farmers' income. The agro-processing industries are at present in their nascent
stage of development . Most of the technologies and facilities for handling, storage,
processing and packaging of farm products and by-products are substandard and outdated as
they cater primarily to the domestic market. There is considerable under-utilisation of
capacity also.
13.8.2 The scope for the privatisation of support services such as research and extension is
likely to remain limited. However, agricultural research institutes like BARI and BRRI will
carry out research on technology development for agro-processing. Meanwhile, some
technologies are already available with these institutes for the development and growth of
agro-processing industries in the country. Nevertheless, some specialised extension activities
could be delegated to the private sector such as those related to fruits and vegetables
enterprises.
13.8.3 This process of supporting agrobusiness will be continued and strengthened during
the Fifth Plan period. In this regard, two institutional developments in recent years are
noteworthy: the establishment of HORTEX, a private board for horticulture promotion and
the Agro-based Technology Development Project (ATDP) which conducts regular monitoring
of the country's agrobusiness markets and provides information about the development in
foreign markets and opportunities for agro-industries. These projects also support
entrepreneurs with credit facilities.
13.9 Agricultural Research
13.9.1 Autonomous research institutes like BRRI, BARI, BJRI, BINA and BSRI were
established with specific mandates for crop agricultural research in order to make the research
system more service oriented and dynamic. National Agricultural Research System (NARS)
with all the agriculture related research institutes under the co-ordinated leadership of
Bangladesh Agriculture Research Council (BARC) has been established.

13.9.2 The research system needs to re-examine its focus and re-order its priorities, avoid
fragmenting and duplicating its efforts, orient its approach from commodity based to farming
system or integrated production system and strengthen its planning, programme monitoring
and co-ordination. The research system should also strengthen its linkages with extension in
the Plan period. Agro-ecological zone-based research will be undertaken. The criteria for
evaluation of research programmes towards rates of adoption of research output by end- users
and the system of accountability of individual research institution, research administration
and personnel will be reviewed and made consistent with actual needs. Problem-solving
researches will be given priority. Criteria for identification and selection of contract research
programmes by the private sector and NGOs will also be developed in response to the
changing environment at farm level. In the same way, priority list will be evaluated annually
to accommodate changed needs and circumstances. Keeping in view these objectives and
strategies, the following tentative research priority areas have been identified:
a. improvement of foodgrain quality with more digestible protein;
b. increase in efficiency in water use in rice cultivation;
 244

c. integrated plant nutrients and soil quality;

d. post-harvest technology, preservation and relevant agricultural machinery;
e. higher photosynthetic efficiency;
f. nitrogen fixation by non-legumes;
g. technologies for maximum use of commodities and their by-products for value
addition;
h. fruits and vegetables for off-season production including preservation, storability and
tolerance to transportation damage;
i. environmental issues and IPM;
j. development of varieties tolerant to stresses (e.g. drought, salinity, water logging);
k. development of hybrid technology for vegetables, maize and sunflowers;
l. management of soil and plant nutrients with balanced use of organic nutrients;
m. management of on-farm water resources in both irrigated and rain-fed agriculture;
n. conservation of soil, plant and genetic resources;
o. assessing the environmental impacts of declining ground water level;
p. research on tillage operation to reduce turn-around time, multiple cropping and relay
cropping;
q. rainfed technology with major thrusts on development of crop cultivation and
management practices (e.g. zero/minimum tillage, relay cropping, appropriate planting
schedule and use of fertilisers including micro-nutrients);
r. post-harvest handling and storage, primary, secondary and tertiary processing of farm
products and by-products, including pulses, oilseeds, potato, vegetables and fruits;
s. development and pilot testing of different scales of producers-processors agrobusiness
schemes, including contract growing schemes;
t. management of hill agriculture in the eastern and south eastern parts of the country, to
harness the agriculture in largely mono-cropped Barind tract, characterised by
drought, low organic matter and sub-surface heavy clay through identification of
suitable crops varieties and soil/water management and agronomic practices;
management of coastal saline soils; and
u. genetic engineering and tissue culture.
In terms of financial outlay, the agricultural research will absorb about 12 per cent of this
sector’s total development outlay during the Fifth Plan period.
13.10 Agricultural Extension
13.10.1 Transfer of technologies and diversification and intensification of crop production
programme through appropriate extension services are of crucial importance to Bangladesh
agriculture. The extension services must be able to render the needed technical advice and
management support at the appropriate time and place. Currently, the extension service draws
its strength from research findings as well as from farmer’s innovation. On the one hand, it
acquires up-to-date findings from research and transfers them to the farmers, and on the other
hand, it brings feedback in the shape of farmers' problems to the concern of research for
possible solution and again takes back the results to the farmers for their field adoption.
Strengthening of these three way linkages among research, extension and farmers community
is vital for the development of a strong and effective new agricultural extension policy
(NAEP). The Regional Technical Committee (RTC) and District Technical Committee
(DTC) have been replaced by 18 Agricultural Technical Committees (ATC), each covering
2-6 districts in similar agro-ecological zone (AEZ). The composition of National Technical
Co-ordination Committee (NTCC) has been amended to include representatives from NGOs
 245

and farming community also. Agricultural extension together with nutritional awareness
programme will receive about 8 per cent of the agricultural development Plan outlay .
13.10.2 Strategies to develop extension services: The following will be constituents of
strategies to develop extension services:
a. development of qualitative demonstration, field days, agricultural exhibition;
b. farming system approach to extension system;
c. non-commodity approach, i.e., irrigation technology, seed technology, on-farm water
management technology and uses, IPM;
d. strengthening of field level activities through proper delegation of authority from
headquarters to field level;
e. priority to marginal and small farmers;
f. development and promotion of environmentally sound farming practices; and
g. involving local government bodies, especially union and thana parishads in the
process;
13.10.3 Local government bodies will co-ordinate, monitor and supervise the activities of
agricultural extension service at the grassroots level. The NGOs, local government
institutions and the extension personnel will work jointly for extension services. The role of
BADC will be re-structured in accordance with the findings and recommendations of the
recently formed Agriculture Commission.
13.10.4 Agricultural and rural training: In addition to higher education at agricultural
colleges and the University, several other training institutions teach and train personnel who
serve the agricultural sector. These institutions are Central Extension Resources Development
Institute (CERDI) at Joydebpur, Graduate Training Institute (GTI) attached to Agricultural
University at Mymensingh and 12 Agricultural Training Institutes (ATIs) located throughout
the country; although the training facilities vary considerably among institutes, they are
generally inadequate and need support for overall improvement. The curricula equally
emphasise both academic and field trainings. During the Fifth Plan period, two ATIs will be
established to meet the growing needs of extension personnel including women extension
agents. Besides, Academy for Rural Development at Comilla and that at Bogra will train
agriculture personnel of the Ministry of Local Government, Rural Development and Co-
operatives in addition to pursuing their training programme for model farmers and managers
of village co-operative societies on various aspects of agricultural development. To make the
agricultural extension service efficient and effective, the training and communication support
of extension system needs to be reorganised, strengthened and improved. The ATIs and
CERDI will emphasise the qualitative aspects of training in agricultural management,
instruction in the production of training materials, training of trainers and of extension agents.
Training institutes will be given responsibilities for extension work in the nearby villages of
their locations with the objective of achieving better organised extension work in the rural
communities which will, in turn, result in an improvement in the quality of training. In
support of the agricultural extension services, agricultural information service will
concentrate on the systematic planning of multi-media communication activities to assist crop
production and on taking initiatives in other relevant areas and fields.
13.11 Agricultural Education
13.11.1 The objectives of agricultural development can be realised through the effective
spread of education and application of science and technology. The improvement in the
prevailing educational system is essential, if progress and development are to occur in
 246

agriculture. Increased levels of literacy and education among rural people are important
factors conditioning the rate of adoption of improved technologies.
13.11.2 Recognising the need for development of scientific base for modernising agriculture,
the country requires a continuing flow of efficient and qualified human capital to upgrade,
maintain and implement development programmes and projects in a wide variety of public
and private institutions serving agriculture. The responsibility of training these people lies
mainly with the system of higher agricultural education. There is already a base of physical
facilities at Bangladesh Agricultural University (BAU) at Mymensingh, Bangabandhu
Agricultural University at Joydebpur and in agricultural colleges at Dhaka, Patuakhali and
Dinajpur. The existing infrastructural base for higher agricultural education at Mymensingh
and Joydebpur is under-utilised, though broad enough to meet the requirements of the
country for various levels of agricultural experts and extension personnel.
13.11.3 Agricultural education system will be reorganised and strengthened and will be
brought in line with the country's agricultural needs. Teaching will be linked to actual farming
practices in specific farming conditions. Syllabi for agricultural education will be suitably
modified so as to contribute effectively to the requirements of a dynamic agricultural sector.
The major attention will be given to improve the quality of teaching and training and related
student output so that the overall response of the system of agricultural education is sufficient
to underpin the development of human capital and the science and technology base for
agricultural modernisation.
13.11.4 Setting up of agricultural colleges in the private sector will be encouraged in the
Fifth Plan period. Agricultural education has already been introduced at the secondary and
higher secondary levels which will be further improved in years to come. Special emphasis
will be given to the training of the teachers.
13.12 Private Sector
13.12.1 During the Fifth Plan, private sector investment in agriculture will be encouraged,
particularly in areas of manufacturing of farm machinery and implements, irrigation
equipment, fertilisers and pesticides, development of quality seeds, processing and storing of
food, vegetables, fruits and others agricultural products. Adequate fund is likely to be
available for these purposes. For a sustainable growth of the agricultural sector, appropriate
fiscal and monetary measures will be framed taking into account the economy-wide and
transboundary circumstances and issues. The public sector will provide public goods and
services (research, extension, agricultural education, etc.), which may not be efficiently and
adequately supplied by the private sector, support development of technical know-how and
promote access to foreign markets, technology and capital.
13.13 Land Use
13.13.1 The Bangladesh National Conservation Strategy identified six important areas of
conflicting land uses in rural areas. These are: crop agriculture vs. shrimp and capture
fisheries, forest land vs. shrimp and capture fisheries; crop agriculture vs. livestock;
agriculture vs. settlements; agriculture vs. brick fields; and agriculture vs. newly accreted
char lands. Traditional systems found ways to make these various land uses compatible.These
manifested in traditional seasonal shrimp culture and rice cropping, fallow periods and
community grazing land for livestock. Due to population pressure on land, however, these
traditional approaches are breaking down; available agricultural land per capita is roughly
half of what it was 25 years ago. As a result, more intensified uses such as intensified mono-
 247

cropping, intensified shrimp cultivation, and extensive brick fields are degrading soil fertility.
Cropping on fragile char land before it has stabilised invites rapid erosion. Flood control and
drainage structure have altered land and water use pattern and led to the decline of fish stocks
and production by more than 25 per cent in recent years.
13.13.2 To replace traditional land use systems, more careful attention will be given to the
impacts of current land uses. More can be done to maximise land productivity in order to
continue to maintain per capita level of agricultural output. Bangladesh can functionally
expand its 'land' base by more intensive cropping, better use of water and coastal resources,
rational forest management, more attention to integrated land use and development of mixed
cropping systems.
13.13.3 Resolving land use conflicts will be given special attention for sustainable
agricultural development. Formulation of appropriate land use/zoning policy to ensure
optimum use of land, prevent the use of prime agricultural land for brick making and
industrial production, protect land from degradation, reclaim unutilised or degraded land for
suitable use and improve the land resources for future generation will be taken up.
13.13.4 Priority of use of land between competing sectors is to be fixed in consideration of
different physiographic units and sub-units which have different use potentials. While
agriculture will receive a high priority in allocation of all the naturally fertile land, other
sectors of production of renewable resources like forestry, fishery and livestock should also
receive due importance. Forestry will have additional consideration in the policy due to its
importance in environmental protection. The land use policy will clearly enunciate that good
agricultural land is not allotted for or converted to non-agricultural uses like indiscriminate
urban and industrial development.
13.14 Agricultural Development and Poverty Alleviation
13.14.1 Crop agriculture and minor irrigation served as the prime generators of income and
employment in the rural Bangladesh over the past two decades. There is no doubt that the
modern HYV seed-fertiliser-irrigation technology has made a significant impact on rural
poverty alleviation. Modern agricultural technology has also helped generate employment in
the rural areas, particularly for the landless. The diffusion of agricultural technology has also
helped changing the nature and terms of the tenancy market impacting on income distribution
and poverty. Some possible technology interventions with reference to the asset status of
households in the Fifth Five Year Plan period will be the following:
a. assetless: Value adding activities utilising the biomass available within the village,
raising plant nursery, seedlings, compost making, processing fruits and vegetables,
feed preparation for poultry and livestock, mushroom production, silk worm rearing,
etc. and development of common property resources including utilisation of
wastelands, road sides, embankments and derelict ponds for fisheries;
b. marginal and small farmers: Labour intensive production activities such as dairy
and poultry raising, vegetable growing, flower production, hybrid seed production,
integrated resource management systems including recycling and value added
agricultural products;
c. medium and large farmers: Technology interventions including those which will
save farm inputs, e.g., bio-fertiliser, bio-pesticides including integrated pest
management system and inter multiple and relay-cropping systems;
 248

d. promoting rural small-scale enterprises: Small-scale enterprises in fertilisers, seeds,

irrigation equipment and other agricultural machinery and small-scale processing units
by the rural poor; and
e. support to rural women: Investments in collective and labour-saving activities such
as grain mills, alternative sources of water within easy reach of households,
appropriate technology for food processing like homestead horticulture, post-harvest
processing and storage of agricultural produces, small scale agro-based industries
and child care centres.
13.15 Agriculture and Nutrition
13.15.1 The objectives of nutrition in agriculture commensurate with those of the crop
production consist of crop diversification and increased production of fish, livestock and
poultry. However, specific objectives in this respect will be to: (a) create nutritional
awareness at the farm family level for changing food habits and to create effective demand for
nutrient-rich food items; (b) increase balanced production and consumption, especially of
oilseeds, pulses, nutrient-rich vegetables and fruits in order to ensure household food security;
(c) encourage homestead gardening for production of fruits and vegetables; (d) adopt and
promote rearing small scale poultry and fisheries at the household level to ensure nutrition
security as well as income generation; and (e) minimise post-harvest loss through food
processing and preservation at household level to ensure gender equity and empowerment of
distressed people.

13.15.2 Following actions will be pursued for creating awareness and increasing
consumption of nutritious food during the Fifth Plan period:
a. nutritional consideration and objective will be incorporated in development projects
and programmes of agriculture as one of the themes of International Conference on
Nutrition (ICN);
b. the nutritional problems in all the agro-ecological zones (AEZ) will be identified as a
basis for developing crop production plan to improve nutrition situation in the
country;
c. short term nutrition training programmes for the personnel of the Department of
Agriculture Extension (DAE), Department of Livestock and Department of Fisheries
and informal training for social workers, religious leaders, farmers and consumers will
be organised;
d. workshops and seminars at thana level will be arranged and farmers rally and field-
days at farm level will be held;
e. incorporation of nutrition into curriculum of agricultural education and training will
be made;
f. training on nutrition and food demonstration for wider dissemination of nutrition rich
practices will be organised;
g. nutritional motivation through mass media campaign and school and mosque based
campaign in collaboration with extension workers/agencies and NGOs will be
organised;
h. food and nutrition fair to create increased nutrition awareness through demonstration
of proper cooking and food preservation methods will be undertaken;
i. all actions and programmes identified in the National Plan of Action for Nutrition
(NPAN) for the agriculture sector will be implemented through government
organisations, NGOs, and other relevant agencies; and
 249

j. the Bangladesh Institute of Research and Training on Applied Nutrition (BIRTAN)

will implement and co-ordinate all nutrition activities in the agriculture sector.
13.16 Environmental Protection
13.16.1 Strategies for sustainable development of the agriculture sector during the Fifth Plan
period will be devised to ensure environmental protection/conservation by way of addressing
the major problems such as:
a. resource utilisation according to potentials;
b. policy options for environmental protection; and
c. location-specific technologies and their proper diffusion;
13.16.2 Agricultural development policy will pay due attention to environment protection.
Efforts will be made to combat natural hazards like floods, storm surges, drought and river
bank erosion and consequential environmental problems such as salinity, drainage, etc.
Human induced problems such as accelerated soil erosion, desertification, deforestation,
salinity, organic matter depletion, soil degradation, water logging, etc. will also be effectively
addressed to improve environment. In course of utilising physical resources of land and water
and human resources for agricultural development and making other related development
intervention, an appropriate protection measures for the country’s complex environmental
system will be carefully adopted.
13.17 Women in Agriculture
13.17.1 One of the major advances made in the last two decades in the agricultural sector is
the recognition of women as important contributor to the food security in Bangladesh. The
role of women in increasing yield potentials of agricultural production, in post-harvest
operations, in homestead or home-based activities, in resource conservation and in
agricultural decision-making is now well recognised. Policy will be formulated for
implementing WID in all programmes that will be undertaken in the sector. Women's
participation will be envisaged in all development programmes/projects. Increased female
participation will be encouraged at the planning, implementing and evaluation stages of any
programme. Raising gender awareness, enhancing access of women in agro-business and
strengthening equal participation are some of the specific areas on which development
programmes/projects will be taken up during the Fifth Plan. NGOs will be directly involved
in WID.
13.18 Area Development
13.18.1 During the last two decades, the government has initiated a number of area
development projects, focusing on regional agricultural and infrastructural development.
Increased understanding about the nature of underdevelopment in the rural area and concern
for balanced and regional development have led to the emphasis upon undertaking regionally
based agriculture-led development projects. Also, the need for target programmes for
disadvantaged groups such as landless, marginal and small farmers and women is widely
recognised. Therefore, programmes envisaged for less developed regions and disadvantaged
groups have been developed with assistance from various donor agencies and by the
government's own initiatives during the Third and Fourth Plan periods. Their impact on
reducing rural poverty and accelerating socio-economic development of the lagging areas has
been moderate and vast number of the target group population and many lagging areas are
still without effective programme support. The objectives of the area development
programmes are poverty alleviation, reduction of malnutrition and assurance of food security
 250

for the disadvantaged people. There will be three strategic thrusts in such programmes during
the Fifth Plan:
a. an integrated farming and resource systems approach to area development;
b. special consideration of the major disadvantaged groups in all programmes; and
c. increased co-ordination with, and contracting out to, the Grameen Bank and NGOs.
13.19 Financial Outlay During Fifth Plan
13.19.1 The public sector financial outlay for crop agriculture has been estimated at
Tk. 21,425.38 million. The programme wise financial outlay is presented in Table 13.3.
Table 13.3
Financial Outlay for Crop Agriculture During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Programme Total Percent
1 2 3
Agricultural Extension 1,650.00 7.70
Applied Nutrition 50.00 0.23
Agricultural Research 2,500.00 11.67
Crop Diversification 1,900.00 8.87
Seed Development 6,000.00 28.00
Fertiliser and Soil Improvement 550.00 2.57
Agricultural Marketing 500.00 2.33
Women in Agricultural Development 50.00 0.23
Environmental Protection 500.00 2.33
Human Resources Development 250.00 1.17
Other Essential Agricultural Sector Investment
Programmes/Projects
(a) Area Development Programmes 3,860.00 18.02
(b) Agro-business Development, Mechanisation and 2,600.00 12.14
Private Sector Development
(c) Agricultural Rehabilitation Programmes 950.00 4.43
(d) Agricultural Insurance Programmes 5.00 0.02
Agricultural Statistics and Others 60.38 0.29
Total 21,425.38 100.00

13.19.2 In addition to the public sector outlay, an amount of Tk. 65,038.91 million is
expected to be invested for the development of crop agriculture in the private sector.

B. Food Management
13.20 Past Performance
13.20.1 Vulnerability of domestic production of foodgrain necessitated the building up of an
elaborate public food distribution system (PFDS) over the years. PFDS aimed at both meeting
emergency needs as well as normal demand of the poor households in addition to meeting
institutional demand originating in hostels, hospitals, jails, etc. While the distribution of
public foodgrain continued to expand, it acquired a new emphasis through domestic
procurement on a voluntary basis as a tool for stimulating foodgrain production with price
support and open market sales (OMS) for price stabilisation at consumers level. Thus, it has
both consumption and production objectives and in respect of both, of late, it has undergone
changes with the growth of domestic output and greater availability of foodgrain in markets.
13.20.2 During the Fourth Plan period, sale of foodgrain through the statutory rationing
channel of the PFDS was almost withdrawn. As a result, there was a significant change in the
 251

shares of foodgrain distribution through monetised and non-monetised channels. For

example, the PFDS distribution through monetised and non-monetised channels were 63 per
cent and 37 per cent respectively in 1990/91 which reversed to 32 per cent and 68 per cent
correspondingly in 1994/95. During the period, overall increase in the production of HYV
boro rice due to expansion of irrigation facilities in the dry season, expansion of foodgrain
trade with the development of transport system, opening of import of foodgrain to the private
traders and improvement in the institutional capability to face crisis situation like drought,
flood, cyclone, etc., largely contributed to much dampened seasonal fluctuations in the supply
and prices of foodgrain.
13.20.3 In support of the public food distribution system, foodgrain storage capacity built up
to about 1.80 million mt till 1985 increased to 1.86 million mt at the end of the Third Plan
(1985-90). The Fourth Plan proposed to maintain this capacity keeping in line with its
privatisation policy. During this period, its main emphasis was on repair and rehabilitation of
the existing silos, CSDs, LSDs, etc., and construction of storage capacities at strategic places.
13.21 Fifth Five Year Plan
13.21.1 Objectives: Attainment of foodgrain self-sufficiency and food security remain the
stated objectives of the national food policy and strategies. However, the objective contents of
the food sub-sector during the Fifth Plan are as follows:
a. ensuring food security for all, elevating nutritional status of the people living below
poverty line;
b. preservation and maintenance of security stock of foodgrain to meet any natural
calamities, production shortfalls and supply hazards;
c. development of a social safety net programme for vulnerable groups through
improvement and enlargement of targeted food distribution;
d. maintenance of price stability within a band to protect interests of producers and
consumers;
e. expansion of private sector in storage, distribution and trade of foodgrain; and
f. development of a sound quality control, grading and standardisation system of all
foodgrain and foodstuff.
13.21.2 Policies and strategies: Food sector has undergone major structural improvements
over years both in market operations and in Public Foodgrain Distribution System (PFDS).
The present policy and strategy to further liberalise the food trade will continue. However,
though the private sector is expected to play a greater role in foodgrain management and trade
in future, the government involvement in some specific areas will be continued in foodgrain
management in consideration of the susceptibility of domestic production to natural hazards.
The following issues relating to food security in particular, will continue to engage the
government’s attention:
a. Maintenance of buffer stock: Buffer stock will be maintained to make up
anticipated production and stock losses due to periodical droughts, floods and
cyclones. An estimated 0.80 million mt of foodgrain will be required to be
maintained as security stock.
b. Procurement of foodgrain: Internal procurement of foodgrain will be continued to
(i) ensure floor price to the growers and (ii) provide incentive and confidence to
growers for further production.
c. Price stabilisation: The government will formulate an effective mechanism to
avoid wide price fluctuations. One of the current public policy is to hold food
security stock for price stabilisation. Open market sale is one of the short term
instruments used for avoiding temporarily wide fluctuations in market prices.
 252

Private sector will be encouraged to own food storage facilities at strategic places
such as food deficit/surplus areas. This will enable the traders to augment market
supply in response to rise in prices, reducing thereby both seasonal and regional
price spreads.
d. Targeted support for vulnerable groups: National level foodgrain availability
does not necessarily mean household food security. In spite of increasing foodgrain
production and falling real prices of rice, over half of the country's population
cannot afford an adequate diet. Hence, the case for public intervention remains
strong and clear. Consequently, targeting the poor for supply of food remains
squarely within the public domain. Vulnerable Group Development, Food for Work
Programme and Food for Education in wider ambits will be some of the specific
programmes of public interventions.
e. Government role: To meet any shortfall in the flow of required quantum of food,
the public sector may have to intervene for:
i. preservation and maintenance of security stock;
ii. development of a safety net programme by improvement and enlargement of
targeted food distribution;
iii. providing incentive to growers through procurement of foodgrain at
remunerative prices;
iv. stabilisation of price of foodgrain in relation to production cost and purchasing
power of the consumers; and
v. modernising and maintaining existing storage capacity by renovating old food
godowns and, if necessary, constructing new godowns in strategic areas of the
country.
f. WTO and measures for food security: Members of the World Trade Organisation
(WTO) are currently implementing various reforms agreed upon in the area of
agriculture during the Uruguay Round of multilateral trade negotiations. The central
element of these reforms which will vitally affect the foodgrain price and food
security of net food importing countries like Bangladesh is substantial progressive
reduction in agricultural protection so as to establish a fair and market-oriented
agricultural trading system. This measure, though expected to eliminate protections
and to correct distortions in world agricultural markets, is likely to push domestic
prices of agricultural products up, at least in the short and medium terms. As a
result, Bangladesh, a least developed and net food importing country, may
experience negative effects in terms of availability of adequate supplies of imported
food-stuff on reasonable terms and conditions, and short term difficulties in
financing normal level of commercial imports of basic food-stuff. To offset these
adverse effects and, thus strengthen food security, Bangladesh will have to initiate
negotiations in appropriate forums to establish a level of food aid commitment
sufficient to meet its needs and to adopt measures to ensure that an increasing
proportion of food-stuff be provided as grants for meeting needs of the target
groups. Bangladesh will also pursue the case for increased quantum of technical and
financial assistance to improve its agricultural production/productivity as well as
relevant infrastructure. Besides, Bangladesh will work out with its development
partners an arrangement under food aid for domestic procurement of foodgrain from
the surplus regions and for distribution to deficit regions.
13.21.3 Food balance: The necessity of food budgeting and management in Bangladesh
arise due to a variety of factors. The country is densely populated having a small area and
bulk of the population suffers from malnutrition. The food crops are often affected by
vagaries of nature such as drought, flood and cyclone. Thus, there is continued insecurity in
domestic food supply which remains one of the major concerns for the country. In spite of
efforts to reach food self-sufficiency, the country remains food deficit mainly because the
 253

population growth could not be controlled as desired and the growth of food production could
not be achieved to a level as required for feeding the additional population. However, the
situation is projected to improve during the Fifth Plan period. The projected food balance
during the terminal year of the Plan vis-a-vis the base year is shown in Table 13.4.
Table 13.4
Projected Food Balance in Fifth Plan
(in million mt)
1996/97 2001/2002
(Base Year) (Terminal Year)
Population (million) 123.80 132.50
Food Requirement * 20.50 21.94
Production of Foodgrain 20.43 25.12
Seed and Wastage (10%) 2.04 2.51
Net Production 18.39 22.61
Food Balance (-) 2.11 + 0.67
*Total foodgrain requirement has been calculated on the basis of per capita per day requirement of 453.59 grams (16.0 Oz).

13.21.4 During the terminal year (2001/2002) of the Fifth Plan, the total size of the
population is estimated to reach at 132.50 million. In order to feed them, the country will
need 21.94 million mt of foodgrain. Foodgrain production has been projected to be 25.12
million mt in 2001/2002. After deducting 10 per cent for seed and wastage from the gross
production, 22.61 million mt of foodgrain will be available for consumption. Thus, the
country is likely to attain food self-sufficiency and may have a surplus of 0.67 million mt by
the terminal year (2001/2002) of the Fifth Plan. But since this estimate is based on a
normative demand at the rate of 453.59 gm a day per capita, while effective demand will be
lower due to lack of purchasing power from income and employment, actual surplus will be
correspondingly higher. Lest this causes a slump in domestic price level and consequently,
discourages farmers to increase production, public intervention will be necessary to ensure a
remunerative price to farmers. On the other hand, shortfall in effective demand will need
income transfer to the poor households till income and employment generation can raise
purchasing power adequately.
13.21.5 Financial outlay: The programme-wise financial outlay in the public sector for the
Fifth Plan is given in Table 13.5.
Table 13.5
Financial Outlay for Food Management Facilities in Public Sector During Fifth Plan
(at 1996/97 prices )
(in million Taka)
Programme 1997/98 1998/99 1999/ 2000 2000/ 2001 2001/ 2002 Total
(1997/98-
2001/2002)
1 2 3 4 5 6 7
Repair and rehabilitation of existing
silos, CSDs, LSDs etc. 195.00 214.00 214.00 220.00 225.00 1,068.00
Construction of silos/new storage
capacity at strategic places and the 140.00 140.00 140.00 150.00 186.00 756.00
related infrastructural facilities.
Establishment of food testing
laboratories throughout the country. 1.00 24.00 25.00 - - 50.00
Research/Monitoring/ Training on
food management /operation and 100.00 100.00 100.00 20.20 - 320.20
strategy/ computer network.
_Total 436.00 478.00 479.00 390.20 411.00 2,194.20
 254

C. Fisheries
13.22 Past Performance
13.22.1 Fisheries play a major role in nutrition, employment and foreign exchange earnings.
About 60 per cent of animal protein is supplied by fish alone and about 1.2 million people are
directly employed by this sub-sector. Another 11 million people indirectly earn their
livelihood out of activities related to fisheries. The production of fish was estimated to be
1,373 thousand mt during 1996/97 as against 847 thousand mt in 1989/90. It is estimated that
production of inland fish was 1,079 thousand mt and that of marine fish about 294 thousand
mt. The growth rate of fish production during the last seven years averaged at 6.5 per cent
which fell short of increase in demand; however, the present rate of fish production has
increased to 8 per cent per year. Over the last decade, price of fish increased at an annual rate
of 2.5 per cent.
13.22.2 There are various impediments to fisheries development, some of which are
particular to sources of fisheries. In case of capture fishery, inadequate knowledge, over-
fishing and indiscriminate killing of juveniles and destruction of spawning grounds,
obstruction of migration routes due to unplanned construction of dams and embankments
under the flood control, drainage and irrigation projects, degradation of water quality,
breakout of fish diseases, defective fish conservation laws and inadequacy of processing,
marketing and other facilities are some of the major factors affecting the desired rate of
development. The major constraints limiting fish culture relate to problems of property rights,
competing water uses and related conflicts, lack of equipment and credit, lack of trained
manpower and quality fish feed, etc. In case of marine fishery, inadequate knowledge and
information of fisheries resources, lack of proper management policy and modern fishing
know-how, use of inefficient fishing equipment and inadequacy of harbour and landing
facilities as well as credit are important impediments.
13.23 Fifth Five Year Plan
13.23.1 Objectives: The major thrust for fisheries development will be on culture and capture
fisheries, promotion of rice-fish farming system in the vast flood plains and conservation and
management along with institutional and manpower development for equitable distribution of
benefits from common property water resources through research on social engineering. The
major objectives of fisheries sub-sector development during the Fifth Plan are to:
a. generate additional employment opportunities in fisheries and ancillary industries to
help poverty alleviation;
b. increase fish production and improve nutritional level;
c. improve the socio-economic conditions of the fishermen, fish farmers and others
engaged in the fishery sub-sector;
d. increase export earnings from shrimp, fish and fish products;
e. improve environmental conditions;
f. improve the biological and institutional management mechanisms for judicious use of
fisheries resources; and
g. strengthen research, extension, management and co-ordination in order to transfer
technology and encourage production activities in the private sector and to ensure
sustainable development of fisheries resources, particularly utilising water resources
of the vast flood plains.
13.23.2 Policies/Strategies: Keeping in view the objectives stated above, the
policies/strategies to be taken up for the development of fisheries are as follows:
 255

a. semi-intensive poly-culture of fish will be ensured in all ponds, dighis and other
closed and semi-closed water bodies;
b. stocking of fish fry in flood plains and semi-closed water and flood control, drainage
and irrigation (FCDI) project areas will be continued to halt the declining trend of
open water capture fisheries;
c. sanctuaries will be established to conserve fish spawning grounds at different areas of
the country; measures will be taken to stop indiscriminate fishing of gravid female
and undersized fish; spawning grounds of the main fish species like Rui, Katla, Hilsa,
Pangas, Golda Chingri, etc. will be identified to establish fish sanctuaries;
d. adequate credit facilities for the fish farmers will be created and credit guarantee
scheme will be introduced for marginal farmers; import of machinery and equipment
for private sector hatchery, feeds and feed ingredients will be further liberalised and
duties and taxes thereon will be reduced;
e. training facilities for development of suitable manpower and entrepreneur groups will
be extended both in the public and private sectors and multi-sectoral development
approach will be followed;
f. bio-technological elements will be applied in conservation of fisheries resources in all
large water bodies, viz., baors , haors, beels, rivers, canals, and lakes;
g. fisheries management policy will be implemented to improve the socio-economic
conditions of fishermen;
h. all precautionary and mitigatory measures will be taken so that fishing grounds may
not be affected during the development works of other sectors like flood control,
drainage and irrigation projects, agriculture, industries and urban development
programmes;
i. physical facilities like electricity, roads, transports, fresh water, etc., will be created
and made available to develop brackish water fish and shrimp resources;
j. traditional methods of shrimp culture will be improved by introducing modern
technology for increased production; shrimp culture extension service will be
strengthened to take necessary steps for the establishment of shrimp hatchery at
private level;
k. marine fisheries resources survey will be strengthened to ascertain the exact stock of
resources in the interest of fish harvest at maximum sustainable yields;
l. programmes will be undertaken to improve the socio-economic conditions of the
coastal fishermen communities;
m. quality of fish and shrimps will be ensured for the export of fish and shrimps through
creation of facilities and modern quality certification system; and
n. khas ponds, dighis, canals, road-side ditches, etc., will be excavated/re-excavated/
developed for fish culture through participation of the rural unemployed youth,
marginal farmers and distressed women;
13.24 Major Programme Areas
13.24.1 Open water capture fisheries: A 2.8 million ha fish habitats in the flood plains
remain as unutilised resources of fish production. In order to increase production in open
water fisheries, programmes will be undertaken to (i) conserve resources through rigorous
implementation of the laws on fish protection and motivation of fishermen, (ii) establish fish
sanctuaries, (iii) increase production by massive stocking of fast growing carp fingerlings in
the natural depressions and flood plains, and (iv) develop fish culture in paddy fields through
protective measures against adverse effects of flood control, drainage and irrigation projects,
roads and high ways projects and township and housing projects. Observing the declining
 256

trend of the stock of open water fisheries in the recent past, efforts were made to augment the
stock through release of fish fries in the flood plains. But these programmes did not yield
good results. Appropriate procedural and management systems will be evolved to ensure
accountability and transparency in the execution of programmes for open water fisheries in
the Plan period.
13.24.2 Closed water culture fisheries: There are over 1.3 million ponds covering an
estimated area of 147,000 ha, some 6,000 ha of ox-bow lakes and over 130,000 ha of shrimps
farms. Currently, the average production in fresh water ponds is 1.4 mt./ha. and that of
brackish water shrimp farms only 160 kg/ha. Programmes will be undertaken to bring all of
1.3 million ponds under extension programmes of DOF, BFDC, FRI and NGOs during the
Plan period to raise the present total production of 331,900 mt to at least 450,000 mt of fish.
13.24.3 Brackish water aquaculture: An estimated 0.143 million ha of coastal land is
under brackish water shrimp farming. The method is largely traditional where an average
production of 160 kg/ha is currently obtained. Recently, farmers, especially in Bagerhat and
Perojpur areas, have started shrimp farming in their paddy fields. Farming area is rapidly
expanding. Development of brackish water fisheries will be contingent upon the provision of
infrastructures, supply of seed, feed and other inputs, security, technical advice, disease
control and training of the farmers on improved scientific farming system. With more support
from DOF, BFDC, FRI and other extension agencies, it will be possible to raise production in
shrimp farms to a level of 400 kg/ha which will yield an additional production of at least
60,000 mt by the terminal year of the Plan. Semi-intensive farming is currently practised in
5,000 ha area by a number of entrepreneurs where production of 3-5 mt/ha has been achieved.
The DOF is currently identifying suitable areas for semi-intensive farming and suitable sites
for establishment of shrimp hatcheries. Private entrepreneurs will be encouraged to invest in
hatchery operation. The government will support development of suitable land with road,
electricity and other infrastructures. Private sector joint venture investment including foreign
investments in hatchery operation, feed production and other related activities will be
encouraged .
13.25 Marine Fisheries
13.25.1 With the extension of exclusive economic zone (EEZ) upto 200 nautical miles
beyond our shore lines in 1974, Bangladesh resumed the responsibility for exploitation and
management of living and non-living resources within its 1,64,000 sq. km. sea area. Since
unlike the mineral resources, fish is a renewable living resource, only judicious exploitation
and scientific management and development can ensure maximum benefit out of it. Over the
last two decades, the share of marine fisheries in the total national landing rose from 10.6% in
1970 to about 22% in 1996. If appropriate technology can be adopted, this can be increased
manifold.
13.25.2 The increasing pressure on the coastal resources in Bangladesh has caused decline of
many marine fishes and shell fishes in the Bay of Bengal. The artisanal fishing which
contributes about 95% of the total marine landing is largely composed of post larvae and
juveniles which are seriously damaging the stock due to use of crude traditional technology.
The number of artisanal fishing gears including estuarine set bag nets, beach seine nets and
shrimp seed push nets are increasing alarmingly causing serious over exploitation of stocks.
So, the following measures/programmes will be undertaken to improve the marine fisheries
resources during the Fifth Plan period:
a. assessment of pelagic, demersal and other marine resources and their development;
 257

b. studying and monitoring of oceanographic parameters of the EEZ of Bangladesh;

c. imparting training to the coastal fishermen and providing support services to improve
the socio-economic conditions of coastal fishermen community ;
d. issuance of licences to mechanised and non-mechanised boats and identity cards to
fishermen;
e. continuous supervision and monitoring of fishing;
f. ensuring replacement of destructive gears like estuarine set bag net and beach seine
nets by other appropriate fishing gears;
g. reduction of mortality of fish and shrimp larvae during shrimp seed collection;
h. conservation of marine fisheries resources in the mangrove reserve forest;
i. stopping sea piracy by trawl fishing of neighbouring countries with the help of the
Coast Guards/Naval Forces;
j. pollution control and environmental conservation through strict enforcement of
marine fisheries laws; and
k. proper utilisation of trash fish, now thrown away by the trawlers;
13.25.3 Post-harvest technology and marketing: Fish marketing carried out at four
different stages, largely in the hands of the private sector, is managed, financed and controlled
by a group of intermediaries known as "aratders" and "mahajans." The "aratders" provide
advances to fish traders who in turn are required to bring fish to them for sale. The fish
marketing system is thus traditional and complex though not very competitive. However, it
faces serious problems including heavy losses, waste and poor fish quality. It is believed that
in Bangladesh, 30 to 33 per cent of all fish caught become unsuitable for human consumption.
This economic waste will be reduced through provision of cold-storage facilities, insulated
and refrigerated transport systems and adequate supplies of ice. The marketing system will
also adjust to (a) expanding export demand for quality frozen sea food, (b) expanding
domestic demand for quality fresh and frozen fish and (c) large seasonal fish catches in areas
far from the main markets and fish landing centres.
13.25.4 Peoples participation in fisheries: Fisheries sector is considered to be the thrust
sector for sustainable development and socio-economic advancement of rural fishermen and
fish farmers. Almost all the activities of fish breeding, nursing, feeding, fisheries training,
harvesting, transportation, marketing, exporting and other ancillary activities are done by the
private sector. Research, development, extension and regulatory activities are performed by
the public sector. Twenty five technology packages have already been developed and are
being implemented on experimental basis from 1996/97. Recently, some NGOs and private
development organisations are involved in group formation, motivation, training and income
generating activities of the fishing community and marginal farmers. A strong and effective
linkage system will be developed between the government, especially local government
bodies, non-government and private organisations in respect of planning, implementation and
monitoring of the fisheries development programme. About 10,000 entrepreneurs will be
developed in different fields of fisheries during the next five years. Job opportunities for
42,500 poor people will be created in this sub-sector.
13.26 Fisheries Research
13.26.1 Lack of technical knowledge, fish seed, proper management, disease control and
suitable manpower account for the present low level fish production in Bangladesh. The
onslaught of viral epidemics destroying substantial quantity of pond and fresh water fishes as
well as brackish water shrimps has caused concern to the government and the people.
Appropriate research support will be provided to address these issues. In particular, it is
 258

proposed to commission a comprehensive study to analyse the sources and causes of fish and
shrimp diseases and find out remedial measures.
13.27 Production and Export Projection During Fifth Five Year Plan
13.27.1 The current level of per capita daily fish consumption is about 25.6 gm. In order to
raise the level of consumption to about 34.43 gm per capita per day at the end of the Plan
period, the required production of fish will be 1.67 million mt. This is based on estimated
projection of 132.5 million population by the terminal year of the Plan. In addition, it is
assumed that during 2001/2002, the export of shrimp and fish and fish products will be
95,000 mt and another 15,000 mt of fish will be required for industrial and other uses. In view
of this demand, the fish production target at the terminal year of the Fifth Plan has been set at
2.075 million mt. Table 13.6 gives the details of projection of fish production in the terminal
year of the Fifth Plan.
Table 13.6
Projection of Fish Production During Fifth Plan
(in '000' metric Tons)
Source of production 1996/97 2001/2002
(Benchmark) (Projection)
1 2 3
1. Inland Fisheries 1,079.00 1,675.00
Ponds 331.90 450.00
Baors 3.50 27.00
Coastal aquaculture 85.00 100.00
Rivers and estuaries 165.00 180.00
Beels and haors 70.00 95.00
Kaptai lake 7.60 9.00
Flood plain 395.00 751.00
Irrigation canals, road side ditches, 21.00 63.00
fresh water polders and enclosures, etc.
2. Marine Fisheries 294.00 400.00
Total (1+2) : 1,373.00 2,075.00

13.27.2 Export earnings from shrimp, fish and fish products and other aquatic organisms
during 2001/2002 are expected to be Tk.38,045.00 million as against estimated earnings of
Tk.16,000.00 million in 1996/97. The export projection for the Fifth Plan is shown in Table
13.7.
Table 13.7
Export Projection of Fish and Fish Products in Fifth Plan Period
(Qty in ‘000’ m tons, Value in million Taka.)
Items 1996/97 2001/2002
(Benchmark) (Projection)
1 2 3 4 5
Qty. Value Qty. Value
Shrimp 28.00 13,150.00 70.00 32,900.00
Fish and fish products 9.80 2,250.00 20.00 4,600.00
Others 5.50 600.00 5.00 545.00
Total : 43.30 16,000.00 95.00 38,045.00

13.27.3 Financial outlay: In order to implement the fisheries development programmes,

Tk.5,861.80 million has been earmarked for the public sector during the Fifth Plan.
Programme-wise financial outlay is shown in Table 13.8.
 259

Table 13.8
Financial Outlay for Fisheries Development in Public Sector
During Fifth Plan (at 1996/97 prices)
(in million Taka)
Programme Financial
Outlay
Survey, investigation, feasibility study, research, etc. 400.00
Fisheries education, training, extension and community development 890.00
Culture and capture fisheries development (including inputs and waterbodies development) 4,360.00
Fish landing, storage, processing, marketing, transportation, distribution, etc. 211.80
Total : 5,861.80

13.27.4 Private sector: Appropriate programmes and projects will be promoted for
implementation in the private sector with support services from the public sector in such areas
as fish hatchery, feed mill, culture of fish and other aquatic organisms, fish processing, fish
preservation, fish production, domestic sale and export. An amount of Tk.21,847.00 million
is expected to be invested by the private entrepreneurs--local and foreign, for implementation
of these programmes/projects. Expectedly, investment by the private entrepreneurs will be
much more than what is envisaged for the public sector.

D. Livestock
13.28 Past Performance
13.28.1 Livestock sector has the makings of a highly viable sector for generation of
employment and income for the landless, unemployed youths and destitute women. Little
attention was given to livestock sub-sector until the recent past. In spite of that, about 50,000
private poultry farms, 26,000 duck farms and 26,000 dairy farms have been set up in the
country in the private sector. Consequently, there has been a 60 per cent fall in the import of
milk powder. Implementation of various development programmes as well as changes in
fiscal and commercial policies resulted in the establishment of 26 thousand dairy farms in the
private sector. The production of milk, meat and eggs between 1991 and 1995 as against their
requirements are shown in Table 13.9.
Table 13.9
Requirement and Production of Livestock Products During Fourth Plan
Year Population Milk Meat Egg
(million number) (million mt) (million mt) (million number)
Requirement Production Requirement Production Requirement Production
1 2 3 4 5 6 7
1991 108 9.86 1.34 4.26 0.45 8,985.60 2,046.60
(13.59%) (10.56%) (22.78%)
1995 121 11.04 1.41 4.77 0.51 10,067.20 2,539.00
(12.77%) (10.69%) (25.22%)

13.28.2 The production of milk and meat increased by an annual compound growth rate of
1.3 per cent and 3.2 per cent respectively. The growth rate of egg production was, however,
satisfactory which was 6.5 per cent between 1990/91 and 1994/95. There are ample potentials
for increasing production of milk, meat and eggs in the country. The main problems of this
sector are inadequate supply of vaccine, medicine, equipment, feed, health care facilities,
quality breed, parent stock, credit facilities and other inputs.
 260

13.29 Fifth Five Year Plan

13.29.1 Objectives: The main objectives for the development of livestock sub-sector during
the Fifth Plan are to :
a. increase people's participation through development of entrepreneur groups and
create new employment opportunities for small farmers, landless labourers and
women and other target groups in livestock development;
b. generate income and alleviate poverty of the rural poor through livestock
development;
c. increase the supply of milk, meat, birds, eggs, hides and skins, etc., through
improvement in breed, feed and disease control of animals and birds;
d. undertake adaptive research on breeding, feeding, disease control for cattle, Bengal
goat and sheep and poultry bird by BLRI and to transfer appropriate technologies to
the users;
e. improve the quality of draft power of both cattle and buffaloes through genetic
improvement, better veterinary services, adequate feed supply and improved
management;
f. increase foreign exchange earnings through the export of quality hides and skin, and
to reduce dependence on import of powder milk;
g. involve the private sector, local government bodies and NGOs in livestock industry
for credit distribution, production of cattle and poultry feed, milk processing, input
supply and marketing and to improve distribution network for these products in
collaboration with Department of Livestock and Livestock Research Institute;
h. privatise input supply and to provide fiscal support, if needed, for sustainable
development of the sub-sector.
13.29.2 Strategies: In order to achieve the above objectives of the Fifth Plan, the following
strategies will be adopted:
a. improvement of the quality of animals and birds through genetic upgrading,
preservation of native breeds and selection of exotic breed;
b. wider provision for treatment of infectious diseases and parasitic infections and large
scale production of vaccine at home;
c. increasing fodder supply through intensive use of available land;
d. improvement of livestock management through manpower training and skill
development;
e. improvement of the quality of draft animals and expansion of single animal ploughing
system;
f. emphasising development of dairy cattle and encouraging establishment of mini dairy
farms through support services;
g. encouraging goat and sheep production through supply of inputs;
h. giving special emphasis on poultry husbandry for increased supply of meat and eggs;
i. giving credit for livestock and poultry farming on reasonable terms in the private
sector;
j. improvement of marketing facilities for realisation of competitive prices by the
farmers;
k. discouraging import of powder milk and other livestock products;
l. strengthening of the organisational and institutional framework of the Bangladesh
Livestock Research Institute for undertaking research on livestock production and
expanding the data base on socio-economic aspects of livestock development;
 261

m. training of the target groups like the landless, destitute women, unemployed youth and
poor farmers in livestock management, inputs production, product processing and
marketing for poverty alleviation and income generation.
n. pricing of vaccines for cost recovery and commercialisation of Veterinary Vaccine
Productions Laboratory under the Department of Livestock Services.
13.30 Major Programmes
13.30.1 Feed and fodder development: Feed mill will be established in the private sector at
important places of the country. The government will provide support services in the form of
credit and technologies. Fodder production will be encouraged through crop diversification,
inter-cropping and plantation of fodder trees with timber trees.
13.30.2 Animal health and disease control: The programme consists of diagnosis,
prevention and treatment, vaccine and medicine production and distribution. Qualitative and
quantitative improvement will be made in disease control. Facilities will be expanded and
number of veterinary surgeons will be increased by 350 during the Plan period. About 10,000
youths will be trained as veterinary health workers.
13.30.3 Animal breeding and breeder multiplication: Programmes will be directed
towards multiplication of breeding of cattle, buffalo, goat, sheep, fowl and duck. Increase in
milk, meat and egg production will be achieved mainly through quality improvement of local
cattle by cross-breeding with deep frozen semen through artificial insemination and
improvement of poultry through introduction of high breed commercial birds for eggs and
meat production. The poultry population is expected to increase significantly during the Plan
period.
13.30.4 Extension training and education: In order to increase livestock productivity,
improved production technologies will be spread all over the country. Training of farmers,
farm owners and NGOs for all kinds of related activities of this sector will be given through
extension services and formal and informal education. Number of veterinary colleges and
veterinary training institutes will be increased from 2 and 3 to 6 and 21 respectively which
will be located in 6 divisions and 21 former larger districts.
13.30.5 Input production: Input production like production of vaccine, semen, day old
chick, duckling and eggs through different projects included in the Plan will increase
significantly. Vaccine production will increase from 350 million doses in 1996/97 to 400
million doses in 2001/2002, semen production from 1.8 million doses to 4.5 million doses,
day-old chick production from 4 million to 6 million, duckling production from 0.5 million to
1.0 million and egg production from 2,815 million to 4,730 million during the Plan period.
Limited input production still in the public sector will be gradually transferred to the private
sector. Meanwhile, existing input supply programmes in the public sector will be run on full-
cost recovery basis.
13.30.6 Employment creation and poverty alleviation: Programmes undertaken during the
Fifth Plan will create positive impact on self and wage employment in livestock farming,
chick and goat rearing, feed selling, and other income generating activities under different
package programmes of the Department of Livestock. Credit programmes of various NGOs
are supporting women’s involvement in livestock production around homesteads using
surplus labour and agricultural by-products. The government encourages these programmes.
The total number of man days involved in the livestock development activities is likely to
 262

increase from 12.50 million in 1996/97 to 16.00 million in 2001/2002. The beneficiaries like
poultry workers will increase from 22,600 to 45,000, chick rearers from 8,000 to 12,000, key
rearers from 5,00,000 to 14,00,000, feed sellers from 1,000 to 3,000, egg collectors from
2,600 to 6,500 and mini hatcheries from 200 to 1,000.

13.30.7 Projection of livestock products for Fifth Plan: The production of milk, meat and
eggs will show a significant increase during the Fifth Plan period. Details may be seen in
Table 13.10.
Table 13.10
Projection of Milk Meat and Egg Production During Fifth Plan

Products Unit 1996/97 1997-2002

(Benchmark) (Projection)
1 2 3 4 5 6 7 8 9
Projection Achievement 1997/98 1998/99 1999/2000 2000/01 2001/02
.
Milk ‘000’mt 1,600 1,510 1,680 1,764 1,850 1,942 2,058
Meat ‘000’mt 600 575 630 662 702 744 788
Egg million number 3,005 2,815 3,260 3,550 3,890 4,280 4,730

13.30.8 Marketing: Marketing of livestock products and by- products in our country is not
properly organised. Livestock market places are under-developed and unhygienic. As
marketing network of livestock products and by- products is not properly maintained, the
producers are being deprived of their benefits. During the Fifth Plan, programmes will be
taken up for improving marketing channel to ensure quality and equitable distribution of
benefits at different stages of production process.
13.30.9 Research: Adaptive research on breeding, feeding, disease control, etc., will be
undertaken by BLRI and appropriate technologies will be transferred to the users. Research
result on fodder production, processing and preservation and vaccine production already
tested and certified will be released shortly, while on going programmes in these areas will
receive priority. Particular emphasis will be given to different aspects of poultry. Locally
suitable poultry and cattle breed will be developed. Attempt for poultry parent and grand
parent stock development will be made. Technology transfer through collaboration with
international and advanced research institutions abroad will be promoted.
13.30.10 Role of NGOs: NGOs will perform major role in group formation, training,
extension services, credit disbursement, supervision and recovery and conducting socio-
economic studies related to development projects. Government-NGO co-operation will be
more extensive for development of this sector.
13.30.11 Private sector: In the Fifth Plan period, one of the major and most important
thrust of the public sector programme will be to support the private sector for the
development of livestock and poultry. Towards this end, adequate technical, material and
financial support, training on breeding, feed production, marketing, credit management,
adoption of new technologies, disease control, etc., will be given to the private entrepreneurs.
Some 23 technology packages have been developed and are being implemented on
experimental basis since 1996/97. About 10,000 entrepreneurs will be trained up in different
trades in the next five years. Major trainees will be poultry farmers, egg collectors, chick
producers, chick rearers, feed producers, feed sellers, dairy farmers, goat rearers, etc.
Integrated approach of developing livestock and fisheries will be encouraged. Fiscal supports
 263

for importing quality breeds, feeds, feed-ingredients, equipment and medicine will be
continued and further expanded, if necessary. Some productive units of the public sector will
be transferred to the private sector to increase efficiency and for reduction of government
subsidy for this sector.
13.30.12 Financial outlay during Fifth Plan: In order to implement the livestock
development programmes during the Fifth Five Year Plan, an estimated amount of
Tk.5,435.60 million will be spent in the public sector. Year wise break up is given in
Table 13.11.

Table 13.11
Public Sector Financial Outlay for Livestock Development During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Year Financial Outlay
1996/97 690.00
1997/98 1,000.00
1998/99 1,000.00
1999/2000 1,012.00
2000/2001 1,164.00
2001/2002 1,259.60
Total (1997-2002) 5,435.60

13.30.13 In addition to the public sector development outlay of Tk.5,435.60 million, an

amount of Tk.20,646.40 million is expected to be invested for the development of livestock
by the private entrepreneurs. With increasing supports from the government, private
individuals, groups and companies are coming up in a big way in different fields of livestock
development. By and large, the main fields will be the establishment of poultry-duck
hatchery, poultry-duck farms, dairy farms, goat farms and feed mills, fodder cultivation, beef-
fattening farms, etc.

E. Forestry and Environment

Forestry

13.31 Past Performance

13.31.1 An estimated 2.45 million ha (17 per cent) of the total land of the country is under
forest or potential forests. Out of this, 2.18 million ha is owned by the government as
classified and unclassified forests and the rest 0.27 million ha is owned privately. In the past,
wide-spread destruction, unplanned extraction, clearing of forest land for agriculture, etc.,
have reduced the forest coverage to about 8 per cent as against the minimum requirement of
25 per cent.
13.31.2 In the past plans, the main emphasis was to expand forests and to increase supply of
timber and wood. Besides, qualitative improvement of natural forest through artificial
regeneration was also given priority. During the Fourth Plan, extraction of forest resources
and afforestation of the newly accreted lands continued. Later, due to increased need of
environmental conservation, extraction was discouraged. Major thrust during the Fourth Plan
was on people’s participation and private sector investment in the management and
development of forests. Forest plantation during the Fourth Plan was 43,619.84 ha against the
 264

target of 46,947.50 ha showing 93 per cent achievement. The plan target of 16,158 km. of
strip plantation was achieved by almost 100 per cent. Rubber plantation covered 1,261.78 ha
of land and 7.83 million kg. of rubber was produced. Moreover, the coastal afforestation
programme, bamboo, cane and murta plantation and industrial and strip plantation showed
good performance.

13.32 Fifth Five Year Plan

13.32.1 Objectives: The main objectives during the Fifth Plan are to expand forest
resources, make forests productive, develop institutional capabilities, and to encourage
people's participation. By the end of the Fifth Five Year Plan, it is envisaged that the tree
coverage will be increased to 14 per cent of the land area of the country and a sustainable
status of existing forest resources will be achieved with the active participation of the local
populace. Specific objectives will be to:
a. expand and rehabilitate the forest resources to increase productivity;
b. conserve and protect the eco-system for bio-diversity and overall environmental
stability;
c. continue and expand people-oriented afforestation programme to elevate socio-
economic well-being of the people;
d. promote multiple land use technology like agro-forestry to ensure increased
productivity and supplement agricultural production;
e. effectively conduct forestry extension activities to transfer improved technology and
research information to end-users, e.g., local people and private homesteads;
f. conduct need-oriented co-ordinated research and experimental works;
g. initiate development of quantitative and qualitative human resources;
h. achieve meaningful participation of local people, local government bodies, NGOs and
government agencies in forestry programmes; and
i. encourage private plantation of rubber, teak, mango, jackfruit and other high-value
trees.

13.33 Policy Strategy and Programme

13.33.1 In line with the above objectives, policies, strategies and programmes for the forestry
sub-sector during the Fifth Plan will be as follows :
a. The natural forests of the country will be set aside for conservation purpose. That
means, the productivity of plantations will have to be increased manifold. People’s
participation will be incorporated in all forest development as far as practicable
including maintenance. In this regard, zoning system might be initiated. People's
participation will be encouraged in the peripheral and buffer zones. Integration of tree
plantation and crop cultivation will be practised. Multi-purpose trees will receive
special attention.
b. Existing low productive plantations, both mature and deforested, will be replanted in
the hill forests. Scientific management principles will be strictly observed to restore
productivity of these lands. A business enterprise system will be introduced to manage
forests for profit. A total of 1,05,000 ha of plantations will be raised in the reserved,
protected and unclassified state forest land of hilly areas during the Plan period.
c. The existing coastal afforestation, including mangroves, will also be continued. The
existing mature coastal plantations will be cut and replanted. An area of 18,000 ha
will be planted and replanted in the coastal areas. The Sundarbans Reserve Forest
 265

(SRF) is the largest single natural mangrove forest in the globe. However, SRF is
presently engulfed with severe ecological problems. The most important species of
this forest, Sundari is affected with top dying. Other aquatic, floral and faunal
diversity are fast disappearing or on the verge of extinction. Following the integrated
development approach for the forest sub-sector, an Integrated Resource Management
Plan has been prepared. Another programme for bio-diversity conservation in SRF is
in the pipeline. Extraction of top-dying Sundari trees and enrichment plantation is also
a priority issue of the forestry sub-sector. During the Plan period, 2.5 million cft. of
Sundari will be extracted and enrichment planting of 2000 ha will be carried out in the
Sundarbans. The sal forests of the country has been degraded and deforested for many
years. The programme to rehabilitate the sal forests will gradually be taken up as
before. A total of 32,000 ha of agro-forestry and woodlot plantations will be raised
under different projects in the sal forest regions.
d. To prevent the extent of damage by cyclones and tidal surges, a programme will be
undertaken under which 24,500 km. of strip forests will be raised during the Plan
period.
e. The reedlands of Sylhet has long been lying unutilised. In addition to the existing
reedland development project under implementation in these areas, some more
programmes will be taken up in future. Under the Fifth Plan, 7,000 ha of reedlands
and 1,000 ha of wetlands will be planted by local government bodies with people’s
participation at grassroots level. In addition to this, 7,000 ha of char land will also be
planted under the Forestry Sector Project.

13.33.2 Farmland forestry: Potentials for increasing productivity of the farmlands which
are degraded due to drought condition and in the gully areas especially in the north west,
exist. A project will be undertaken to afforest the farm lands/farm land ridges. Agro-forestry
will be made popular gradually. About 8,000 ha of farm land plantations will be raised during
the Plan period.

13.33.3 Social forestry: Social forestry has now become a social movement in Bangladesh.
The programme includes expansion and strengthening of 335 thana nurseries, establishment
of 2,000 union level nurseries, expansion and strengthening of 80 forest extension and
nursery training centres, distribution of 40 million seedlings and raising of 19,000 km. of strip
plantations. The local government bodies will co-ordinate the afforestation programmes at the
grassroot level under this programme. During the Fifth Plan, NGOs will be more directly
involved in afforestation programmes. They will be motivating people through informal
training and other extension sources and will help the Forest Department to implement its
programmes. In some cases, they will be co-sharers of benefits of the plantation projects.

13.33.4 Rubber plantation: Three hill districts and parts of greater Mymensingh, Sylhet and
Tangail are specially suitable for rubber cultivation. Rubber plantation in Bangladesh was
started on a pilot scale in 1961 by BFIDC. So far an area of 31,118 ha (1995) has been
planted which yields 7.83 million kg raw rubber in the public sector. A total of 16,527 ha has,
of late, come under rubber plantation in the private sector with a production of 0.25 million
kg. Taken together, these account for about 35 per cent of the country's requirement for raw
rubber. The yield rate, however, is not satisfactory. This is mainly because of poor seed and
management, inadequate technical knowledge, lack of infrastructural facilities like access to
roads and electricity, support services and credit. These problems will be addressed properly
 266

in the Plan period. Inter-cropping with fruits and vegetables will be attempted. Joint
participation of local and foreign investors will be explored.

13.33.5 Wood energy development : Wood energy contributes 13 per cent of the total fuel
consumption of the country. Wood fuel is the most important form of energy for domestic use
in rural areas. In Bangladesh, domestic cooking consumes 65 per cent of fuel wood and the
rest 35 per cent is consumed by the industrial and commercial sectors. There is a wide gap
between supply and demand of fuel wood in the country. To meet high demand relative to
supply, recently through social forestry, short/medium rotation fast growing tree species have
been planted along the roads and embankments, and on marginal and fallow lands with active
participation of local people. BCSIR has developed efficient wood burning oven. Further
research programmes on development of wood fuel, efficient use of wood, etc., will be
undertaken in the Plan period to reduce strain on wood supply. Technical assistance may be
required for this purpose.

13.33.6 Non-wood forestry products: As a subsidiary product of forests, non-wood forest

products have substantial potentials for economic benefit. Bamboo, cane, murta, medicinal
plants, honey, wax, gol-patta, etc., did not receive proper attention in the past. Non-wood
forest products will be developed during the Fifth Plan in a systematic way. The Fifth Plan
projects to cover 8,000 hectare with non-wood forest products.

13.33.7 Forestry survey and research: Emphasis will be given to homestead private forests
in terms of genetic research (tissue culture) to improve productivity. Supply of inputs will be
made cheaper and easier. Emphasis will be given for maximum utilisation and multiple use of
land. Research on non-wood forest products, especially for rural use, will be conducted. The
forest soil survey will be completed so that site-species matching can be ensured. In addition,
detailed inventory of forest resources will be carried out to prepare specific forest
management prescriptions. Moreover, detailed survey of about 400,000 ha forest lands will be
conducted and forest areas will be demarcated to avoid unlawful encroachments.
13.33.8 Forest institutions, policies/legislation: The responsibility of development of
forestry in the country rests largely with the Forest Department (FD). But the FD has long
been constrained by shortage of skilled manpower, logistics and legal backing. Development
of forestry to a large extends will be contingent on the institutional development/reforms of
FD and other allied institutions. Future actions during the Fifth Plan will be in accordance
with the new Forest Policy and the Master Plan. New laws pertaining to the conservation of
forests and wildlife will be introduced. FD will be reorganised and participation of local
people will be emphasised. The role of BFIDC as a public sector corporation will be
reviewed, especially considering the declining scope of mechanical extraction from
Chittagong Hill Tracts and opening up of rubber plantations to the private sector.
13.33.9 Extension and training: Recently, high emphasis is being given to participatory
approach for development. Involving local people in implementing and maintaining
development programmes is the cardinal principle of such approach. Thus, during the Fifth
Plan, people-oriented programmes will receive special attention. There is a need for vigorous
forestry extension activities and training to implement these programmes. The Fifth Plan
projects to train about 100,000 persons, especially in social forestry at the grassroots level.
Besides, as mentioned earlier, to develop the skills of manpower in the forestry sector, a total
of 1,550 persons will be trained in professional, sub-professional and bottom level of the
Forest Department and allied agencies.
 267

13.33.10 Conservation: Presently, about 1.5 per cent of the total land area falls under
protected land area category which is about 10 per cent of the total forest land. The protected
area will be increased to 15 per cent during the Plan period. Effective management plan for
all the protected areas will be prepared with the introduction of zoning system. People’s
participation will be effectively utilised in conserving resources in the respective zones.
Along with this, eco-tourism will be introduced in a selective way based on the carrying
capacity of the eco-system. Use of alternatives to forest products like steel/plastic furniture
and aluminium structures will be encouraged. This will ease the pressure on forest products.
Ban on the use of fuelwood in brick fields will continue and be made more effective and
other modes of efficient use of energy will be promoted, e.g., improved cooking stove.
Moreover, programmes will be developed and implemented to protect the
threatened/endangered species of flora and fauna and the fragile eco-system. Wildlife farming
of deer and reptile like crocodiles, iguana, snakes and frogs, etc., will be encouraged and
promoted on a commercial basis through private initiatives.

13.33.11 Financial outlay: An amount of Tk.6,982.10 million has been provided for
development of forestry in the public sector during the Fifth Plan. Details are given in
Table 13.12.

Table 13.12
Physical Programme and Financial Outlay for Development of Forestry in Public Sector
During Fifth Plan
(in million Taka)
Item Physical Activities Financial Outlay
FORESTRY SUB-SECTOR
1. Plantation and Maintenance (hectare) 209,938 2,729.20
a. Hill forests (RF, PF, USF) (ha.) 105,000 1,365.00
b. Coastal afforestation and enrichment 20,000 260.00
plantation in the SRF (ha.)
c. Reed land, wetland and charland plantation (ha.) 15,000 195.00
d. Agroforestry, woodlot and farmland afforestation (ha) 40,000 520.00
e. Strip plantation (24500 km) equivalent to (ha.) 19,000 247.00
f. Bamboo, cane and medicinal plants (ha.) 8,000 104.00
g. Vacant land in tea garden, around pond banks and in 2,938 38.20
Barind tract gullys (ha.)
2. Seed orchard establishment (Seed orchard division) 4 129.74
3. Seedlings distribution (million number) 56.6 468.00
4. Jhumia Rehabilitation (family no.) 3,000 233.00
5. Development of Wildlife Conservation, Environment, - 996.66
Education, Recreation etc.
6. Physical Infrastructure - 650.00
7. Vehicles/Equipment - 191.00
8. Survey, Demarcation, Inventory and Work Plan Preparation - 203.00
9. Manpower 3,000 708.20
10. Extension and Training - 203.20
11. Research - 270.00
12. Miscellaneous - 200.10
TOTAL 6,982.10
 268

13.34 Private Forests

13.34.1 In Bangladesh the village forest area is comprised of only 0.27 million ha. But this
forest has been meeting most of the demand for forest products like timber, firewood, etc.
Over the years the village forests including the homesteads have grown into a major source of
forest products, especially with the initiative and involvement of local people. However,
during the earlier plan periods, supports were provided from the government, mainly in terms
of technical back-up and extension services. More support is necessary to establish this as a
sustainable source of forest resources especially for promoting multi-purpose tree species of
high productivity. Extension, training and credit facilities will be provided to encourage the
private sector to undertake rubber, teak, jackfruit and other high value crop plantation on a
commercial basis.
13.34.2 With the successful implementation of social forestry, thana afforestation, homestead
forestry, farm forestry and agro-forestry programmes/projects, increasing investment is
coming up in the private sector as well as in the public sector. An amount of Tk.4,732.00
million is projected to be invested by the private sector for nursery development, seedling
raising, plantation, maintenance, etc., in the Fifth Plan period.
Environment
13.35 Past Performance
13.35.1 Bangladesh is facing a number of environmental problems. These have originated
mainly from population pressure, extreme poverty, natural disasters, depletion of forest
resources, energy crisis, unplanned urbanisation and industrialisation, water pollution, air
pollution in major cities, soil degradation, etc. Bangladesh has been trying to combat
environmental degradation and correct the same with limited facilities and resources.
13.35.2 The main theme of programmes of the Department of Environment (DOE) in the past
was to develop institution and policy and programme tools to fulfil its mandate. During the
last plan period, one of the vital projects of the Department was the ''Improvement in Dhaka
Urban Environmental Infrastructure Project'' to the end of strengthening DOE's capabilities in
environmental planning, pollution control and monitoring. Under this project, a laboratory
and functional building was constructed at Dhaka along with procurement of 24 items of
laboratory equipment and logistic supports. There was a plan for development of other
regional laboratory/office building during the Fourth Five Year Plan. Due to various
constraints these works could not be undertaken till the last financial year.
13.35.3 Ministry of Environment and Forest completed a comprehensive study on National
Environmental Management Action Plan (NEMAP) for identifying probable environmental
concerns/issues and their remedial measures in different sectors of the economy. A good
number of programmes and projects have been recommended for implementation under
different ministries/organisations. Subsequently, another TAPP 'Bangladesh Environment
Project (BEP)' was taken up to formulate investment projects in the light of NEMAP
recommendations.
13.36 Fifth Five Year Plan
13.36.1 Objectives: The main objectives of the Environment sub-sector during the Fifth
Five Year Plan are as follows:
a. promoting appropriate environment management system for sustainable development;
b. ensuring conservation of bio-diversity and its sustainable utilisation;
 269

c. ensuring active participation of the poor, especially the women, in environment

management activities;
d. promoting environment-friendly activities in development programmes/projects;
e. preserving and protecting the natural resource base;
f. strengthening the capability of public and private sectors to manage environmental
concerns;
g. minimising environmental pollution from different industries;
h. monitoring and controlling present environmental pollution and degradation related to
soil, water and air;
i. fulfilling obligations under international treaties and conventions for minimising
adverse impacts on global environment;
j. promoting co-operation with regional and international institutions/organisations to
address global environmental problems;
k. undertaking research and development for innovating technology in national
perspective and application of modern technology, information exchange and benefit
sharing with other countries; and
l. creating public awareness in order to participate in environment promotion activities.
13.37 Policy and Strategy
13.37.1 The following policies and strategies will be taken up during the Fifth Five Year
Plan to attain with the above objectives of the environment sub-sector:
a. National Environment Council headed by the Prime Minister and Executive
Committee of National Environment Council headed by the Minister for Environment
and Forest will be more active for policy designs and programme directives;
b. Environment committees at division, district and thana levels with people's
participation will be strengthened; attempts will be made to form this committee at
union parishad level also;
c. Department of Environment will be strengthened in the light of existing Environment
Policy, Laws and Action Plan in order to co-ordinate, monitor and implement these
activities;
d. Drafting of rules, regulations and guidelines under the Environment Protection Act
(EPA) 1995 will be finalised soon in order to ensure effective enforcement of EPA;
e. Sectoral legislations are to be reviewed and redrafted in the light of Bangladesh's
commitment expressed through signing and ratifying a number of International
Conventions and Protocols on environment;
f. ‘Polluters Pay Principle’ will be followed in order to ensure strict compliance of
environmental legislation; and
g. Incentives in the form of tax-rebate, tax-holiday, etc., will be provided and
incremental cost incurred by the environment-friendly entrepreneurs will be met in
various forms and from multiple sources;

13.37.2 Programmes : In considering the socio-economic and environmental aspect of the

country, the following activities/programmes/measures will be taken in the environment sub-
sector during the Plan period :
a. Raising manpower and infrastructure development of the DOE in order to fulfil its
mandate; there is an urgent need to create and establish 2 (two) new divisional offices
in Sylhet and Barisal Divisions and 12 (twelve) sub-regional offices with laboratory
 270

and other necessary facilities of local government at old districts of the country during
this Five Year Plan period;
b. Skilled manpower is essential for better environmental management and co-
ordination. In this regard, DOE will undertake training programmes on different
subjects concerning environment;
c. Survey, research and development activities in different fields and subjects will be
taken up to combat environmental degradation and other environmental problems. A
research and training centre will be set up during this Plan period;
d. Facility of data-base and documentation of different environmental subjects and fields
will be created to help decision makers, other professional groups, institutions and
government departments and ministries to formulate an appropriate plan of action to
protect environment. United Nations Environmental Programme (UNEP) is going to
establish electronic information network in DOE shortly;
e. Public awareness is a key to achieve success in any national programme. With the
help of electronic and other media, it has now become very easy to reach all the
people within a short time. DOE is trying to use all kinds of modern media in order to
disseminate information on environmental issues and encourage entrepreneurs to
come up with more investment;
f. DOE will formulate projects and undertake activities to the end of environment
protection of Bangladesh, Agenda-21 and NEMAP and take initiative to implement
international protocols and agreements on environment;
g. "Environmental Court" may be established to resolve all cases of violation against
any clause under the Environment Protection Act, '95 and other rules, regulations and
policies meant for preserving and protecting the environment;
h. Establishing treatment plants for industries (e.g., cement, fertiliser, paper, textiles,
handloom, leather, etc.) and making their use mandatory;
i. Introducing self-monitoring system in Export Processing Zones and other industrial
areas; and
j. Strengthening drinking water quality surveillance.
13.37.3 Physical programme and financial outlay of the public sector for development of
environment during the Fifth Plan are shown in Table 13.13.

Table 13.13
Physical Programme and Financial Outlay for Development of Environment
in Public Sector During Fifth Plan
(in million Taka)
Programme Physical Activities Financial Outlay
Strengthening of DOE at regional and sub- 18 offices 120.00
regional levels.
Phasing-out of ozone depleting substances - 20.00
Biodiversity management 11 Centres 110.00
Environmental quality control, monitoring and 19 Air Monitoring 120.00
management. Stations and 6
Treatment Plants.
Public awareness on environmental standards - 10.00
Alternative energy development. - 10.00
Agenda-21: Implementation follow up. - 10.00
Total 400.00
 271

13.37.4 Private entrepreneurs are expected to invest in environmental protection and

development. In setting up and maintaining places of scenic beauties, in preventing wanton
destruction of good and pulsating environment and in keeping Bangladesh beautiful, private
sector is expected to come up in a larger way hitherto not accounted for in the recent past.
Private investment for environmental development in the Fifth Plan is projected to be at least
Tk.100 million, i.e., a fourth of the envisaged public sector investment.

Water Resources

13.38 Introduction
13.38.1 The twin problems of shortage of water during the dry season and its abundance in
the rainy season are critical to the development and management of water resources in
Bangladesh. During the winter months, optimum use of available water resources will have to
be made taking into consideration the multifarious demand for use of water for domestic
need, irrigation, navigation, fisheries, livestock, forestry, environment, etc. On the other
hand, in the wet months, the main tasks, in addition to provision of supplementary irrigation,
are controlling, regulating and managing of floods to protect human lives, properties, crops,
etc. It is estimated that 7.56 million ha could be developed for irrigation as against the current
irrigated area of 4.00 million ha while 5.76 million ha will require flood control and drainage
(FCD) facilities as against 4.2 million ha covered in 1996/97. Bangladesh, being in the lower
riparian areas of three major rivers of the world, the Ganges, the Brahmaputra and the
Meghna, could not since long undertake any meaningful water resources development
programme to harness the water flows of these rivers for the benefit of its people. Now,
following the treaty for sharing the Ganges water with India, vista of opportunities have been
opened up for regional, sub-regional, basin and sub-basin wise development and management
of water resources for the benefit of all peoples of the region. It is in this backdrop that the
Ganges Barrage is being taken up for implementation during the Fifth Plan period.

13.39 Major Issues: Physical Environment

13.39.1 Most of Bangladesh is located within the flood plains of the three great rivers
mentioned above and their tributaries and distributaries.
13.39.2 The three rivers drain a total catchment area of about 1.72 million sq km, of which
only about 7 per cent lies within Bangladesh. This limits the ability of the country without co-
operation of the upper riparian to have any control over the inflow of water and sediment that
flow over it to discharge into the Bay of Bengal. There are five major adverse effects of this
which are described below:
a. Flood and drought
i. The country's unique geo-physical setting makes it extremely vulnerable to both flood
and drought. The annual minimum flow of rivers near the Bay of Bengal is only one-
twentieth of their peak monsoon discharge. The high water levels in the major rivers
during monsoon cause drainage congestion and over-bank spillage of their tributaries
which is often exacerbated by runoff from coincident high local rainfall. Over the
1954-93 period, this resulted in seasonal and fairly predictable inundation over an
average of about 26,200 sq. km. or about 27 per cent of the country's net cultivable area
of 95,600 sq. km. However, periodic severe flooding is also common and during the
aforesaid 39-year period, flooding covered 37 per cent or more of the country in one out
 272

of every 10 years. The record was in 1988 when almost 60 per cent of the country was
inundated.
ii. Certain parts of Bangladesh are also subjected to drought during the monsoon season
which adversely affects the cultivation of kharif crops. The upstream withdrawal of
water from some rivers by the upper riparian during the dry season has aggravated the
situation, giving rise to need for supplementary irrigation and combating salinity and
other ecological problems.
b. Siltation: The combined annual average sediment load entering Bangladesh and conveyed
to the Bay of Bengal via the main rivers is estimated to be about 0.77 billion mt, varying over
a range of 0.45-1.84 billion mt during the period 1956-88. A part of this sediment load is
deposited on the floodplains during the flood season, gradually changing its topography and
drainage conditions. Bangladesh has an estimated total of 25,000 km of drainage channels
and their water conveyance capacity and navigability have been seriously threatened by
continuous morphological change of river beds. The problem has not been properly attended
to in the past on the ground that dredging is expensive. However, such generalised assertions
must be tested against specific cases where very selective dredging and desiltation
programme, combined with developing raised platform could provide cost-effective solution
of the problem and also assist in poverty alleviation and environmental upgradation.
c. River bank erosion
i. The floodplains and coastal delta are in a constant state of slow morphological change.
The large seasonal variation in river flow results in a varying sediment transportation
capacity and causes river-bank erosion, migration of river-banks and meandering river
channels. Recent satellite image studies of the Ganges-Brahmaputra-Meghna rivers
show that 106,300 ha were lost to erosion, while only 19,300 ha were accreted over the
period 1982-92. The net area of 87,000 ha lost to erosion is equivalent to an annual
erosion rate of 8,700 ha. Most of it is agricultural land.
ii. River bank erosion has significant economic and social impacts. The loss of land, crops
and property has led to landlessness and impoverishment of thousands of households.
A study showed that out of the total population of 1.88 million living in the
Brahmaputra floodplains, 450,000 live within the banklines or reverine chars and the
remainder within a kilometre of the river. Over the period 1980-92, land capable of
supporting 405,000 people was eroded and new char land created from the eroded
sediment could only support 55,000 people causing a net displacement of 350,000
people.
iii. Since river training and river bank protection work involve huge sum of money, major
investment in these areas was not encouraged in the past by our development partners.
But lately, there has been a growing concern and reassessment of the economic and
socio-political benefits of protecting important towns, infrastructure, hats and bazars as
well as agricultural land.
d. Cyclonic storm surges: Natural calamities are recurring phenomena in Bangladesh, the
most severe ones occurring in the form of cyclonic storms which mainly affect the coastal
districts. The country has over 700 kms of coastline on the mainland and several offshore
islands in the Bay of Bengal. Vulnerable areas include the important port towns of
Chittagong and Khulna and heavily populated islands of Sandwip, Kutubdia and Hatiya.
During the last 125 years, over 42 cyclones hit the coastal belt; 14 occurred during the last
25 years. Cyclones often take a heavy toll of human life, livestock, crops, properties, and
physical infrastructure. Such cyclones also tax the country's institutional and financial
 273

capabilities, since resources have to be diverted to provide immediate relief to the affected
population and to restore damaged or destroyed physical facilities.
e. Salinity intrusion: Since the Farakka Barrage in West Bengal went into operation, the net
availability of surface water to Bangladesh via the Ganges during the dry season was
reduced below critical level. The impact of this reduction is demonstrated by a marked
increase in salinity in southwestern Bangladesh. The southern part of this affected region
is subject to tidal action from the Bay of Bengal and saline intrusion from the tides is
normally pushed back by upland flows of fresh water from the Ganges through its
tributaries in which the Gorai plays a vital role. Due to flow reduction since 1975, tidal
limits and the salinity front have moved northward. Around Khulna, some 146 km.
upstream from the Bay, the salinity (in terms of electric conductivity) has increased from
380 micro-mhos/cm in the pre-diversion period to 29,000 micro-mhos/cm. This is a major
problem in over 25,900 sq. km of the Ganges dependent area and is causing both short
and long-term problems in crop production, fishery, forestry, power generation, industrial
development, health care and domestic water supply. Following the ganges water sharing
treaty with India signed on December 12, 1996, the situation seems to be improving; the
desired improvement will not take place till the proposed Ganges barrage is constructed
and water flowing down the Gorai and other relevant distributaries is augmented.
13.40 Water Resources Potential
13.40.1 The net cultivable area of the country is estimated at 9.03 million ha of which 7.56
million ha is suitable for irrigation. The primary mode for increasing agricultural production
for the last two decades has been an expansion of irrigation coverage during the rabi season.
Irrigated land in Bangladesh comprises approximately 3.99 million ha. Of this, large
irrigation systems currently service about 0.40 million ha; shallow tubewells, about 2.23
million ha; low-lift pumps, 0.58 million ha; deep tubewells, 0.52 million ha and traditional
and other methods, about 0.26 million ha.
13.40.2 Investment in barrages, reservoirs, pumps and canals is likely to provide adequate
access to fresh water supply in the future. The Ganges water sharing treaty has removed some
degree of uncertainty in the quantum of surface water available to south west Bangladesh
during the dry season. However, with increasing use of water by a growing population and
increasing industrial and agricultural uses, there may be a need for surface water storage and
additional ground water augmentation. In this context, reaching agreement with the upper
riparian in respect of sharing of water of other common rivers is of vital importance. Both for
intermediate and long term planning accurate assessment of surface and ground water
availability throughout the year will be necessary as only then conjunctive use could follow.

13.40.3 Proper drainage planning is also necessary for removing excess water during the wet
season. Development in drainage infrastructure, both on public and private accounts, will
have to be carefully thought out and the enabling environment created for public
participation.
13.40.4 Managing the supply of water has been addressed in piecemeal fashion in the past.
Flood management has been a top priority for decades, but an environment-friendly
mechanism for doing so is yet to be designed for protecting the interest of navigation and
fisheries. However, once the total resource picture is clear, the upcoming water management
plan will address the issue properly.
 274

13.41 Institutional Framework

13.41.1 Since time immemorial, water has been viewed in Bangladesh as a free gift of nature.
Systematic exploitation of water resources began in the country in the early sixties with the
start of the flood control, drainage and irrigation (FCDI) projects as prepared under the
National Water Management Plan. It was then believed that crop vulnerability to flooding
could be reduced by the construction of embankments and polders to create flood-free areas.
Though Land and Water Resources Sector Study (1972) by the International Bank for
Reconstruction and Development de-emphasised major FCD projects and recommended
substantial public investment in minor irrigation, the preference for FCD along with major
civil engineering work did not diminish very significantly. A National Water Plan (NWP)
completed in 1991 proposed an ambitious programme costing US $4.2 billion for 20 years for
construction of FCD projects to increase monsoon rice production and to complement minor
irrigation development. The plan also recommended studies to establish the engineering and
economic feasibility of Ganges and Brahmaputra Barrages and measures to control salinity in
the south-west region. The latest studies under the aegis of the Flood Action Plan (FAP) also
stressed structural measures along with consideration for such aspects as impact of these on
fisheries, project-affected people and environment.
13.41.2 The dominance of structural measures as the primary mode of water resources
development led to the empoldering of over 3 million ha or about one-third of the net
cultivated area at a cost of over US $1 billion over the past 30 year period. This fixation has
deeply influenced the institutional evolution of the BWDB.
13.41.3 Past water sector planning has been criticised on the ground of its heavy reliance on
structural measures that caused major externalities and sacrificed the interest of other groups
like the fisherman, boatman, landless labourer and women. In a country with severe water
imbalances during different periods of the year, it is inevitable that any solution will have
impact on one or the other users of water adversely to some extent. The issue then becomes
one of minimising the hardships to all by developing an approach that will protect the
minimum interests of the most important constituencies (the poor and underprivileged, for
example), ensure water availability for critical needs (drinking water for example) and
prevent environmental degradation (by taxing polluters for example). All of these require
development of a systematic policy and programme for equating the demand and supply of
water through economic measures and socially and environmentally friendly means keeping
in mind the legitimacy of claims of all user classes.
13.41.4 The Water Resources Planning Organisation (WARPO) is charged with overall
integrated water sector resources allocation and macro level planning while the BWDB is the
principal executing agency for carrying out those plans into action after conducting micro
level planning. The WARPO is a new organisation and is primarily run by engineers
borrowed from the BWDB. There will be vast improvements in its institutional capability
when its own multi-disciplinary staff will be recruited which is under way.
13.42 Review of Past Performance
13.42.1 Water sector development strategies and policies have undergone numerous changes
overtime and consequently the medium and short term plans had to be modified and guided
by these policy objectives. For example, minor irrigation, which covers about 90 per cent of
the total irrigated area, was gradually privatised and now it is entirely operated by the private
sector. During the Fourth Plan, emphasis was given on the small scale FCDI projects with
minor irrigation development to optimise both irrigation coverage and flood control and
 275

drainage improvement to the required direction. Necessary policy measures have been taken
to reduce the capacity gap between big and small farmers through formation of water users
groups and by providing technical support services and credit to small farmers.
13.42.2 At the end of Fourth Plan period (June '95), surface water irrigation covered an area
of 1.14 million ha. On the other hand, cumulative achievement of ground water irrigation at
the end of June '95 was 2.17 million ha as against the target of 3.02 million ha.
13.42.3 During the past plans, BWDB constructed about 8,515 km of embankment, 4,774 km
irrigation canal and 3,462 km of drainage channel to protect valuable crops, lives and
properties. It was estimated that an area of about 4,084 million ha was brought under flood
control and drainage facilities at the terminal year of the Plan period.
13.43 Fifth Five Year Plan
13.43.1 Objectives: The objectives of the Plan in the water sector stretching over the period
from 1997 to 2002 will be to:
a. alleviate poverty and generate employment opportunities;
b. ensure ecological balance;
c. promote water conservation for irrigation and other uses;
d. enhance conveyance capacity of water courses through desiltation;
e. protect towns, commercial centres, agricultural lands, etc., from erosion of inland and
border rivers;
f. promote culture fisheries in the completed projects;
g. promote optimum use of available flows of the common rivers in domestic,
agricultural, fisheries, navigation and industrial sectors;
h. fulfil the need of irrigation for achieving foodgrain self-sufficiency by ensuring year-
round sustainable irrigation through conjunctive use of surface and ground-water thus
avoiding over-extraction of sub-surface water;
i. control floods to protect crops, lives and properties and promote both HYV rice and
fish cultivation through controlled flooding;
j. prevent saline water intrusion;
k. ensure people's active participation in planning, implementation and maintenance of
water sector projects; and,
l. carry out studies on future water resources development projects.
13.43.3 Strategies: In order to achieve the Plan objectives, the following short and long
term strategies will be adopted:
a. short term strategy will lay stress on maximum utilisation of existing facilities
through command area development, effective operation and maintenance and
rehabilitation of existing projects, quick completion of carry-over projects and
balanced use of surface and ground water and desiltation of rivers and channels. In
case of new projects, an integrated basin/sub-basin planning approach will be
followed. Avoidance of conflicts between in -stream and off-stream users of water,
delineation of coastal areas for shrimp culture on a scientific basis and zoning of areas
for shrimp cultivation and paddy cultivation, development of data base and
encouraging local participation in project planning, implementation and operation and
maintenance, protection of towns, commercial centres and agricultural lands from
erosion of inland and border rivers including repair and maintenance of existing river
bank protection works will be pursued;
 276

b. the long term strategy envisages major interventions. Ultimate solution to water
resource problems lies in the development and utilisation of the major river waters.
Investigations, surveys and studies must, therefore, start for a balanced long term
development utilising major river waters through a system of barrages. The recently
concluded the Ganges water sharing treaty has unveiled a new vista for a wide range
of possibilities in this direction;
c. comprehensive flood control/management measures will be undertaken to protect
lives, properties, and crops keeping in view open water fishery production needs and
requirements. Cropping patterns will be changed and improved varieties will be
introduced in the protected areas for increased foodgrain and fish production;
d. needs and programmes to sustain open water fish resources will be included in the
irrigation and flood control and drainage projects for long term development; and
e. As IWTA Master Plan for navigation is under implementation, its effectiveness will
gainfully be used in the long term water resources planning, where applicable.
13.43.4 The core strategy: The following proposed measures will carry the water resource
management strategy to the year 2010:
a. Increasing efficiency of completed projects: In the previous section, it was noted that,
in the past FCDI projects concentrated on irrigation, neglecting other competing needs
for water. In addition, these facilities, for a variety of reasons, have not been able to
perform to their optimal capacity. Given the need for irrigation expansion, it makes
good sense to try to rehabilitate these completed projects through redesign and suitable
modifications to remove, as far as practicable, their negative impact on other sectors
such as navigation, fisheries and environment. There has to be another parallel effort to
organise the beneficiaries for command area development and its long term
sustainability.
b. River bank protection and environmental upgrading
i. The havoc created by continued erosion by all the rivers in Bangladesh has been
highlighted in the previous section. Unfortunately, this problem so far has not been
systematically handled. For long, the government has been spending quite a
substantial amount on river bank protection. But its impact has been marginal for the
reason that the resources are distributed over too many projects covering innumerable
sections without completing any section. This type of piecemeal work does not lead to
any permanent solution but, more often than not, results in wastage of scarce
resources. There is a need for massive investment, and since everybody cannot be
satisfied all at once there will be need for prioritisation.
ii. Towns, river ports and markets have traditionally been developed by the side of rivers
for obvious reasons. These are the growth centres of Bangladesh and they constitute
life-line of the economy. Scarcity of resources and larger claim of agricultural needs
have so long prevented reasonable allocation for their protection. Out of 240 identified
town protection schemes, only 75 have been completed upto June 1996, 96 are at
various stages of implementation and the rest are yet to be taken up.
iii. Side by side with protection work, there is need for reasonable investment on
upgradation of environment. Water supply, improved road network, sewerage
disposal, drainage system and other municipal services will be developed fast. With
donor support, a modest beginning has been made. This will be intensified and carried
out further.
 277

c. Increasing conveyance capacity of rivers

i. Ever since the birth of Bangladesh, siltation has become a major problem. This has
not only adversely affected the navigability in major parts of 25,000 km long riverine
routes but has also increased the level of salinity. About one fourth area of Bangladesh
has been subjected to the hazard of either desertification or salinity.
ii. In the past, meaningful desiltation programmes for sustaining desired navigability and
water conveyance could not be taken up due to huge cost involvement. The problem
has now compounded and it can no longer be ignored. A few surveys and pilot
programmes carried under the FAP have revealed the prospect of selective dredging.
If a method for partial cost recovery can be found, selective dredging can be a viable
programme.
d. Major new investments
i. As has been mentioned elsewhere, regional surface and ground water development
will be reaching near saturation by early next century. This indicates the urgency for
development of major rivers by constructing the Ganges and the Brahmaputra
barrages. The National Water Plan ( NWP-II) recommended feasibility studies of the
two major proposed barrage projects in the Fifth Plan. When fully developed, the
Ganges barrage, according to the feasibility study carried out in 1984, will be able to
irrigate 1.33 million ha. Additionally, round the year sweet water flow through the
distributaries of the Ganges will push back salinity intrusion thereby restoring the
ecological balance of the Ganges development area. All these will help pursue
environment-friendly agricultural and industrial activities which, in turn, will help
alleviate poverty.
ii. The potential to expand irrigation further brings up the question of increasing crop
production by increasing production in the kharif (rainy) season. For that, flood
protection will need to be provided in order to reduce the risk of flood losses and /or
boost production of high yielding crops. Studies carried out under the FAP provides a
policy and implementation framework under which HYV rice and fish can be
cultivated through controlled flooding.
e. Strengthening and developing relevant institutions
i. Pursuit of the Plan as outlined above will call for requisite capable institutions. Water
sector agencies, particularly BWDB, suffer from many deficiencies. These are well
documented in the relevant reports. Through efficient restructuring and over time,
steps will be taken to strengthen the institutional capacity of BWDB.
ii. While doing this, special efforts will be made to develop institutions for local level
planning, people's participation at all stages of the project cycle, for ensuring
accountability, transparency and long term sustainability of completed projects.
Programmes will have to be designed in such manner that these can ensure
participation by women and the landless. Finally, allout efforts will be made to
minimise the adverse effects of water sector projects on environment. The
environmental impact assessment (EIA) guidelines developed under the FAP will be
helpful in this regard.
13.44 Programmes For Fifth Plan
13.44.1 Since the scope of further exploitation of surface water from the minor rivers and
channels is gradually declining due to shortage of water, more emphasis will be given on the
 278

immediate harnessing and use of main river water to augment the supply in smaller rivers and
channels.
13.44.2 Small early implementation projects implemented in the past and currently under
implementation by BWDB have created water conservation facilities by way of regulating the
post monsoon outflow of the drainage system. Development of such facilities by way of
command area development of completed projects will receive priority during the Plan
period.
13.44.3 Gravity flow, Low Lift Pump (LLP) and other methods of surface irrigation are, at
present irrigating about 1.15 million ha of land. This area is projected to increase to 1.32
million ha (about 15 per cent increase) by the terminal year of the Fifth Plan. Double lifting
will be necessary to augment water availability in secondary channels for irrigation purpose.
13.45 Flood Control and Drainage
13.45.1 During the Plan period, small flood control and drainage projects will be continued
in addition to phased implementation of specific river bank protection programmes. It is
expected that drainage programmes may extend further to cover an area of about 4.9 million
ha by the terminal year of the Plan period as against the actual coverage of 3.8 million ha
achieved by the end of the Fourth Plan. Comprehensive flood control and management
measures will be undertaken to protect lives, properties and crops keeping in view the needs
of fisheries, environmental and navigational requirements, etc. For augmenting flows of the
Gorai river and other selected rivers and canals, re-excavation of river-beds under Food for
Works Programme and also by capital dredging will be carried out during the Plan period.
13.45.2 A prioritised portfolio of strategic vulnerable location of river banks will be
identified for phased implementation of river bank protection programme. FAP studies have
so far identified a number of hard points along the Brahmaputra and the Meghna rivers. A
number of hard points along the Padma banks have also been proposed for protective works.
The protective works of other minor rivers proposed to be implemented will be studied
carefully before making any investment on these projects.
13.46 A Special Note on Construction of Ganges Barrage
13.46.1 The signing of the historic treaty on the sharing of the Ganges Water at Farakka on
December 12, 1996 between Bangladesh and India has added a new dimension to the water
management strategy.
13.46.2 Background: The Ganges has been flowing through Bangladesh from time
immemorial; the life and livelihood of its people, along with the flora and fauna, have been
shaped by this great river. The well-being of more than 40 million people in the south-
western region of the country is entirely dependent upon the Ganges. The river provides
drinking water, sustains agriculture, forestry and fisheries, helps operate a quarter of the
country's industrial activities, prevents salinity intrusion from the Bay of Bengal and plays a
determining role in maintaining the ecological balance of the country. The balance between
man and nature in the Ganges dependent area (GDA) in Bangladesh rests essentially on the
Ganges water as this is the only major source of water in the area and all other rivers receive
water directly or indirectly from it.
13.46.3 Past studies: Ever since the preparation of the Master Plan in 1964, the importance
of development of the surface water resources has been stressed time and again and the
barrage over the river Ganges in Bangladesh has been envisaged for more than three decades
 279

for an overall integrated water resources development in the GDA in Bangladesh as well as
for overcoming the adverse effects of large scale diversion of the Ganges water at Farakka.
Studies conducted thus far have identified the tentative location of the barrage from the point
view of optimal water use and various other engineering and environmental considerations.
13.46.4 Objectives: The proposed Ganges barrage will be constructed at a location near
Pangsha about 64.40 km downstream of Hardinge Bridge on the Ganges River. The main
purpose of the barrage will be to supply irrigation water to the south-west region of
Bangladesh. The project will provide irrigation to an area of 1.35 million ha from the Ganges.
The net benefited area of the project will be 1.31 million ha. The time for construction of the
Ganges barrage is estimated to be about eight years and the full benefit will be achieved after
nearly 18 years.
13.46.5 Salient features: The following are the salient features of the Ganges barrage;
a. the Ganges barrage, a 1,940 metre long structure is proposed to be constructed
incorporating a road and rail bridge and gas, power and other services lines as
required to be connected to either bank by the structure;
b. a right bank main command canal, 74 km long, running south-west from the barrage
to feed water into the Gorai, the Kumar, the Nabaganga, the Chitra and the Kobadak
Rivers, with a headwork's capacity of 26,500 cusec will be one integral part of the
project ;
c. a second right bank main command canal, 43 km long, running south-east from the
barrage to feed water into the Chandana, the Old Kumar and the Sitalakhya rivers,
with a headworks capacity of 10,600 cusec will be the second integral part of the
project ;
d. a third right bank canal of 10 km long from the barrage pond near the Hardinge Bridge
to serve the area to the west of the Ganges-Kobadak Scheme with headworks capacity
of 3,000 cusec will be the third integral part of the project ;
e. irrigation development by a combination of surface water gravity supplies, low lift
pumps and shallow tubewells, which will serve an area of 100,000 ha will be the main
components of operational ambits ; and
f. drainage and flood control by embankments and sluices in low-lying areas covering
1.44 million ha within the command area will be the related objective in addition to
irrigation.
13.46.6 Benefits: On its completion, the Ganges Barrage Project will:
a. restore the basic resource (land) to its original position and safeguard it from further
degradation;
b. increase agricultural production through intensive use of modern techniques;
increase in agricultural production following the introduction of irrigation, drainage
and flood control will be from 2.20 mt/ha/year to 7.41 mt/ha/year, an increase of 5.21
mt/ha/year. The net economic benefit out of the increased agricultural production
only will be about US $1020 million a year;
c. provide the required quantum of flows through the Gorai in the dry season to check
the salinity intrusion in the south-west region of Bangladesh to maintain ecological
balance and protect environment of the region;
d. restore the natural bio-mass (including the Sunderbans) and safeguarding further
destruction;
e. safeguard the industries in the area;
f. restore livestock and fisheries resources;
 280

g. improve soil moisture condition;

h. increase job opportunities in many sectors including agriculture;
i. provide crossings for traffic, gas and power across the Ganges and improve the
communication system in the region ;
j. revive economic potential for proper growth of regional economy ;
k. safeguard public health and sanitation condition ; and
l. help developing a balanced ecosystem of the region to safeguard environmental
degradation.
13.46.7 Costs: The tentative cost of the project which includes barrage, main irrigation and
drainage canals, has been estimated at Tk.141,000 million. A provision of Tk.17,175.50
million has been made in the Fifth Plan to undertake detailed feasibility and to prepare
engineering works as well as to complete a part of the barrage construction.
13.47 Flood Action Plan (FAP)
13.47.1 Following the devastating floods of 1987 and 1988, Flood Action Plan (FAP)
covering a number of regional and sub-regional studies were undertaken to find out the
technical, social and environmental issues required to be addressed in formulating long-term
flood control, drainage, irrigation and river management programmes. Based on the
recommendations of some of the FAP studies, a number of follow-up investment projects
have been taken up with donors' assistance. FAP started with 11 main components and 15
supporting studies and pilot projects for implementation during 1990-95. Most of the original
programme of studies under FAP have been completed. The regional studies identified and
evaluated a number of projects. Some other flood mitigation projects have also been
identified in regional context. A few priority projects such as the protection of Dhaka city and
a number of secondary towns, erosion protection on the Brahmaputra right bank and the
rehabilitation of the coastal embankments are currently under implementation. Besides, there
are a number of on-going long term studies and pilot projects.
13.48 Ground Water Irrigation
13.48.1 Shallow tubewell (STW) and hand tubewell (HTW): There have been changes in
the rate of growth and utilisation of irrigation equipment following changes in the
government policy during the last few years. For example, it is observed that withdrawal of
subsidies from irrigation equipment has slowed down the pace of minor irrigation
development. Future growth of minor irrigation will, therefore, depend on adjustment of
policies and implementation of suitable programmes to encourage the private sector and
individual farmers' participation in minor irrigation development. Strengthening of
institutional mechanisms and required support services to the private sector will be provided
by the government for accelerated development of STW and HTW irrigation technologies.
13.48.2 Deep tubewell (DTW): Because of high capital and operating cost, DTWs are not
commercially attractive to the farmers at full cost. As a result, DTWs are projected to cover
an area of 0.51 million ha during terminal year of the Plan as against the current level of 0.52
million ha. It is, therefore, felt that in the areas where DTWs are the only technically feasible
modes of irrigation, adequate measures will be taken to make DTWs attractive to the farmers.
Such measures will include introduction of high value crops, increasing the command area of
individual tubewells through improved onfarm water management practices and formation of
DTW users’ groups, strengthening support services to water users' groups, including access to
electricity, credit, market facilities, etc. Irrigation coverage under traditional methods of
ground water equipment, i.e., Deep Tubewell (DTW), Shallow Tubewell (STW) and Hand
 281

Tubewell (HTW) is projected to decline from the estimated 2.81 million ha in 1996/97 to
1.31 million ha by the terminal year of the Plan. Continuation of policy changes in terms of
withdrawal of site restriction and subsidy, non-availability of water at required depth, etc.,
resulting in higher cost, particularly of DTW, are likely to lead to a decline in the use of these
equipment by the poor farmers. However, reduction in irrigation area through these traditional
methods is expected to be compensated by additional irrigation coverage of 2.23 million ha
under relatively new technologies of Forced Mode Tubewell (FMTW), Deep Set Tubewell
(DSTW) and Very Deep Set Shallow Tubewell (VDSSTW). It is expected that private sector
investment in irrigation development during the Fifth Five Year Plan will be about Tk.5,010
million.
13.49 Involvement of Women in Development
13.49.1 Participation of women in the development and construction of irrigation and flood
control infrastructure was found to be insignificant in the past. Presently, local women are
working along with men as construction workers in the Food for Works Programme,
embankment construction, tree plantation and other projects implemented by the Water
Development Board (BWDB). Under the Fifth Plan, steps will be taken to involve distressed
and unemployed women in such projects/programmes implemented by the BWDB. In
addition, more avenues for employment of women are expected to be created in O & M
activities of flood control projects and tree plantation and fish culture activities of BWDB
projects. It has been estimated that 0.92 million person-days of incremental employment will
be generated by the terminal year of the Fifth Plan which will include a sizable share for
women.
13.50 Private Sector Participation
13.50.1 The government is fully committed to promoting the participation of the private
sector in increasing irrigation coverage and command area development. As per existing
policy measures, sales, marketing, distribution of fertilisers, irrigation equipment, farm
machinery, etc., have been entirely transferred to the private sector.
13.50.2 It is noted that irrigation need by farmers is closely linked to rice and commodity
prices. For example, if the rice price is low, farmers will be discouraged to spend more for
irrigation to produce more agricultural commodities and as such, the expected command area
is likely to be diminished. It is, therefore, necessary to evolve mechanisms for price
stabilisation. Import of irrigation equipment and machinery will be further liberalised and
fiscal policy turned in favour of private sector's participation. At the same time, necessary
measures will also be taken to encourage efficient domestic manufacture of irrigation
equipment and farm machinery as well as maintenance spares.
13.51 Cost Recovery from Irrigation Projects
13.51.1 Presently, BWDB is collecting irrigation tax from 12 irrigation projects out of 22
completed projects as per Water Rate Irrigation Ordinance of 1963. BWDB started collection
of water rate since 1976/77. During 1995/96, the target of collection of water rate was
estimated at Tk. 25.00 million against which the amount realised was Tk. 8.77 million.
During 1996/97, the revenue collection target was estimated at Tk.30.00 million against
which the amount realised till April/97 was Tk.8.59 million. The reasons for low collection
was due to evading practices, power failure for which timely irrigation was not possible and
lack of proper legislation and punitive measures against the defaulters.
 282

13.51.2 Water pricing will be such as to convey the scarcity value of this resource to the
users and beneficiaries to foster their motivation in the economic and social context. The
water rate/charge will be adequate to cover the recurrent O & M cost and part of the capital
cost. The objective of pricing policies will be to improve efficiency in water use. The users
will have incentives to use only the amount of water they need and additional quantities will
entail higher cost per unit. The present system of collection of water rate from the irrigation
projects is not satisfactory due to procedural reasons and as such revenue generation from the
irrigation projects is much lower than expectations. The collection of water rate will be
initiated from all irrigation projects as soon as irrigation infrastructure/facilities are created
and the beneficiaries will be motivated to pay the price for irrigation soon after they start
getting benefits from construction of irrigation infrastructure. The water pricing for surface
and ground water irrigation will be rationalised and collection mechanism improved through
legislation and improvement of procedural practices.
13.52 Physical and Financial Programmes
13.52.1 Physical: Benchmark position of irrigation, flood control and drainage as of 1996/97
and projection for the terminal year of the Fifth Plan are provided in Table 13.14.
Table 13.14
Irrigation Flood Control and Drainage Projections During Fifth Plan
(area in million hectare)
Programme 1996/97 2001/2002
(Benchmark) (Projection)
1 2 3
I. Irrigation :
A. Surface Water Irrigation
i. Gravity Flow 0.40 0.59
ii. LLP 0.58 0.66
iii. Traditional 0.17 0.07
Sub -Total (A) : 1.15 1.32
B. Ground Water Irrigation
i. DTW 0.52 0.51
ii. STW 2.23 0.73
iii. HTW 0.05 0.07
iv. FMTW - 0.01
v. DSSTW - 2.10
vi. VDSSTW - 0.12
Sub-Total (B) : 2.81 3.54
C. Others 0.04 0.18
(Minor Irrigation)
Sub-Total (C) : 0.04 0.18
Total (A+B+C) : 4.00 5.04
II. Flood Control and Drainage 4.20 4.90
Sources : i National Minor Irrigation Census (1995-96)
ii National Minor Irrigation Development Project
iii Bangladesh Water Development Board.

13.52.2 Financial: The projection for public sector financial outlay for the development of
water resources during Fifth Plan is Tk.73,373.13 million. The detail break-up is shown in
Table 13.15. In addition, an amount of Tk.5,500 million is likely to be invested in water
resources development by the private sector.
 283

Table 13.15
Public Sector Financial Outlay for Development of Water
Resources for Fifth Plan (1997/98-2001/02)
( in million Taka)
Programme Financial Outlay
1. Surface Water Irrigation 12,961.00
2. Ground Water Irrigation 3,600.00
3. The Ganges Barrage 17,175.51
4. Flood Control and Drainage including River and Town Protection 34,131.00
5. Surveys, Studies and Investigation 4,640.00
6. Others (Satellite Imagery, Mapping, Char Development etc.) 865.62
Total 73,373.13
13.52.3 Private sector's investment in development of water resources is estimated at about
10 per cent of the public sector's. The nature of investment required for development of water
resources limits the scope for an enlarged role for the private sector in the continuing
situational context.

Rural Development and Institutions

13.53 Introduction
13.53.1 Bangladesh is one of the most densely populated countries of the world and a vast
majority of the population live in the rural areas. Poverty is widespread in the country and
more so in the rural areas. It is estimated that around 50 per cent of the population lives below
poverty line and about half of them is considered to be the hard-core poor. The rural poverty
is characterised by landlessness, over-crowding in agriculture, underdevelopment of rural
non-farm sector, colossal unemployment, low savings and acute shortage of credit facilities.
Women are the disadvantaged group in the country and more so in the rural areas in their
traditional setting with little literacy and almost no skill training. Rural infrastructure in the
country consists of 2,100 identified growth centres, 14,400 km of feeder 'B' roads, 87,000 km
of rural roads and some 8,300 km of water ways during the monsoon. These infrastructure
that contribute towards rural development are mostly underdeveloped and poorly maintained.
13.53.2 For socio-economic development of the country as a whole, reduction of rural
poverty is a must. Towards that end, RDI programme will aim at increasing income through
productive employment generation in the rural areas and rural infrastructure development,
including development of marketing network, to boost up economic activities. These call for
undertaking intensive, expanded and multi-dimensional programme during the Fifth Five
Year Plan.
13.54 Performance During Fourth Five Year Plan (1990-95)
13.54.1 Under the Rural Development and Institutions Sector, three major types of
programmes were under implementation during the Plan period. These were production and
employment programmes for the poor, development of physical infrastructure and small
scale irrigated agriculture, drainage and flood control works.
13.54.2 Under production and employment programme, about 0.78 million members were
enrolled in various formal and informal groups. Most of these group members became self-
 284

employed on receipt of certain amount of credits. The credit disbursed to various formal and
informal groups amounted to Tk. 3,019.00 million under BRDB.
13.54.3 Under LGED, the targets for construction of feeder roads seem to have been largely
exceeded. Over 3,709 km of roads were constructed against the target of 2,399 km. Similar
was the case with construction and rehabilitation of bridges and culverts. Around 42,000
metres of bridges and culverts were either constructed or rehabilitated against the target of
over 30,000 metres. Tree plantation on the slopes of the feeder roads, rural roads and
embankments were inbuilt in the construction programmes. LGED created over 112.0 million
person-days of employment against the target of 133.1 million.
13.54.4 Ministry of Land established some 384 self-reliant ideal villages to rehabilitate
17,315 landless and rootless families. Chittagong Hill Tracts Development Board undertook
some programmes for development of the hilly areas, particularly in the field of community
development. BARD, Comilla and RDA, Bogra implemented some small projects, mostly
experimental and pilot ones. The targets and achievements under the various programmes
during the Plan period are shown in Table 13.16.
Table 13.16
Targets and Achievements of Major Programmes for Rural Development and
Institutions During Fourth Plan (1990-95)
A. Production and Employment Programme (PEP)
Programme Units Targets Achievements
Formation of primary societies/group number 23,581 16,882
Enrolment of members number 529,621 777,660
Skill training number 166,695 616,800
Shares/savings million taka 159.6 449.33
Credit million taka 330.3 3,019.00
Realisation of credit million taka - 2,559.15
Small Farmers Development Programme (SFDP)
Formation of groups number 1,982 5,625
Enrolment of members number 12,145 35,597
Share/savings million taka 7.3 30.4
Disbursement of credit million taka 60.7 166.4
B. Development of Physical Infrastructure
Development of growth centres number 316 277
Development of feeder road Type -B km 2,399 3,709
Construction of bridges and culverts metre 15,039
41,987
Rehabilitation of flood/cyclone metre 15,057
damaged bridges and culverts
Rehabilitation of flood/cyclone km 2,929 2,574
damaged pucca roads
C. Irrigated Agriculture and Irrigation Management Programme (IMP)
IMP coverage (DTW) number 1,556 1,499
(LLP) number 207 156
IMP training persons 8,555 6,215
D. Other Minor Programmes
Settlement of families in Adarsha Gram number 35,140 17,315
E. Employment Generation
Infrastructural programme million person-days 133.1 112.0
Self-employment under PEP million persons 0.53 0.78
 285

13.54.5 The allocation for the RDI sector during the Fourth Five Year Plan was
Tk. 16,500.00 million at 1989/90 prices. In the revised ADPs during the plan period, an
allocation of Tk. 25,622.20 million was given to this sector against which an amount of Tk.
21,823.5 million was utilised. ADP allocations and expenditures incurred during the period
are shown in Table 13.17.
Table 13.17
Revised ADP Allocations and Expenditures for Rural Development and Institutions
During Fourth Plan (at current prices)
(in million Taka)
RDI Agencies Revised ADP Allocations Expenditure
1. BRDB 2,845.97 2,460.00
2. BARD 133.45 75.20
3. RDA 21.78 17.60
4. Co-operatives 578.41 123.70
5. Ministry of Land 937.40 509.60
6. LGED 20,028.37 17,682.90
7. NILG 3.64 3.60
8. Ministry of Relief 112.04 108.70
9. Special Affairs Division 646.14 537.20
10. Ministry of Finance (Ag. Bank) 10.00 -
11. Ministry of Agriculture 5.00 5.00
12. Planning Division 300.00 300.00
Total 25,622.20 21,823.50

13.54.6 Performances during 1995/96 and 1996/97: All the three major programme
components, i.e., production and employment programme, infrastructural development
programme and irrigation related infrastructure were under implementation during 1995/96
and 1996/97. Under the production and employment programmes, employment for 0.39
million persons was created. These were mostly self-employed members of the various formal
and informal groups. Under the infrastructure construction programme, some 2,856 km of
metalled roads were constructed in addition to 20,800 metres of bridges and culverts. Apart
from these, 163 growth centres were developed by constructing sheds, internal roads and
lanes in the hats and bazars. An amount of Tk. 17,689.9 million was provided in the Revised
ADPs for 1995/96 and 1996/97.
13.55 Fifth Five Year Plan (1997-2002)
13.55.1 Objectives: The following are the objectives of the Fifth Five Year Plan for the RDI
Sector:
a. reduction of poverty in the rural areas;
b. productive employment generation in the rural areas;
c. self-employment creation for the rural poor ;
d. development of rural infrastructure; and
e. development of small and landless farmers.

13.55.2 Strategies: The elements of the strategy for achievement of the above objectives
will include, among others, the following:
a. provision of skill training mostly for self-employment in non-farm sectors;
b. formal and informal group formation and group development for co-operative
activities;
c. resource mobilisation through individual/group savings;
 286

d. creation of enabling environment for availing of credit facilities;

e. social mobilisation for awareness creation on various aspects of rural life;
f. development of small and landless farmers;
g. development of rural infrastructure such as growth centres and roads, bridges and
culverts connecting such centres;
h. provision of small irrigation and flood control related infrastructure;
i. preventing destitution through rural maintenance programme; and
j. covering at least one full administrative district under any project with one or more of
the programme components of productive employment, rural infrastructure and small
scale irrigation and flood control infrastructure to find out the replicability.

13.56 Major Thrust

13.56.1 Facilities for self-employment: It is obvious that it will not be possible to create
enough wage employment even for a significant proportion of the vast army of the rural
unemployed and under-unemployed labour force. As such facilities for self-employment will
be created through skill training and micro-credit, particularly in the non-farm sector under a
well-conceived pro-poor programme. An employment bank will be set up in the Fifth Plan
period to support self-employment. Since provision of microcredit from the public sector fund
will not be sufficient to create enough employment, local resources will be mobilised through
savings of the beneficiaries.
13.56.2 Facilities for Bittaheen: There is a large number of landless and assetless people
who are known as bittaheen. They will have priority in the scheme of poverty alleviation and
separate institute for the bittaheen will be set up. To meet the credit needs of such people,
opening separate counters in the existing banks for the bittaheen may be necessary.
Alternatively, separate banks for the bittaheen will be established.
13.56.3 Social mobilisation and empowerment of the poor: On the top of all efforts
towards reduction of poverty, social mobilisation for awareness creation on various social,
economic, environmental, skill development and institution building matters and supporting
local government bodies will remain in-built in the process of participatory bottom-up
planning and poverty alleviation. Empowerment of the poor in identifying their needs and
directly involving them in planning, designing and implementation of self and community
based projects will be a mechanism for nation building activities in this context.

13.56.4 Women in development: Since women are the most disadvantaged group in the
society and the victims of extreme poverty, special attention will be given to reduction of
poverty among women. In appropriate cases, separate programmes for the women will be
taken up.
13.56.5 Environment protection: Environmental concern is an important element in any
programme of rural development. RDI programme will have elements of environment
protection, environment conservation and re-generation, social mobilisation and input supply.
Environment -friendly activities will remain in-built in all programmes of rural development.

13.57 Programmes
13.57.1 Poverty alleviation will be one of the major concerns of the RDI programmes during
the Plan period, and conscious and deliberate attempts will be made to substantially reduce
poverty, particularly of the hard-core rural poor. The programmes will include the following:
 287

a. Production and employment programme: Under this programme various projects will
be undertaken for skill training, awareness creation, human resource development and
empowerment of the poor. Credits will be disbursed for undertaking income generation and
for self-employment activities. There will be separate projects for rehabilitation of the
landless and assetless people, particularly women. Specific projects will be undertaken for
the bittaheens and the people of the special areas. Poverty alleviation programmes will be
designed and suited to the need and creativity of the people and be financed with local
resources as far as possible.
b. Rural infrastructure development programme: Under the rural infrastructure
development programme, projects will be taken up for development of growth centres and
growth centre connecting roads, bridges and culverts on the one hand and small-scale
irrigation and flood control related infrastructure projects on the other. Road maintenance
programmes, mostly rural roads, will be implemented through the rural destitute women and
eventually they will accumulate savings to undertake income generating activities by
themselves.
13.58 Projections for development of RDI in the public sector during the Fifth Plan are
shown in Table 13.18.

Table 13.18
Projection for Development of RDI in Public Sector During Fifth Plan

Programme Unit Projection

Productive employment generation million person 1.3
Employment under infrastructural programme million person-days 175
Growth centre development number 600
Feeder road category 'B' kilometre 7,000
Rural road kilometre 15,000
Bridges and culverts metre 100,000
Small scale water management related infrastructure:
- Embankment kilometre 1,000
- Khal/canal kilometre 4,000
- Water control structure number 350
Maintenance of physical infrastructure kilometre 10,000

13.59 Land Reform and Land Use

13.59.1 Control over asset, particularly access to land is a major determinant of household
income in Bangladesh, particularly in the rural areas. Two-thirds of the rural people are
landless or functionally so. The high degree of income inequality in the country is closely
related to unequal distribution of land ownership. The average size of land holding is
declining due to population pressure coupled with inheritance laws and the need for other
uses of land such as human settlements and roads. Share cropping is widespread as the
smaller pieces of land are not enough for subsistence.
13.59.2 The Land Reform Ordinance of 1984 has provision for the protection of tenants and
sharecroppers. The basic issue is lack of enforcement of the ordinance. Farm holdings in
Bangladesh are generally very small and big farms are limited in number. In this context,
scope for a comprehensive redistribution of land and further reduction of land ownership
ceiling is considered to be limited.
 288

13.59.3 Against this backdrop, effective implementation of the ongoing land reform activities
including Adarsha Gram, Khas Land distribution, ideal village programmes and providing
rights to bargadars will get priority in the Fifth Plan period. Further, improving land records,
distribution of appropriate land titles and speedy settlement of disputes on land will create
opportunities for small farmers to avail of credit facilities.
13.60 Area Development Approach
13.60.1 Rural Development during the Fifth Five Year Plan will be undertaken following
Area Development Approach which is commonly understood as comprehensive development
or integrated multi-sectoral development. This approach conforms to the over all national
sectoral development strategy. Under the Area Development Approach, programme for the
total development of a particular geographical area covering development activities in various
fields such as education, human resources, family planning, agriculture, water resources,
infrastructure, housing, etc. will be undertaken. Projects will be drawn up by the concerned
sectors and will be integrated and co-ordinated at some convenient administrative units.
Considering the complexity of integration and efficiency at the operational level, one at
administrative district, for example, may be considered as the point of co-ordination and
integration of the projects which conform with the rural development strategy, presently being
pursued under the RDI Sector.

13.60.2 Under the Area Development Approach, there will be one area development
programme covering the projects of different sectors which will be co-ordinated at the
district level for which appropriate mechanism will be developed as soon as the new local
government structure becomes operational. The area development programme will essentially
involve the local government authorities and will be co-ordinated by such authorities at the
district level. The programmes of all development agencies including government,
parastatals, NGOs and private organisations will be co-ordinated with a view to avoiding both
duplication of efforts and unbalanced allocation of resources. The area development
programme drawn for the comprehensive and multi-sectoral development of the entire
geographical area of a particular district will be decomposed at the upazila level and further
down to union parishad.
13.61 Financial Outlay During Fifth Plan
13.61.1 An amount of Tk.87,002.48 million has been projected for the development of RDI
in the Public Sector. The programme wise breakup of the outlay is shown in Table 13.19.

Table 13.19
Public Sector Financial Outlay for Development of RDI During Fifth Plan
(in million Taka)
Programme Financial Outlay
Production and employment programme (PEP) 20,000.00
Infrastructural development programme 56,000.00
(including irrigation related infrastructure)
Other programmes 11,002.48
(including special programmes and action research)
Total 87,002.48

13.62 Given the nature of social investment, private investment for rural development and
institutions will be very limited. Some investment outside the public sector will be based on
savings mobilised and institutional investment by NGOs. A tentative amount of Tk. 2,000
million is likely to be invested for the development of RDI in the private sector during the
 289

Plan period. The return against such investment is expected to be more per unit than what is
projected to be in the public sector.

CHAPTER XIV

INDUSTRIES

14.1 Introduction
14.1.1 Manufacturing combines human ingenuity - science, technology and innovations with
natural endowments of a nation. The fountain of the wealth of today's developed nations
receives the perennial flow from trade in manufactures which lie at the back of their highly
remunerative employment, high level of income and the high standard of living. This is why
international trade is dominated by manufactures which accounted for around 75 per cent of
the world merchandise exports of US$ 4,880 billion in 1995. Primary products comprised the
rest in which the shares of food, fuel, minerals and metals and agricultural raw materials were
9.1 per cent, 7.1 per cent, 6.3 per cent and 2.8 per cent, respectively. It is, therefore, no
wonder that the demolition of the tariff wall against trade in manufactures had been at the top
of the agenda of all multilateral and plurilateral trade negotiations conducted under the
auspices of the General Agreement on Tariffs and Trade (GATT), the predecessor institution
of the present World Trade Organisation (WTO), and that the developed countries, who are
the greatest beneficiaries of trade in manufactures, have brought down the tariffs on
manufactured goods traded amongst themselves to a level as low as 4 per cent only.
14.1.2 Failure of most of the developing economies, excepting the newly industrialised
countries, to generate adequate purchasing power in their respective domestic market led
them to look for purchasing power outside the national boundaries and pursue the export-led
growth strategy. The bulk of exports from these countries, however, still comprises of
primary commodities and historically, world prices of primary commodities have been
volatile, unstable and least rewarding. Besides, these countries, more often than not, suffer
from adverse terms of trade. As a result, trade has been neither a source of resource flow nor
an 'engine of growth' for these countries. These stark realities, combined with the
overwhelming weight of manufactures in the global export trade, make the success of the
export-led development strategy contingent on the development of a viable manufacturing
sector.
14.2 Past Industrial Development
14.2.1 Bangladesh is a late starter in the process of industrialisation. Before liberation, some
simple process industries like jute, textiles and sugar mills, two pulp and paper mills, a small
urea fertiliser plant, a cement factory, a 'mini' steel making plant with imbalanced
downstream rolling facilities for making mild steel bars, sheets and plates, a few
pharmaceutical units with capacities for formulation, bottling and packaging and several
minor dockyards and light engineering workshops comprised the industrial base of the
country. After liberation, within the overall objective of attaining a self-reliant economy, the
First Five Year Plan (1973-78) of the country adopted an import-substitution strategy for
industrialisation with emphasis on domestic production of basic needs and investment goods.
However, with the unfortunate change in the government that was brought about in August
1975 a perceptible shift in the self-reliant economic goals and objectives occurred, making
the country increasingly dependent on foreign aid and aid-financed imports covering all types
 290

of commodities - food, consumer goods, consumer durables, raw materials, intermediate

inputs and of course, investment goods.
14.2.2 During the last twenty five years, the nation's industrialisation efforts were channelled
mainly through the public sector. A major portion of public investment was devoted to new
capacity creation in chemical fertilisers and in the establishment of several basic engineering
industries, while both the public and private sectors invested in textiles and clothing. Some
investments were also made in balancing, modernisation and expansion of some of the
existing jute and textile mills. Besides, significant promotional investments were made by the
government by way of setting up a large number of industrial estates for small and medium
sized industrial units as well as two export processing zones (EPZs) to provide infrastructural
facilities, utilities and other services for the entrepreneurs - both foreign and local. However,
most of the industrial estates remained under-utilised and the strategy for labour-intensive
industrialisation as well as spatial dispersal of industries, by and large, ended in a failure.
With the exception of export-oriented ready made garments industries (RMGs), which
achieved a commendable growth over a relatively short span of time, the country's
industrialisation efforts in other areas, particularly in producing consumer goods, RMG-
linkage inputs and high value added consumer durables and producer goods, did not bear
much fruit. The vast potential that exists for development and diversification of agro-based
and agro-support industries remains to be tapped. Indeed, even the existing industrial units
gradually lost operational viability due to lack of investments in balancing and modernisation
as well as loss of protective domestic markets due to liberalisation of the trade regime at a
pace which did not permit necessary adjustments and relocations. Industrial units awaiting
privatisation also have landed in the same situation as uncertainty and apprehension about job
losses have besieged both the management and the labour equally as a result of which they
have lost interest in running these units. On the contrary, in the context of conscious policy
decisions to allow progressive erosion of the public sector's role in the country's
industrialisation efforts, a standstill position has been reached with respect to any significant
investment by the public sector in the establishment of any new production capacity.
14.2.3 Bangladesh is a densely populated country, with a narrow natural resource base, an
extremely limited per capita availability of arable land and very low purchasing power of the
population. The low purchasing power of the population is responsible for the small size of
the domestic market which has shrunk further, particularly in the 1990s, due to opening up of
the economy with attendant liberalisation of the trade regime. Given the small size of the
domestic market, Bangladesh has to pursue an export-led development strategy with emphasis
on industrialisation for sustained economic growth and social development. Such a strategy
holds out the potential for eventual solution of problems like acute unemployment, abject
poverty, low rate of savings and investment as well as high dependence on foreign aid.
14.2.4 The country has a vast pool of easily trainable manpower resources. It also has the
advantage of relatively low wage level. But its technological base is weak and it lacks
dynamic entrepreneurship, managerial expertise and efficiency, work forces with requisite
skills and above all, adequate investible surplus. To raise the manufactures' share from the
present 9.28 per cent level to 12.70 per cent of GDP by the terminal year of the Fifth Plan
obviously is a challenging task. This will not only call for the necessary enabling
environment, but also require an upbeat efficiency of the private sector with ability to
compete in a globalised market economy and liberalised trade regime. It is, nevertheless,
achievable as has been demonstrated by a number of East and Southeast Asian countries.
 291

14.2.5 The crucial and logical transformation of the Bangladesh economy that is needed for
an accelerated pace of industrialisation, is yet to take place. Over the last quarter of a century,
the economy of Bangladesh has gone through a slow and rather erratic structural
transformation. It defied the classical relationship between the structural composition of an
economy and its stage of development. The share of her agricultural sector, though dropped
from about 58 per cent in 1972 to about 33 per cent in 1995, the share of the manufacturing
sector limped from 9.0 per cent in 1973 to a mere 11.4 per cent in 1994/95. The services
sector, on the other hand, jumped from 26 per cent to about 48 per cent over the same period.
To bring about a visible improvement in the quality of life of the people, the pivotal role that
the manufacturing sector has to play in the desired transformation of the economy, still
remains to be displayed.
14.2.6 The sector's share in GDP for some selected years, including benchmark years of the
past Plans, and its growth over the periods under discussion are shown in the Table 14.1.
Table 14.1
Manufacturing Sector's Share in GDP and Past Growth Rates
(at constant prices)
Year Share in GDP Period Annual Compound
(per cent) Growth Rate Over
Period (per cent)
1972/73 9.00 1973 - 1978 7.35
1979/80 11.22 1978 - 1980 6.21
1984/85 9.86 1973 - 1980 7.02
1989/90 9.91 1980 - 1985 0.93
1994/95 11.36 1985 - 1990 4.22
1995/96 11.37 1990 - 1995 7.00
1996/97 11.08 1995/96 5.33
1996/97 3.31
Source: BBS
14.2.7 Despite its potential for growth, the manufacturing sector in the past failed to meet
expectations. In 1994/95 this sector achieved a growth rate of 8.6 per cent compared to 7.2
per cent in 1989/90. Over the period from 1990/91 to 1995/96, the manufacturing sector grew
at an average annual rate of 6.3 per cent and there have been fluctuations also. The first year
of the Fourth Plan registered the lowest growth rate (2.39 per cent), while the highest growth
rate (9.1 percent) was achieved during the year 1992/93. The growth rates during 1995/96 and
1996/97 were 5.3 per cent and 3.3 per cent, respectively. Among the industrial sub-sectors,
ready-made garments (RMG) and pharmaceuticals recorded the highest growth performances
(greater than 10 percent), while growth rates of jute and cotton textiles declined.
14.2.8 The total investment during the period 1990/91-1994/95 stood at Tk.131,457 million,
at current prices, in which the share of the private sector was 85.89 per cent, including foreign
direct investment (FDI) of 10.54 per cent. Investment in the years 1995/96 and 1996/97 stood
at Tk.34,919 million and Tk.34,513 million, in which the share of the private sector was 95
per cent and 97 per cent, respectively. Major portion of the investment went into fertiliser
and pharmaceuticals as well as export production. Ready-made garments and knitwears
jointly accounted for over 70 per cent of the total investment in the manufacturing sector.
Details of year wise total investment as well as agency wise public sector expenditure in the
manufacturing sector for the period under review are given in Tables 14.2 and 14.3.
 292

Table 14.2
Investment in Manufacturing Sector1
(at current prices)
(in million Taka)
Year 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 Total
Total Investment 23415 22699 24319 25825 35199 34919 34513 200889
Public Sector Investment 8331 3338 1240 2273 2227 1718 1082 20209
Private Sector Investment 15084 19361 23079 23552 32972 33201 33431 180680
Domestic Private 12579 17927 21248 20595 19053 16346 15003 122751
Investment
Foreign Direct 1568 428 894 1367 12392 15555 15506 47710
Investment
Investment in the EPZs 937 1006 937 1590 1527 1300 2922 10219
Percentage Share
Public Sector 35.58 14.71 5.10 8.80 6.33 4.92 3.14 10.06
Private Sector 64.42 85.29 94.90 91.20 93.67 95.08 96.86 89.94
Domestic Private Sector 53.72 78.98 87.37 79.75 54.13 46.81 43.47 61.10
Foreign Direct Investment 6.70 1.88 3.68 5.29 35.20 44.55 44.93 23.75
Investment in the EPZs 4.00 4.43 3.85 6.16 4.34 3.72 8.46 5.09

Table 14.3
ADP Expenditures by Major Ministries and Parastatals During Fourth Plan Period
(1990-95), 1995/96 and 1996/97
(in million current Taka)
Sl. Name of Agencies 1990/91 1991/92 1992/93 1993/94 1994/95 Total 1995/96 1996/97
No. 1990-95
01. Bangladesh Chemical 7,694.47 2,575.94 465.939 1,046.41 851.927 12,634.69 666.40 105.811
Industries Corporation. (92.36) (77.15) (0.38) (46.04) (38.22) (72.89) (38.79) (9.78)
02. Bangladesh Steel & 16.20 24.70 - - - 40.90 2.50 -
Engineering Corporation (0.18) (0.15)
(0.19) (0.74)
03. Bangladesh Textile - - - 35.00 43.58 78.58 76.50 60.00
Mills Corporation. (1.54) (1.69) (0.45) (4.45) (5.54)
04. Bangladesh Jute Mills 57.77 - - - - 57.77 4.00 -
Corporation (BJMC) (0.69) (0.33) (0.23)
05. Bangladesh Sugar & 189.25 74.90 214.70 301.22 107.13 887.20 68.00 20.10
Food Industries (2.27) (2.24) (17.32) (13.25) (4.81) (5.08) (3.96) (1.86)
Corporation (BSFIC)
06. Bangladesh Forest - - - - - - - -
Industries Development
Corporation (BFIDC)
07. Bangladesh Small & 178.50 312.80 217.30 333.80 349.30 1391.70 287.50 118.40
Cottage Industries Corp. (2.14) (9.37) (0.18) (14.69) (15.69) (8.03) (16.73) (10.94)
08. Bangladesh Handloom 92.50 37.40 20.00 10.35 180.40 340.65 22.15 35.10
Board. (1.11) (1.12) (0.02) (0.46) (8.10) (1.97) (1.29) (3.24)
continued to next page

1
Private sector investment figure has been taken from GED, Planning Commission (Table- 1.8, Chapter -1). Investment in EPZs has been Collected from BEPZA. Foreign Direct
Investment has been estimated to be 40% of registered FDI with Board of Investment and it is based upon a survey conducted by BOI in 1993/94. Domestic private sector investment has
been derived as residuary after deducting investment in EPZ and FDI.
 293

Table 14.3 (continued)

ADP Expenditures by Major Ministries and Parastatals During Fourth Plan Period
(1990-95), 1995/96 and 1996/97
(in million current Taka)
Sl. Name of Agencies 1990/91 1991/92 1992/93 1993/94 1994/95 Total 1995/96 1996/97
No. 1990-95
09. Bangladesh Sericulture 40.00 80.00 61.90 115.00 146.25 443.15 121.90 15.00
Board. (0.48) (2.40) (0.05) (5.06) (6.57) (2.56) (7.09) (1.39)
10. Bangladesh Export 50.00 220.00 220.00 280.00 249.20 1019.20 134.30 484.03
Processing Zone (0.60) (6.59) (17.74) (12.32) (11.19) (5.12) (7.82) (44.73)
Authority(BEPZA)
11. Bangladesh Industrial 10.00 0.83 4.67 44.77 - 60.27 9.20 -
Technical Assistance (0.12) (0.02) (0.38) (1.97) (0.35) (0.54)
Centre (BITAC)
12. Ministry of Industry - - 0.015 29.648 15.167 44.83 15.00 -
(0.0012) (1.30) (0.68) (0.26) (0.87)
13. Ministry of Textiles 1.44 1.78 3.43 2.70 8.38 17.73 6.00 2.30
(0.02) (0.05) (0.28) (0.12) (0.38) (0.10) (0.35) (0.21)
14. Department of Textiles - - - - 64.71 64.71 57.30 10.00
(DOT). (2.91) (0.37) (3.33) (0.92)
15. Ministry of Jute (MOJ). - - - - - - 133.7 145.00
(7.78) (13.40)
16. Department of Jute - - - - - - - 26.60
(DOJ). (2.46)
17. Department of Printing, - 7.50 28.67 40.00 52.75 128.92 5.0 (0.29) 59.89
Stationery, Forms and (0.22) (2.31) (1.76) (2.37) (0.74) (5.53)
Publications
18. Patent & Design 0.365 1.187 1.60 0.363 0.450 3.965 - -
(.005) (0.04) (0.13) (0.016) (0.02) (0.02)
19. Trade Mark Registry 0.365 0.900 1.60 0.400 0.360 3.625 - -
(0.005) (0.03) (0.13) (0.02) (0.016) (0.02)
20. Board of Investment - - - 11.20 67.40 78.60 1.10 -
(0.49) (3.03) (0.17) (0.06)
21. Tariff Commission - - - 21.46 25.492 46.96 16.70 -
(0.94) (1.14) (0.27) (0.97)
22. NPO - - - - - - 0.10 -
(0.005)
23. Privatisation Board - - 0.365 40.173 40.54 59.00 -
(0.16) (1.80) (0.23) (3.43)
24. Export Promotion - - - - 23.200 23.20 15.00 -
Bureau (EPB) (1.04) (0.13) (0.87)
25. Bangladesh Institute of - - - - - - 2.00 -
Management (BIM) (0.12)
26. Ministry of Commerce. - - - - 0.842 0.84 7.500 -
(0.04) (0.005) (0.44)
27. Dhaka Chamber of - - - - - - 5.00 -
Commerce and Industry (0.29)
(DCCI)
28. Micro-Industries - - - - - 2.30 -
Development Assistance (0.13)
and Services (MIDAS)
Total 8,330.86 3,337.94 1,239.82 2,272.69 2,226.71 17,408.02 1,718.15 1,082.23
(100) (100) (100) (100) (100) (100) (100) (100)

Note: Figures in parentheses are corresponding percentages of total annual expenditures

 294

14.2.9 Over the same period, manufactured exports grew at an average rate of 16 per cent per
annum, reflecting a significant rise in the sector's share in the country's total export earnings,
from 67 per cent in 1989/90 to 84 per cent 1996/97. In terms of value, export on account of
manufactures increased over the period by US$ 2,554 million, from US$ 1,150 million in
1989/90 to US$ 3,704 million in 1996/97. Share of the ready-made garments and knitwear
was the largest (about 67 per cent) in this increase.
14.2.10 The share of the manufacturing sector in country's total employment is 7.4 per cent
only. It provides employment to about 3.63 million people (of ages 15 years and over) in
which the share of the private sector is just over 95 per cent. Women folk accounts for some
37 per cent of the sector's employment. About 62 per cent of this employment is in the rural
area in which the share of women is about 39 per cent. Informal sector accounts for about 52
per cent of the sector's total employment. The large, medium and small industries account for
one-third of this employment while cottage industries employ one-third and the remaining
one-third is in the handloom sub-sector.
14.2.11 Production of major consumer goods, however, remained low partly due to closure
of a large number of medium and small manufacturing industries and partly due to the
depressed demand for domestic manufactured goods in the context of liberalisation of
imports. In their place, non-traditional exports such as garments and frozen food have become
important sources of industrial growth. In recent years, major source of industrial growth has
been textiles, with ready-made garments manufacture expanding from an insignificant level in
the early 1980’s to the present position of the country's leading export earner. Leather exports
have also grown modestly.
14.3 Objectives and Strategies for Industrialisation
14.3.1 The government has clearly enunciated its industrialisation objectives and strategies.
These are: industrial development with emphasis on optimum utilisation of indigenous
endowments, promotion of employment and catalysing the growth of production and exports.
14.3.2 In the above context, the specific objective of the industries sector during the Fifth
Plan will be to bring about a structural change in the economy to make it conducive to
accelerated growth of overall GDP and to face boldly the challenge of a free market economy
in the twenty first century. This will be brought about, within the overall context of poverty
alleviation, through maximisation of its contribution to:
a. Gross Domestic Product : The sector will not only contribute to the growth of the
total value added directly but also will facilitate the growth of overall economy
indirectly through forward and backward linkages.
b. Balance of Payments : This will be strengthened through efficient import substitution
and export orientation. The key aspect of this will be to attain international
competitiveness through efficient allocation and use of resources and enhancement of
total factor productivity.
c. Strengthening of Technological Base : This will be achieved through building of
indigenous capacity in science and technology as well as enhanced access to the
frontier of international technology shelf by way of adoption and adaptation. Such
access to modern technology will be both an end as well as a means to industrial
development during the Fifth Plan.
d. Generation of Productive Employment and Poverty Alleviation : Skill
development will be a hallmark of the Fifth Plan in order to exploit the country's
comparative advantage in the international market. At the same time, development of
 295

self employment with particular focus on the poor and the disadvantaged especially
women, will be a major thrust of the industrial development during the Fifth Plan. As
such entrepreneurship development with easy access to complementary resources and
inputs will receive high priority.
14.3.3 For modernisation and expansion of the sector, necessary steps will be taken to gear
up production and distribution system for supplying necessary inputs to the sector. Practical
steps will be taken for skill development of people engaged in various vocations. Principles
of free market economy will be pursued and all assistance and encouragement will be given to
the private entrepreneurs. All laws, regulations and procedures related to industries, trade and
investment will be reformed and simplified. For balanced industrial growth and spatial
dispersal, appropriate policies will be designed and implemented for establishing industries at
District and Thana levels. For the unemployed youth, employment opportunities will be
created through the establishment of labour-intensive medium, small and cottage industries.
Efficiency and productivity of the parastatals will be improved by bringing about radical
change in their operation and management so as to enable them to be competitive and
commercially viable. While pursuing the free-trade policy, adequate measures will be taken to
remedy the imbalance between the import and export trade as well as to prevent unfair trade
practices. Necessary reforms of the economy will be implemented at a faster pace. Specific
strategies to achieve the overall objectives of the Fifth Plan will be to:
a. promote the private sector as the main agent for industrial development, while at the
same time undertaking public investment in some strategic industries as well as in
those areas where the private sector is not forthcoming; public-private joint ventures
will particularly be encouraged in all areas as may be expedient for industrial growth;
b. strengthen the enabling policies and remove all distortions to the extent possible in
order to achieve efficient operation of the market and at the same time uphold the
interest of the consumers;
c. undertake massive efforts to develop efficiency culture in all walks of life particularly
in industrial premises; particular attention will be given to improve the efficiency of
the public sector;
d. pursue and accelerate the process of privatisation of state-owned enterprises in an
efficient manner;
e. encourage domestic and foreign investment for overall industrial development;
f. develop export-oriented, export-linkage and efficient import-substitution industries;
g. promote diversification of markets as well as products; such efforts will include, but
not limited to, marketing assistance to the exporters and implementation of
appropriate package of incentives including flexible exchange rate;
h. exploit the opportunities opened up by the General Agreement on Trade in Services of
WTO, and to develop, with an eye to the export market, those service sectors in which
Bangladesh enjoys comparative advantage;
i. develop data base at the frontiers of international technology shelf and disseminate the
same to the users in both private and public sectors; in particular, modern technologies
will be required in areas such as electronics, biotechnology, cybernetics (both hard
and software); R&D facilities will be developed in these and other modern technology
areas. To facilitate this, research in basic science will be encouraged;
j. develop skill, extend vocational training;
k. develop entrepreneurship in general, particularly in rural areas through extensive
training, both formal and informal and easy availability of complementary resources
and inputs;
 296

l. undertake appropriate measures to build healthy and productive relations between

employers and employees;
m. encourage development of labour intensive small and cottage industries through
acquisition and development of appropriate technology;
n. encourage development and diversification of agro-based and agro-supportive
industries;
o. encourage development of industries based on indigenous raw materials and
indigenous technology;
p. formulate policies and strategies for balanced industrial growth in different regions of
the country;
q. put special emphasis on the growth of productivity in industries and to ensure
optimum utilisation of the existing capacities;
r. explore modalities and establish institutional arrangements for revitalising and
rehabilitating sick industries through shared responsibilities and obligations of all
concerned parties;
s. strengthen quality control practices so as to ensure that the country's manufactures
conform to international quality standards; and
t. take appropriate measures for preventing environmental pollution by the industries
and maintain ecological balance.
14.4 Thrust Sub-sectors
14.4.1 In keeping with the overall objectives and strategies of the industrial sector during
Fifth Plan, traditional sub-sectors like textiles and clothing, jute, tea, leather and leather
products, along with agro-based small and medium industries, will be given priority and the
jute sector will be consolidated through privatisation, restructuring and rationalisation. In this
context, given the demand condition at home and abroad, the following sub-sectors have been
identified as the thrust sub-sectors for promoting actively during the Plan period:
14.4.2 Textiles and Clothing : The textiles sector, whose contributions to industrial GDP
and employment are the highest and which supplies one of the basic needs of the economy
will continue to be focused during the Fifth Plan. In pursuance of the implementation of the
GATT-1994 and with the phasing out of the Multi-Fibre Arrangement (MFA) by the year
2005, the facilities that are being enjoyed by Bangladesh as a least developed country for
export of its textile products will be phased out progressively. In the globalised trade scenario,
the sub-sector will have to pursue the following objectives:
a. To attain self-sufficiency in fabrics by ensuring availability of 17.0 metres of fabrics
per capita per annum by the year 2005, to meet the requirement of RMG industry
through establishing backward linkages and to ensure direct export of textile goods by
expanding production of quality fabrics at competitive prices;
b. To create enabling environment and to provide the means by which the textile
industry can serve as the prime mover of industrialisation for generating employment,
increasing export earnings and encouraging contribution to national income by
enhancing value addition;
c. To establish linkages among the various textile sub-sectors, both upstream and
downstream, by ensuring their healthy and harmonious development, to undertake and
implement various integrated and related plans and programmes for the development
of spinning, weaving, knitting, hosiery, dyeing, finishing, and the export-oriented
RMG industry, etc. on a priority basis and in keeping with the goals and objectives of
the Fifth Plan; and
 297

d. To create a congenial industrial environment for attracting local and foreign

investment in the expansion of local textile industry by taking all the necessary
measures and to provide various incentives.
14.4.3 To remain competitive, productivity of the sector has to increase and so also the
quality of products. Establishment of backward and forward RMG-linkage industries is a
must. Besides, Bangladesh will switch over gradually to high value products. Adequate
marketing skills will be developed so as to eliminate dependence on the middle-men.
Facilities such as textile design training schools will be built. Development of fashion
industry will be encouraged. Marketing assistance will be provided by the government to
garments industry. Bangladesh will have to shift its emphasis from political diplomacy to
economic diplomacy and all Bangladesh missions abroad will be geared up for rendering to
the entrepreneurs all necessary services in connection with marketing of products and access
to needed technologies.
14.4.4 Leather and Leather Products Industry : In view of its tremendous export
potential, development of leather and leather products industry will be given priority. Joint
ventures will be encouraged in this area. Varieties of high value added leather products can be
made using locally manufactured crust and finished leather and, as long as domestic supplies
remain inadequate, using finished leather imported on back-to-back basis in the same manner
as fabrics for RMG industries. Appropriate measures will be taken to encourage investments
in leather and leather products as well as linkage industries to support the sub-sector through
supply of various accessories. To be successful, leather and leather product industry will be
closely linked to the market as fashions change frequently; the industries will take measures
to improve the quality of the product through upgradation of technology and skills. In this
context, strengthening of the Institute of Leather Technology will be called for.
14.4.5 Computer Software Development and Data Entry Industry : Computer Software
and Data Entry Industry has tremendous prospect in the international market and has the
prospect of substantial employment generation. In 1992 the total world market for software
and services was US$190 billion, growing at an annual rate of over 15 per cent . The share of
data entry/data processing segment in the global market was nearly 30 per cent in 1990 (about
US$ 43 billion). Bangladesh, which has one of the lowest cost of educated labour in the world
has comparative advantage in the area of mid-level skill. In order to develop this industry
following steps will be taken during the Fifth Plan:
a. Development of skilled manpower: Some universities like BUET, Dhaka University,
Shahjalal University of Science and Technology, etc. offer under-graduate and graduate
programmes in Computer Science. These graduates may find gainful employment in
the software industry. For increasing their numbers, intake capacity of all these
institutions will be enlarged. However, for data entry/data processing industry lesser
skill is necessary. In the private sector, several training institutes are providing training
for data entry/data processing. There is, however, no quality control over the content
and implementation procedure of such training programmes. Measures will be
undertaken to extend and improve these training facilities and courses;
b. Marketing assistance: In order to develop export in this area the private sector needs
to be assisted with information on market. Export Promotion Bureau needs to be
entrusted with the responsibility of building a data base on such market information on
a priority basis. It should be assisted by the commercial section of the Bangladesh
missions abroad. Overseas relation is vital in such industries. Hence, the commercial
wings in these missions will have to play an active role in procuring orders for these
 298

industries through directly approaching potential customers, organising trade shows,

mobilising Bangladeshi communities abroad, etc. Formation of joint ventures with
European and American companies established in the field will be encouraged;
c. Credit: In order to encourage the development of this industry bank loans will be
given on a priority basis;
d. Fiscal Measures: Fiscal incentives will be given to encourage the development of this
industry;
e. Monitoring: Being an export oriented service industry, the personnel involved in its
monitoring will be given extensive training on its nature and working; and
f. Telecommunication Facilities: Development of telecommunication facilities is a
prerequisite for development of this industry; increasing participation of private
entrepreneurs will be encouraged in this area through removal of hurdles that stand on
their way; policies in this area will be rationalised in order to reduce both cost and time
of such services to this industry. Customs services will have to be improved and
modernised to facilitate speedy development of the sector. Among the charges which
need to be substantially reduced is the cost of dedicating the satellite time.
14.4.6 Electronics Industry : Electronics industry has tremendous prospect for efficient
import substitution as well as exports. Through subcontracting substantial employment can be
generated in this sector. An embryo of this industry already exists. Internationally some of the
electronics industries, particularly those with low level of technology content, have become
sunset industries in countries like Japan, Hong Kong and Singapore. During the Fifth Plan,
efforts will be made to attract foreign direct investment in these areas. Trade in
semiconductor is very large and it is relocating to developing countries. Feasibility of setting
up such industries will be explored during the Fifth Plan.
14.4.7 Selected Agro-based Industry : Selected agro-based industries using agricultural
inputs such as fish, vegetables, fruits, flowers, etc. will be developed in view of growing
demand for such products in international markets. But as many of these are perishable goods,
air cargo facilities at a competitive cost will have to be developed during the Fifth Plan on a
priority basis. Private sector will be encouraged to expand services in this area. Besides,
appropriate policies and strategies will be pursued for the establishment of more direct
flights/routes to connect markets of major interest to Bangladesh which will be of great help
in boosting its exports.
14.4.8 Fisheries Industry : There is a large domestic demand for fish; foreign markets are
sizable and ever growing because of its proven superiority over meat proteins. Bangladesh
currently exports shrimp worth US$ 700 million each year. The fishing industry contributes
about 3 per cent of the country’s GDP which is also a significant foreign exchange earner.
Given the large number of water bodies and excellent climatic conditions, the country has a
great potential for development in fisheries industry including fish processing and canning
and expansion of employment generation in this sub-sector. There is also a great potential for
development of intensive and semi-intensive shrimp cultivation as well as for development of
hatcheries in the country’s 140 to 150 thousand hectres of coastal area.
14.4.9 Light Engineering Industries : Light engineering industries in Bangladesh produce a
multitude of labour intensive goods including toys, consumer items, small tools, spare parts,
and paper products for a large domestic market. Further development of these industries
offers various investment opportunities.
 299

14.4.10 Chemicals and Gas-based Industries : Bangladesh has a sizable demand for
chemical products to meet local needs in industries such as food and agro-processing,
pharmaceuticals, tanneries, cosmetics, paints and varnishes, printing, packaging and textile
processing. At present, most chemicals are imported. There is also vast potential for gas-
based down stream linkage industries and petro-chemical industries.
14.4.11 Garments Linkage Industries : To meet the challenge of time all out efforts will be
made to develop garments-linkage industries and adequate promotional support will be
provided in the Fifth Plan period.
14.4.12 Grameen Check and Dhaka Check : Handloom industry at present shares 61 per
cent of the total cloth production of the country, meeting 36 per cent of the local demand.
About 52 million metres of different types of cloth in the form of saree, lungi, bed sheet,
curtain, shirting, grey cloth, etc. in intricate designs and texture are woven in handlooms.
RMG-industries export a large quantity of handloom fabrics, in the form of different sorts of
dresses and costumes. Different types, design and colourful match of check fabrics are used
in making these dresses and costumes. Currently, Bangladesh imports about 120 million
metres of check fabrics from neighbouring countries in order to meet the demand for check
fabrics for the garment industries. It is expected that demand for check fabrics will exceed
300 million metres by the end of the Fifth Plan period. The same quality check fabrics can be
produced in Bangladesh. Indeed, it is already being produced in the country by Grameen
Uddog - a subsidiary organisation of Grameen Bank. Grameen Bank has succeeded in
penetrating into the international market by exporting this item and also in generating sizable
employment for the handloom weavers. At present, Bangladesh Handloom Board has given
special attention for boosting up production of check fabrics. For easy identification,
Bangladesh Hand Loom Board also developed Dhaka Check similar to Grameen Check. To
fulfil the future demand for check fabrics about 125 thousand handlooms will be engaged
exclusively for production of check fabrics generating employment opportunity for some 365
thousand people.
14.4.13 Hotel and Tourism Industries : With growing international interest in travelling
through Asia, tourism has taken roots in Bangladesh. Attractive places like Sylhet’s tea
gardens, water-falls at Baralekha, sea-beaches of the Cox’s Bazar and Kuakata provide
attractive scenery and seclusion for the tourists. A glimpse of the Royal Bengal Tiger might
be exciting on a trip to the Sundarbans, the largest mangrove forest in the world with unique
bio-diversity. Historical relics and monuments, ancient mosques, Buddhist monasteries,
Hindu temples, and other landmarks are witnesses to the country’s glorious past. Most of all,
in its tribal areas, Bangladesh harbours a history and culture which is still untouched by much
of the changes occurring elsewhere. To cater to the increasing need of services in this sector,
additional hotels and tourists resort facilities in the Cox’s Bazar, Dhaka, Chittagong and
elsewhere will be developed and necessary support services will be provided in terms of
physical infrastructure and utility services.
14.5 Policy Issues
14.5.1 Achieving an average annual economic growth rate of about 7 per cent during the
Fifth Plan period depends heavily on considerably faster growth in manufacturing, energy and
services sectors. Amongst these, the share of the manufacturing sector is projected to rise
from 9.28 per cent of GDP in 1996/97 to 12.70 per cent in the year 2002. Such a rise is
expected to occur mainly through private sector investments. With 96 per cent of the total
manufacturing sector outlay earmarked for investment by the private sector, the Fifth Plan
 300

relies heavily on the private entrepreneurs-both local and foreign for investment in
industries. Generally, the public sector will be more visible through policy and institutional
support rather than investment in the industries sector through the ADPs. The public sector
inputs will be provided mainly through right policies, institutional and infrastructural support,
legal reforms and good governance. The public sector investment will be limited only to the
BMREs of strategic and essential industries such as jute, steel, chemical, fertiliser, paper,
newsprint, etc. The government does not intend to invest in new industrial capacity creation
except in such areas where the private sector will not be forthcoming. Divestiture of existing
industrial units will be accelerated. Private enterprises and joint ventures in Export Processing
Zones will be encouraged. Special economic zones will also be set up.
14.5.2 Bangladesh enjoys Most Favoured Nation (MFN) status with the leading economies
of the world. Besides, the country is a signatory to MIGA and International Centre for
Settlement of Investment Disputes (ICSID). The Export Promotion Bureau (EPB) is
facilitating country’s exports in every possible manner. Fiscal and monetary policies have
been tuned to faster growth in the manufacturing, export and services sectors. Bangladesh
also enjoys GSP facilities. However, as the MFN tariffs will progressively be lowered in
pursuance of the relevant WTO Agreements leading to increasing erosion in the margin of
preference, the benefits out of the GSP schemes will soon become insignificant and the
comparative edge of Bangladesh over others will disappear.
i. Industrial Policy
14.5.3 The policy environment surrounding the private sector started improving with the
liberalisation of the industrial policy in July, 1974 and subsequent introduction of a series of
promotional measures. These included virtual elimination of the investment ceiling, extended
tax holidays, concessional rate of import duty on machinery, curtailing the reserved list of
industries for public sector investments, introduction of a free list of industries for which no
prior approval is required, enactment of a law for promotion and protection of foreign private
investment, activation of the National Stock Exchange, and revival of the Investment
Corporation of Bangladesh for underwriting public issues of shares and for providing bridge
finance to private industrial units, etc. Perhaps, the most salutory effect had been the
government decision for progressive disinvestment of the industrial units which, following
Independence, had to be taken over by the government for management. During the period
1973-80, a total of 199 industrial units were disinvested by the government at a total sales
price of Tk.115.8 million.
14.5.4 The industrial policy of 1982 was revised in 1986 providing further relaxation and
changes in which all industries, except seven strategic industries, were opened up for private
investment. No approval for investment was then required if the investors imported
machinery and equipment using their own resources and/or through Secondary Exchange
Market (SEM) provided imported raw-materials constituted less than 50 percent of total
requirement. The public sector enterprises were intended to be converted into public limited
companies in order to make up to 49 per cent of their shares available for pubic subscriptions
and to facilitate their operation in a competitive market. They were given operational
autonomy in pricing, procurement, etc. Under the Revised Industrial Policy (RIP) a large
number of fiscal and other incentives were also introduced/expanded in order to promote
rapid industrial development of the country. A number of import bans and quota restrictions
were relaxed to promote industrial efficiency. During the Third Five Year Plan there was
considerable investment in power loom and ready-made garments industry. The export of
ready-made garments increased substantially.
 301

14.5.5 The industrial policy of 1991 which was formulated in the light of promoting a
competitive market economy and which was further revised in 1992 laid down basic
strategies required for industrial development of the country. All industries have now been
opened up for private investment, both local and foreign, except a selected few related to
national security like arms and ammunition, nuclear energy, minting and security printing,
mechanised extraction in the reserved forests and the railways. Under the policy, the
government has been pursuing privatisation of selected public sector enterprises. A number of
public sector units have already been privatised or downsized/closed down and others slated
for privatisation. Main policy objectives under the Industrial Policy are to:
a. develop industrial sector in order to increase its contribution to gross domestic
product, income, resource mobilisation and employment;
b. expand industries by putting more emphasis on development of the private sector and
in this respect to make the role of the government more promotional rather than
regulatory;
c. encourage domestic and foreign investment in overall industrial development;
d. develop export-oriented, export-linkage and efficient import-substitution industries;
e. especially encourage the development of small and cottage industries;
f. expedite development of the labour intensive industries through acquisition and
improvement of appropriate technology;
g. attain self-sufficiency in essential consumer goods through efficient and cost-effective
production;
h. encourage development of agro-based and agro-support industries;
i. encourage development of industries based on indigenous raw-materials and
indigenous technology;
j. encourage balanced industrial growth in different regions of the country;
k. encourage investment in the intermediate and basic industries;
l. limit the role of the government generally to establishing strategic and heavy
industries and to improve efficiency of the public sector;
m. put special emphasis on the increase of productivity in industries and to ensure
optimum utilisation of the existing industrial capacities;
n. create possible opportunities for revitalising and rehabilitating sick industries;
o. make effective arrangements for improving standards and controlling quality of
products; and
p. take appropriate measures for preventing environmental pollution and maintaining
ecological balance.
ii. Fiscal and Monetary Policies for Industrialisation
14.5.6 Some important changes were made in the monetary management including interest
rates to revive economic activities by increasing the flow of credit to the productive sectors
of the economy including trade and industry. New interest rate bands were refixed for loans
and advances by reducing floor and ceiling by different degrees effective from December 1,
1991. In order to make interest rate more market oriented and competitive, interest rate bands
for all lending categories except agriculture, jute and jute goods exports, other export and
small and cottage industries, were withdrawn and in these cases banks were given freedom to
determine their own interest rates effective from April, 1992. In April, 1994 interest rate
bands for priority sectors such as agriculture, export and small and cottage industries were
fixed within 10-14 per cent, 8-10 per cent and 9-12 per cent respectively. The policy of
liberalisation of interest rate, which was introduced for moving towards market oriented
 302

competitive economy by reducing administrative control coupled with other necessary

measures, will be further geared up to build up a healthy banking system.
14.5.7 Within the above overall framework, effective policy measures will be pursued to
provide the entrepreneurs with the following incentives:
a. Tax holiday, from five to fifteen years, depending on the type of industries as well as
their locations such as the developed, less developed, least developed and special
economic zones; the period of such tax holidays will be calculated from the month of
commencement of commercial production; the eligibility of tax holiday will be
determined by the National Board of Revenue and the time of commencement of
commercial production will be certified by the respective sponsoring agencies;
b. The National Board of Revenue in consultation with the Ministry of Industries will
publish in the official gazette area-wise classification for the application of concessional
duties and tax holidays and this will be revised from time to time to keep pace with
industrial expansion;
c. There will be no discrimination in case of duties and taxes for the same type of
industries set up in the public and private sectors;
d. Local industrial products will be protected through tariff rationalisation keeping in view
the interests of the entrepreneurs and the consumers with a time-bound phasing for
eventual elimination of protection;
e. To create internal market for jute products and to discourage industries producing jute
substituting and environment polluting synthetic fibres, especially polypropylene bag,
necessary tariffs will be imposed on related imports; in addition, effective steps will be
taken for compulsory use of jute bags for packing of foodgrains, sugar, cement,
fertiliser, etc.;
f. Duties and taxes on imports which compete with similar domestic goods will be
rationalised so that the incidence of duties and taxes on imported raw materials and
intermediates used to produce such goods remain at a level below that on the finished
imports;
g. Energy price equalisation measures, as deemed appropriate, will be put in place for
those least developed areas where the price of fuel oil in BTU terms will be higher than
the ruling natural gas prices, as long as gas can not be made available in those areas;
h. In cases where credits/loans obtained from foreign institutions or government for private
industrial investments are relent to commercial banks/DFIs through the government, the
following conditions will be applicable:
i. The government will relend the above mentioned credits/loans through commercial
banks/DFIs; the concerned banks/DFIs will disburse the credits/loans to the
entrepreneurs with applicable service charge at relending rates as determined by the
government; and
ii. The entrepreneurs shall undertake full responsibility for repayment of the
loans/credits and the concerned banks/DFIs will provide guarantee to the
government for repayment of the loans/credits. The concerned banks/DFIs will,
however, be entitled to claim collateral from the entrepreneurs;
i. Special incentives will be provided to encourage non-resident Bangladeshis for
investment in industries. In case of their investment in Bangladesh they will enjoy
facilities similar to those given to the foreign investors. They will be able to buy any
newly issued shares/debentures of Bangladeshi companies. Moreover, they will be able
to maintain foreign currency deposit in the NFCD account;
 303

j. Provision will be made for accelerated depreciation allowance, in lieu of tax holiday, if
entrepreneurs so opt for; and
k. Special financial incentives for small and cottage industries, particularly those located in
the backward areas, will be provided.
iii. Sick Industries
14.5.8 A large number of industries, over years, have turned into sick ones. The main reasons
for their sickness may be enumerated in terms of :
a. depreciation of Taka in relation to dollar or yen or pound in which loan capital was
obtained for setting up the relevant industries; this resulted in sizable increase in taka-
burden of the repayable loan capital;
b. technological obsolescence of the process or the product;
c. withdrawal or lowering of protective tariff wall;
d. management inefficiency;
e. inadequate working capital support by the banking system; and
f. pilferages by the sponsors, in collusion with the personnel of the lending bank or
financial institution.
14.5.9 In the Fifth Plan period concrete steps will be afoot to remove the relevant causes of
sickness. Ways and means will be found out to draw up realistic schemes for getting out of
sickness through joint effort of owners, management, labour and the funding agencies, i.e. all
the stakeholders.
iv. Some Specific Promotional Measures
14.5.10 In recent years, considerable reforms and positive changes have been brought about to
promote the manufacturing, trade and services sectors. Tariff rates have been considerably
lowered and rationalised generally in line with the trade liberalisation approach pursued by
the government. The Board of Investment (BOI) is playing a positive role in facilitating
private investment with focus on foreign direct investment (FDI). Some of the fiscal and other
specific incentives that the government is offering to attract private investments, in general,
and foreign direct investments, in particular, include but not limited to the following:
a. Cent per cent ownership of enterprises by expatriates;
b. Generous tax holiday for 5 to 7 years, depending on the industrial subsectors, and
10 years for all types of units established in the export processing zones; tax
holiday for power generation plant will be 15 years;
c. No import duty on capital machinery for 100 per cent export-oriented industries;
for other industries, import duty on machinery and spares will be levied at the rate
of 7.5 per cent ad valorem only;
d. Facilities for easy repatriation of profits, invested capital, royalties, technical fees
etc. for foreign investors;
e. Exemption of taxes on wages/salaries of expatriates working in industries as well
as on royalties and technical fees;
f. Bilateral arrangements with different countries concerned for avoiding double
taxation;
g. Granting of citizenship to foreign investors who will invest in Bangladesh at least
US$ 500,000 or to those expatriates who will deposit at least US$ 1 million in a
non-repatriable account with a recognised financial institution, and granting of
permanent residentship to those foreign nationals who will invest at least US$
100,000 in Bangladesh;
 304

h. Issuance of multiple-entry visas as well as work permits to foreign nationals

without any discrimination;
i. Enactment of the Private EPZ Act under which the private sector will be allowed to
set up EPZs; and
j. Establishment of a Permanent Law Commission to make the administrative-legal
system more responsive to the needs of the civil society, in general, and those of
the entrepreneurs, in particular.
v. Trade Policy
14.5.11 Tariff Reductions : In the last decade, tariff rates have been lowered significantly.
The average tariff has come down to about 22 per cent of the annual import value. While
lowering the averages, attention was given to keep the rate of customs on raw materials and
capital goods lowest, on intermediate goods in-between and on finished goods consumed by
the affluent highest. The aim has been to make industrial production competitive and bereft
anti-export bias.
14.5.12 Elimination of Non-tariff Barriers (NTBs): Like tariff rationalisation, substantive
progress has been made in eliminating or reducing quantitative restrictions (QRs) to points
where only a small number of items remain subjected to NTBs at present primarily on
grounds of security, health and religion. Besides, the current Import Policy Order (IPO)
covering the period 1995-97, brings about a greater transparency by restoring two separate
lists - one for the banned items and the other for the regulated items. Non-tariff barriers to
imports have been significantly eased also through the abolition of the need for maintaining
import passbooks for industrial importers, except for regulated imports.
14.5.13 Tariff reductions along with overall improvement in other policy areas carried out so
far have played a major role in liberalising and boosting imports. However, the surge in
imports resulting from liberalisation of the trade regime has affected adversely some
domestic industries.
vi. Supportive Institutions and Special Measures : In the Fifth Plan period institutional
development will be pressed in for giving support to the private enterprise, specially for
setting up and operating industries. The main emphasis will be on (i) improvement of
development management (ii) creation and sustenance of private sector development and (iii)
improvement of key public social and infrastructure services. These objectives will be
achieved through reorientation and strengthening of the following major institutions and
organisations:
14.5.14 a. EPZs and Special Economic Zones: At present, 73 industrial units in Chittagong
EPZ and 23 industrial units in Dhaka EPZ are operational. Besides, 34 industrial units in
Chittagong EPZ and 46 industrial units in Dhaka EPZ are under implementation. Total
investment in the operational units has figured at US$ 236.56 million with a total
employment of over 46,000 persons. In order to accelerate economic development and
employment generation during the Fifth Plan period, Bangladesh Export Processing Zone
Authority envisages establishing as many as three more EPZs in various parts of the country.
14.5.15 The determinants and directions of international investment have been changing
rapidly in the recent times. Because of new candidates like the East European countries and
the CIS (Commonwealth of Independent States that emerged out of the erstwhile USSR), the
share of both official development assistance and foreign direct investment to developing
countries has been on the wane. In view of changed circumstances, EPZs, encompassing
necessary infrastructural facilities, utilities and other support services, can be used as conduits
to attract foreign direct investments. At a time when industries are being re-located to low
 305

cost production areas, Bangladesh with its hard working, intelligent, and cheap labour force,
should not miss the opportunity of making the best use of its EPZs to attract foreign direct
investments. In order to attract foreign investment, besides development of infrastructure and
support services, such as warehouses, communication network, gas and water supply,
electricity, telephone and modern electronic links, etc. the government will also continue to
provide the following incentives:
a. income tax exemption for ten years and proportional income tax rebate between 30
and 100 per cent on export earning after this period;
b. duty free import of raw-materials, machinery, construction materials and other
materials used in manufacturing process;
c. income tax exemption on salaries for foreign executives and technicians for three
years;
d. tax exemption on interest on foreign loans;
e. tax exemption on royalties, technical know-how and technical assistance fees;
f. tax exemption on the profits on account of transfer of shares by foreign companies;
g. permitting export linkage inputs to be imported through back-to-back L/Cs by
recognised export-oriented/export-linkage industries which will be provided with
necessary bonded warehouse facilities, even if they are located outside the EPZ areas;
and
h. offshore banking facilities.
14.5.16 b. Board of Investment (BOI) : In order to boost up and promote private
investment during the Fifth Plan, the Board of Investment will continue to perform its
following mandated functions:
a. promotion of investment;
b. providing facilities for capital investment and rapid industrialisation;
c. registration of industrial projects, foreign loan agreements, royalty, technical know-
how and technical assistance agreement wherever required;
d. providing assistance to provide infrastructural facilities for industries;
e. issuing work permits to expatriate personnel working in the private sector industrial
enterprises;
f. providing import facilities to industrial units in the private sector;
g. approval of the payment of royalty, technical know-how and technical assistance fee
to foreign nationals/organisations beyond the prescribed limits; and
h. recommendations for acquisition and allotment of land in the industrial areas/estates
for industrial purpose.
14.5.17 The government has recently embarked upon a policy initiative for private
participation in areas of infrastructure development and provision of utility services. Already
a few economic sectors such as gas exploration and exploitation, power generation and
telecommunication have been opened up for local and foreign private investment. Some
projects in the areas of ports and shipping as well as roads and highways have already been
identified by the concerned ministries/agencies for implementation by the private sector. In
the Plan period, public sector areas of operation will be progressively reduced and private
investors will be induced to take up the place.
14.5.18 One key element for the success of export-led growth is the availability of abundant
skilled manpower. Skill development at all levels, therefore, will be given top priority in the
Plan period. Environment will be created to attract more private entrepreneurs in the field of
 306

training, research and development. In order to boost-up the private sector, the following
additional measures will be taken:
a. higher level of investment will be encouraged in manufacturing, infrastructure and
service industries by the private sector;
b. the existing list of reserved sectors will be reviewed to further widen the areas for
private sector investment; and
c. the pace of privatisation or denationalisation process will be accelerated.
14.5.19 c. Privatisation Board : The Privatisation Board was established by a resolution of
the government in March, 1993. It is entrusted with the overall responsibilities of privatising
state-owned enterprises (SOE) identified for privatisation. Ministries having state-owned
enterprises under their control have set up privatisation cells for assisting the Privatisation
Board in identifying, preparing, processing, implementing and monitoring SOEs for
privatisation. The process of privatisation till the end of 1996 was not very satisfactory.
During the Fifth Plan, the Privatisation Board will be reinvigorated to hasten the process of
privatisation of industrial, commercial and state owned enterprises. With this end in view the
Privatisation Board will take-up the following measures to:
a. develop selection criteria, prepare list of enterprise for sale/transfer, and subsequently
implement or arrange for the transfer of such enterprises to the private sector;
b. determine the priority and sequencing of such privatisation, including a detailed work
plan and time table for the various enterprises proposed to be transferred;
c. identify the optimal methods such as public offering, private placement, sale of assets,
management contracts, leasing or management/employee buy outs by which the process
of privatisation will be implemented in particular cases;
d. co-ordinate among and recommend to the Ministry of Finance, Ministry of Jute,
Ministry of Textiles and other relevant ministries and agencies steps which may be
necessary for the successful privatisation of the enterprises, such as revaluation of the
enterprises, restructuring of debt in accordance with sound financial principle,
retrenchment of redundant workers, closure of obsolete facilities of the enterprises;
e. formulate policies for and advise the government with regard to private sector
development, investment and participation in previously reserved sectors such as
telecommunications, energy and power etc.;
f. organise public information campaign about the merits and benefits of privatisation; and
g. undertake any other activities connected with privatisation.

14.5.20 With a view to attracting private buyers, capital restructuring has been carried out in
several manufacturing units like jute mills under the Bangladesh Jute Mills Corporation.
Overdue loans of both private and government sector jute mills have been restructured
through waiving one-third and rescheduling the remaining two-third. Around 39,000 workers
were released from the jute sector between June 1990 and June 1995 under the normal
‘severance benefit scheme’. Four jute mills have been closed down and one mill has been
downsized. The Bangladesh Jute Corporation which was previously dealing in trade of raw
jute was wound up, but its assets are yet to be disposed off. Non performing loans of the
Nationalised Commercial Banks (NCB), due to public sector manufacturing corporations like
the Bangladesh Textile Mills Corporation (BTMC), the Bangladesh Jute Mills Corporation
(BJMC) etc. have been settled and process is under way for settling overdue loans of other
public sector manufacturing units. Collection of debt service liabilities (DSL) and settlement
of arrear dues among corporations have also been strengthened. Sale of 21 public
manufacturing sector units have so far been finalised. The process has been stalled due to
 307

non-payment of instalments by the buyers. The manpower of public enterprises remaining

with the government is being rationalised and their overhead expenses curtailed with the
objective of making these more efficient and dynamic.
14.5.21 With the exception of a few intermittent years, the jute industry has been passing
through a critical time since independence by incurring huge losses due to manifold reasons-
internal and external - which warrant some positive actions for restoration of its commercial
viability. In order to address the deteriorating situation of jute sub-sector, the government has
taken a number of reform measures under a programme implemented with the assistance of
the World Bank. The main features of the programme are down-sizing of industry,
rationalisation of employment, restructuring of past debt, loss financing for jute goods export,
privatisation of the jute industry, reforming wage policy, elimination of government
intervention in the industry, training of workers and managers in retained mills, social safety
net programmes, etc.
14.5.22 The ultimate objective of jute mills privatisation programme is to maintain export of
Bangladesh jute goods at the minimum level of 450 thousand tons per year. Towards this end,
the programme aims at bringing down the public sector loomage capacity to 4,000 and
raising that of the private sector to around 16,000 so that the sub-sector becomes viable,
efficient and competitive. Under the programme, 23 public sector jute mills, out of 31, have
already been enlisted for privatisation. The Privatisation Board almost completed evaluation
of the asset values of these mills. It may be mentioned that the private sector jute mills have
failed to operate their existing capacity; about two-third of its loomage capacity has remained
in operation during the last four years resulting in the short fall of targeted jute goods
production in and export from Bangladesh. During the Fifth Plan, attempts for privatisation of
public sector jute mills will continue and privatisation programme will be followed
vigorously.
14.5.23 Privatisation and private sector development have been very difficult till the end of
1996. During the 1993-96, the Privatisation Board managed to privatise only 12 industrial
units. But due to restructuring of the Privatisation Board, the process of privatisation has
gained momentum. The government is fully committed to privatisation and by the terminal
year of the Fifth Plan, the process of privatisation will be completed. It may be mentioned
here that the Privatisation Board has so far identified 217 SOEs for privatisation covering
nearly all the economic sectors, out of which a total of 113 SOEs were taken up for
privatisation until June 1998. Besides, the Privatisation Board is continually reviewing the
existing policies and strategies for privatisation and recommending appropriate policy
reforms for approval of the Cabinet Sub-committee on Economic Affairs. New strategies are
also being formulated by the Board for efficient and effective implementation of the
privatisation programme.
14.5.24 In accordance with the privatisation policy of the government, 24 textile mills under
BTMC having 182,168 spindles and 681 looms are to be privatised. Out of these, 6 mills
were privatised and handed over to the private owners, and remaining 18 mills are in the
process of privatisation by the Privatisation Board/Ministry of Textiles.
14.5.25 d. Chamber of Commerce and Industries : Under the present policy of private
sector led export-oriented growth, the responsibility of the private sector has increased
tremendously. Private Sector is now considered to be the pivotal economic player. During the
Fifth Plan the institutional capability of the Federation of Bangladesh Chambers of
Commerce and Industry (FBCCI) and its member organisations will be developed and
strengthened so that they can lead the private sector to perform its role so as to attain higher
 308

growth target. To prevent unfair trade practices, in particular, circumvention of domestic and
foreign laws, rules and regulations, these bodies will be encouraged to put in place
appropriate code of conduct for their members to observe. With this end in view necessary
promotional and support services will be provided to FBCCI and other chambers to improve
their institutional capability so that they can discharge their functions for promotion of trade,
investment and industry.
14.5.26 e. Export Promotion Bureau : In the wake of the establishment of the World Trade
Organisation to administer GATT 1994, GATS (General Agreement on Trade in Services)
and TRIPS (Trade Related Aspects of Intellectual Property Rights) under an integrated
Dispute Settlement Mechanism, the Bangladesh Export Promotion Bureau (EPB) will have to
play a dynamic role to achieve the following objectives: (i) to identify obligations of the
government to the business and industrial community of the country, to customers abroad as
well as under contracts, agreements, arrangements, conventions, etc. of WTO and other
relevant international/regional organisations and take all necessary steps towards meeting
these obligations; (ii) to remove existing regulatory constraints; (iii) to provide policy support
comparable with those of other competing countries; (iv) to provide improved services for
export promotion activities; (v) to provide access to supportive infrastructure services; (vi) to
improve entrepreneural and managerial capabilities through human resources development
and (vii) to implement export development programme to help expand and diversify the range
of exportable products. Towards the fulfilment of the above objectives, EPB will be required
to be revamped in conjunction with effective private sector co-operation and collaboration,
including establishment of a joint institute of foreign trade involving representatives of both
public and private sectors.
14.5.27 f. Bangladesh Tariff Commission (BTC) : The Tariff Commission will carryout in-
depth studies and formulate policies for further tariff rationalisation, liberalisation of the
import regime and evolving an incentive structure for strengthening the domestic production
and export base. It will review, on a continuing basis, the tariffs on imported inputs - raw
materials and intermediate inputs - as well as on capital goods. While rationalising the tariff
structure, adequate attention will be given to ensure that inputs for any domestic product are
not subjected to rates of duties and taxes higher than those on competing finished imports
and that the domestic industries do not suffer loss because of dumping on the one hand and
denial of access to foreign market on the other. The BTC will establish effective co-
ordination with the National Board of Revenue (NBR), the Bangladesh Bureau of Statistics
(BBS), the Bangladesh Bank (BB), the Ministry of Planning/Planning Commission and the
Ministry of Commerce for establishment of a rational and dynamic tariff structure consistent
with existing government policy of pursuing free market economy. For discharging its
functions more effectively, BTC will build up its capacity further through necessary
strengthening and upgradation as well as human resources development.
14.5.28 g. Bangladesh Standard Testing Institute : Standardisation is the gateway to trade
and industrialisation. A well conceived standardisation programme lays the foundation for
growth of domestic production, protection of consumer interest through ensuring requisite
product quality and progressive assimilation of imported technology through adoption and
adaptation. Standardisation of products as well as of inputs minimises wastage of resources
and ensures compatibility of manufacturing processes and practices. In view of these factors,
during the Fifth Plan period, the performance of the Bangladesh Standard Testing Institute
will be reviewed and effective measures will be introduced to enhance its functional
capability through necessary expansion and modernisation. Some vital components of
 309

modernising the Institute will be strengthening its methodology, quality control and testing
sections and induction of sufficient number of quality professionals into it.
14.5.29 h. Bangladesh Institute of Management : In the Fifth Plan period, BIM will
conduct research on management development and will impart training on socio-economic
and other functional areas of management. The main objectives of the institute will be to : (i)
upgrade the existing centre to a self-sustained higher institute of training , research and
learning, (ii) train and develop managers at all levels of the economy, (iii) assist, develop and
maintain higher productivity in business and industry through adoption of technological and
engineering innovation and services, (iv) give consultancy services for solving management
and related problems faced by various sectors of the economy, and (v) carry out research in
different fields of management, economics and business. Activities and courses will be
designed and implemented to support private sector industrial and business units.
14.5.30 i. Bangladesh Industrial Technical Assistance Centre (BITAC) : The Bangladesh
Industrial and Technical Assistance Centre (BITAC) has been providing technical and
advisory services to the entrepreneurs. Presently BITAC Dhaka, Chittagong, Chandpur and
Khulna are in operation. During the Fifth Plan the performance of existing centres will be
duly evaluated and new centres will be established keeping in view the needs of the industrial
areas. BITAC will assist the private sector entrepreneurs, particularly the small entrepreneurs,
to solve their technical problems as well as in adopting/adapting new technologies in their
production practices.
14.5.31 j. National Productivity Organisation (NPO) : The National Productivity
Organisation (NPO) was established in 1989 under the Ministry of Industries. The
institutional capability of this organisation will be further developed to create productivity
consciousness and awareness to the people for launching productivity as a national objective
to be pursued by a national movement in the country, undertake programme for human
resource development for productivity improvement, build productivity infrastructure and
convert industrial enterprises into an efficient and profitable organisation, work as a catalyst
to promote plant-level productivity through consultancy services, conduct survey, study and
research work on productivity, and assist the government in formulating productivity policy.
14.5.32 One of the major issues in the industrialisation of a country is to use trade and
industrial policies in a co-ordinated manner so as to accelerate the pace of industrialisation.
This was done in Japan and the Newly Industrialised Countries. For this purpose, a Trade and
Industrial Policy Co-ordination Council will be set up during the Fifth Plan period.
14.5.33 Other General Measures : Other major institutional supports to the growth of
private enterprises and industrialisation by the private sector will have to come through
reforms in under-performing public administration, backlogged judiciary, costly banking
system and also from reduction in transaction costs in getting services from the public
utilities. These are monumental works and will be undertaken for completion with
determination. As a general principle the government will support institution of the civil
society, and rule of law and the private sector to help build constituencies that will in turn
support accountable, responsible and responsive and performing public institution. Of the
public utilities, power will be the major determinant of industrial investment. Concrete
programmes in both private and public sectors have been drawn up to meet this need.
14.6 Development Programmes and Targets
14.6.1 Textiles and Clothing Sub-sector : Domestic supply of fabrics from the existing
capacity was 1,129 million metres in 1995/96, including 200 million metres for the RMG
 310

industry. Corresponding estimates for 1996/97 are 1,163 and 210 million metres respectively,
while the supply from the existing mills in the terminal year (2001/2002) of the Fifth Plan is
projected at 1,348 million metres, including 268 million metres for the RMG industries. On
the other hand, the total demand for fabrics in the year 2001/2002 is projected to be 5,265
million metres, including 3,228 million metres for export. Consequently, the total demand-
supply gap of fabrics will increase from 2,633 million metres in 1996/97 to 3,917 million
metres in the year 2001/2002, out of which 2,960 million metres will be on account of RMG
industries, unless more fabric manufacturing capacities are established, in the mean time, as
backward linkage industries. The actual and estimated/projected demand for and supply of
fabrics for the local and export market for the years 1995/96, 1996/97 and 2001/2002 and the
corresponding supply-demand gaps are shown in Table 14.4.

Table 14.4
Demand-Supply Gap of Fabrics : 1997-2002
(in million metres)
Sl. Fabrics Actual Benchmark 2001/ 2002
No. 1995/96 (Estimated) (Projected)
1996/97
i. Demand for Fabrics 3,520 3,796 5,265
a. For domestic consumption 1,520 1,596 2,037
b. For export (for RMG and other forms of export) 2,000 2,200 3,228
ii. Supply of Fabrics From Existing Facilities 1,129 1,163 1,348
a. For domestic consumption 929 953 1,080
b. For export 200 210 268
iii. Demand-Supply Gap of Fabrics 2,391 2,633 3,917
a. On account of domestic consumption 591 643 957
b. On account of export 1,800 1,990 2,960

14.6.2 The excess demand for yarn over the local production in 1995/96 was 390 million kg.
which is expected to increase to 639 million kg. in 2001/2002. About 67 per cent of this total
demand will be for cotton yarn, while the rest 33 per cent will be on account of yarn from
man-made fibres. The projected demand for yarn by 2001/2002 and the demand-supply gap of
all types of yarn for the same years are given in Table 14.5.
Table 14.5
Demand-Supply Gap of Yarn: 1996-2002
(in million kg.)
Particulars 1995/96 1996/97 2001/2002
Actual Estimated Projected
Demand of yarn 503 542 752
Production of yarn 113 113 113
Demand-Supply Gap 390 429 639

14.6.3 The demand-supply gaps of raw cotton and man-made fibres were 369 million kg. and
169 million kg. respectively in 1995/96 which are projected to reach 555 million kg. and 254
million kg. respectively by 2001/2002 assuming wastage for raw cotton at the rate of 10 per
cent and for man-made fibres at the rate of 3 per cent. The existing and projected requirement,
domestic production, and demand gaps of raw cotton and man-made fibres are shown in
Table-14.6.
 311

Table 14.6
Demand-Supply Gap of Raw Cotton and Man-made Fibres : 1996-2002
(in million kg.)
Items of Raw Materials 1995/96 1996/97 2001/2002 (Projected)
(Benchmark)
a. Raw-Cotton
Demand 374 403 560
Production 5 5 5
Demand Gap 369 398 555
b. Man-made fibres
Demand 171 184 256
Production 2 2 2
Demand Gap 169 182 254

14.6.4 With a view to progressively increasing domestic production of yarn and cloth the
Fifth Plan envisages to overcome the shortage of manpower through human resource
development, creation of an investment friendly environment, reforming the textile sector
through fine tuning of policy objectives, creation of new capacity in spinning and weaving
and BMRE of un-economic units in the private sector and some selected public sector mills.
The private sector will be at the cutting edge of investment and technological advancement
keeping in view the global and domestic opportunities. The following strategies will be
pursued for the overall development of the textiles and clothing sub-sector:
a. New capacity will be created to cater to the needs of the export-oriented RMG
industries as well as the domestic markets. To this end market response will determine
the nature of investment to allow horizontal and vertical expansion. Investment fund
will be sought from domestic banking sources, joint-ventures, foreign direct investment
and relocation of units by foreign entrepreneurs either independently or through joint
venture arrangement with local sponsors;
b. BMRE of the old and uneconomic existing units in the private sector and in selected
cases in the public sector will be undertaken to ensure their financial and commercial
viability through increased productivity;
c. The existing specialised textile mills and power looms will be organised into groups on
area basis and around 200 looms in each area will be taken as a package for intra and
inter-unit balancing;
d. Till adequate domestic supply capacity is created, grey fabrics will be allowed to be
imported under extended bonded warehousing facilities for dyeing and finishing
locally; and
e. Tariffs on all imported inputs for the textiles and clothing subsector will be rationalised
on a continuing basis; raw cotton and synthetic chips/fibre will be treated at par while
levying duties and taxes on them.
14.6.5 Handlooms : The growth of the traditional sector comprising handlooms and
sericulture will promote rural employment, import-substitution and export industries. The
handloom industry plays an important role in the economy of Bangladesh. Next to agriculture,
it is the second largest source of rural employment and income. About 5 million people are
directly or indirectly engaged in this industry. The Handloom Census 1990 recorded
1,027,407 weavers in the country and 501,834 handlooms out of which 317,026 were
operable. Handlooms produce some 757 million yards of cloth. Monthly demand of yarn for
handloom is 12.7 million kg. Fixed capital and credit demand per loom was Tk.10,008 and
Tk.8,904, respectively. The Handloom Board has undertaken different programmes/projects
for implementation in order to improve the handloom industry to a satisfactory level in
 312

producing quality products. To address the problems of the handloom industry, well identified
strategies will be undertaken during the Fifth Plan period.
14.6.6 The strategies for development of handloom sub-sector will include:
a. strengthening of the Bangladesh Handloom Board (BHB) to perform promotional
activities for boosting up production at competitive prices;
b. revitalisation of idle looms and linking up demand sources through organising the
supply sources of handloom products;
c. improvement of loom technology and changing of traditional handlooms into power
looms in phases;
d. activating the institutional credit sources for financing the working capital
requirements of the handloom weavers and mobilising banking institutions to meet
their credit needs as well as to do profitable banking business;
e. ensuring availability of yarn, dyes and chemicals at competitive prices to the
handloom weavers and to make appropriate arrangements for marketing their products
locally;
f. establishment of export-linkages through more concerted efforts to market handloom
products abroad and also to feed the export-oriented RMG industry by encouraging
non-traditional product base to produce handloom woven shirting, suiting and
furnishing fabrics of upgraded quality;
g. improvement of technology of handloom through research and adaptation;
h. reaping the productive potential of handloom weavers through re-organisation of co-
operative societies as well as through development of skill and improvement of
designs; and
i. promotion of export of Grameen Check and Dhaka Check to overseas markets.
14.6.7 Sericulture: Sericulture is an important sector which can play an important role in
generating employment and alleviation of poverty. About 8-9 hundred thousand families are
engaged in this occupation directly or indirectly. It is not a primary occupation in Bangladesh.
It is more or less a subsidiary occupation providing part time jobs for women at family level.
This sub-sector is labour intensive and its value addition is high. But it is lagging behind due
to some problems, such as scarcity of disease free layings, lack of capital or loan, traditional
technology of rearing and reeling, low quality of cocoons, poor marketing facilities, shortage
of trained and skilled manpower and slow expansion of mulberry cultivation. As sericulture
farmers are unskilled and they do not have appropriate rearing house, about 25 per cent to 30
per cent disease-free layings and cocoons are damaged in the rearing process. This in turn
makes sericulture farming uneconomic. Farmers lose their interest and leave the occupation.
There is a strong need for increasing the number of skilled bosnis (small sericulture farmer)
and skilled reelers. Therefore, the Fifth Plan envisages to set up chaki rearing-cum-
minifiliature centres where intensive training will be imparted for development of skilled
bosnis and reelers.
14.6.8 The strategies for development of the sericulture sector will include:
a. restructuring and strengthening of sericulture activities to perform research and
provide extension services, supply disease free layings, disseminate high yielding
variety of mulberry cultivation and silk worm rearing technology and help increase of
income of silk farmers through qualitative and quantitative improvement of products;
b. encouragement of NGOs for greater participation in different stages of production and
marketing activities;
 313

c. ensuring access of bosnis (small sericulture farmers) to various inputs and facilities
conducive to production of quality cocoons through adopting appropriate policy
measures;
d. extension of mulberry plantation, production of cocoons, and local marketing of silk
products of bosnis and large farmers by a combination of efforts by entities involved
in sericulture sub-sector;
e. development of export-linkage to market sericulture products abroad and to feed the
export-oriented RMG industry;
f. improvement of technology in the silk sector and design of silk products; and
g. setting-up chaki rearing cum minifiliature centres where intensive training will be
given for development of skilled bosnis and reelers.
14.6.9 To over come the problems of this sub-sector the Fifth Plan envisages to undertake the
following programmes to promote:
a. expansion of mulberry plantation in all possible places;
b. expansion of extension services;
c. production of quality cocoon;
d. new reeling technology for improvement of quality silk yarn;
e. marketing and credit;
f. establishment of chaki rearing and minifiliature centre (CRC) under the zonal or
regional offices of Bangladesh Sericulture Board (BSB); and
g. strengthening Bangladesh Sericulture Research and Training Institute (BSRTI) to
enhance the skill of manpower engaged in sericulture farming and silk reeling.
14.6.10 In order to bring about sustainable development of the silk sector, the Fifth Plan
seeks to undertake a long term multi-faceted programme for introducing improved technology
through strengthening institutional arrangement and policy improvements. This programme
envisages establishment of a non-profit private sector institution- Bangladesh Silk
Foundation. It will be established to provide necessary support and training activities in silk
sector as well as to co-ordinate the efforts and initiatives of the NGOs and private
entrepreneurs. The main objective of Bangladesh Silk Foundation will be to assist in
increasing the income of small scale silk producers, most of whom are poor women, through
introducing improved technology and to develop institutional and policy support for
sustainable development of silk and sericulture sub-sector. During the Plan period
Bangladesh Silk Foundation will undertake programmes to (a) enhance productivity of silk
worm through dissemination of improved technology and undertaking adaptive research
through BSRTI, (b) develop Germ Plasm Maintenance Centre, (c) improve management of
grainages, (d) disseminate silk worm rearing and reeling technologies to the farmers, NGOs,
rearers and reelers, and (e) undertake product development, design improvement and market
promotion of silk yarn and fabrics. These programmes envisage to enhance the volume of
production of silk yarn from the present level of 29 tons in 1996-97 to 181 tons by 2002 and
to raise silk farmers’ income and create employment opportunities. Besides, appropriate steps
will be taken towards rationalisation of tariff rate on the imported silk yarn to enable local
production stand the competition of imported silk yarn.
 314

14.6.11 Other strategies for overall development of the textile sub-sector will be as under:
a. For development of human resources for the textile sector, the existing training
institutions under the Ministry of Textiles (MOT), Department of Textiles (DOT),
Bangladesh Handloom Board (BHB) and Bangladesh Sericulture Board (BSB) will be
strengthened and some new training facilities will be created- to stay with time,
additional trade courses will be designed and offered to the trainees;
b. A central testing and quality control laboratory will be established in the public sector
to serve both the public and private sector units;
c. The facilities being created in the National Institute of Textile Training Research and
Design (NITTRAD) will be utilised for product testing and adoption of market
sensitive design enabling sophisticated marketing and merchandising high value added
garments in the process of transforming fashion business into an economically viable
proposition;
d. Dependence on imported machinery and spares will be reduced through transfer,
adoption and adaptation of technology and development of cost-effective indigenous
technology;
e. Currently women's participation in the export-oriented RMG industry of Bangladesh is
more than 85 percent of total employment; but in other modern textile sub-sectors, it is
very negligible compared to 50-60 per cent in developed countries; keeping in view the
national objective of poverty alleviation of the socially disadvantaged groups
particularly distressed women, adequate measures will be taken for greater
participation of women labour force in the modern textile sector.
14.6.12 Projected Productions: The projected production of fabrics has been estimated at
3,651 million metres out of which fabrics for domestic consumption will be 2,037 million
metres. If the projected production is achieved, per capita consumption of cloth will be 15.37
metres in 2001/2002.The estimated production for yarn and fabrics during the Fifth Plan
period is shown in Table 14.7.
Table 14.7
Projected Production of Yarn and Fabrics 1997-2002
Textile Products Benchmark Projections
(estimated) 1996/97 2001/2002
Yarn production1 (million kg.) 113 522
Fabric for domestic consumption (million metres) 953 2037
Fabric for RMG production 210 1614
Total fabrics 2 production (million metres) 1163 3651
Population (million) 123.8 132.50
Per capita demand for fabrics (metres) 12.9 3 15.37
Notes :
1
Of total yarn requirement for projected production of fabrics, 100 per cent will be produced by 2001-2002.
2
Cent per cent of domestic fabric requirement and 50 per cent RMG fabric requirement will be domestically
met by 2001/2002.
3
Demand for domestic market in 1996/97 is estimated at 1596 million metres.
14.6.13 Fabrics from the modern sub-sector (which includes composite textile mills,
specialised textiles and power looms and knitting and hosiery units), handloom, sericulture
and others (tents, soft luggages, gloves, socks, tarpaulins, inter-linings, under-garments,
umbrella-cloth etc.) is projected to increase from 564 million metres in 1996/97 to 2953
million metres in 2001/2002. The benchmark production and projected production in these
sub-sectors during the Fifth Plan period are given in Table 14.8.
 315

Table 14.8
Projected Production of Fabrics During 1997-2002
(in million metres)
Textile Sub-sectors Benchmark (estimated) 1996/97 Projected Production
(2001/2002)
Modern Sector 564 2,953
Handloom 595 690
Sericulture and others 4 8
Total 1,163 3,651
14.6.14 While fabric production in handloom is assumed to grow at an annual compound
growth rate of about 3 per cent, in sericulture it is assumed to grow at the rate of about 15 per
cent per annum, that in modern sub-sector at the annual rate of 39 per cent during 1997-2002.
The overall annual growth rate of fabrics in the textile sub-sector is envisaged to be 25.7 per
cent during 1997-2002. A comprehensive programme for the creation of new capacity in
spinning, weaving, dyeing and finishing and export-oriented garments will be launched in
order to attain self-reliance in fabric for domestic market by the year 2002 and to meet 50 per
cent of the fabric requirements of export-oriented RMG industries. Table 14.9 shows the
number of units proposed to be set up during the Fifth Plan.
Table 14.9
Number of New Units Proposed to be Established in Different Subsectors
During Fifth Plan
Sub-sectors 1997/98 1998/99 1999/2000 2000/2001 2001/2002 1997-2002
Spinning 42 42 42 42 45 213
(Each unit of 25,000 Spindles)
Weaving 46 46 46 46 46 230
(Each unit of 120 Shuttleless Loom)
Dyeing and finishing 49 49 49 49 53 249
(Each unit of 10 million metres per annum)
RMG 153 153 153 153 153 765
(Each unit of 0.6 million pieces per annum)
14.6.15 Employment Generation in the Textile Sub sector: In the textile sub-sector it is
estimated that a total of 1,779,560 persons will be employed during the Plan period, of which
8,40,760 will be in the public sector and 938,800 will be in the private sector. In the private
sector 130,800 persons will be employed in spinning, 46,000 in weaving and knitting,
373,500 in dyeing and finishing, 382,500 in RMG, 6,000 in specialised textiles and 6,000 in
miscellaneous industries. In the public sector 1,500 persons in BTMC, 3,260 in Department
of Textiles, 670,000 in sericulture and 166,000 in handloom will be employed.
14.6.16 Jute Industries: Jute is a vital sector of the economy from agricultural, industrial
and commercial points of view. About 5 million bales of raw jute is produced in the country
every year of which about 1.5 to 2 million bales are exported, 3 million bales are consumed
by local mills and about 0.5 million bales are used for domestic consumption and kept as
carry over stocks. About 50 per cent of world import demand for jute goods (approx. 0.90
million metric ton) annually is met by Bangladesh. Jute is the third biggest export earner
(Tk.15,960 million annually) of the country.
14.6.17 As this sector provides large scale employment and earns substantial foreign
exchange, the government continued to provide hidden subsidies and financial assistance to
jute mills from the very beginning. Consequently the sector's debts to the banks stood at about
Tk. 40 billion in 1993 when the government launched Jute Sector Reforms Programme
(JSRP) with financial and technical assistance from IDA. The Programme envisaged to create
 316

a viable, essentially privately owned jute industry to be operated on a commercial basis.

Major thrust of the JSRP was privatisation of the public jute mills within 30th June, 1996.
The Privatisation Board tendered and re-tendered a number of jute mills for privatisation
during the last few years but not much satisfactory response was received from the market.
14.6.18 The performance of the private sector mills till the end of 1996/97 has been
disappointing and frustrating. In spite of receiving debt write-off, restructuring facility and
loss financing support from the government under JSRP, the private sector could not utilise
its existing installed capacity of 10,000 looms. As a matter of fact, the private sector utilised
less than 50 per cent of their capacity and closed down 8 mills.
14.6.19 The JSRP was a difficult and complex programme. The government made sincere
efforts to carry it forward. The government spent more than double the amount of the IDA
Credit Line (Tk. 10,000 m.) in this project. The government issued bonds worth Tk. 18,060
million to pay off the debts of BJC and 4 closed jute mills and provided loss financing
support to the running jute mills. It also paid Tk. 3,360 million to meet the separation cost of
the workforce of the public jute mills. But the purpose for which the programme was
undertaken has not been achieved. The commercial viability of the jute industry has not been
established. Privatisation was recognised as an effective means to strengthen the role of the
private sector in trade and industry with a view to accelerating economic development and
augmenting resources for the same. Accordingly, the government adopted a comprehensive
privatisation policy and laid down detailed procedure to facilitate the process of privatisation.
In order to create a viable, essentially privately owned jute industry to be operated on a
commercial basis in a reformed policy environment, the government has been pursuing the
jute sub-sector restructuring programme since July, 1993. The government has already
decided to reduce its ownership of jute sector investment from 64 per cent to 20 per cent.
Some 23 jute mills, out of 31 in the public sector, are enlisted for privatisation. The
Privatisation Board has almost completed evaluation of the asset value of these mills with a
view to unloading them to the private sector with utmost speed.
14.6.20 The loss of production of the jute industry to the extent of 15 per cent to 20 per cent
is attributable to erratic power supply. It is expected that the power need of the jute industry
will be met by the later part of the Fifth Plan. The future of jute and jute industry lie in their
diversified uses and aggressive market promotion. For this, there is an immediate need for
strengthening the R&D and institutional capacities of the Ministry of Jute and its various
organs.
14.6.21 In order to achieve the objectives of the Fifth Plan, the following strategies will be
pursued for the jute manufacturing sub-sector during the Plan period :
a. Improvement in Productivity and Capacity Utilisation: Improvement in productivity
and capacity utilisation will be done through rehabilitation of the existing jute mills
through BMR programmes, enforcement of industrial discipline and exploring
possibility of participation of labour through profit-sharing and participation in
management, adequate and timely supply of raw-materials and spare parts, privatisation
of maximum public sector jute mills and rationalisation of man power therein,
improvement in managerial efficiency through skill development training and
improvement in the quality of conventional jute products and reduction in the cost of
production through improvement in per loom production and reduction in raw jute cost
by increasing per acre productivity.
 317

b. Diversification of End Uses of Jute: Diversification of end uses of jute through

production of pulp and paper, geo-textiles, absorbents, hard-boards, handicrafts, mats,
decorative wall covering, shopping bags, carpets, blankets etc. will be pursued through
undertaking appropriate development programmes. Development and extension of
appropriate varieties of jute, kenaf and rami fibre to enable round-the-year supply of
these items for establishment and smooth operation of pulp and paper industry will be
undertaken. Improvement in the quality of jute products will continue to remain a
central strategy for attracting higher prices for Bangladeshi jute goods.
c. Market Promotion: Attempts will be made to promote and develop market for jute
goods through identifying the constraints of the existing marketing system of jute goods
and taking appropriate measures to overcome such constraints, assessing the market
demand both at home and abroad, conducting studies on a continuous basis on the jute
goods demand with a view to overcoming the demand and supply gap, formulating
appropriate pricing policies, opening required number of sales centres in Bangladesh
missions abroad, organising display of jute goods in major importing countries,
participation in the international trade fairs and contacting foreign buyers to gear up
exports, making institutional arrangement to monitor export prices of competing goods
to prevent dumping by the competing countries and formulating appropriate export and
import policies. Commercial Sections of Bangladesh Missions abroad will be revamped
for this purpose.
d. Financial and Other Policy Incentives: Financial and other policy incentives strategy
includes rationalisation of monetary and fiscal incentives, viz. reducing interest rate
from existing 15 per cent to about 10 per cent or less, exemption of excise duty on
electricity, reduction in the prices of oil and gas for generation of electricity for jute
mills to the level fixed for Bangladesh Power Development Board (BPDB) and
exemption of advance income tax in case of jute yarn and twine, adopting suitable and
appropriate mechanism to maintain parity with dollar value among the competing
countries to match the external competition for our jute and jute goods.
e. Strengthening of Institutional Capability and R&D: Strengthening of institutional
capability and R&D involves evaluation of the existing R&D institutions for clear
identification of technological gaps. In order to bridge the gaps, establishment of a new
“Jute Industry Development Centre” under Bangladesh Jute Research Institute (BJRI)
will be pursued with necessary technical assistance to undertake research activities to
develop technologies for improvement of quality and yield of traditional jute fibres as
well as for diversification of jute products. To evolve new high yielding varieties of
jute seeds to increase per acre yield which, in turn, will lead to substantial reduction in
the cost of production to make jute and jute goods competitive in the international
market will be at the top of R&D priority. Research and Development of rami fibre by
sharing experience with China will be promoted.
f. International Jute Organisation (IJO): For undertaking research and development in
the areas of jute, jute goods and related products as well as accessing markets, necessary
assistance will be sought from the International Jute Organisation (IJO).
g. Improvement of Environment and Natural Resources: Retting of jute is perceived to
contribute to water pollution where there is insufficient availability of water. In such
areas, canals and small ponds will be dug for retting of jute. If necessary, promotional
measures will be undertaken to motivate the jute growers by the local government
bodies for retting their jute in a proper way to reduce/eliminate adverse environmental
 318

effects. New techniques for retting of jute will be explored. The government policy on
banning the production of polythene bags as substitutes for jute bags will be enforced
and towards this end, polythene bag factories may be converted into jute bag
manufacturing factories. Setting up of more polythene industries in the country will not
be allowed. To reduce the acreage under jute and at the same time maintain a higher
volume of supply for its diversified end uses, including use of green jute for pulp
making and thus to ease the burden on insufficient forest resources of the country,
efforts will be made to produce jute throughout the year through necessary
augmentation of soil nutrition.
h. Social Safety-net Programme: Programmes will be undertaken to provide
retrenchment benefits and retraining for self employment to support affected workers.
i. Planning and Implementation of Development Programmes Through Local Level
Institutions: With the introduction of proposed institutional structure at Zilla, Thana
and Union levels, small and cottage industries planning activities could be included in
the functions of such local government bodies. During the Fifth Plan, BSCIC will
provide necessary services for industrial development including industry based on jute
and will maintain effective liaison with the development programmes of such
institutions. The process of interaction between BSCIC and the local level institutions
will ensure effective local level participation in such industrial planning and
development. Moreover, the NGOs who have emerged as a new force for development
in the rural areas are expected to play an effective role in the skill development of the
poor and disadvantaged groups through motivation and training and help them in
producing varieties of industrial goods including jute goods.
j. Employment Generation and Poverty Alleviation: The jute and jute manufacturing
sub-sector has immense potential for employment generation and poverty alleviation in
Bangladesh. Jute production, jute industry and trade and the related services employ
about 10 per cent of our labour force and jute industry is the second largest industrial
employer after textiles. The new and diversified use of jute plants and fibres for pulp
and paper, textile yarn blended with cotton and wool, geotextiles, jute reinforced plastic
materials, luggages, shopping bags, handicrafts, accessories, etc. will open new horizon
for employment opportunities. The women will find job opportunities in the rural areas
by utilising finer jute yarn in cottage industries. In the agricultural sector, increased
yield per unit area will bring down the production cost of jute which will help growers
to alleviate their economic hardship by raising their income.
14.6.22 Chemical Industry: In the Fifth Plan, the objectives of the chemical sub-sector will
be as follows:
a. to increase the contribution of chemical industries sub-sector (fertiliser, paper,
newsprint, etc.) to GDP;
b. to meet the needs of the country in respect of fertiliser, paper, news print, etc.;
c. to identify and exploit the comparative advantages of the economy in different sub-
sectors and to direct public sector investment in those desirable sectors where private
investment is still shy;
d. to identify and give emphasis on thrust sectors;
e. to develop human resources for efficient management and operation of enterprises;
f. to develop a sound technological base in the country; and
g. to provide facilities and services to attract private investment, including foreign direct
investment.
 319

14.6.23 In order to achieve the objectives and targets set for the chemical industries sub-
sector, the following strategies will be pursued for accelerating the contributions of this sub-
sector towards a self sustained economy:
a. Public sector dominance in this sub-sector will be gradually reduced and the private
sector will be encouraged to set up new industries either alone or jointly with the
public sector. All the sub-sectors under chemical sector are open to the private sector.
But the private sector has not come forward to take up the challenge except
participating in a joint venture with a foreign company (KAFCO). The investment
size, technological complexities and the mandatory price structure may be attributed
as main reasons standing in the way of private sector participation in the fertiliser
sector, particularly in urea manufacturing. A private company has recently come to set
up a joint venture SSP fertiliser with BCIC. There are great prospects for participation
by private sector in all areas of chemical sector. Necessary technical support such as
project analysis, project preparation, demand and supply analysis, sourcing and
pricing of machinery, market information, etc. will be provided to the private sector in
setting up joint ventures and/or new enterprises in the private sector.
b. Excess manpower in the corporations/enterprises will be rationalised to economise
revenue expenditure. At the same time necessary power/authority will be delegated to
the corporations/enterprises and they will be made accountable for failure and
rewarded for success.
c. One of the major problems and impediments to the growth of this sub-sector is the
dearth of finance, technical know-how and skilled manpower. In this context, besides
local currency support through ADP, the following source of financing will be
vigorously explored:
i. alternate sources of financing for projects from the capital market will be
explored. BCIC will be given freedom in exploring and arranging alternate sources
of finance outside the country;
ii. more emphasis will be given on building projects on BOT/BOO/BOOT model; the
public sector will identify viable projects, process them for approval and
implementation; after implementation they will operate the projects for some time
and subsequently transfer them to private entrepreneurs; and
iii. local currency financing, inter-alia, public subscriptions of shares through the
capital market will be explored; joint venture companies, with participation of
BCIC, will be encouraged to issue shares/debentures.
d. In case of sick industries, viability where possible will be restored inter-alia, through
screening out inefficient manpower and replacing them by efficient, dependable,
sincere and committed manpower. Necessary training, both local and foreign, will be
imparted for building up efficient management for restoring their viability. Technical
support in the form of studies, equipment and machinery will be provided to put the
industries/enterprises on a viable footing. All stakeholders - owners, management,
labour and the concerned lending institution will be asked to bear out rehabilitation.

14.6.24 Projected production for some major chemical products during the Fifth Plan are as
follows:

a. Urea Fertiliser: Bangladesh is a major producer of Urea Fertiliser in the region having
6(six) factories with annual installed capacity of 2,500 thousand metric tons of urea. In
1995/96 BCIC produced 2,134 thousand metric tons of urea. According to the projection
made by BCIC the actual demand of urea fertiliser during 1995/96 was approximately
 320

2,300 thousand metric tons. The projected urea production was 2,110 thousand metric tons.
The demand of urea is rising by 10 per cent per annum. In 1996/97 the government has taken
action to import 200 thousand metric tons of urea to meet the local demand. A recent study
indicated that future demand of urea will further increase as shown in the Table 14.10 .
Table 14.10
Demand Projection of Urea Fertiliser (1997-2002)
(in million metric ton)
Year Urea Demand Local Production Net Import Requirement
1996/97 Benchmark 2.40 2.05 0.35
1997/98 2.45 2.10 0.35
1998/99 2.67 2.10 0.57
1999/00 2.92 2.10 0.82
2000/01 3.19 2.49 0.70
2001/02 3.49 2.55 0.94

This leaves room for setting up more urea fertiliser factories in the country. For this
purpose NGFF will be replaced by Shahjalal Fertiliser Co. Ltd. increasing annual
production capacity from 106,000 metric tons to 330,000 metric tons and another new
urea fertiliser factory will be set up in northern/southern part of the country by the year
1999/2000. There is a plan to increase capacity of urea production in JFCL and
ammonia production in CUFL by 1999/2000 to 2000/2001.
b. TSP: The present annual demand of TSP in the country is about 700 thousand metric
tons. TSP Complex produces about 150 thousand metric tons of TSP/SSP (TSP-
50,000 metric tons and SSP 100,000 metric tons). The rest of the demand is met
through import. In order to meet a big chunk of the demand the annual production
capacity of TSP Complex will be increased to 275 thousand metric tons (TSP-75,000
metric tons and SSP-200 thousand metric tons) through balancing and full capacity
utilisation. There is a plan for setting up a three hundred thousand metric ton SSP
Factory by a foreign sponsor in collaboration with BCIC. There is also a plan for
setting up a DAP factory with a capacity of 360 thousand metric tons in the country.
c. Paper: The present demand for writing and printing paper is 80,000 metric tons. The
demand for various grades of paper has been increasing. In 1995/96 BCIC produced
41,889 metric tons of paper and the rest of the demand was met from the supplies of
private sector and import. The projected production of paper in 1996/97 is 44,000
metric tons. The growth rate of demand for different grades of paper has been
assumed to be 6 per cent to 10 per cent. In order to cater to the future demand the
present capacity of producing paper and pulp in public sector including joint ventures
will be increased through BMRE of the existing mills and setting up of new mills
preferably under joint venture/private sector.
d. Newsprint: The demand for newsprint has increased rapidly during the last few years
because of its use as writing paper and the government policy of cherishing the
freedom of the press. The present demand for newsprint is about 60,000 metric tons
per annum. The lone newsprint producer in the country, Khulna Newsprint Mill
(KNM) having installed capacity of 48,000 metric tons per annum is no longer in a
position to meet the domestic demand. In 1994/95 and 1995/96 KNM produced
43,061 and 40,479 metric tons newsprint respectively. A large quantity of newsprint is
being imported into the country to meet the short-fall. To meet the demand for
newsprint BCIC will undertake BMRE of KNM in the Fifth Plan period.
 321

e. Cement: The present annual demand for cement in the country is 0.28 million metric
tons. In 1994/95 and 1995/96 BCIC produced 0.147 million and 0.153 million metric
tons cement respectively. The only integrated plant Chhatak Cement Factory having a
capacity of 0.233 million metric tons is under BCIC. There are about 6-7 cement mills
in the private sector and based on imported clinker.
14.6.25 Under chemical industries sub-sector the major programmes/projects will include
inter alia Shahjalal Fertiliser Factory, capacity increase of urea in Jamuna Fertiliser Factory,
capacity increase of amonia in Chittagong Fertiliser Factory, Di-Amonium Phosphate Plant
(DAP) at CUFL, setting up of a paper machine in SPPM, BMRE of Karnaphully Paper Mills,
BMR of Khulna Newsprint Mill (KNM) and one Urea Fertiliser Factory in the northern or
the southern zone. Projected production for different chemical products is summarised in the
Table 14.11.
Table 14.11
Projected Production for Chemical Industries
(in metric ton)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002
Urea 2,049,810 2,150,000 2,150,000 2,150,000 2,330,000 2,363,000
TSP/SSP/DAP 104,181 150,000 176,000 209,000 220,000 220,000
Newsprint 23,903 45,000 45,000 45,000 45,000 45,000
Paper 23,239 45,000 45,000 53,400 72,600 79,200
Cement 107,300 150,000 186,000 221,000 221,000 233,000
Source : BCIC

14.6.26 Sugar Industry: Objectives of the sub-sector during the Fifth Plan is to increase
the contribution of sugar sector to GDP, create new job opportunities specially in rural areas
and reduce sugar import by increasing the domestic sugar production.
14.6.27 In the current industrial policy additional investment in sugar industry by the public
sector has been discouraged and the private sector has been given preference with various
incentives. But so far, response from the private sector in sugar industry has been
disappointing. So the public sector will continue to play some role. BMRE programmes of
existing sugar mills will continue to be implemented for their progressive unloading to the
private sector.
14.6.28 Dry and low rain-fall belt in the north, north-west and western regions of Bangladesh
comprising the greater districts of Rajshahi, Dinajpur, Bogra, Rangpur, Pabna, Kushtia,
Jessore and Faridpur are considered as the best sugarcane growing areas of the country. In
fact, almost all of the existing sugar mills are located in these regions where sugarcane has
emerged as the main cash crop over the years. There is ample scope for capacity expansion of
some existing sugar mills as well as establishment of new sugar mills in different locations of
the cane growing regions.
14.6.29 Demand for sugar in the country is estimated to be about 371 thousand tons in
1996/97 for a population of 123.8 million based on per capita sugar consumption of 3.0 kg. a
year. Assuming the consumption rate remains constant, demand for sugar will increase to
about 400 thousand tons in 2001/2002 for an estimated population of 132.5 million. If per
capita sugar consumption increases due to growing urbanisation and change of food habit,
total demand of sugar will increase further. Against this demand, total sugar production
capacity of the 15 operating sugar mills is now 215 thousand tons per annum based on total
 322

cane crushing capacity of 21,044 tons per day, 120 effective crushing days and 8.5 per cent
sugar recovery. However, depending on the availability and quality of sugarcane, actual sugar
production may vary from 200 thousand tons to 225 thousand tons per annum. Thus, at
present there is an annual deficit of about 150 thousand tons of sugar which is met through
import at the cost of Tk.2,500 million in hard earned foreign currency. The deficit will
increase nearly to 200 thousand tons in 2001/2002, unless additional sugar production
capacity is created at suitable locations of cane growing regions of the country.
14.6.30 Estimated demand, domestic production and import of sugar up to 2002 are given
in the Table 14.12.
Table 14.12
Estimated Demand for Production and Import of Sugar
Year Population Demand @ 3.0 kg. Local Production Deficit/ Import
(million) (million ton) (million ton) (million ton)
1996/97 123.80 0.37 0.14 0.23
2001/2002 132.50 0.40 0.200-0.23 0.17-0.20

14.7 Obstacles to Growth of the Sugar Industry in Bangladesh

14.7.1 With the exception of a few, most of the sugar mills in Bangladesh do not have cane
plantations of their own and they have to depend on a large number of small farmers in their
respective mill zones for sugarcane supply. But owing to several factors including fragmented
and small cane holdings, high initial input cost, year round waiting time for cane, incidence of
pest and disease, lack of high yielding variety of cane, high risk involvement etc., per acre
yield of sugarcane in Bangladesh (which is 20-21 tons/acres) is relatively low. As a result,
sugarcane faces hard competition from other crops, especially paddy which has a much
shorter growing period. Besides, sugar content in the cane is also low mainly because of
climatic factors. This stands in the way of increasing the sugar recovery which at present
varies from 8.0 per cent to 8.5 per cent.
14.7.2 Sugar industry in Bangladesh was originally started by the private entrepreneurs
during the mid-thirties. But since then no further investment by the private sector has been
made in the sugar industry. Investment in sugar industry is now open to both the public and
the private sectors. In the new industrial policy, the role of the public sector has been shrunk
and new investment by the public sector in sugar industry has been discouraged in order to
encourage the private sector investors. Though private investment in different industrial
sectors has increased significantly in recent years, no private entrepreneur has so far come
forward to set up new sugar mills in the country. As it is neither desirable nor advisable to
withhold investments from the sugar subsector altogether, an appropriate policy package,
along with adequate incentive measures, will have to be worked out to make the sugar
subsector attractive for private investments.
14.7.3 Total cane crushing capacity of the existing 15 sugar mills of the country is 21,044
metric tons cane per day (TCD) with which 200-225 thousand tons of sugar can be produced
per annum. Based on present performance and future prospect of sugarcane production in
their respective mill zones, cane crushing capacity of 8 (eight) of the existing sugar mills
namely, Carew, Zeal Bangla, North Bengal, Natore, Faridpur, Kushtia, Mobarakganj and
Panchagarh Sugar Mills, can be increased by 1000-1250 TCD each during the Fifth Plan. In
addition to the expansion programme, 3 (three) new Sugar Mills of 2000 TCD each may be
set up at Shibganj of Chapai Nawabganj district, Serajganj of Serajganj district and
Jhikargacha of Jhenidah district. The private sector will be encouraged to establish these new
 323

mills. This will increase the cane crushing capacity by another 6,000 TCD. On completion of
the development programme proposed above, total cane crushing capacity of the country will
increase from 21,044 TCD in 1996/97 to 35,294 TCD and sugar production capacity will
increase from 215 thousand tons to nearly 400 thousand tons per annum by 2001/2002. This
will help reduce sugar import. In addition, the proposed three new sugar mills will create
direct employment opportunity for 3,225 persons (1,075 persons in each) and will also bring
about benefits to a large number of people including marginal farmers in areas surrounding
the mills.
14.7.4 Besides the sugar mills, there is a bright prospect for setting up an export oriented
molasses-based distillery having a capacity of 5-6 million litres per annum. This project may
be set up as a joint venture with foreign entrepreneurs who will ensure export of the same.
This will increase the value-addition of molasses which is obtained as a by-product from the
sugar mills and will also create job opportunity for about 200 persons.
14.7.5 Steel and Engineering: The engineering industries produce investment goods which
determine the technological capability and consequently the production level and efficiency
of an economy. The engineering industries are also suppliers of important consumer durables.
This is particularly so in the electrical and transport equipment industries. In the developed
economies, the growth of the subsector generally exceeds that of the manufacturing as a
whole. In the developing economies, on the other hand, the sub-sector lags behind.
14.7.6 Bangladesh has a 'mini' steel plant at Chittagong which has been out of operation for
quite sometime. Its engineering base is very weak despite the fact that the country has a
machine tools factory, a diesel engine manufacturing plant as well as a plant for
manufacturing general electrical equipment. The performance of the sector has not been
satisfactory for various reasons though this is the basic sub-sector for industrial development.
During the first four years of the Fourth Plan (1990-95), the production volume of this sub-
sector showed downward trend because of the low capacity utilisation, low productivity, lack
of investment fund in the public sector, major constraints in the private sector consisting of
demand constraints, inefficient operation of existing units both in the private and public
sectors, dearth of skilled and trained personnel, inadequate R&D, inadequate infrastructures,
inconsistent tariff policies etc.
14.7.7 Under the current industrial policy, the growth of this sub-sector has come to depend
on private sector initiative. In pursuance of the government's privatisation policies, BSEC is
endeavouring to increase the efficiency of the enterprises under its control. Proposals for
financial re-structuring of some of the enterprises are under consideration by the government.
In the meantime BSEC has already issued public shares to the extent of 49 per cent in four of
its enterprises. Again, the remaining 51 per cent shares (held by the government) of the two
enterprises out of the above mentioned four enterprises have been earmarked for sale to the
public. Dhaka Steel Works Ltd. along with two other enterprises (i.e. Quality Iron & Prantik
Traders Ltd.) is under the process of handing over to one of the previous Bangladeshi
shareholders. Besides, seven more enterprises namely, Bangladesh Machine Tools Factory
(BMTF), Bangladesh Diesel Plant, Bangladesh Blade Factory, Bangladesh Can Co. Ltd.
General Electric Mfg. Co. Ltd., Mehar Industries (B) Ltd. and Chittagong Steel Mills Ltd. are
earmarked for outright sale. However, the disinvestment of SOEs is a continuous process and
to be implemented in phases. Keeping in view the importance and prospect of steel,
engineering, ship-building, electrical will be and electronic products, the objectives for the
Fifth Plan of the steel and engineering sub-sector will be to:
 324

a. support the agricultural sector with the ultimate objective of transforming the age-old
agricultural practice into a semi-mechanised one;
b. supply capital goods and spares to various sectors of the economy, e.g., agriculture,
power, gas, natural resources, transport, communication, construction as well as
manufacturing sector itself;
c. substantially reduce dependence on import of machinery and essential spares and
components for jute, textile, sugar mills and electronic industries, thereby improving
the balance of payments of the country;
d. strengthen and diversify the existing export structure through production and export of
engineering goods;
e. maximise capacity utilisation of the existing capital intensive industries through
necessary balancing, modernisation, replacement and expansion;
f. provide linkage, through sub-contracting, to light engineering industries throughout
the country and thus create gainful employment opportunities with special emphasis
on rural employment through promotion and development of industries in rural areas;
g. create employment opportunities through development of skills in major sectors like
steel, engineering, ship-building and electronics;
h. accelerate transfer of appropriate technology through establishment of project design
and engineering company and thereby reducing dependence on expatriate
consultants/experts with regard to undertaking feasibility study, project design,
engineering services, etc.; and
i. accelerate research and development activities for consolidating the industrial base as
well as for the development of indigenous technology.
14.7.8 The general development strategies for the steel and engineering sub-sector as a whole
are outlined as follows:
a. consolidation and effective utilisation of existing capacities will be achieved through
planned capacity expansion, product diversification, BMREs and introduction of
additional working shifts;
b. with a view to improving the balance of payments position, reducing dependence on
imports and promoting self reliance, necessary programmes will be undertaken to
diversify the industrial base and to set up import substitute industries for the
progressive manufacture of agricultural equipment, jute textile, sugar, electrical
machinery and equipment as well as their spares and accessories;
c. measures will be taken to develop viable products which are high technology based
and require venture capital for which private investment is not forth coming;
d. a significant feature of the strategy for industrial development in general and for steel
and engineering industries in particular will be to set up projects under joint-venture
with the reputed local/foreign manufacturer mainly to create strong export base and
thereby to improve country’s balance of payments position;
e. new capacity will be created in the areas of steel making, electrical cables and
conductors and basic electronic components manufacturing; and
f. viability of sick projects like Bangladesh Machine Tools Factory, Bangladesh Diesel
Plant and other projects will be restored through improvement of management
capability of the enterprises and also through phasing out of inefficient manpower for
progressive transfer to the private sector.
 325

14.8 Development Programmes

14.8.1 The government has undertaken a programme for restructuring of BSEC to make it
commercially viable. To make Chittagong Steel Mills Ltd. (CSM) profitable, a restructuring
proposal is under consideration of the government. All out efforts will be made to run CSM
on commercial and profitable basis.
14.8.2 The other important projects which will be implemented during the Fifth Plan period
are: a plant for production of 1,000 M.T. per annum of cross-linked polyethylene (XLPE)
cables, a light engineering complex at a suitable location in the north-west region of the
country, progressive manufacturing of buses, trucks and cars at Progati Industries Ltd., setting
up of a plant for manufacturing of black plain steel sheet, an alloy and special steel
manufacturing plant and a new plant to manufacture cars. At the same time the uneconomic
enterprises under the corporation will be sold and some enterprises will be disinvested
partially.
14.8.3 Projected Production of Major Engineering Products: Steel & Engineering
Corporation mainly produces products like steel ingot, billet, corrugated galvanised iron
(CGI) sheet, mild steel plate, GI/MS pipe, electric cables, fluorescent tube light, super-
enamelled copper wire, ceiling fan, diesel engine, water vessel, bus, truck, jeep and motor
cycle, etc. The projected production of major engineering products is given in Table 14.13.
Table 14.13
Major Products of BSEC (1996-2002)
Items Unit 1995/96 1996/97 1997/ 98 1998/ 99 1999/ 00 2000/ 01 2001/ 02
(Benchmark)
Steel Ingot M.T. 21898 60000 60000 60000 60000 65000 75000
Billet 110/85mm M.T. 15197 15380 25000 30000 35000 35000 40000
Billet 50/65mm M.T. 4624 10000 10000 10000 12000 12000 15000
C G I sheet M.T. 5439 25000 15000 15000 20000 20000 25000
M S Plate M.T. 3175 7500 7500 7500 7500 8000 10000
GI/MS Pipe M.T. 6134 8000 8000 9000 10000 10000 10000
Electric Cables M.T. 3172 3200 3000 3000 3600 3800 3850
FL. Tube Light Mil.No 0.95 0.95 0.97 0.97 0.98 0.98 1.00
SEC Wire M.T. 394 350 350 350 375 400 400
Ceiling Fan Nos. 28491 60000 60000 60000 65000 65000 70000
Diesel Engine Cyl. 604 2500 2500 3000 3500 4000 4000
Water Vessel M.T. 2319 6200 6200 65000 6500 7500 7500
Bus, Truck, Jeep etc. Nos. 1232 1200 1200 1225 1250 1300 1350
Motor Cycle etc. Nos. 6700 7000 7000 7500 8000 8000 8000

14.8.4 Small and Cottage Industries: Small and cottage industries occupy a unique
position in the economy of Bangladesh. Its contribution to poverty alleviation cannot be
underestimated. During the Fourth Plan, against the projection of 0.4 million employment
generation, 0.35 million job opportunities were created. The contribution of the sub-sector to
the GDP is about 5 per cent. The SCI sector now employs 5 million people directly and
indirectly which accounts for 82 per cent of the total industrial labour force. The agriculture
sector is not likely to provide the required employment opportunity in the long run. The
establishment of large scale industry to offer large scale employment is not considered to be a
feasible option at the moment because of resource constraint. It is, therefore, imperative to
develop means outside the agricultural sector for creation of employment opportunities. The
SCI is an area where large scale employment opportunities exist. Compared to large and
medium industries, the SCI has some inherent advantages; these are:
a. lower capital investment;
 326

b. more jobs per unit of invested capital;

c. lower capital-output ratio;
d. lower infrastructure requirement;
e. shorter start-up time;
f. creation of micro entrepreneurial talent;
g. lower consumption of energy;
h. less environmental risk; and
i. stimulation of personal savings and promotion of agro-industrial linkages.
14.8.5 Keeping in view the industrial and socio-economic policies of the government, the
major objectives of SCI during the Fifth Plan are :
a. to reduce unemployment through generation of new employment opportunities,
especially for the rural people;
b. to increase the income of poor people by self-employment through indigenous
resources and technology;
c. to generate employment through entrepreneurship development;
d. to meet the local demand for essential commodities;
e. to discourage influx of the rural people to the urban areas through rural
industrialisation;
f. to encourage geographical dispersal of industries and ensure balanced regional
development;
g. to promote sub-contracting linkages among the various types of large, medium and
small scale industries;
h. to encourage production of export-oriented and import-substitute products through
promotion of small agro-based industries; and
i. to increase the contribution of SCI sector to GDP.
14.8.6 In order to achieve these objectives of the SCI, the following strategies will be
followed :
a. to assist the SCI entrepreneurs through rendering pre and post investment promotion
and extension services;
b. to develop and improve efficiency of SCI entrepreneurs including women
entrepreneurs through management training programmes;
c. to obtain optimum utilisation of existing capacity through measures for balancing,
modernisation, rehabilitation and expansion (BMRE) of existing industries;
d. to assist and promote local industries with comparative advantage through tariff
rationalisation and appropriate fiscal measures;
e. to encourage growth of linkage industries and subcontracting, agro-based and agro-
support industries, export oriented and import substitute industries, engineering,
electrical and electronics industries;
f. to extend credit facilities to the SCI entrepreneurs;
g. to develop the quality of the SCI products;
h. to develop marketing facilities of the SCI products;
i. to strengthen co-ordination among the agriculture and others related sectors;
j. to diversify the industrial activities in the new potential areas;
k. to promote joint venture with local and foreign collaboration; and
l. to take appropriate measures for ensuring optimum utilisation of the facilities created
in the existing industrial estates; establishment of any new industrial estate, though
being generally discouraged, will only be allowed if justified by regional needs.
 327

14.8.7 In view of the objectives and strategies set forth the following projections have been
made for the SCI sector in the Fifth Plan:
a. to increase the SCI sector’s contribution to GDP from 5 per cent to 7.5 per cent; and
b. to create employment opportunities for 0.478 million people.
14.8.8 Programmes: In order to achieve the above objectives a comprehensive programme
for development of small and cottage industries has been proposed. This programme can be
classified into two types - public sector programme and private sector programme. An outlay
of Tk.1,089.89 million has been envisaged for the public sector, while Tk. 125,246.97 million
is earmarked for private sector investment. Of this, credit requirement has been estimated at
Tk.12,800 million including a foreign exchange component of Tk.6,144.4 million during the
Fifth Plan period for setting up small and cottage industries in the private sector.
a. Public Sector Programme: In the public sector a number of projects will be
implemented during the Plan period through investment of Tk.1,089.89 million. Out of
these investment projects, 12 are spill-over projects and the rest will be new projects.
Under technical assistance one project is a spill-over project. Public sector programme
aims at providing infrastructure facilities including common facilities, dyes and
chemicals, credit facilities, training to the entrepreneurs, extension services and
research, market promotion and also self employment facilities for the people. Besides,
some new projects such as development of salt industry in Khulna-Satkhira region,
Women Entrepreneurship Development (4th phase), Skill Development Centre at
Gopalgonj will be established during the Plan period. Bangladesh Small and Cottage
Industries Corporation (BSCIC) has been constantly monitoring the utilisation position
of developed industrial plots in the existing industrial estates. It also takes appropriate
measures to expedite allotment process whenever there is a genuine need. Construction
of any new industrial estate will be undertaken only in response to a clearly
demonstrated demand for it.
b. Private Sector Programme: In the private sector a programme of Tk.125,246.97
million is proposed for investment. The objective of the private sector programme is to
encourage establishment of small and cottage industries in various important areas.
These are: agricultural tools and equipment, affixation pumps, motors and other
equipment, fertiliser and insecticides, dyes and chemicals, leather and rubber products,
rural transport and transportation equipment, sports good and toys, food, fruits and
vegetables, preservation and processing of semi-intensive shrimp culture, fish, poultry
and cattle feed, cotton spinning, textiles, handloom, hosiery and silk products, machine
tools, electrical and electronics equipment and goods, spares and accessories,
intermediate products, dairy supplies and services etc. Also priority will be given to the
development of rural, cottage and handicrafts industries.
14.9 Benchmark Production and Terminal Year Projection for Major Manufactures
14.9.1 Benchmark production of major manufactures and projection of production for the
terminal year of the Fifth Plan are presented in Table 14.14.
 328

Table 14.14
Projected Production of Major Industrial Output During
Fifth Plan Period
Items Unit 1996/97 2001/2002
(Base Year) (Terminal Year)
Urea 000 M.T. 2,049.81 2,363.00
T.S.P/S.S.P 000 M.T. 104.18 220.00
Paper, Pulp and Newsprint 000 M.T. 70.00 124.20
Cement 000 M.T. 107.30 233.00
Yarn Production Million KG 113.00 522.00
Cotton Yarn Million KG 75.71 349.74
T.C.& Others Million KG 37.29 172.26
Fabrics Production Million Metre 1,163.00 3,651.00
Cotton Cloth Million Metre 779.21 2,446.17
T.C. & Others Million Metre 383.79 1,204.83
Fabrics for Garments Million Metre 210.00 1,614.00
Cotton Fabrics Million Metre 140.70 1,081.38
T.C. & Others Million Metre 69.30 538.62
Jute Textiles 000 M.T. 435.00 500.00
Hessian 000 M.T. 139.20 160.00
Sacking 000 M.T. 252.30 290.00
C.B.C. 000 M.T. 43.50 50.00
Sugar Million M.T. 0.14 0.23
Spirit 000 Litre 2,500.00 4,000.00
Bus, Truck & Car Nos. 1200 1350
Motor Cycle Nos. 7000 8000
Diesel Engine Nos. 750 4000
Steel Ingot 000 M.T. 21.90 75.00

14.10 Manufacturing Sector Outlay During Fifth Plan

14.10.1 The Fifth Plan provides an outlay of Tk.310,569.86 million for investment in the
manufacturing sector. About 96 per cent of this outlay (i.e.Tk.298,776.16 million) is expected
to be in the private sector and the residual 4 per cent is earmarked for the public sector.
Outlay for the public sector will be utilised mainly for promotional and support services for
the private sector, providing the equity share in case of joint ventures between the public and
private sectors as well as in establishing industrial undertakings in those areas where the
private sector will not be forth coming. During the execution of the Plan if the private sectors
response is inadequate investment in the public sector may have to be made in critical areas
such as chemical fertiliser, chemicals etc.
14.10.2 The tables 14.15 and 14.16 show agency wise tentative public sector investment
outlay and sub-sector wise private sector investment outlay respectively during the Fifth Plan
period.
 329

Table 14.15
Public Sector Investment Outlay for Fifth Plan
(at 1996/97 prices)
(in million Taka)
Agency/sub-sector Spill-over New Projects Total Investment
projects
A. Investment Amount Amount Amount %
Bangladesh Chemical Ind. Corpn. 1,040.00 3,883.37 4,923.37 41.75
Bangladesh Steel & Engg. Ind. Corpn. 150.00 212.00 362.00 3.07
Patent, Design & Trademark - 4.00 4.00 0.03
National Productivity Organisation (NPO) - 6.70 6.70 0.06
Bangladesh Sugar & Food Ind. Corpn. - 297.00 297.00 2.52
BEPZA 500.00 560.48 1,060.48 8.99
BFIDC - 6.26 6.26 0.05
Bangladesh Small & Cottage Ind. Corp. 1,000.00 89.89 1,089.89 9.24
BITAC - 31.79 31.79 0.27
BFDC (Bangladesh Film Dev. Corpn.) - 6.26 6.26 0.05
BIM 10.00 4.85 14.85 0.13
Department of Printing & Stationery 20.00 15.67 35.67 0.30
BJMC 30.00 121.20 151.20 1.28
Department of Jute 150.00 31.30 181.30 1.54
Bangladesh Jute Research Institute - 40.58 40.58 0.34
BTMC 150.00 138.76 288.76 2.45
BHB (Bangladesh Handloom Board) 500.00 34.85 534.85 4.54
Bangladesh Sericulture Board 27.00 58.10 85.10 0.72
Department of Textiles 1,060.00 255.00 1315.00 11.15
Sub-total (A) : 4,637.00 5,798.06 10,435.06 88.48
B. Other Outlay: 115.80 1,242.84 1358.64 11.52
Total (A+B) 4,752.80 7,040.90 11,793.70 100

Table 14.16
Private Sector Investment Outlay During Fifth Plan Period
(at 1996/97 prices)
(in million Taka)
Sl. Sub-sector/Group Outlay
No. Large & Med. Small Cottage Total
Allocation % Allocation % Allocation % Allocation %
1. Food & Allied Industies. 11,544.07 6.65 16,461.44 14.12 1,274.55 14.71 29,280.06 9.80
2. Textile Products. 51,199.23 29.50 40,302.55 34.57 2,463.32 28.43 93,965.10 31.45
3. Jute Products and Allied Industries. 1,903.11 1.10 641.20 0.55 84.92 0.98 2,629.23 0.88
4. Forest Products and other Agro-based 3,804.97 2.19 2,867.93 2.46 1,274.55 14.71 7,947.45 2.66
Industries.
5. Paper, Board, Printing & Publishing 7,673.89 4.42 4,196.97 3.60 169.82 1.96 12,040.68 4.03
and Paper Converting & Packaging.
6. Tannery, Leather and Rubber Products 9,502.85 5.53 3,427.52 2.94 424.56 4.90 13,444.93 4.50
7. Chemical, Pharmaceutical & Allied 40,332.93 23.24 13,162.16 11.29 254.74 2.94 53,749.83 17.99
Industries.
8. Glass, Ceramic & other Non-metallic 5,129.52 2.96 1,014.27 0.87 339.65 3.92 6,483.44 2.17
Mineral Products.
9. Engineering, Electrical & Electronics 14,403.36 8.30 15,890.19 13.63 2,123.67 24.51 32,417.22 10.85
Industries.
10. Service Industries (Warehousing, 15,354.75 8.85 11,564.98 9.92 - - 26,919.73 9.01
Transportation, Construction, etc.)
11. Trade & Industries Promotion: 209.14 0.12 - - - - 209.14 0.07
12. Misc. Industries 12,381.37 7.14 7,053.24 6.05 254.74 2.94 19,689.35 6.59
Total 173,529.19 100 116,582.45 100 8,664.52 100 298,776.16 100

14.11 Sub-sectoral Investment Outlay

14.11.1 Projected Investment Outlay for the Private Sector Textile Industry: The
estimated investment requirement for creation of new capacity in spinning, weaving, dyeing
 330

and finishing, export-oriented RMG sub-sector and other textile industry is estimated at
Tk.93,965.10 million and shown in the Table 14.17.

Table 14.17
Projected Investment in Private Sector Textile Industry During Fifth Plan Period
(in million Taka)
Textile Sub-sector 1997/98 1998/99 1999/2000 2000/2001 2001/2002 1997-02
A. New Capacity Creation
Spinning 9,105.55 9,195.25 9,305.10 9,129.80 8,913.57 45,649.27
Weaving 5,625.10 5,205.35 4,923.20 4,712.20 4,410.52 24,876.37
Dyeing & Finishing 2,712.85 2,203.15 2,512.85 2,610.15 3,056.03 13,695.03
RMG 776.33 785.25 809.25 710.40 623.00 3,704.23
Others * 717.35 718.55 683.85 732.10 588.35 3,440.20
Total (A) 18,937.18 18,707.55 18,234.25 17,894.65 17,591.47 91,365.10
B. BMRE
10 Textile Mills 200.00 150.00 - - - 350.00
Specialised Textiles 350.00 325.00 325.00 325.00 325.00 1,650.00
Total (B) : 550.00 475.00 325.00 325.00 325.00 2,000.00
C. Handloom & Sericulture
Handloom 120.00 120.00 120.00 120.00 120.00 600.00
Total (C) : 120.00 120.00 120.00 120.00 120.00 600.00
Total (A+B+C) 19,607.18 19,302.55 18,679.25 18,339.65 18,036.47 93,965.10

* New capacity creation in other textile industry.

14.11.2 Investment Outlay in Public Sector Textile: The present policy of the government
is to privatise public sector textile mills in phases. In pursuance of this policy, 10 textile mills
under BTMC were laid off. Among these laid off mills, 7 were sold to private entrepreneurs
and 6 of these were handed over to them. The remaining 3 laid off mills are in the process of
sale through tenders. Another 11 textile mills from the remaining 30 mills and one
engineering workshop under BTMC will be privatised immediately. Until all the mills are
privatised BTMC will operate the profitable mills. In view of this, new spindles are being
added to 10 BTMC mills under BMRE projects. Another 4 mills will be brought under
BMRE programme during the Fifth Five Year Plan period. Besides, Ministry of Textiles
(MOT), Bangladesh Handloom Board (BHB), Bangladesh Sericulture Board (BSB), and
Department of Textiles (DOT) will carry out promotional activities by implementing several
development projects. The proposed outlay for public sector agencies under the Ministry of
Textiles is shown in Table 14.18.
Table 14.18
Projected Investment in Public Sector Textile Industry During Fifth Plan Period
(in million Taka)
Public sector 1997/98 1998/99 1999/2000 2000/2001 2001/2002 1997-2002
BTMC 40.20 62.00 66.00 75.36 45.20 288.76
BHB 76.60 102.60 157.40 137.10 61.15 534.85
BSB 19.20 16.20 15.90 16.30 17.50 85.10
DOT 398.65 335.10 326.25 152.25 102.75 1,315.00
MOT 35.60 32.80 4.84 5.25 4.75 83.24
Total 570.25 548.70 570.39 386.26 231.35 2,306.95
 331

14.11.3 At present there are 31 textile mills in the public sector. Most of them are very old
and technically out-dated to produce good quality yarn and grey fabrics. All the public sector
textile mills are running at loss due to some inherent problems like low capacity utilisation,
irregular repair and maintenance, lack of managerial efficiency, excess manpower, high cost
of production, etc. Thus replacement of machinery to increase production and meet needs for
the export quality fabrics is essential for increased value addition and employment generation
for RMG.
14.11.4 Investment Outlay for Jute Industry: In order to achieve the objectives and goals
of the Fifth Five Year Plan for jute manufacturing industries under the purview of the
Ministry of Jute, an investment outlay of Tk.3,064.57 million at 1996/97 prices has been
provided for; of this Tk.435.34 million has been projected for the public sector and
Tk.2,629.23 million for the private sector. Agency wise financial outlay for public and private
sectors in jute industry including spill-over and new programmes has been shown in
Table14.19.
Table 14.19
Projected Outlay of Jute Industry During Fifth Plan Period
(in million Taka)
Agency On-going New Total Jute Industry
Projects Projects/Programmes
Amount Amount Amount
A. Public Sector
1. Ministry of Jute 56.00 6.26 62.26
2. Bangladesh Jute Mills Corporation 30.00 121.20 151.20
3. Department of Jute 150.00 31.30 181.30
4. Bangladesh Jute Research Institute - 40.58 40.58
Sub-Total (A) 236.00 199.34 435.34
B. PRIVATE SECTOR
1. Bangladesh Jute Mills Association - 1,200.00 1,200.00
2. Bangladesh Jute Spinners Association - 717.77 717.77
Sub-total (B) - 1,917.77 1,917.77
C. Small & Cottage Industries. - 711.46 711.46
Total (A+B+C) 236.00 2,828.57 3,064.57

14.12 Total Investment Outlay Under Ministry of Industries: An outlay of Tk.6729.60

million including Tk.2,200.00 million for spill-over projects and Tk.4,529.60 million for new
projects has been made in the public sector under the Ministry of Industries. Agency wise
outlay is mentioned in Table 14.20.
Table 14.20
Public Sector Investment Outlay of Agencies under Ministry of Industries
(1997-2002)
(in million Taka)
Name of Corporation/ Outlay for Spill-over Outlay for New Total Outlay
Agency Projects Projects
Public Sector Agencies
BCIC 1,040.00 3,883.37 4,923.37
BSEC 150.00 212.00 362.00
BSFIC - 297.00 297.00
BSCIC 1,000.00 89.89 1,089.89
BITAC - 31.79 31.79
BIM 10.00 4.85 14.85
NPO - 6.70 6.70
Patent Office - 4.00 4.00
Total 2,200.00 4,529.60 6,729.60
 332

14.13 Investment and Employment Target of EPZs: During the Fifth Plan
implementation of the policy packages will be closely reviewed and monitored and necessary
support services will be provided to attract investors with the ultimate objective of generating
more employment opportunities in EPZ areas and also to boost up export. The projections
that have been made for the Fifth Plan, with this end in view, are shown in Table 14.21.
Table 14.21
Expected Investment and Employment in EPZs by 2001/2002
Zones No. of Investment Employment Yearly Export
Industries (million US (nos.) (million US dollar)
dollar)
Chittagong EPZ 110 350 50,000 600
Dhaka EPZ 90 300 40,000 500
Gazipur EPZ 150 400 60,000 700
Mongla EPZ 100 300 40,000 500
North Bengal EPZ 90 300 40,000 700
Total 540 1,650 230,000 3,000
Source : Bangladesh Export Promotion Zone Authority (BEPZA)

14.13.1 At the end of Fifth Plan 540 industrial units with a total investment of $ 1,650
million are expected to be established and 230,000 jobs are expected to be created. The yearly
expected export at the terminal year of the Plan is estimated to be $ 3 billion.
14.14 Investment Outlay: An outlay of Tk. 1060.48 million including Tk. 500.00 million
for spill over projects and Tk. 560.48 million for new projects has been provided in the Fifth
Plan for the EPZ sub-sector.
14.15 Trade and Export Promotion: Within the broad framework of the export
development strategy, the main objectives of the export sub-sector are as follows :
a. to develop marketability of exportables through product diversification and
quality improvement;
b. to establish backward linkage with export oriented industries and service sectors
towards utilisation of more local materials;
c. to attract increased number of entrepreneurs for setting up of export oriented
industries and encourage them through incentive packages;
d. to expand and consolidate existing markets and also create new markets for
Bangladeshi exportables; and
e. to further narrow down the gap between export earning and import expenditure
through achievement of export targets.
14.15.1 In order to achieve the aforementioned objectives, the following strategies will be
pursued:
a. remove procedural and regulatory bottlenecks incompatible with the promotion
of exports;
b. provide progressive policy support comparable with those in other competing
countries to enable Bangladeshi exporters to be on a sound footing in
international trade;
c. strengthen and improve institutional framework for providing better services to
the exporters and the export oriented industries;
d. improve supportive infrastructure services to improve efficiency and for smooth
functioning of export related activities;
 333

e. adopt appropriate human resource development programme to improve

entrepreneurial and managerial capabilities to boost production and marketing;
and
f. formulate and implement programmes to broaden and diversify the range of
exportables.
14.16 Allocation for Trade and Export Promotion and Privatisation Programme: In
order to achieve the objectives and to implement the programmes of the sub-sector during the
Fifth Plan (1997-2002) an outlay of Tk.1,358.64 million has been made. Agency wise
investment projection is shown in Table 14.22.
Table 14.22
Other Outlay for Trade Promotion Services
(in million Taka)
Name of Agencies Total
Export Promotion Bureau 1,087.86
Tariff Commission 1.44
Board of Investment 10.00
Ministry of Commerce 3.13
Privatisation Board (Cabinet Affairs Division) 41.25
Industries Division, Planning Commission. 12.25
Ministry of Jute 62.26
Ministry of Textiles 83.24
Ministry of Industries 3.13
Sadharan Bima Corporation 1.58
Statistics Division 12.50
Bangladesh Standard Testing Institute 40.00
Grand Total 1,358.64

14.16.1 Development of industries in the Fifth Plan will be a challenge for the private sector.
If this challenge is successfully met, in the Fifth Plan period, the private enterprise will be the
trail blazer in lifting the economy from the syndrome of poverty and unemployment in the
next two plan periods.
334
 335

CHAPTER XV

ENERGY
15.1 Introduction
15.1.1 Energy is essential for promoting living standards. It is a pre-requisite for economic
growth and technological progress. In Bangladesh, per capita generation of electricity in 1995
was only 92 kwh which is lower in comparison to that in neighbouring countries. In view of
the prevailing low generation and consumption of energy, efforts should be made to develop
this sector in such a way that the needs of all sectors can be met adequately, efficiently and
economically.
15.1.2 Electricity demand grew at an average rate of 11 per cent per annum during 1972-94;
per capita generation increased from 15.6 kwh in 1973 to 92 kwh in 1995. Notwithstanding,
the progress made to date, only about 15 per cent population have access to electricity.
15.2 Review of Past Development
15.2.1 During the War of Liberation, power installations suffered extensive damage. As a
result, at the worst case, peak demand dropped to 30 MW from the pre-liberation level of 225
MW (1970). So, after independence the immediate problem was rehabilitation of power
supply. By the end of 1972-73, a rehabilitation and development programme was undertaken
in the First Five Year Plan (1973-78). However, because of the shortage of fund the
programme was carried over to the Two Year Plan (1978-80). Several projects, initiated
before the Liberation War were completed and a number of new projects were undertaken
during the periods. As a result, installed generation capacity increased to 822 MW from 545
MW, while the peak demand rose to 462 MW from 222 MW.
Table 15.1
Power Development During 1972-96
(year ending June)
Items 1972 1973 1975 1980 1985 1990 1995 1996
Installed Capacity (MW) 550 608 752 822 1,141 2,352 2,908 2,908
Effective Generation (MW) 469 455 557 625 1,018 1,834 2,133 2,105
Maximum Demand (MW) 183 222 396 462 887 1,509 1,970 2,087
230 kV Transmission Line (Km) - - - - 179 250 419 419
132 kV Transmission Line (Km) 828 828 1,395 1596 1,971 2,235 2,469 3,017
66 kV Transmission Line (Km) 167 167 167 167 167 167 167 167
Distribution Line(Km) (33 kv & below) 9,010 9,686 17,003 20,256 34,796 69,731 103,540 121,817
No. of Consumers 254,584 277,884 403,518 529,660 848,152 1,670,137 2,766,765 3,090,829
Per Capita Generation (kwh) 15.6 22.9 27 46 70 92 95

15.2.2 To reduce the gap between demand and generation capacity, the Second Plan (1980-
85) undertook a rapid expansion programme. The most important achievement during this
period was the construction of the East-West electrical inter-connector which enabled the
transfer of gas-based low cost power from the east to the west. Five power generation plants
having a total installed capacity of 330 MW were completed during this period. But
generation capacity still lagged behind the demand. The main constraint to the expansion of
power supply was shortfall of resources coupled with a huge system loss and a slow response
to tariff adjustment against rising fuel cost. By the end of the Second Plan, the system loss
stood at 37.5 per cent. An investment programme of Tk. 14,370 million at 1979/80 prices was
undertaken. The actual investment was Tk. 20,970 million at current prices. The Second Plan
also pursued a policy of substituting imported fuel by natural gas. A significant progress was
made in this direction. By the end of 1984/85, total number of electricity consumers stood at
about 964,000 compared with 522,000 in 1979/80. Table 15.1 shows the progress of power
development in the country during 1972-96.
 336

15.3 Overview of Fourth Plan

15.3.1 Ensuring supply ahead of demand is the ideal situation in case of electricity for
meeting manufacturing, irrigation, commercial and domestic needs of any economy.
However, it was not possible to do so in Bangladesh. Against a peak demand of 1640 MW in
1990/91 and 1970 MW in 1994/95, the installed capacity was only 2352 MW and 2908 MW
respectively. The operational capacity (2133 MW) was again interrupted by occasional power
outages owing to fluctuations in gas pressure, transmission and distribution faults. These
caused enormous losses to industrial production and commercial activities. Irrigation suffered
relatively less due to its use of diesel power and electricity supplied by REB in off-peak
hours.
15.3.2 Electricity generation, transmission and distribution require large financial investment.
Although Bangladesh has considerable gas reserve and promising potentials, due to high
system loss, large account receivables, poor management and inability to rationalise tariff
rate and introduce other reforms, concessional loan for the power sector from the multilateral
development partners was not available in the Fourth Plan period. Consequently, needed
investments for generation, transmission and distribution of electricity could not be made
during 1990-95. Hard term suppliers’ credit and inadequate government resources made it
possible to add only about 581 MW of generation capacity in the following power plants
during the Fourth Plan Period:

a. Raozan (Chittagong) Power Plant (1st unit) 210 MW

b. Sylhet Combined Cycle Power Plant 90 MW
c. Baghabari Power Plant 71 MW
d. Ghorashal Power Plant (5th unit) 210 MW

15.3.3 However, due to non-completion of scheduled rehabilitation of some power stations,

generation capability decreased by 271 MW and about 11 MW capability was retired during
the period. The net capacity increase was thus 299 MW. In addition, reduced gas supply
caused shut-down of some power stations resulting in lower operational supply of electricity.
15.3.4 Organisational changes were made in the area of transmission and distribution of
power in the country with BPDB entrusted with generation, transmission and distribution in
urban areas, DESA with distribution of electricity in the greater Dhaka area and REB with
distribution in the rural areas. Power generation and distribution was opened to both local and
foreign private investments. To this end, a Power Cell was created to facilitate private sector
investment in electricity production and distribution. A Rural Power Company (RPC) was set
up for generation and supply of power exclusively to the REB. Concrete results of these
measures are expected during the Fifth Plan period.
15.4 Fourth Plan Targets and Achievements
15.4.1 The Fourth Plan was formulated with a public sector allocation of Tk. 64,500 million
at 1989/90 prices for the power sector. This allocation was inadequate in relation to the
physical targets set in the Plan document. Due to shortage of both local and external
resources, the Plan allocation as well as Plan targets had to be revised. The revised allocation
was Tk. 45,360 million at 1989/90 constant prices against which Tk. 67,480 million was
spent at current prices. Major targets as well as the achievements during the Plan period are
shown in Table 15.2.
 337

Table 15.2
Targets and Achievements of Power Sector During Fourth Plan

Agency Particulars Actual Fourth Plan Achievement

Position in Target New Addition Cumulative
1989/90 during Fourth Position in
Plan (1990-95) (1994-95)
BPDB Installed Capacity (MW) 2,352 2,878 581 *2,908
Capability (MW) 1,834 2,743 581 **2,133
Transmission line (km) 2,503 3,151 552 3,055
230kv,132 kv, & 66 kv
Grid Substation capacity 4,150 2,621 2,369 6,519
(MVA) 230kv, 132kv &
66kv
Distribution line km (33 kv 30,256 36,734 4,437 34,693
& below) (Excluding
DESA)
Consumer connection (No.) 850,438 1,050,000 225,296 1,075,734
REB Distribution line km 35,333 61,188 29,853 65,186
Electrified village (Number) 8,545 14,530 7,939 16,484
Consumer connection (No.) 495,565 962,962 679,006 1,174,571
DESA Transmission line (km) 221 - 104 325
132kv
Grid Substation 433 - 874 1,307
Capacity (MVA)
Distribution line km 5,511 6,765 1,995 7,506
Consumer connection (No.) 324,134 570,000 192,326 516,460
* 2352 MW+581 MW new - 25 MW retired/standby = 2908 MW
** 1834 MW+581 MW new - 11 MW retired - 271 MW derated/decrease for maintenance
& rehabilitation = 2133 MW

15.5 Operational Performance During Fourth Plan

15.5.1 Load demand : The forecast peak demand of 2,485 MW for the terminal year of the
Fourth Plan could not be met due to shortage of available generation capacity. The peak
demand served by the end of the Plan period was 1970 MW. This gave an annual growth rate
of 4.8 per cent.
15.5.2 Energy generation : Energy generation could not reach its target. The targeted
generation in the Plan period (1990-95) was 55,735 GWh and the achievement was 46,962
GWh (84 per cent). The achievement in the final year of the Plan period was 10,806 GWh
against a target of 13,577 GWh. Because of shortage of available generation capacity as stated
earlier actual demand could not be met.
15.5.3 Energy sale : Electricity sales also remained at a low level due to high system loss
and for want of adequate generation throughout the period. The energy sale in the final year
(1994/95) of the Fourth Plan was 8,371 GWh (82 per cent of target) against a target of 10,183
GWh.
15.5.4 System loss : The system loss in BPDB (including DESA) and REB was 41.11 per
cent and 16.27 per cent respectively in the first year (1990/91) of the Fourth Plan. The system
loss of DESA in 1991/92 was 35.55 per cent. The combined system loss envisaged in the
Fourth Plan was 25 per cent. To reduce the system loss some measures such as creation of
Dhaka Electric Supply Authority, introduction of incentive/punishment scheme to improve
overall performance and introduction of new commercial operation system were taken. These
 338

measures brought some improvement, but not up to the expectation. The system loss of
BPDB, REB and DESA came down to 22.54 per cent, 15.04 per cent and 30.00 per cent
respectively in June 1995. These figures are based on generation/purchase and sale of energy
by individual entities. In June 1995, BPDB's gross generation was 10,806 million units and
sale was 8,371 million units. Purchase and sale by DESA in the same period were 4,162 and
2,913 million units respectively, and by REB 1,199 and 1,018 million units respectively. This
warrants considerable improvement in this area.
15.5.5 System imbalance : System balance could not be ensured during the Fourth Plan.
Because of non-availability of loan from development partners, the on-going projects
suffered. No new power projects (except those under suppliers’ credit) could also be started
and the scheduled rehabilitation programme of some existing power stations could not be
undertaken. The expansion and distribution system as envisaged in the original Plan
document also slowed down. Some surplus generation capacity could not be utilised fruitfully
due to bottlenecks in the grid-stations/sub-stations and shortage of gas supply.
15.5.6 System reliability : Five Power stations with a total generation capacity of 581 MW
were put into operation during the Plan period. A few units were also put into operation after
rehabilitation in the terminal year. Still there was shortage of generation capacity.
Consequently, load-shedding was resorted to. The annual load-shedding duration ranged
from 113 hours in 1991 to 763 hours in 1995. The total load-shedding over the Plan period
was 2,844 hours (6.49 per cent of total duration of the Plan period), i.e., on an average about
24 days per year. The reason for load shed of DESA was tremendous load growth in the
industrial and commercial sectors. As a result, the system reliability during the Plan period
was not satisfactory.
15.6 Power Sector Reforms
15.6.1 An inter-ministerial working group was constituted on the 3rd February, 1993 to
review the necessity and feasibility of private investment (along with public sector) in the
power sector. It transpired to the working group that mere private investment in power
generation is not the solution for the power sector to come out of the whole gamut of
problems and deficiencies in the sector. Given the magnitude of the inefficiencies and the
sector's large capital requirement, the working group felt that there was a need to undertake
basic reforms to address fundamental problems in the sector. The working group reviewed
operational, structural and other deficiencies of the sector, examined various options with
regard to reforms and emphasised the necessity for private investment and participation on an
equal footing in the power sector and finally recommended the reform programme to be
undertaken.
15.6.2 Institutional issues : Power generation and its supply have remained a state
monopoly. The government owns, operates and regulates the power sector entities. This has
sometimes resulted in overlapping and undemarcated responsibilities with lack of
accountability in terms of sector entities, operational performance and service standards. As a
result, the performance of the utilities remained far from satisfactory.
15.6.3 The responsibilities for generation, transmission and a large part of distribution of
electricity are integrated and vested in the same authority. This makes it difficult to identify
the areas of poor performance. All policy decisions/approvals involving planning and
installation of additional plants, recruitment of personnel, pay and allowances, major
procurement and rehabilitation are taken by the administrative ministry. Both BPDB and
 339

DESA carryout execution. Opening up generation for the private sector, keeping transmission
and distribution facilities in the public sector does not really attract private investment.
15.6.4 Management issues : Major impediments to BPDB's and DESA's efficient operations
include lack of management and commercial independence and an unclear definition of the
corporate structure and responsibilities.
15.6.5 Lack of accountability and discipline among the employees of BPDB and DESA are
major constraints. Rivalry of trade unions affiliated to different political parties makes the
environment even more difficult in BPDB and DESA. Incentive/punishment schemes have
been introduced in both the entities to improve the situation but the results remain yet to be
seen and marked.
15.6.6 The performance of management of PBS(REB) has been better. This can be partly
attributed to transparent operating procedures that were designed before the formation of the
organisation. There is no labour union in REB/PBSs. There is no incentive for good
performance and also no punishment for the poor performers as the PBS is based on
cooperatives.
15.6.7 Financial and economic issues : The present tariff level is low in relation to the
financial requirements of the operating entities. BPDB's present average tariff is only about
61 per cent of the long run marginal cost (LRMC). Further, both PDB and DESA provide
implicit subsidies to the PBSs through a bulk supply tariff which is about 52 per cent of
LRMC. All these adversely affect the financial viability of the utilities. Some categories of
consumers enjoy low tariff at the cost of those in the productive sector.
15.6.8 Since the power supplying entities have turned to be financially non-profitable
because of inadequate tariffs, high system loss and low collections, investment from own
resources as well as from the development partners has become insignificant. The fund
requirements in the power sector are large but there are competing demands on government
resources constraining public investment in this sector. During the Fourth Plan period, the
estimated investment need was Tk. 69 billion at 1990 constant prices, against which the
allocation was only Tk. 45 billion. The investment requirement in power sector (both public
and private) during the Fifth Plan period is estimated at Tk. 117.36 billion at 1996/97
constant prices.

15.6.9 Technical issues : Power supply is constrained by shortage in generation capacity and
inadequate transmission and distribution system. The problem has been compounded by the
shortage of gas supply. As a result, BPDB has to shed loads during peak hours through out
the country.
15.6.10 REB was created to extend distribution of electricity to the rural areas through PBSs.
However, in absence of a clear-cut demarcation of service areas, problems have arisen in the
transfer of 33/11 kv sub-station lines and consumers from BPDB and DESA to the PBSs.
Further, in areas served by PBSs, there are still 'pockets' of urban centres that are still served
by BPDB/DESA.
15.7 Operational Performance During 1995/96 and 1996/97
15.7.1 During the period of July ’95 to June ’97 no new generation capacity was added to the
system, that is the installed capacity remained at 2908 MW, the same as of 1994/95. The
Barisal- Patuakhali 132 kv line (37 km) was energised during this period. A total of 2366 km
distribution line (33 kv, 11 kv & below ) was added to the system raising the length of the
 340

distribution line to 37,059 km through implemention of various distribution projects. The

consumer number in BPDB system increased to 1,210,132 in June 1997 from 1,075,734 in
1994/95.
15.7.2 Load shedding continued during the period of 1995/96 and 1996/97 due to shortage of
available generation capacity. For this, actual peak demand could not be supplied. As per
PSMP of 1995 the projected peak demand was 2419 MW in 1996/97. But the peak demand
supplied was only 2114 MW (10.07.1996). During this period load shedding varied from a
minimum 10 MW to a maximum 674 MW. System loss in BPDB system decreased
marginally. During 1995/96 and 1996/97 the ADP allocation and (provisional) expenditures
for BPDB were as follows:
Table 15.3
ADP Allocation to and Expenditure of BPDB During 1995/96-1996/97
(in million Taka)
Fiscal Year Revised ADP Allocation Expenditure (provisional)
Total Project Aid Total Project Aid
1995/96 5,929.5 2,770.2 7,433.0 3,599.4
1996/97 6,201.7 2,000.4 4,790.4 1,597.6

15.8 Need for Major Reforms

15.8.1 BPDB has been trying for the reduction of system loss for the last 10 years which
persisted between 41 and 31 per cent. BPDB was reorganised and DESA was created for
performance improvements but desirable results have not been achieved because DESA was
created without addressing the fundamental institutional deficiencies. Although there have
been some improvements, it is not expected that desirable results can be achieved and
sustained without major reforms in the power sector.
15.8.2 The objectives of the proposed power sector reform programme will be to:
a. achieve commercial characteristics and efficiency in the power sector so as to
reduce system loss, attain financial viability in order that it no longer requires
subsidies;
b. increase production and distribution of electricity for the vast majority of the
population of Bangladesh which is yet unserved and to meet the growing
demands of industry, commerce and agriculture;
c. increase the operating efficiency of the existing public sector entities through
greater competition, managerial autonomy and accountability and full
commercialisation/corporatisation;
d. improve the reliability and quality of the existing power supply system; and
e. create an environment which will attract private capital and entrepreneurs, both
domestic and foreign, to supplement public sector investments and initiatives in
improving the performance of the sector.
15.9 Options for Reforms
15.9.1 Cost centres : The recent successful experiences in many countries offer a variety of
options for reforms starting with the establishment of separate cost and/or profit centres
within the existing utilities for commercialisation and corporatisation, and eventually, to
complete privatisation. Along with it, it is also possible to contract out specific activities of
the utility to private entrepreneurs (e.g. meter reading, billing, collection, routine and periodic
maintenance, etc.) or to offer long-term franchises to manage and operate some substantial
 341

portions of the utility's assets (e.g., a generating plant, a portion of the distribution network,
etc.). It is essential that regardless of ownership (public or private), the utility has complete,
detailed and up-to-date information on the cost of owning and operating the various parts of
its business. No reform is possible without the establishment of separate cost centres for all
identifiable and separable parts of the utility.
15.9.2 Unbundling : Once a decision is taken on the establishment of the cost centres, the
next set of options to look at will be the structure of the utility (also known as unbundling).
The utilities can be restructured (or unbundled) along functional lines with generation,
transmission and distribution being operated by separate entities. For example, BPDB can be
restructured into separate entities - one handling generation, another operating the
transmission system, and a separate and independent company responsible only for
distribution. This has recently been introduced in the UK. Only in high state of development,
this system can work. Alternatively, distribution can be handled by four zones within the
BPDB while DESA and REB/PBSs can continue to operate the distribution system in their
respective areas. In this event, rationalisation of distribution entities will be needed. PBSs
may operate as they are doing now under their area boards. A further alternative will be to
separate the generation and transmission functions from distribution and operated by a single
company (eg; Thailand). The principal advantage of restructuring along functional lines will
be in appraising cost of generation, transmission and distribution separately which can be
reflected in contracts between the functional entities. In addition, if the power sector is
structured around functional areas, it will attract private capital to one or more of these
functions where the expected returns will be high or the risks relatively low. For instance,
while the private entrepreneurs may not like to invest in the existing utilities as a whole, they
may wish to invest in new generation facilities. It is assumed, however, that an enabling
investment environment which includes a detailed and transparent legal and regulatory
framework will be in place to encourage and attract private investment. Investments by the
private sector will allow the government to divert funds to meet other socially pressing
objectives.
15.9.3 Following the decision to establish cost/profit centres and restructuring the entities
along functional lines, the logical next step will be to corporatise the new entities. For each
new functional entity, a company can be formed as a public limited company with a clear
demarcation of the roles and responsibilities of the government (ownership), the board of
directors (policy and monitoring), and the management of the company (operations). The
board members should be appointed for fixed terms (with a possibility for renewal). Some of
the Board members, including the chairman, should be from the private sector and
compensated properly in accordance with private sector practices. The board should appoint
the senior managers of the company and delegate to them full managerial autonomy for their
day-to-day operations. Through performance contracts, the board (and through them the
managers) should be held accountable for efficient operations.
15.9.4 Corporatisation is normally a preparatory step for increased private participation.
While there are many ways to achieve this, the most common one can be through the sale of
shares in the company. The advantage of this, at least from the government's standpoint, is
that while the government continues to retain control of the companies, private capital is
mobilised to support the government's development objectives for the sector. However, in
order to attract private capital in this manner, it is essential that a capital market exists and
that these companies are properly managed and earn a reasonable return on their investments.
Another frequently used method for increasing private participation is to contract out specific
 342

activities of the utility to private entrepreneurs or to offer long-term franchises to manage and
operate some portions of the utility's assets.
15.9.5 With successful corporatisation and gradual increase in private participation, the final
step to be considered in the reform process is the full privatisation. For an existing utility, this
will mean an outright sale of its assets. For expansion of the system, this can take several
forms such as build-own-operate (BOO) scheme, hire/purchase agreements, etc.
15.9.6 An important point to consider, prior to starting the reform process, is the need to
create an appropriate and transparent regulatory system. It should preferably be in place prior
to the unbundling exercise so that the system grows along with the implementation of the
reform process, while facilitating the same.
15.10 Recommended Reform Programme
15.10.1 In order to overcome the constraints encountered in the viable/desirable operation of
the power sector and to achieve the objectives enumerated above, various options to reforms
can be considered. Options for reform will be concentrated on the following areas:
15.10.2 Restructuring of DESA : The corporatised entity should be endowed with
appropriate management and financial autonomy and commercial independence so that
accountability and monitoring of performance can be ensured and improved.
15.10.3 The new company should have its own terms and conditions of employment and
have the right to select employees. The present employees of DESA who do not get employed
in this restructured company should be provided with appropriate severance package.
15.10.4 Restructuring of BPDB : BPDB should be restructured along the functional lines.
In the first phase, the functions of generation and transmission should be separated from those
of distribution of electricity and two separate corporatised entities, one for carrying out
generation and transmission functions and the other for carrying out distribution functions in
those areas that are now being served by BPDB, should be established. These two (new)
public limited companies should be formed under the existing Company Act and the
ownership should remain with the government. These new companies will have the same
features as those of the company to be created out of DESA as described above. In the longer
term, generation and transmission functions may also be needed to be separated.
15.10.5 Rural electrification : The rural electrification programme through the co-
operatives has been fairly successful and, therefore, should continue without changing the
structure. However, its area of operation should be rationalised with that of the proposed
distribution companies so that duplication of investment can be avoided, services can be
improved and the utilities may become viable. The recent government decisions on the
demarcation of service areas of BPDB, REB and DESA should be reviewed and the following
criteria may be considered for rationalisation of distribution areas:
a. The supply area should be continuous and one utility should not have pockets of
supply areas within another utility, so that optimum utilisation of distribution
facilities may be ensured and manpower for operation and maintenance may be
reduced.
b. The supply area should be of sufficient size to facilitate planning of efficient
distribution network.
c. The utilities/distribution units should have a good consumer mix.
 343

15.10.6 Regulatory framework and change of laws : With the present undifferentiated role
of the government as owner, operator and regulator, there is a little regulation with respect to
sector entities performance standards and service codes. On the other hand, the tariffs are not
adequately related to economic and financial requirements. Recommendations have been
made to separate the operation on commercial basis and to attract private investment. In order
that the consumers are ensured of an adequate supply of electricity at a reasonable cost, the
operational safety is ensured and the power utilities remain economically and financially
viable, an independent regulatory body should be established. To begin with, the regulatory
body may be attached with the Ministry of Energy and Mineral Resources (MEMR). The
regulatory tasks should include, among others, the following :
a. framing of rules and codes of practice for operation and maintenance;
b. establishment of performance standards and uniform system of accounts;
c. approval of construction standards for safe installation;
d. approval of tariffs;
e. ensuring enforcement of industry standards, public safety, as set forth under (a),
(b) and (c) as well as demand management; and
f. issuing exclusive service franchises to the distribution companies, either public
or private, and license to private generators.
This will require the existing laws creating the BPDB and DESA as well as the Electricity Act
to be amended.
15.10.7 Tariff regulation : Tariffs are inadequately related to economic and financial
criteria. BPDB/DESA are financially burdened with the cost of providing subsidised
electricity supply to PBSs, the size of lifeline block is excessive, and their tariff adjustment
process is ad hoc and non-transparent.
15.10.8 To support the development of a viable and self-sustaining power industry in
Bangladesh, tariff setting needs to be rationalised, which can be achieved by having a
regulatory body with the clear terms of reference. This regulatory body (initially attached to
MEMR) will set tariffs in accord with explicit economic and financial criteria. Specifically,
the following aspects will need to be addressed :
a. Tariffs : In view of the possible formation of separate generation, transmission and
distribution companies, a tariff study should be carried out on long run marginal cost
basis to find out the cost of supply at different voltage levels, at various geographical
locations and consumer classes. The tariff study will also design the structure
including retail tariffs considering social aspects but avoiding distortion as much as
possible. The size of the present lifeline block is too large. It should be either reduced
to restrict its application to poor consumers or totally abolished.
b. Transparency : To improve financial discipline, transparency in financial relations
and to measure the true financial relationships between the generation/ transmission/
distribution companies, subsidies between various categories of utility companies
should be made more explicit. Eventually, any such subsidy to PBSs or for meeting
public service obligations, if justified, should be funded by the government.
c. Indexation : To reduce uncertainty and ensure predictability, the regulatory body may
consider indexed rate regulation. One major advantage of indexed regulation is that,
after the initial or base prices are established, adjustments occur virtually
automatically in accordance with some defined index (e.g., fuel prices, currency
values, discounted inflation rate, etc.) that have been approved by the regulatory body.
 344

15.10.9 Private participation : In view of the large capital requirement in the power sector
and limitations of government fund, private sector investment will be necessary for rapid
development of the power sector. In order to attract private sector participation, actions on the
following fronts should be taken:
a. Generation : Specific power generation projects identified at the national level
will be offered for private investment. Competitive tenders on the basis of Build-
Own-Operate (BOO) or Build, Operate and Transfer (BOT) will be invited. The
government may also negotiate with the private parties who will express interest in
investing in generation projects.
b. Distribution : The government will invite private parties, including co-operative
societies of the utility sector employees, to participate in the distribution of power
in one or more localities on an experimental basis. In doing so, careful evaluation
of various proven modalities for participation (e.g., franchise, contract, etc.) will
have to be made.
c. Contracting of services : The government will consider contracting out some
functions currently performed by BPDB and DESA, particularly meter reading,
billing and collections.
d. Wheeling arrangement : The electricity generated by private generators may be
supplied to the grid system of the Generation and Transmission Company on
agreed terms and conditions. The private/public generators may also sell directly to
large consumers through the transmission and distribution facilities of other
distribution companies provided the facilities are adequate and the commercial
terms and conditions of such wheeling arrangements are acceptable to all
concerned.
15.10.10 Some of the steps already initiated/implemented towards privatisation and reform
programmes are briefly outlined below:
a. Implementation of power sector reform : Power sector reform programmes are
being implemented. Some of the proposed reform programmes have already been
initiated by the utilities. Power Cell has already prepared the Private Sector Power
Generation Policy of Bangladesh which was approved by the government. The Cell
has also prepared standard security package document, that is, Implementation
Agreement (IA), Power Purchase Agreement (PPA) and Fuel Supply Agreement
(FSA) for Independent Power Projects. A study on re-structuring of the power
sector has also been completed and a final report with recommendation of reforms
proposed to be undertaken has been prepared. A new tariff structure based on long
run marginal cost of supply in the restructured electricity industry has been
proposed to be implemented.
b. Power grid company of Bangladesh : PGCB, a subsidiary company under BPDB
has been set up. Initially, it will build, own and operate the Comilla-Meghnaghat-
Rampura and Meghnaghat-Haripur 230 kV transmission line and related grid
substations. In course of time, all transmission assets of BPDB will be transferred
to PGCB.
c. Dhaka electric supply company : DESC, a new distribution company has been
set up under Dhaka Electric Supply Authority. DESC will own and operate assets
for the distribution network initially at Mirpur and in course of time all of DESA's
distribution assets will be transferred to DESC.
 345

d. Meghnaghat power company : MPC has been formed. Installation of a 300-450

MW Combined Cycle Power Plant by private sector power investors on BOO basis
is under process.
e. Rural power company : RPC has been formed under Rural Electrification Board.
Initially, a 60 MW Gas Turbine Power Plant will be installed and operated by RPC
at Mymensingh.
15.11 Fifth Plan
15.11.1 In order to achieve an annual economic growth rate of 7 per cent, alleviate poverty
and realise desirable socio-economic and human development, it is essential that the
minimum electricity growth rate is maintained at a factor of 1.5 of GDP growth. Adequate
and reliable supply of electricity at a reasonable cost is a pre-requisite to attain this goal.
Hence, there is a great need and urgency to expand the electrification programmes. It is
recognised that the pace of power development has to be accelerated in order to achieve the
overall economic development projections of the country and avoid looming power shortages.
Specially, for investment in expansion of industry, power development has become
prerequisite.
15.12 Objectives
15.12.1 The development objectives of the power sector in the Fifth Plan period will be to :
a. facilitate economic development through adequate and reliable supply of electricity
at economic cost;
b. ensure reliable and uninterrupted power supply through maximum utilisation of the
existing capacities, adding generation capacities by optimising energy mix and
balanced expansion of transmission and distribution network;
c. reduce the cost of supply through implementation of least cost expansion plan and
efficient system operation with a view to making the electricity available to the
consumers at a reasonable price;
d. make the utilities self-reliant through efficient management, reasonable
restructuring of electricity tariff and favourable financial arrangement so that
reasonable portion of capital expenditure can be financed out of internally
generated funds;
e. improve management and engineering capability of the utilities;
f. raise resource management efficiency, reduce system loss and improve financial
performance of the power sector;
g. ensure environmentally sound, sustainable power development with minimum
damage to environment;
h. encourage private sector participation in power development;
i. expand power supply in the rural areas to boost rural economy and thereby alleviate
poverty and ensure women's participation in the rural areas; and
j. give special attention to meet the power shortage in the north-western region and
to line up power connection to deep tubewells installed for agricultural use.
15.13 Strategies
15.13.1 These objectives will be achieved through a package of policies, strategies and
necessary institutional reforms which, inter alia, will include:
a. generation, transmission and distribution of more electricity at least cost through
optimisation of fuel mix; to this end special attention will be given to use coal
deposits;
 346

b. augmentation of the capacities through rehabilitation of power plants, transmission

lines and grid substations;
c. balancing of transmission and distribution networks to match generation capacity
and extension of transmission and distribution networks to connect growth centres,
both urban and rural, and to meet irrigational needs;
d. addition of more 230 kv and 132 kv transmission lines for efficient transfer of
power from generating stations to the major load centres;
e. encouraging private investment in power sector, particularly as joint venture or on
BOT/BOO principles through various incentive packages; to meet immediate need
in 2 or 3 strategic locations public sector generation will be taken up if private
investment is found lacking;
f. generation of nuclear power as an appropriate option for a reliable, economic, safe
and long term generation mix in consideration of the inadequacy of indigenous
fuels for meeting electricity demand on a medium to long term perspective;
Rooppur Nuclear Power Project has been included in the public sector development
programme for many years, it has not been possible to implement it mainly due to
constraints of financing; though the initial cost of a nuclear plant is high (estimated
to be about 40 to 50 billion taka for a 600 MW plant), its low operation and
maintenance cost makes the average generation cost comparatively cheap; efforts
will be made to start implementation of the project with a 600 MW nuclear power
plant during the Fifth Five Year Plan; the private entrepreneurs will also be
encouraged to participate in the implementation of the project;
g. dissemination of various forms of renewable energy technologies like solar, wind
and mini-hydro, specially in rural areas and other remote and isolated location of
the country;
h. development of biogas: biogas technology is believed to have good potentials as a
source of energy in Bangladesh. BCSIR has developed technologies though their
dissemination has been very limited; during the Fifth Plan, efforts will be made to
popularise the use of biogas technology in the country;
i. introduction and dissemination of improved cooking stove: replacement of
traditional stoves by an improved version having better energy conversion
efficiency will help conserve biomass in the rural areas; moreover, use of the
technology in the urban area, will help reduce consumption of fuel wood, thereby
reducing deforestation; technologies are available and efforts will be made to
popularise them during the Fifth Plan;
j. application of new and renewable energy technologies; and
k. making appropriate institutional, fiscal, legal and administrative arrangement for
the successful implementation of the above strategies.
15.14 National Energy Policy
15.14.1 The objectives of the National Energy Policy (NEP) are to:
a. provide energy for sustainable economic growth so that the economic
development activities of different sectors are not constrained due to shortage of
energy;
b. meet the energy needs of different zones of the country and socio-economic
groups;
c. ensure optimum development of all the indigenous energy sources;
d. ensure sustainable operation of the energy utilities;
e. ensure rational use of total energy sources;
 347

f. ensure environmentally sound sustainable energy development programmes

causing minimum damage to environment; and
g. encourage public and private sector participation in the development and
management of the energy sector.
15.15 New and Renewable Energy Technologies
15.15.1 Biomass : Electricity coverage being only 15 per cent of the population and natural
gas reaching only 3 per cent of the households, biomass is the major source of energy in
Bangladesh. Over three-fourths of the total population of the country depend on biomass for
cooking, crop drying and winter heating. So in terms of population coverage, biomass stands
most important of all energy sources. Biomass includes trees, crop wastes, cow dung etc.
Unfortunately, Bangladesh does not have adequate supply of biomass due to low forest
coverage, a large portion of the country being affected each year by natural calamities like
flood, cyclone and river erosion. The present forest coverage is only around 17 per cent.
However, using standard tree density criteria, the forest coverage comes down to only 7 per
cent compared to 25 per cent which is usually considered to be the average a country should
have to maintain energy and environmental balance. As response to this serious problem,
social forestry, homestead forestry and linear planting (along roads, embankments and
railways) have been given high priority in the public expenditure. The policies, programmes
and projects undertaken to augment the supply of biomass have been mentioned in the
forestry sub-sector. It can briefly be said here that afforestation on all available land has been
a social movement in Bangladesh for over a decade and it can be said that, by and large, it has
been successful. If the current trend can be sustained, it will largely offset the deficit in the
supply of biomass for the majority of the population who are critically dependent on it. Along
with social forestry, popularisation of improved cooking stove, bio-gas plants, and utilisation
of solar energy, especially in the offshore islands, will contribute to both conservation of
energy through more efficient use of biomass and increasing the supply of energy through
solar power. Power sector policies, programmes and projects have, therefore, been aimed at
this direction. The dominant role of biomass in the energy supply mix of the country is likely
to continue.
Improved bio-mass fuel burning devices have been introduced in order to save bio-mass fuels
and to improve the environmental conditions surrounding the energy consuming devices.
Projects/programmes for improved stoves for urban cooking, rural cooking and improved
devices will be undertaken for bio-mass fuel consuming industries. Necessary support and
incentives will be made available to the entrepreneurs from the credit institutions. Action
research programme, training programme, extension and dissemination programme will be
provided. In addition to that, promotion of awareness about bio-mass fuel conservation and
improved devices will be encouraged.
The government has laid emphasis on the development and augmentation of rural and
renewable energy during the different Plan periods. Agencies like Rural Electrification Board
(REB) and the Local Government Engineering Department (LGED) are involved in
dissemination of various types of renewable energy technologies. The Department of Forest
and other extension agencies are also involved in planned plantation with a view to not only
improving the situation of forest coverage of the country but also in augmenting the supply of
biomass on a long term perspective. The Grameen Bank and the NGOs like BRAC, Proshikha
and others are involved in deployment of available technologies through their respective
networks. REB as well as a number of private sector enterprises are involved in marketing of
solar photo voltaic (PV) based technology.
 348

Augmentation of bio-mass supply through intensive afforestation in especially selected

locations like reserved forest as well as village and community forestry programmes has
gained momentum. These programmes are being implemented by the related extension
agencies. If sustained, this will have a significant impact not only on maintaining an
acceptable level of forest coverage of the country, but also facilitate sustainable supply of fuel
wood. Under energy conversion till date, 417 bio-mass plants including 198 of BCSIR have
been set-up by various agencies. An elaborate programme of bio-gas plants technology
diffusion was envisaged during the Fourth Plan period. REB and associated agency, under the
technical guidance of BCSIR, will undertake the responsibilities for setting up of additional
5000 bio-gas plants in selected areas of the country.
15.15.2 Mini-hydropower : According to the report of the Working Committee on Mini-
hydropower Generation of Bangladesh, there is potential for producing 10 GWh of electricity
annually. Concrete steps will be undertaken during the Fifth Plan period to realise this
potential.
15.15.3 Solar energy : The average daily solar radiation varies from 5.05 kWh/sqm in
winter to 8.76 kWh/sqm in summer. At present solar energy is mainly used as a convenient
and low cost means of drying crops, fish and salt. Some photo voltaic units have been
installed in different parts of the country mainly for demonstration. Capital cost for solar
photo voltaic technology for the generation of electricity being costly, its prospects are to be
ascertained for specific end uses and locations. One immediate positive step to encourage use
of solar energy will be to allow duty free import of photo voltaic cells.
15.15.4 Wind power : Average wind speeds in the country are low (less than 3 m/s). There
is a prospect for wind power generation using low speed wind turbines in selected areas and
for specific end-uses. In the Fifth Plan period a pilot project will be undertaken to use wind to
generate power in a selected local area.
15.15.5 Tidal and wave power : The prospects of tidal and wave power in coastal areas need
to be assessed. A feasibility study will be undertaken in the Fifth Plan period to find out ways
and means to use tidal and wave power.
15.16 Load Management
15.16.1 The annual load factor of the national electricity grid is about 57 per cent. The
characteristics of demand is such that the evening peak is very sharp. In order to improve the
performance of the system, reduce investment as well as to rationalise the energy use, there is
a need to undertake appropriate measures for the management of loads. Recently, the
government has adopted some load management measures to reduce electricity consumption
during peak hours such as early closure of commercial shops, prohibition of using irrigation
pumps during evening peak hours, etc. These measures, however, are yet to be implemented
fully.
15.17 Load Forecast
15.17.1 Power being the basic infrastructure for higher level of economic growth, the high
demand forecast of 4051 MW by the terminal year of the Fifth Plan has been envisaged. To
meet this demand, public sector investment will not be adequate. Considerable private
investment will be needed. However, since other sectors of the economy cannot grow at the
projected rate without necessary power supply, the public sector financial outlay may have to
be adjusted upwards in the course of Plan implementation should there be inadequate
response from the private sector for power generation. On the basis of the High Forecast, the
 349

projected peak demand, generation capability and reserve margin up to FY 2002 are shown in
the Table 15.4.
Table 15.4
Projected Maximum Demand for Power During Fifth Plan
Year Maximum Generation Firm Reserve Reserve Margin as
Demand Capability Capacity Margin per cent of Max.
(MW) (MW) (MW) (MW) Demand (%)
1997/1998 2806 2813 2352 7 -
1998/1999 3109 3464 2983 355 11.42
1999/2000 3447 4342 3681 895 25.96
2000/2001 3736 5156 4196 1420 38.00
2001/2002 4051 5739 4779 1688 41.67

15.17.2 This projected maximum demand of 4051 MW will call for total generating
capability of 5739 MW including reserve margin of 1688 MW by 2001/2002. A total of 3319
MW generation capacity is planned to be added to the system raising the installed capacity to
5875 MW. This will need an investment of around Tk. 100,000 million which can only be
possible if the private sector power investors participate in power generation. Following
completion of 8 projects already undertaken by the public sector ( SL. 1-5, Table 15.5),
capacity addition in the public sector during the Plan period will be 1389 MW only. This will
leave a capacity gap of 1930 MW. This gap is expected to be filled up by private sector/ joint
venture investments. In case, the private sector does not come forward in time, alternative
ways and means will be devised in the shortest possible time to meet the anticipated demand.

Table 15.5
Projected Capacity Addition to Power Generation During Fifth Plan
Sl. Name of the Power Plant Fuel Capacity Expected date
No. MW of
commissioning
A PUBLIC SECTOR
1. 210 MW Ghorasal Thermal Power Station Extension (6th Gas 210 March, 1998
unit)
2. 210 MW Siddhirganj Thermal Power Station Gas 210 March, 2000
3. 109 MW Haripur Combined Cycle Power Plant Gas 109 March, 2000
4. 60 MW Shahjibazar Gas Turbine Gas 60 FY 2000
5. 210MW Chittagong Thermal Power Station (2nd unit) Gas 210 September
1997
6. Sylhet 90 MW Combined Cycle Power Plant ( 2nd unit) Gas 90 FY 2001
7. Barapukuria 300 MW Coal Based Thermal Power Station Coal 300 FY 2001-2002
8. East Zone 2×100 MW Gas Turbine Gas 200 FY 2001-2002
Sub total : A 1389
B. PRIVATE SECTOR/ JT. VENTURE
1. 4×100 MW Barge Mounted Power Plant Oil/Gas 400 FY 1999
2. Mymensingh 60 MW Gas Turbine Gas 60 FY 1999
3. 100 MW Baghabari Gas Turbine Oil/Gas 100 FY 2000
4. Meghnaghat 450 MW Combined Cycle Power Station Gas 450 FY 2001
5. Haripur 360 MW Combined Cycle Power Station Gas 360 FY 2000
6. 210 MW Khulna Thermal Power Station F. Oil/Gas 210 FY 2002
7. 350 MW Power plants in west zone Gas 350 FY 2000-2002
Sub total : B 1930
Grand total : (A+B) 3319
 350

15.18 Physical Programme

15.18.1 The physical programme for the Fifth Plan includes 35 on-going projects and 30 new
projects (excluding TA projects). The ongoing projects and some of the new projects will be
completed and the benefit will be obtained during the Plan period. A 300 MW Barapukuria
Coal Based Thermal Power Plant, a 300-450 MW Meghnaghat Combined Cycle Power Plant
and four 100 MW Barge Mounted power plants will be taken up for implementation during
the Plan period.
15.18.2 With the implementation of these projects, necessary additional facilities for
generation, transmission and distribution will be created during the Plan period. Installed
generation capacity is expected to go up from 2908 MW (June, 97) to 5875 MW at the end of
the Plan period against the projected power demand of 4051 MW. This will have a reserve
margin of 1688 MW (41.67 per cent) over the maximum demand. The generation programme
includes 10 on-going projects and 5 new projects. Scheduled completion of the public sector
projects will add 1389 MW of electricity by the terminal year of the Plan.
15.18.3 In the Fifth Plan, 627 km of 230 kv line and 847 km of 132 kv transmission line
including 166 km second circuit stringing have been proposed. The Plan aims at expansion of
230 kv and 132 kv transmission lines and substations to remove bottlenecks in the
transmission system. Transmission projects included in the programme have been tested by
computer simulation for load flow, voltage drop and stability. The programme includes 3 on-
going projects and 9 new projects. All on-going projects and 9 new projects are scheduled to
be completed during the Plan period. A list of the Transmission Projects to be implemented
during the Fifth Plan is shown in Table 15.6.
Table 15.6
Power Transmission Projects to be Implemented During Fifth Plan

Sl. Name of the Project Line Length Expected Year of

No. (km) Completion

1. Rehabilitation, Renovation & Augmentation of Grid 166 1999

System incl. Ashuganj-Jamalpur 132 kv Second Circuit.
2. Comilla-Chittagong 230 kv Transmission Line Project. 150 1999
3. Comilla-Meghnaghat-Rampura & Meghnaghat-Haripur 110 2000
230 kv Transmission Line & National Load Despatch
Centre.
4. Khulna-Ishurdi-Bogra-Barapukuria 230 kv trans. line & 367 2001
132 kv line from Barapukuria to Saidpur & Rangpur. 95
5. Three Transmission Lines
(a) Thakurgaon-Panchagarh 132 kv single ckt line. 45 2000
(b) Naogaon-Joypurhat 132 kv single ckt line. 40 2000
(c) Chuadanga-Jhenaidha-Magura 132 kv single ckt line 73 2000
6. Tangail-Madhupur-Jamalpur 132 kv single ckt line. 100 2001
7. Dohazari-Cox’s Bazar 132 kv second ckt stringing. 88 2001
8. Chandpur-Comilla 132 kv second ckt stringing. 70 2000
9. Kabirpur-Tangail-Shirajgonj 132 kv tr. line 85 2000
10. Comilla-Bara Aulia 132 kv transmission line 140 1999
11. Barisal-Bagerhat-Khulna 132 kv transmission line 110 2000
12. Bhandaria-Mothbaria-Patharghata 132 kv transmission 55 2000
line
 351

15.18.4 Like the transmission sub-sector, thrust has been given to the distribution sub-sector
in the Fifth Plan. Importance has been given to town distribution projects as well as the rural
electrification projects. The secondary town distribution projects aim at meeting the fast
growing demand in the urban areas, improving reliability and quality of supply and reducing
system loss. In the distribution programme 7 on-going projects and 3 new projects of BPDB,
11 on-going and 7 new projects of REB, and 5 on-going and 2 new projects of DESA have
been included in the Plan period.
15.18.5 The physical programme for the Fifth Plan aims at achieving a transmission line of
1408 km under BPDB and 66 km under DESA, and distribution line of 5,377 km under
BPDB, 50,000 km under REB and 3714 km under DESA. The details of physical projections
are shown in Table 15.7.
Table 15.7
Summary of Physical Projections for Power Sector During Fifth Plan Period
Agency Particulars Bench Mark Projection (1998-2002)
Position (Additional) Cumulative
(1996/97) Position
BPDB Capability (MW) 2,148 3,319 5,739 *
Transmission line (km)
230 kv 419 627 1,046
132 kv 2,506 781 3,287
Substation capacity (MVA) 6,505 1,940 8,445
Distribution line (kv) 33 kv and 37,059 5,377 42,436
below
Consumer connection (No.) 1,250,000 3,00,000 1,550,000

REB Distribution line (km) 85,111 50,000 135,111

Electrified village (No.) 20,520 12,000 32,520
Consumer connection (No.) 1,712,439 1,000,000 2,712,439

DESA Transmission line (km) 511 66 577

Distribution line (km) 33 kv & 6781 3,714 10,495
below
* 2,148+3,319 (new) - 531 (net increase through maintenance & rehabilitation.) - 259(rtd.) = 5,739 MW.

15.19 Financial Programme

15.19.1 An investment outlay of Tk. 88,361 million including project aid of Tk. 58,275
million both at 1996/97 prices has been made in the public sector during the Fifth Plan for the
implementation of the physical programme for the power sector. Agency wise break up of this
allocation is shown in Table 15.8.
 352

Table 15.8
Agency-wise Public Sector Financial Outlay For Power Development
(at 1996/97 prices)
( in million Taka)
Name of Agency Local Currency Project Aid Total
A: Spill over projects
BPDB 7290 17648 24938
REB 2891 6505 9396
DESA 3466 5080 8546
Sub-total 13647 29233 42880
B: New projects
BPDB 7555 17683 25238
REB 6731 8410 15141
DESA 2153 2949 5102
Sub-total 16439 29042 45481
Total (A+B) 30086 58275 88361

15.19.2 In addition to ADP financing, resources will be raised through bonds to finance
implementation of projects by PDB, DESA and REB.
15.19.3 The private sector is also expected to make substantial investment (to the tune of Tk.
29,000.00 million) both in generation and distribution of power during the Fifth Plan period.
Of this amount, about 80 per cent is expected to be in generation and 20 per cent in
transmission and distribution.
 353

CHAPTER XVI

OIL GAS AND NATURAL RESOURCES

16.1 Introduction
16.1.1 Indigenous energy resources consist of known reserves of natural gas, limited hydro-
electric power and traditional fuels coming from fuelwood, crop residuals and animal dung.
About 55 per cent of the country's overall energy supply is in the form of traditional fuels
with the balance being met by natural gas (24 per cent), imported oil and coal (19 per cent)
and hydro-electricity (2 per cent).
16.1.2 The present per-capita consumption of non-renewable energy resources in Bangladesh
is about 64 Kilogram of Oil Equivalent (KGOE) which is one of the lowest in the world. Per-
capita energy use in KGOE is 123 in Sri Lanka, 236 in India and 267 in Pakistan. Of the total
non-renewable energy consumption, about 60 per cent is derived at present from indigenous
resources and the rest is met from imported petroleum and coal. Moreover, the entire reserves
of exploitable indigenous primary energy resources are located in the east zone, thereby
resulting in a gap in energy supply between the east and west zones. Mining of newly found
coal in the west zone is expected to start by the turn of the century which will help reduce the
gap partially. Of the various natural resources available, natural gas in particular :
a. supplies primary commercial energy for electricity generation to accelerate the pace of
agricultural and industrial development and reduces the kitchen drudgery at the level
of individual households;
b. helps in narrowing the deficit in the balance of payments by reducing import bill for
oil, coal, etc.;
c. mobilises resources for the national exchequer; and
d. provides raw materials for the production of urea fertiliser and fuel for electricity
generation.

16.1.3 The development of the oil and gas sector is vital for further strengthening of the
national economy. Expansion of the energy sector since the 1980's is mainly attributed to
increased natural gas production. Currently, natural gas accounts for about 70 per cent of the
commercial energy consumption compared to about 35 per cent in 1980. The development of
Bangladesh's natural gas resources has also contributed to the reduction in deforestation and
to an increase in tax revenue for the government through the levies on gas sales. During
1985-1992, gas production increased at an average annual rate of about 10 per cent. It is
estimated that minimum growth rate of about 10 per cent per annum in gas production will be
required to meet the average GDP growth target of 7 per cent per annum during the Fifth
Plan period. However, the existing gas infrastructure has limited capacity and needs to be
expanded as per requirement. Additional investment is, therefore, required to enable
Bangladesh to utilise its available gas reserves and to increase exploration activities for new
gas and oil fields. For further long-term gas supply commitments, particularly for the planned
power plants, the government is encouraging private sector participation in the oil and gas
exploration activities through the Production Sharing Contract (PSC) with the International
Oil Companies.
 354

16.2 Potentials of Natural Resources

16.2.1. Natural Gas: Natural gas is currently the only indigenous non-renewable energy
resource of the country which is being produced and consumed in significant quantities. Gas,
the main source of commercial energy, plays an active role towards the growth of the
economy. Currently, about 90 per cent of power generation is based on natural gas and the
whole of the urea fertiliser requirements of the agricultural sector is met by using gas as feed
stock. Natural gas output now accounts for about 70 per cent of the country's commercial
energy supply. Current gas reserve (proven) has been estimated at about 22.90 TCF of which
13.60 TCF is considered as recoverable. So far 2.72 TCF has already been consumed and as
of September 1996, the recoverable reserve was 10.87 TCF. New discovery in Sangu
(offshore), Shahbazpur, Shaldanadi and other blocks may augment the gas reserve to several
times the present reserve. This will enable generation of more electricity and setting up of
new urea plants against the Bangladesh's share of the PSC's already signed. A brief
description of the newly discovered gas fields is given below :
16.2.2 Saldanadi Gas Field : Saldanadi gas field is situated along the India-Bangladesh
border under Kashba Thana of Brahmanbaria district. The structure was selected for
exploratory/appraisal drilling after evaluation of seismic data collected during 1991/92 field
season by BAPEX. Accordingly, drilling was undertaken in 1996 and a prospective gas
reserve was discovered at a depth of 2,511 metres. After reviewing the data, a preliminary
estimate of gas reserve was given at 0.202 TCF.
16.2.3 Shahbazpur Gas Field : Shahbazpur field is located in the central part of
Shahbazpur island of Bhola district. The location was selected for exploratory drilling after
evaluation of seismic data collected during 1986/87 field season. Shahbazpur well was
spudded in December, 1993 and in 4 months, a depth of 3,631 metres was reached. Due to
encountering of over pressure, the well had to be abandoned after flowing gas through coil
tubing from interval 3,201-3,210 metres. Subsequently, it was decided to drill a side-track
hole. After drilling of side-tracking hole down to 3,342 metres, commercial gas flow was
ensured. Analysis of results obtained from vertical and side-track drillings indicated an in-
place reserve of 0.5138 TCF.
16.2.4 Shangu Gas Field : In 1994, Bangladesh Government signed a Production Sharing
Contract (PSC) with Cairn Energy and Holland Sea Search for oil and gas exploration in
Chittagong and its adjacent coastal areas. The international company conducted a
comprehensive seismic survey in the Bay of Bengal in 1995 and identified a prospective area
of hydrocarbon reserve located 40 km away from Shangu estuary. The first well was drilled
down to the depth of 3,500 metres and four gas zones were reached. Examination of two
zones indicated the presence of significant amount of gas and Shangu was declared a gas
field. Then the second well was drilled to estimate the gas reserve and a reserve of 0.848 TCF
was determined and to exploit the gas reserve, development of the field was planned. To
make it commercial, plan was prepared to drill additional production wells, construct
platform and install pipelines and processing plants. After successful completion of all these
activities, it is expected that the production of natural gas from this field will be possible from
April,1998.
16.2.5 Patharia Oil and Gas Exploration Well : Patharia area is located in the north-
eastern part of Bangladesh under Baralekha Thana of Moulvibazar district. After evaluation
of seismic data and gravity survey, the location was selected for exploratory drilling. Drilling
of one exploratory well with Saudi assistance was planned during the Third Plan period.
 355

Patharia well was spudded in 1989. The well was designed to be drilled down to a depth of
5,000 metres. However, due to several changes in casing points and hole deviation, it could
reach only down to 3,438 metres. Then the drilling was terminated for deterioration of casing
due to frequent reaming, slow drilling rate and risk factor in continuation of drilling.

16.2.6 Oil : Exploration activities carried out so far could not discover any significant oil
deposit. The only oil deposit so far discovered in the country is in Haripur which produced a
total of about 0.65 million barrels of crude oil till 1994. The oil production has since ceased
because of reduction of pressure and influx of water in the oil zone. Comprehensive
exploration efforts need to be mounted in this field.
16.2.7 Coal : Discovery of coal dates back to late fifties, when an exploratory oil well was
drilled through coal beds in Bogra. Subsequent explorations resulted in the discovery of the
Jamalgonj coal deposit at a depth of about 1,000 metres from the ground level and having an
estimated reserve of more than 1,000 million tons of coal. Feasibility studies have indicated
that the development of this deposit is not yet feasible under the prevailing international
market price. However, with the increase in gas price, these deposits may become
competitive. After evaluation of a detailed geological and geophysical survey, Geological
Survey of Bangladesh (GSB) identified 13 locations in the region of greater Rangpur and
Dinajpur districts as the prospective basins for coal exploration. Exploratory wells were
drilled in 5 basins out of which high quality bituminous coal deposits were found in 3 basins.
In addition, BHP, a foreign company, also discovered a coal reserve in one basin. In 1984/85,
Geological Survey of Bangladesh located another coal deposit at Khalashpir (Pirgonj) of
Rangpur district at a shallower depth (150 metres), with an estimated reserve of 450 million
tons of coal. This deposit requires to be appraised in respect of its potential.
16.2.8 Besides, minable coal deposit was also discovered in Barapukuria area of Parbatipur,
Dinajpur at a reasonably shallow depth (240 metres) with an estimated reserve of about 300
million tons. Based on this, a project for construction of an underground mine has been
undertaken at an estimated investment of Tk. 8,873.60 million to produce an annual output of
1 million tons commencing from 2000/01. Recently, another coal deposit has been discovered
by Geological Survey of Bangladesh in Dighirpara area of Dinajpur district covering an area
of about 15 sq. km. As only one well has been drilled, the actual deposit of coal could not yet
be determined.
16.2.9 The GSB has planned to conduct comprehensive exploration activities by the year
2000 in the following seven basins :
a. Badargonj-II (Rangpur)
b. Basudevpur (Rangpur)
c. Barapukuria-I (Dinajpur)
d. Barapukuria-II (Dinajpur)
e. Daudpur (Dinajpur)
f. Dongapara (Dinajpur)
g. Shamnagar (Dinajpur).
16.2.10 Peat : Deposits of peat occur at shallow depths in different low lying areas of
Bangladesh. According to the Geological Survey of Bangladesh, the reserve of dry peat is
about 170 million tons. The major deposits are in greater districts of Faridpur (150 million
tons), Khulna (8 million tons) and Sylhet (13 million tons). Peat requires drying before
making briquettes for use as fuel. A pilot project for extraction of peat and making briquettes
 356

was implemented by Petrobangla, but the results were not encouraging and extraction was
assessed as economically not viable. However, in future, this resource may be viable as and
when prices of other fuels rise.
16.2.11 Hardrock and Limestone : Hardrock was discovered by GSB in Madhyapara area
of Dinajpur District in 1964 at a depth of 285 metres from surface. An agreement was signed
with North Korea in 1993 for the opening of an underground hardrock mine with a target
production of 1.6 million tons per annum. The hardrock mine is expected to come into
operation by the year 2000/01. Madhyapara hardrock will be used for river training , heavy
construction work, railway ballast, highway, etc. The granite slabs excavated from this mine
can also be used as polished tiles and pavings. Presently these are imported. Considerable
import substitution and increased revenue earning may, therefore, be expected from this rock.
Limestone has been found at Joypurhat and some other places of Sylhet district. The
production of sub-surface limestone of Joypurhat is yet to materialise.

16.3 Review of Past Performance (1973-1997)

First Five Year Plan and Two Year Plan (1973-1980)
16.3.1 The need for development of natural gas as a source of energy was recognised in the
First Plan (1973-78). In this Plan, priority was given on the gas transmission and distribution
related works with a view to accelerating the use of natural gas as fuel and industrial raw
material. One of the objectives of the Two Year Plan (1978-80) was to accelerate the pace of
exploration activities and encourage expanded use of gas, particularly as a substitute of
imported petroleum. An allocation of Tk. 2,360.00 million was made during the First Plan
and Two Year Plan periods for development of the sector. However, actual expenditure
during the period stood at Tk. 2,870 million.
16.3.2 An intensive effort was made during this period to find new hydro-carbon sources,
particularly in the off-shore areas, but with limited success. Gas deposits were found in two
wells out of eleven exploratory wells drilled, of which 9 were off-shore wells drilled by the
international oil companies (IOCs). Nine production wells drilled in 4 fields with an
estimated production capacity of 210 MMCFD, produced only 122 MMCFD of natural gas in
1979/80. Total transmission line extended up to 224 km in 1979/80. During this period, the
main physical achievement was the connection of Habigonj gas field with the Titas field by
the 12" transmission line over a stretch of 56 km and initiation of gas transmission line from
the Bakhrabad field to Chittagong. Total distribution line of 1,608 km was constructed and
119,400 gas connections were given upto 1979/80. Crude oil storage tanks with a capacity of
80,000 tons and refined petroleum storage tanks with a capacity of 25,000 tons were installed
during 1973-80.
Second Five Year Plan (1980-1985)
16.3.3 Implementation of the Second Plan started with the objective of maximising the
utilisation of indigenous natural gas and saving foreign exchange through substitution of
imported fuel. The Plan envisaged to raise the supply of gas to 128 BCF in 1984/85 from 44.5
BCF in 1979/80 in order to enhance the share of natural gas in commercial energy
consumption from 37 per cent in 1979/80 to 68 per cent in 1984/85. At the same time,
exploration activities were geared up in search of oil and gas.
16.3.4 During the Plan period, drilling of 6 exploration wells were completed against the
planned target of 9 wells. Out of these, 4 wells were found to have gas reserves. The
 357

important developments during the period were the activation of Bakhrabad gas field to
supply gas to Chittagong area and connection of this field with the Titas system by a new
transmission line near Dhaka. Transmission system was expanded by 307 km altogether
which enabled gas supply to rise from 44.5 BCF in 1979/80 to 94.6 BCF in 1984/85. The
share of gas in commercial energy rose from 37 per cent in 1979/80 to 56 per cent in 1984/85.
At the end of the Plan period, 240,000 customers were given gas connection against the target
of 258,000 customers which raised the total gas connection to 359,400 customers in the year
1984/85.
16.3.5 The country continued to be entirely dependent on imported POL. The total quantum
of POL product consumed during the Second Plan was 6.8 million tons at an average rate of
about 1.4 million tons per year. Of this, about 70 per cent was derived from imported crude
oil refined at the Eastern Refinery Ltd. (ERL) and the rest, the middle distillates like diesel
and kerosene were imported. ERL also set up an LPG recovery plant with a designed capacity
of 17,000 tons per annum. Production of LPG was 7,000 tons in the year 1984/85. At the end
of the period, the economics of ERL were upset by the fall in world oil price. As spot
purchases of POL products became cheaper, refining of crude through ERL was reduced to
below 1 million tons against its capacity of 1.5 million tons. Moreover, naphtha was exported
at a cheap price when some middle distillates were being imported at a higher cost. So a study
was undertaken for ascertaining the feasibility of secondary conversion of some of the ERL
products into more needed middle distillates. The drop in world prices, however, helped BPC
to improve its financial position as the domestic prices of POL products remained unchanged
and BPC was able to make up its past losses.
16.3.6 During this period, about 1,025 sq. km of geological mapping, 2,560 sq. km of
geological surveys, 1,520 km of drilling and 3,000 geochemical analyses were completed. A
new shallow depth coal deposit at Dinajpur was discovered as a result of geological survey
during this period.
16.3.7 An amount of Tk.6,150 million (at 1979/80 prices) was allocated to the sector in the
Plan while the actual expenditure amounted to Tk. 9,550 million. The excess expenditure
was met from Petrobangla's own resources.
Third Five Year Plan (1985-90)
16.3.8 The Third Plan envisaged to maximise the use of natural gas to reduce pressure from
fuel import bill, explore the major gas fields to assess the proven reserves, conduct
exploration for oil and gas, construct transmission and distribution lines to provide additional
gas to various customers, improve product-mix of Eastern Refinery and conduct survey for
mineral discoveries. In order to achieve these objectives, the Plan set a target to drill 18
development/appraisal wells and 5 exploration wells for hydrocarbon and construct 3,760 km
of transmission and distribution lines. It was planned that the oil consumption would be
contained within 1.6 million tons in 1989/90. GSB envisaged to continue extensive
geological mapping and survey works including drilling of 6 more boreholes to delineate the
Barapukuria coal deposit during the Plan period .
16.3.9 During the Third Plan, 16 out of 18 planned development/appraisal wells were drilled,
2,700 km transmission and distribution lines out of planned 3,760 kms were constructed and
only 2 out of 5 exploration wells were completed. During the Plan period, additional gas
connections were given to 165,600 customers as against the target of 160,000. Gas supply
was raised from 94.6 BCF in 1984/85 to 165 BCF in 1989/90. Oil consumption and hence the
 358

import bill could not be contained on account of underestimation in demand projections and
lagging behind of the expected substitution of diesel and kerosene through rural
electrification and other programmes. The addition of a secondary conversion plant to Eastern
Refinery could not even be initiated. Physical activities of GSB were almost completed
which included drilling of 6 boreholes for coal exploration. Training courses to 500
professionals and technicians of BOGMC, GSB etc. were provided by Bangladesh Petroleum
Institute under the Plan . The discovery of oil in sylhet gas field in December, 1986 and the
discovery of a large coal field at Khalashpir, Rangpur at a depth of 250 meters in April, 1989
were two remarkable achievements during the Plan period.
16.3.10 Out of the total allocation of Tk. 13,150 million, the amount utilised was about Tk.
12,000 million during the Plan period in the public sector. Besides the public sector, Tk.
1,250 million was spent for hydrocarbon exploration by two IOCs.

Fourth Five Year Plan (1990-95)

16.3.11 The Fourth Plan was launched with the objectives of ensuring the supply of
increased quantum of commercial energy mainly from indigenous resources and optimising
its utilisation. The agency-wise physical targets and actual achievements were as follows :
Petrobangla
16.3.12 Exploration Survey and Drilling for Hydrocarbons : Intensive geophysical and
geological survey were to be undertaken over discovered as well as new areas. The target was
7,500 lkm. of survey during the Fourth Plan. In effect, actual seismic survey amounted to only
1,712 lkm. with an additional 1,000 lkm of geological survey.
16.3.13 Drilling of 5 exploration wells was planned to be executed by BAPEX. In practice,
no exploration drilling was completed during the Fourth Plan. The main reasons were
financial constraint, non-availability of project equipment and lack of expert personnel in
BAPEX. PSC partners were expected to drill at least 10 exploration wells during the Plan
period. No PSC was actually made operational and no drilling took place .
16.3.14 During FFYP, 45 new production wells were targeted (net no. of wells was to be 41
as four wells were expected to be shut-off). By the end of the Fourth Plan, 42 wells were
completed (net 39 wells, 3 wells were shut off). The Plan target was to have 35 wells in
operation. Against this target, 33 wells were put into operation upto June, 1995, while two
others came on stream shortly thereafter. Peak demand for gas was estimated to increase by
300 MMCFD to 950 MMCFD by 1994/95; in reality, peak demand was registered at 850
MMCFD by 1994/95. Annual production of gas was planned to increase from 165 BCF to
275 BCF by the end of Fourth Plan. Actual production of gas reached to 247 BCF.
16.3.15 Transmission and Distribution Line and Customer Connections : During the
Plan period, some major transmission pipe lines were completed and commissioned. These
included North-South Pipe Line, Brahmaputra Basin Pipeline and Pipeline to Raozan power
plant. In addition, a condensate pipeline of 190 km length was completed. However, the
Ashugonj-Bakhrabad pipeline suffered due to delay in financing and other complications. The
target was to add 700 km transmission line by the end of the Plan period.
16.3.16 To reach the consumers, the distribution network was planned to be expanded with
the addition of 2,500 km pipeline. This would bring the total distribution network to 7,500
km. In effect, distribution network under the three franchise areas increased by 2,950 km so
 359

that the total figured at 7,950 km. Concomitant with the growth of the network, customer
connections also grew rapidly. The Plan envisaged an addition of 195,000 new connections to
bring the total to 600,000. Actual number of connection to customers reached 631,710 by the
end of the Plan period.
16.3.17 Development Projects : During the Plan period, a total of 16 projects were
completed, of which 10 were investment projects and 6 were technical assistance projects.
These projects together created employment opportunity for about 800 persons during
implementation and about 650 persons during operation. The oil and gas sub-sector
contributed Tk. 36,000 million to the government in the form of CD/VAT, corporate tax,
dividend, etc. during the Plan period.

16.3.18 Plan Allocation : Against a Plan allocation of Tk.23,980 million the actual
utilisation was Tk. 15,320 million which was about 64 per cent of the Plan allocation and 80
per cent of RADP allocation.

16.3.19 Bangladesh Petroleum Corporation : BPC undertook five development projects

(4 spill-over and 1 new) during the Fourth Plan involving a total investment of Tk. 5,339.90
million with a foreign exchange component of Tk. 3,121.50 million to attain improved
operational flexibility and also to ensure easy availability of petroleum products at the door
step of the people. During the years under review, RADP allocation was Tk. 3,381.50 million
out of which an amount of Tk. 3,056.90 million was utilised. Among the five projects, three
were completed as scheduled at a cost of Tk 3,609 million.
16.3.20 With the completion of BMRE of ERL, the refinery attained its original processing
capacity of 1.5 million tons of crude oil per annum. Besides, a three MW steam turbine
generator, a cooling tower, dolphin type oil jetty and modern fire fighting facilities were also
installed to improve power generation and cooling system of the refinery and to facilitate
crude reception and naphtha export. After completion of the secondary conversion plant at
ERL, excess furnace oil (FO) produced in the Refinery was upgraded to High Speed Diesel
(HSD) which saved foreign currency by way of import substitution of HSD.
16.3.21 Geological Survey of Bangladesh : GSB is entrusted with the responsibility of
carrying out basic geological studies including geological, geotechnical and geophysical
drilling, etc. in the country for the exploration of mineral resources except oil and gas.
16.3.22 The organisation already completed 3,289 sq.km mapping works including
geological, geotechnical, photogeological and geochemical mapping. About 5 km of seismic,
3,312 lkm. of geophysical logging, 50 sq.km. of resistivity and 440 sq.km. of gravity
magnetic survey have also been completed within this period. Two drill holes have been
drilled in the Dighipara of Dinajpur and Badarganj of Rangpur district respectively and a coal
field has been discovered with a good quality bituminous coal at a depth of 1,076 metres
below the surface. During the Fourth Plan, GSB spent only Tk. 2.15 million against an
allocation of Tk. 2.25 million for implementation of the project - Detailed Geological
Exploration in Selected Areas of Bangladesh.
16.3.23 Bangladesh Petroleum Institute : BPI was established in January 1981 as a
development project under the Ministry of Energy and Mineral Resources. BPI was mainly
assigned to train 250 professionals annually in the petroleum sector. It imparted training over
the years to professionals and technicians engaged in the petroleum sector. During the Fourth
Plan period, a total of 550 persons were trained through 21 courses, seminars and workshops
 360

on various aspects of exploration, production and development of oil and gas fields, safety
and management. BPI also sent abroad 7 of its professionals on short courses and on the job
training (4 to 8 weeks) and 3 of its professionals on long term courses including post
graduation. It also procured books, a number of training aides and class room tools to
facilitate its training activities. BPI was allocated Tk. 154.60 million out of which Tk. 113.90
million (73.69 per cent) was utilised.

16.3.24 Sectoral Allocation and Utilisation During Fourth Plan : A total of Tk. 30,250.00
million at current prices was allocated to the oil, gas and mineral resources sector, out of
which Tk. 22,800 million was released through RADP. The actual utilisation was Tk.
18,936.30 million during the Plan period which was 62.6 per cent of the Plan allocation and
83 per cent of RADP allocation.
16.4 Performance During 1995/96 and 1996/97
16.4.1 The OGNR sector is highly important in determining the growth prospect of the
economy. Over the two year period, the major objectives in this sector were to ensure a
reliable and uninterrupted supply of commercial energy, mostly natural gas. During this
period, emphasis was given on the development of the private sector in the oil and gas
exploration activities mainly through Production Sharing Contract (PSC). Activities
undertaken during this period related to the seismic survey, exploration, expansion of gas
transmission and distribution network, development of coal and hardrock mine, etc. During
this period, 564 Lkm of seismic survey was conducted and 2 exploration wells were drilled by
BAPEX. Both exploration wells (Shahbazpur and Saldanadi) led to discovery of gas. During
1995/96, 15 km transmission pipelines and 575 km distribution and other pipelines were
constructed. During 1996/97 fiscal year, 326 km distribution and other pipelines were laid
until December,1996. The Ashugonj-Bakhrabad pipeline (30" dia 59 km) connecting Surma
basin production area and Bakhrabad franchise area was completed. Gas production during
1995/96 reached 265 BCF increasing from 247 BCF in 1994/95. Production of the same was
261 BCF in 1996/97. Remarkable achievement of these two years were the discovery of three
new gas fields among which two were on-shore and one off-shore. The off-shore field was
discovered by one international oil company under PSC and two on-shore fields were
discovered by BAPEX.
16.4.2 An allocation of Tk. 4,534.90 million was provided through ADP for 43 projects of the
sector in 1995/96. Actual expenditure during the year was Tk.4,080 million. In 1996/97
Tk.4,858.20 million was allocated to 37 development projects of the sector.
16.5 An Overview (1973-1996)
Oil and Gas Exploration
16.5.1 During the period 1973-96, drilling of 24 exploratory wells including 7 off-shore wells
was completed. Individual depth of wells varied from 1,560 metre to 4,977 metre. The
number of wells drilled by national organisations were 14, while ten wells were drilled by the
foreign companies. National organisations discovered 7 gas fields, and one oil field. Foreign
companies discovered 2 gas fields including one in the off-shore area. It may be stated that oil
and gas exploration activities had been very limited. Only one well per year, on an average,
was drilled in the last 23 years.
16.5.2 As far as gas fields are concerned, the exploration/discovery ratio in Bangladesh till
now is 3:1 i. e. 17 gas fields were discovered out of 54 exploration wells since 1910, which is
 361

one of the highest in the world. Reserves were estimated at 22.90 TCF of which 13.60 TCF
are recoverable. Out of 17 discovered gas fields, 8 were brought into production. It is
important to note that almost all the exploration activities were undertaken in the shelf area in
the north eastern part of Bangladesh .
16.5.3 To expedite petroleum exploration, a new Model Production Sharing Contract (PSC)
was formulated in 1988. In 1989, the area of the country was divided into 23 blocks of which
17 blocks including 6 off-shore blocks were offered to the international oil companies (IOCs)
for competitive bidding. In 1993, the government announced a new petroleum policy to seek
participation of IOCs in hydrocarbon exploration and production through PSC.

Production of Natural Gas Condensate and Crude Oil

16.5.4 At present gas is being produced from 8 fields, namely, Titas, Bakhrabad, Habiganj,
Rashidpur, Kailashtilla, Sylhet, Narsingdi and Feni. Production from two fields, namely,
Chatak and Kamta has been suspended owing to various technical reasons. Gas production
increased from 23.58 BCF in 1972/73 to 292 BCF in 1996/97, while sales went up from 20
BCF in 1972/73 to 285 BCF in 1996/97. Of the total volume of sales, 46.74 per cent was
consumed by the power sector, 35.57 per cent by fertiliser, 9.65 per cent by other industries
including tea estates, and the rest 8.04 per cent by commercial and domestic users. Total
revenue from sales of gas and gas associated fuel amounted to Tk. 11,618 million in 1993/94.
16.5.5 In 1993/94, production of crude oil from only one oil field at Haripur was 5,395 metric
tons. But it decreased steadily during the last few years and was suspended in July, 1994.
Current production of gas associated condensate amounts to about 1,000 barrels a day which
is expected to rise to about 3,500 barrels a day when the wet gas fields of Kailashtilla and
Beanibazar, Jalalabad are commissioned.
16.5.6 The present demand for petroleum products of the country is about 2 million tons of
which 50 per cent is for diesel, 25 per cent for kerosene, 8 per cent for motor spirit, 10 per
cent for fuel oil and the rest 7 per cent is for other minor products, whereas 1.4 million tons of
refined petroleum products are produced by the only refinery of the country of which 20 per
cent is diesel, 30 per cent kerosene, 15 per cent LPG and gasoline (motor spirit and naphtha)
and 35 per cent fuel oil. This shows that the country has excess gasoline and fuel oil while
there is a shortage of diesel and kerosene. The consumption rate of petroleum products is
growing slowly but steadily at the rate of 2.5 per cent to 3 per cent per annum. Import of
refined petroleum products, therefore, remains, quite essential. To meet the present and future
demand for petroleum products of the country, addition to the present refinery capacity will
be needed.
Transmission and Distribution of Gas
16.5.7 During the last few years, the operational networks of the transmission and
distribution companies have been considerably expanded through the construction of gas
pipeline and associated DRS and MRS installations. About 9,600 km of pipelines have been
constructed upto June 1996 of which about 1,600 km are high pressure transmission lines.
16.6 Institutional Development
16.6.1 Petrobangla : The gas sector in Bangladesh is dominated by the Petrobangla Group
consisting of eight state-owned companies responsible for the exploration, production and
delivery of natural gas as well as exploration and development of oil and solid minerals
including coal. The Petrobangla Group consists of the holding corporation (Petrobangla), one
 362

exploration and drilling company, two production companies, three distribution companies
and one liquid natural gas company. In 1993, the government approved the establishment of
the Gas Transmission Company Ltd. (GTCL) to operate the national gas grid.
16.6.2 Bangladesh Petroleum Corporation : BPC was set up in 1976 with the objective of
importing, refining and marketing of petroleum oil and lubricant products. It operates through
seven subsidiary companies.
16.6.3 Geological Survey of Bangladesh : GSB, the national geoscientific organisation,
established in 1962, is responsible for geological, geophysical, geochemical mapping and
drilling activities related to finding out solid mineral resources in the country. It evaluates the
known mineral resources, conducts studies, renders advisory services and supplies relevant
information regarding hydrogeology, engineering geology, urban and environmental geology,
etc.
16.6.4 Bangladesh Petroleum Institute : BPI was established in 1992 as a research and
training institute with the objective of imparting training to professionals and technicians in
the oil and gas sector and carrying out research works.
16.6.5 Hydrocarbon Unit : A hydrocarbon unit was established in 1994 in the Ministry of
Energy and Mineral Resources to perform the activities relating to state control over
government owned corporations and companies, monitoring exploration/production licences,
approval of PSCs, monitoring crude oil refining, petroleum products distribution policy,
fixing of price of petroleum products, preparation of budgets, all administrative matters and
control of financial matters.
16.7 Major Constraints
16.7.1 The gas sector in Bangladesh is wholly dominated by Petrobangla. The sector has a
large potential for increased contribution to the country's economic growth. However, a
number of constraints restrict the appropriate development of the sector. The country is
dependent on foreign aid. Lack of necessary capital is limiting the development of the sector.
Exploration, gas field development, transmission and distribution activities are highly
technical and capital intensive activities. The problem of the sector is accentuated by the
dependence on expatriate consultants. In spite of providing a large number of short and long-
term training, both local and foreign, to a number of technical, professional and
administrative personnel in different fields of gas sector activities in the last one decade,
substitution of foreign consultants by the local consultants has not been effective in sectoral
planning, designing and implementation of programmes/projects. Also, there has been
inadequate transfer of technology through technical assistance projects. The deficiency in the
development of manpower has also been caused by inappropriate selection of trainee
clientele. These have to be overcome through appropriate sectoral manpower planning.
Considerable delays in project implementation occur due to the following :
a. too many stages of approval at different levels for appointment of consultants/
contractors and procuring machinery/equipment/materials both within the government
and the development partners;
b. imposition of too many conditionalities by the donors at different stages of credit
negotiation, signing of agreement and effectiveness of credit; and
c. change in the scope of works and linking the implementation of priority projects with
the conditionalities of low priority projects.
 363

16.8 Fifth Five Year Plan (1997-2002)

16.8.1 Objectives : The main objectives for the development of oil, gas and natural resources
sector during the Fifth Plan will be to :
a. substitute imported oil by indigenous fuel, mainly natural gas, to the extent possible
and feasible;
b. meet most of increased demand for commercial energy through the development of
indigenous gas;
c. intensify exploration and appraisal activities for augmenting the hydrocarbon
resources base;
d. make a balanced development of different components of gas activities, namely,
exploration, production, transmission and distribution in sync with downstream uses,
etc.;
e. involve private sector in oil and gas development activities particularly in exploration
under production sharing contract (PSC), transportation and sale of gas based
liquids, LPG, condensate (diesel/motor spirit/kerosene, etc.);
f. gradually adjust gas price to its economic cost of supply in the interest of its optimal
use;
g. build a national gas grid for equitable regional distribution;
h. conserve energy resources and help maintain the ecological balance;
i. extract coal, hardrock and other solid mineral resources;
j. conduct geological and geophysical surveys in order to explore and discover new
sources of indigenous energy resources;
k. strengthen research and development in the energy sector;
l. provide cylindered liquid natural gas for the rural people; and
m. use surplus gas for downstream activities.
16.8.2 Policies and Strategies : The following policies and strategies will be adopted for
realisation of the above objectives :
a. in order to accelerate development activities, efforts will be made to gradually involve
the private sector in exploration, production, transportation and sale of oil and gas;
b. a shift towards better mix will be made so that dependence on a single energy source
like natural gas is minimised, and other energy resources are exploited;
c. natural gas fields rich in condensate and propane/butane will be developed to reduce
the import bill for oil; emphasis will be given to supply liquid natural gas to the
indigenous rural people by cylinder;
d. gas pipeline in the west zone through the Bangabandhu Bridge for effective regional
balance in energy supply will be laid in;
e. measures will be taken to use coal discovered in the west zone for electricity
generation;
f. efforts will be made to expand the gas and condensate transmission and distribution
networks to the extent possible/feasible;
g. gas supply to industrial estates will be ensured;
h. timely maintenance of the gas production wells to avoid supply dislocation caused by
sanding/water intrusion as happened in the Bakhrabad well will be ensured;
i. conservation and economic use of natural gas will be promoted through adoption of
appropriate technology and tariff measures; price of natural gas will be rationalised
into economic price considering the heating value parity;
 364

j. extraction of hardrock and other solid minerals including thorium, uranium and beach
sand minerals will be geared up;
k. special incentive package for oil and gas exploration in the west zone will be given;
l. efforts will be made to encourage establishment of privately owned and managed
distribution companies for marketing of natural gas available from transmission
pipelines to unserved urban centres;
m. measures will be taken to establish a regulatory authority which will be manned by
competent persons for licensing energy utilities, setting prices and consideration of
related issues;
n. environmental impact assessment will be made mandatory for energy development
projects;
o. dependence on external assistance will be reduced gradually by internal financing to
the extent possible;
p. a comprehensive programme of training linked with career development of
professionals will be implemented;
q. research and development activities will be increased for productivity and cost-
effective advances in the energy sector;
r. geological and geophysical activities will be geared up;
s. measures will be taken to provide tax incentives to those entrepreneurs who will come
forward to set up natural gas based industries; and
t. international oil companies with whom PSCs have been signed for exploration of oil
and gas will be encouraged to invest downstream in power generation activities,
fertiliser factories, petro-chemical complex, etc.
16.9 National Programmes
16.9.1 The demand for primary commercial energy is expected to increase from 10 million
ton oil equivalent (MTOE) in 1997 to 15 MTOE by 2002 showing an average growth rate of
8.57 per cent. At this growth rate, per capita primary commercial energy consumption will
rise from 81 KGOE in 1996/97 to 109 KGOE in 2001/02. This increased demand will mostly
be met by indigenous natural gas raising its share to 70 per cent of the total primary
commercial energy consumption. The peak demand of natural gas is expected to increase
from 1,100 MMCFD in 1996/97 to about 1,700 MMCFD in 2001/02 and average demand
from 900 MMCFD in 1996/97 to about 1,360 MMCFD in 2001/02 giving an annual average
growth rate of about 10 per cent. Endeavours will be made to put coal to use so that partial
energy demand can be met from this alternate indigenous resource. To augment gas supply,
both intensive and extensive exploration for hydrocarbon will be carried out aiming at adding
new reserves during the period 1997-2002 in both public and private sectors and under PSCs.
16.9.2 To contain the import of oil more or less at the present level, all efforts will be made to
substitute this with indigenous natural gas and coal to the extent possible and extract LPG
from natural gas to reduce the import of kerosene. The import of diesel and kerosene will be
further reduced by expanding rural electrification programme for irrigation and lighting. In
spite of all these efforts, the import of POL is estimated to grow at an average rate of 9 per
cent annually. It is expected that the consumption of POL in 2001/02 will be about 3.49
million tons compared with the consumption of 2.38 million tons in 1996/97.

16.10 Programmes in Public Sector

16.10.1 Survey/Exploration for Hydrocarbon : The geological and geophysical surveys
will be intensified to discover and delineate new hydrocarbon bearing structures and to
 365

determine the extent and potential of existing gas fields. It is expected that a total of 3,000
lkm of seismic survey and about 1,200 lkm of geological survey will be undertaken during
this period. At the same time, programme of drilling 7 exploration wells will be implemented
during the Plan period in the public sector. For exploration of hydrocarbon, in the private
sector, particularly the multinational companies will be encouraged to invest under PSCs.
16.10.2 Production/appraisal wells : Drilling of production wells in Rashidpur/Habiganj
gas fields and drilling of appraisal-cum development and workover wells in Titas fields have
been planned for 1997-2002. The major work in this respect will include the drilling of
appraisal and production wells in Saldanadi and Shahbajpur (2+2=4), Rashidpur (4 wells),
Habiganj (4 wells), Titas (3 wells), and workover of about 10 wells together with the drilling
and establishment of 480 MMCFD process plant.
16.10.3 Transmission and distribution line : A number of on-going lines will be completed
and new ones taken up during 1997-2002. The major ones will include Monohardi-
Narshingdi-Shiddhirgonj pipeline (59 km), Rashidpur-Ashugonj loop line (82 km),
Beanibazar-Kailashtilla pipeline (23 km) and pipeline over Bangabandhu Bridge and on the
west bank (80 km). In total, more than 350 km of transmission line is expected to be
completed. Besides, about 2,000 lkm distribution line will be constructed in three franchise
areas to supply gas to users.
16.10.4 Coal : At the present rate of growth in energy demand, partial energy demand
mostly for thermal power plants beyond 2000 will be met by coal. Development of the
Barapukuria coal mine is under implementation projecting a production of 1 million tons of
coal per year from 2000 for 65 years. In addition, Khalashpir (Rangpur) coal deposit is being
studied for possible extraction. Studies will also be undertaken to extract coal bed methane
from the Jamalgonj coal deposit.
16.10.5 Hardrock : The present annual demand of hardrock is 1.5 million tons. The
hardrock project is projected to yield of 1.65 million tons per annum.
16.10.6 Development of LPG / NGL : Necessary arrangements will be made for production
of LPG/NGL from the wet gas fields of Sylhet region. It is expected that about 125,000 tons
of additional LPG/NGL/ condensate will be produced annually by the end of the Plan period.
16.10.7 Major programmes of petrobangla : The following will be the major programmes
of Petrobangla in the Fifth Plan period :

Oil and Gas Exploration Drilling 7 wells

Geological and Geophysical Survey 3,000 km
Appraisal/Development Drilling 13-15 wells
Gas Transmission Lines 375 km
Gas Distribution Lines 2,000 km

In addition to these, contingent on negotiations with the relevant oil exploration companies,
additional exploration may be undertaken.
16.10.8 Bangladesh petroleum corporation : BPC's main activities will be concentrated on
the completion of BMRE of the existing refinery, construction of lighterage and dolphin
jetties, second crude oil distribution unit at ERL, Mongla Oil Installation and LPG import,
storage, receiving, bottling and distribution facilities. In addition, a second refinery will be set
up during the Plan period to meet the rising demand for POL products.
 366

16.10.9 Geological Survey of Bangladesh : Extensive and intensive geological and

geophysical surveys supported by drilling for mineral discovery, engineering, water resources
and tectonic studies will be undertaken by GSB. It will also conduct research for identifying
rocks and minerals and establishing rock sequence in the country. GSB will take up activities
relating to the delineation of Khalashpir coal and completing its early feasibility study. A few
important proposals of GSB are as follows :

Major Programmes 1997-2002

Detailed geological mapping for minerals 7,000 lkm
Research or stratigraphy 10 sections
Research and exploration for metallic deposits 200 samples
Gravity and magnetic survey 1,000 sq. km
Seismic/Resistivity survey 200 sq. km.
Drilling of exploration wells (15 Nos.) 7,000 metres

16.10.10 Gas Demand Forecast and Other Proposals : Gas demand forecast and other
proposals for 1997-2002 period are given in Tables 16.1, 16.2 and 16.3 . Gas demand forecast
for power generation and fertiliser production has been made on the basis of already
committed projects and future demand estimated from power sector master plan (PSMP).
Demand forecast for other sectors has been estimated considering historical trend of
consumption (around 10 per cent per annum) by the sectors over the last ten years.
Table 16.1
Gas Demand Forecast During 1997-2002
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002
(Benchmark)
Peak demand (MMCFD) 1100 1240 1380 1470 1550 1700
Average demand (MMCFD) 900 1000 1120 1200 1250 1360
Annual production capacity (BCF) 292 350 495 506 500 500
Annual gas supply (BCF) 285 350 410 438 455 495
Source : Petrobangla.

16.10.11 As stipulated in the energy policy, gas supply will be required to be limited to a
maximum of 1,000 MMCFD or 365 BCF/Year provided significant increase in the natural
gas reserve does not take place. If remarkable addition to reserve occurs, the situation may
significantly improve in the coming years and the production capacity shown above may well
be attainable. It is expected that from 1998/99 there will be no supply constraint and gas
supply will be based on available demand.
Table 16.2
Customer-wise Average Gas Demand During 1997-2002
(in MMCFD)
Sector 1997/98 1998/99 1999/2000 2000/01 2001/02
Power * 540 638 680 712 766
Fertiliser 280 285 305 305 305
Domestic 70 79 84 92 102
Commercial 17 17 18 21 24
Industrial + B.F+ T.E* 95 101 113 120 163
Total 1002 1120 1200 1250 1360
(365 BCF) (410 BCF) (438 BCF) (455 BCF) (495 BCF)
Source : PSMP/GSMP * Brick Fields + Tea Estates
 367

Table 16.3
Field-wise Appraisal/Production Wells During 1997-2002

1996/97 ( Benchmark) 2001/2002

Locations Production wells Wells under Production Wells Wells under operation
operation
1. Titas 11 11 14 14
2. Bakhrabad 8 8 8 8
3. Habiganj 6 6 10 10
4. Feni 2 2 2 1
5. Belabo 1 1 1 1
6. Meghna - - 1 1
7. Sylhet 1 1 2 2
8. Kailashtilla 4 3 4 4
9. Rashidpur 4 4 8 8
10. Bianibazar - - 2 2
11. Fenchugonj - - 2 2
12. Jalalabad # - - 2 2
13. Semutang # - - 1 1
14. Sangu # - - 4 4
15. Saldanadi - - 2 2
16. Shahbazpur - - 2 2
Source : Petrobangla, # Under PSC Investors

16.10.12 Financial Outlay (1997-2002) : A total of Tk 26,039.60 million at 1996/97 prices

has been projected under the Plan for development of oil, gas and natural resources in the
public sector. In addition, Tk. 8,726.07 million is expected to be invested by the private
sector. Agency- wise break-up of the financial outlay is as follows:

Table 16.4
Public Sector Outlay for Development of Oil Gas and Natural Resources in Fifth Plan
(in million Taka)
Agency Allocation
Petrobangla 19,990.60
BPC 5,978.70
GSB 70.30
Total 26,039.60
 368

Table 16.5
Projected Physical Attainments in Oil Gas and Natural Resources in Fifth Plan
Sl. Description Base Year Proposed Addition Remark
No. 1996/97 2001/02
1. Peak Demand for Gas (mmcfd) 1,100 1,700 --
2. Annual Supply of Natural Gas 285 365/400 115 Subject to gas reserve
(bcf)
3. Customer (Nos) 650,000 790,000 140,000 --
4. Exploration wells for Hydrocarbon 55 77-82 22-27 Subject to new PSC
operations
5. Production wells (Operation) 36 64 28 Both Public & PSC
6. Transmission lines (km) 1,600 1,975 375 --
7. Distribution lines (km) 8,000 10,000 2,000 --
8. Geological & seismic survey (lkm) 7,000 7,000 3000 public sector,
4000 in PSC
9. Production of Cond/NGL (tons/yr) 50,000 175,000 125,000 Jalalabad, Beanibazar
& Kailashtila fields to
be commissioned
10. Production of Coal (100,000 tons) nil 10 10 --
11. Production of LPG (tons/yr) nil 15,000 15,000 NGL plant needed to
be commissioned

16.11 Participation of Private Sector

16.11.1 One of the policies of the government is to involve the private sector in the
development of hydrocarbon resources of the country through participation of international
oil companies (IOC) under production sharing contract. This policy will continue during the
Fifth Plan. With the known recoverable reserve of gas, it will not be possible to give
additional gas connections beyond 2000 without constraining the supply to the already
connected consumers. With the projected demand and known recoverable resources of gas,
the country will start facing gas shortage after 2010 if no gas fields are discovered. In order to
accelerate exploration efforts, international oil companies will be encouraged to participate in
hydrocarbon development. During the last forty years, IOCs/private companies discovered 10
gas fields in the country. On the other hand, the state owned organisation discovered 9 gas
fields through implementation of different projects. For exploration of hydrocarbon the whole
country has been divided into 23 blocks of which 17 are offered for IOCs for competitive
bidding. Three production sharing contracts have been signed for development of discovered
gas fields and further exploration and development of new fields. It is envisaged that the
supply of gas under PSCs may be available from end- 1998.
16.11.2 In order to regulate the operation of private and public sector entities in the sector,
the government is in the process of creating a Gas Regulatory Authority. In line with the
policies of privatisation and commercialisation of the sector, the entire gas industry is being
segregated into production, transmission and distribution lines. Each operation is entrusted
with separate companies to be operated on profit and loss basis. Instead of regulating the price
of natural gas, the government is considering to align the domestic price of gas to its
international price/long run marginal cost of gas. To this end a committee has already
submitted a report on gas pricing, decision on which is awaited.
16.12 Environmental Aspects
16.12.1 Following the decision taken in the Earth Summit held in Rio-de-Janeiro, Brazil in
1992 and in line with the environmental policy of Bangladesh, measures will be taken to
assess the environmental impact of the development projects, especially of the new ones. The
 369

Government of Bangladesh has developed an environmental policy which requires

assessment of environmental impact of all new industrial projects. In fulfilment of the policy
to conduct environmental impact assessment, the government has initiated appropriate action
programmes. Over the past decades, the gas sector practically caused no environmental
problem since gas produces no hazardous smoke detrimental to environment. Rather, it has
been protecting the environment by replacing traditional fuel wood and kerosene.
16.12.2 Recently the government has planned to extract coal and use it in producing
electricity in the energy-deficit west zone of the country. Though coal pollutes the
environment to some extent, it will also help save the environment by reducing the
deforestation process in the west zone. Besides, as this coal is of high quality with low
sulpher content, it will cause comparatively low environmental damage. However, to contain
possible adverse environmental effects, the government has established an Environment and
Safety Division in Petrobangla to assess and monitor the environmental effect of the
development projects and suggest mitigation measures. The newly created division will also
develop environment and safety management system.
16.12.3 As regards pollution effect of oil refinery, consideration of environment was not
taken much into account at the time of construction of oil installations and oil refinery. As a
result, the installation does not have adequate environment protection measures and the
amount of oily water/sludge going into the surrounding canals, ponds and river and the off-
gas pollute the environment around the refinery flare. In order to release minimum carbon-di-
oxide gas in the atmosphere and to meet the requirement of refinery, adequate measures will
be undertaken during the Plan period.
16.13 Linkage With Other Sectors
16.13.1 Since the demand for gas is a derived demand, gas sector development issues,
policies and strategies are closely related to and ultimately dependent on the end-user's
sectoral objectives and policies, particularly those of power generation and industries
(including fertiliser) sub-sectors. In fact demand estimate and investment programme of oil,
gas and mineral sector are made on the basis of existing demand and drawn up development
plan of the major consuming sectors. Efficient use of gas and commercial energy depend on
the operational efficiency of power and fertiliser units, which vary widely from plant to plant
due to technological obsolescence and age of the installed plants. Generally keeping this in
consideration, the challenge will be to ensure development of downstream production units so
as to completely avoid any mismatch of supply and use.
16.14 Internationalisation of Gas Trade
16.14.1 Bangladesh has an estimated gas reserve of 22.90 t.c.f of which 13.6 t.c.f is
considered recoverable. With the intensification of oil and gas exploration under the PSCs,
this reserve is going to increase significantly in the years to come. With a success ratio of 3:1,
it will not be a surprise if we experience a doubling or tripling of the existing reserve very
shortly. On the other hand with the current demand scenario and its growth, intensive oil and
gas exploration requires a sharp expansion of the gas market even beyond borders. It may be
mentioned that due to asymmetric gas reserve vis-à-vis the internal demand in our
neighbouring countries, cross border gas trade is a highly promising option for Bangladesh.
According to an estimate, by the year 2005, gas demand-supply gap will be 20.8 BCMY in
India, 16.1 BCMY in China, 10.6 BCMY in Thailand and 7.5 BCMY in Pakistan. Surrounded
by such energy deficit economies, Bangladesh has a great potential for export of gas. The
corner stone of a medium to long run strategy of the government may be an
internationalisation of gas trade to make the sector economically viable and harness the
resources needed for its development. Care will be taken to export gas if so required within
the framework of a pragmatic policy of ensuring national interest.
 195

CHAPTER XI

IMPLEMENTATION AND MONITORING

11.1 Introduction
11.1.1 Like any other Plan, the success of the Fifth Five Year Plan will depend on the proper
implementation of its programmes and projects, implementation monitoring and post-
implementation evaluation. This is particularly important in view of the fact that it is a
flexible plan and plan projections will be revised based on evaluation of actual performance.
Annual Development Programme (ADP) is the operational document of a Five Year Plan in
respect of the public sector. It is basically a list of all public sector development projects
undertaken during a fiscal year. While ideally, it should be a list of approved projects duly
appraised by appropriate authorities, the list in reality consists of projects at different stages of
approval including unapproved ones. The implementation of the public sector part of a plan
involves the implementation of these projects in ADPs and policies supporting them. While
for all practical purposes, plan implementation was essentially viewed as the implementation
of the public sector projects, monitoring and evaluation of the projects, policy planning and
policy implementation have received less attention. But with the reorientation of the economy
towards a free market, the private sector will assume greater role and public policies, greater
significance. So monitoring of their impact on the private sector and on the economy as a
whole will demand greater attention.
11.2 Implementation of Plan/Projects
11.2.1 In the project cycle, project implementation is the most critical phase as it is
determined by realities and contingencies. It is further determined by the initial conditions
such as project approval status and timely commitment of fund. As mentioned above, ADP is
traditionally composed of many unapproved schemes which affect project implementation.
Project implementation consists of the following main stages which may overlap with one
another:
a. Feasibility study;
b. Appraisal of project and acceptance by development partner
(for aided project);
c. Approval of projects and assigning responsibility of implementation
to an agency;
d. Appointment of project director (PD) and project staff;
e. Setting up of project office (where applicable);
f. Appointment of consultants (where applicable);
g. Allocation and release of fund;
h. Land acquisition (where applicable);
i. Procurement of goods and services;
j. Execution of projects;
k. Evaluation of completed projects; and
l. Impact evaluation.
11.2.2 Project approval : Strictly speaking, approval of projects should pre-date its
implementation. However, due to delays in processing of projects or exigencies, sometimes
implementation of a project begins even prior to its formal approval. In the recent past, there
has been a marked improvement in the process of approval of projects. The government is
also seriously considering delegating more power of approval to administrative ministries in
 196

order to expedite implementation. This will, however, require further strengthening of the
planning wings of some of the ministries for ensuring quality of project formulation and
evolving an alternative institutional procedure for co-ordination.
11.2.3 Assigning responsibility of implementation to an agency : While there is no bar
against ministries directly implementing projects, this is generally left to their subordinate
agencies like autonomous bodies (e.g. Water Development Board for irrigation projects),
directorates and departments. Usually, project formulation and preparation are also the
responsibility of the implementing agencies in so much as they conceptualise most of the
projects in line with the policy parameters given by the relevant ministries.
11.2.4 Appointment of project director and project staff : Once a project is approved, the
relevant agency appoints a Project Director with the concurrence of the administrative
ministry. The PD then has to appoint the project staff some of whom may be seconded from
the ministry and/or the agency. The selection of a suitable PD is crucial to the project's
success. Project implementation suffers frequently due to the selection of a wrong type of
PD. Project implementation also suffers from frequent transfer of PDs and absence of PDs at
project sites during implementation. Forward planning to complete the preparatory works of a
project may help in partly resolving this problem. This issue needs serious attention of
implementing agencies.
11.2.5 Allocation/Release of fund : The procedure for release of fund has become simpler
than before. Yet it still remains one of the major causes of slow utilisation of financial
resources for project implementation. Every year a new circular detailing procedures for fund
release is issued by the Finance Division. The delay in its circulation along with occasional
changes in the provisions make it difficult to get early release of funds. Release procedures
for approved and unapproved projects are different and are more stringent in case of the
latter. Financial powers delegated at different levels need to be re-examined and where
necessary, may be enhanced. Standard procedures of fund release will also be put in place.
11.2.6 Land acquisition : Land acquisition, particularly in case of infrastructure projects has
remained a sore point in project implementation. The legal procedures are cumbersome and
delay the implementation of projects. The social cost due to displacement of people from the
project land is sometimes high. Recently, however, large development projects like the
Bangabandhu Bridge Project has put in operation the resettlement/rehabilitation of people
affected by land acquisition. The government is also considering a set of guidelines for land
acquisition and resettlement for private sector infrastructure development. All these
procedures need to be made uniform and a clear legal and institutional framework will be
introduced during the Fifth Five Year Plan. An important way to minimise social cost of land
acquisition is to involve the beneficiaries of a project at the project formulation stage through
formation of advisory committee. Quantum of land will be determined judiciously so that no
land is acquired which will remain unutilised.
11.2.7 Procurement of goods and services : Delay in procurement of equipment and hiring
of consultancy services are major problems affecting project implementation. The problem is
particularly intractable in case of aided projects because the multi-lateral and bi-lateral
development partners tend to pursue their own standards for procurement of goods and
services. Such diversities compound the problems of procurement at the users end. The
problem may be further confusing in case of co-financing (from more than one sources). To
overcome these problems, after a careful study in the late 1980s, new procurement guidelines
were issued by the Economic Relations Division (ERD) in 1992. Project directors and agency
 197

officials need to be trained in the use of these guidelines. The effectiveness of the new system
should also be reviewed and problems which may still persist should be resolved.
11.2.8 Construction management : Most investment projects entail construction of physical
facilities like buildings, roads and embankments. But weather condition of Bangladesh tends
to limit the construction season and so the pace of physical work varies over seasons. This
together with the programme of mobilising financial and physical resources need to be
spelt out in a time-bound critical path. Some components may be time-specific while others
may float. A critical path analysis must identify both, while some flexible work may be
delayed. In the sphere of physical works building codes are needed in order to speed up
implementation. More importantly, in construction of public buildings, the role of the Public
Works Department should be one of providing technical support to the project authorities in
respect of design, tender evaluation and verification of work quality and the project authority
should get the work done through private contractors. When a Ministry has a large number of
building works like the Ministry of Education it may contract out designing works in a time-
bound frame.
11.2.9 Execution of projects : Project implementation means strict adherence to design
specification, approved cost, time-schedule and quality. Project authority should prepare a
work plan for project implementation including a bar chart, critical path analysis,
synchronisation/programming of various activities, identify milestone decisions,
implementation procedures and techniques, review and monitoring mechanism. A project
launching workshop, particularly in big and complex projects, should be held before the
project starts and all rules, procedures and systems for implementation and monitoring should
be discussed and agreed upon.
11.2.10 Evaluation of completed projects : In a real sense project implementation cannot
be deemed to have been completed without its evaluation. The executing agencies are
required to furnish to Implementation Monitoring and Evaluation Division (IMED) in a given
proforma certain information. On the basis of such information and also field verification,
project completion reports are prepared and submitted to NEC. At present a very limited
number of projects are taken up by IMED for ex-post evaluation. Some ministries/agencies
carry out impact evaluation of some of their activities through consulting firms. Efforts
should be mounted to get an increased number of programmes/projects evaluated about their
impact on the society at large.
11.3 Monitoring of Projects
11.3.1 Monitoring implementation of development projects is a relatively new idea. Many
developing countries undertook large number of projects under their development
programmes since the middle of the century. But no institution was created to monitor the
implementation and evaluate the results of those development projects until recent years.
Bangladesh experienced monitoring problems after independence and new institutions had to
be built up. The primary responsibility of monitoring of projects rests with the sponsoring
ministry/agency itself. Along with the officials of the executing agencies officers of the
ministry, particularly in the development and/or planning wing, should undertake regular field
visits to keep abreast of the progress of work and to help resolve bottlenecks of
implementation. Monitoring by Implementation Monitoring and Evaluation Division in its
present form cannot be all-embracing. This Division has neither the resources, nor the time to
look into the details of some 1200 projects being implemented annually. In fact IMED was
initially conceived to monitor critical projects in order to expedite their execution, not to
obviate sectoral responsibilities.
 198

11.3.2 For the purpose of effectively carrying out monitoring and evaluation activities several
institutions and practices have developed in Bangladesh. From the government side these
have emerged both at the central level as well as at the levels of corporations and
departments. The development partners in Bangladesh also introduced their own monitoring
and evaluation system. Although both of these systems operate fairly independently in the
country, institutional linkages are often set up and used.
11.3.3 Besides, IMED and the planning wings of the administrative ministries, monitoring
cells of some executing agencies, project implementation units (PIU) of some large projects,
etc. Planning Commission, Statistics Division, Economic Relations Division, etc. also
undertake some sectoral reviews of performance.
11.3.4 Monitoring arrangements
a. Planning wings in administrative ministries : Planning wings of the administrative
ministries were created to strengthen their project planning and monitoring
capabilities. Except for the planning wings of the Ministry of Agriculture, Fisheries
and Livestock, Irrigation and Flood Control and Education, most of the other
planning wings in other ministries are understaffed and ill-equipped to carry out the
planning, monitoring and evaluation functions effectively. Monitoring is carried out
mainly through obtaining progress reports from the project management, field
inspections and monthly review meetings in the ministries. Representatives from
Ministry of Finance, Ministry of Establishment, Planning Commission, ERD and
IMED attend these meetings.
b. Economic Relations Division of Finance Ministry : ERD is responsible for aid
mobilisation and also for programming of external resources for projects. They
undertake quarterly and annual reviews of fund utilisation, especially foreign aid.
Development partners also maintain constant liaison with ERD and inform them of
disbursement situations from time to time. A cell to keep track of the issues related to
aid line-up and utilisation is functioning in the ERD. The information collected and
collated by this cell provide important inputs for the policy makers.
c. Finance Division : With the assistance from UNDP, the System for Autonomous
Bodies Reporting and Evaluation (SABRE), as a computerised database is in
operation at the Autonomous Bodies Wing of the Finance Division. The objective of
the system is to provide standardised financial information on autonomous and semi-
autonomous bodies which are regularly required for budgetary and financial control,
economic planning and performance evaluation. SABRE envisages to cover all
autonomous and semi-autonomous bodies as well as their units or enterprises falling
under the budgetary control of the Finance Ministry. The Development Wing monitors
progress of claims and disbursement of Reimbursable Project Aid (RPA).
d. Development Partners : Most of the development partners have developed their own
system of progress monitoring, namely Tri-partite Review Meetings (TRM mainly by
UNDP), Review Meetings, Review Mission Reports, Consultants' Progress Reports
and Local Mission Reports, etc. Except for UNDP, the World Bank and the Asian
Development Bank who pursue intensive monitoring techniques, the other
development partners rely more on consultant's progress reports and review meetings
with the government.
11.3.5 Monitoring by IMED : IMED is involved in the entire life cycle of a project - pre-
project appraisal, monitoring during implementation and reporting on completion of projects
as well as ex-post evaluation as discussed below.
 199

a. Pre-project stage : Identification, formulation and appraisal of projects are

undertaken at this stage. During pre-project stage IMED contributes as under:
i. Undertakes cost rationalisation prior to submission of the PCP for approval
(This has been discontinued from February 1997);
ii. Involves in the preparatory stage of ADP;
iii. Represents in the NEC/ECNEC/SPEC/DPEC/DSPEC;
iv. Checks rationale of estimate of costs;
v. Checks reliability of implementation schedules;
vi. Checks duplication, overlaps, if any, with other projects;
vii. Compares with experience of similar project(s) implemented before; and
viii.Checks manpower size, reliability and also the suitability of institutional
framework planned for implementation of the project.
b. Monitoring during implementation: IMED monitors progress during
implementation of projects through :
i. Periodic Reports/Returns;
ii. Field inspection; and
iii. Co-ordination/Review meetings.
i. Periodic reports/returns: IMED has introduced a system of progress reporting
for collection of various information on project implementation. The system
attempts in translating the work schedule of projects into quantifiable work
components and to relate the physical performance with the financial
expenditure. In fact, the system follows 'PERT' (Program Evaluation and
Review Technique) management system which the government desires to
introduce in case of all development projects in the country. IMED presently
uses different proforma for the purpose of collection of information about
physical and financial progress of projects/programmes for their evaluation.
The reports on the progress of implementation are examined by IMED
and consolidated into Ministry/Agency-wise reports on physical and
financial achievements vis-a-vis targets. Various implementation problems are
identified on the basis of these reports and information collected by the
officers of IMED during their inspection. These reports are then placed before
the National Economic Council (NEC), Executive Committee of the National
Economic Council (ECNEC) quarterly/periodically along with the
recommendations of IMED for removal of bottlenecks in order to speed up
the implementation of slow-moving projects. The NEC/ECNEC takes
decisions on major issues which become binding on all concerned.
ii. Field inspection : On-site inspection of progress of implementation of projects
is one of the basic responsibilities of the IMED. All the officers of IMED visit
projects to identify problems/bottlenecks of the projects. In fact every month
each sector officer is to inspect at least three projects grouped as follows :
• Project targeted for completion;
• High priority projects;
• Sick projects; and
• Other aided projects.
Projects targeted for completion during a financial year are generally inspected
every quarter, high priority projects twice a year and other aided/sick projects
once a year. Bottlenecks identified during inspection are conveyed through
 200

inspection reports to the concerned Project Director/Agency/Ministry for

corrective action.
iii. Co-ordination/review meetings: IMED officials hold Co-ordination
/Review meetings with the ministries/ divisions/agencies at appropriate
levels and attempt to resolve problems/bottlenecks standing on the way of
smooth implementation of projects. The unresolved problems are taken up
by the Secretary/DGs with the concerned heads of ministries/
divisions/agencies. Some problems are required to be attended to at the level
of the Ministers. Problems of more intricate nature which cannot otherwise
be resolved are placed before the ECNEC/NEC for their decisions which are
followed up by IMED until those are implemented.
c. Reporting on completed projects : A project management is required to submit
certain information through the administrative ministry to IMED as soon as a
project is completed. Generally this takes place at the end of a financial year. IMED
completes reporting on the projects completed in the preceding year in about 3/4
months of the following year. The findings form a part of the annual report
presented to the NEC about overall implementation of development projects in the
country.
d. Ex-post evaluation : IMED also carries out ex-post evaluation of a few selected
projects on a limited scale. The Population Development and Evaluation Unit
(PDEU) of the Planning Commission was transferred to IMED. The personnel of
this Unit are being used to gear up ex-post activities of IMED.
11.3.6 Monitoring of post-implementation operation
(Sustainability monitoring)
a. Sustainability monitoring is a recent concept. In Bangladesh, institutional
arrangements for sustainability monitoring has not yet developed in most of the
agencies. Some agencies undertake this function in a very limited way. These are
Bangladesh Water Development Board, Bangladesh Rural Development Board,
Bangladesh Academy for Rural Development, Bangladesh Institute of
Development Studies, etc. The Ministry of Finance through SABRE made efforts
to install performance evaluation of public sector agencies with limited success.
IMED undertakes sustainability monitoring function on an ad hoc basis on
assignments from the ECNEC, the Planning Commission and upon request from
the ministries/agencies.
b. Sustainability monitoring, though a very necessary tool in the development process,
has not yet taken its desired shape in Bangladesh. The government is aware of this
fact and this is emphasised in the Fifth Five Year Plan.
c. The Environmental Impact Assessment that needs to be carried out during
formulation of projects should be observed by all the concerned agencies and
truthfully followed up during and after implementation. It is high time that
adequate attention is focused on the issue of environment in the formulation and
implementation of all development activities.
11.4 Project Evaluation
11.4.1 Formative or on-going evaluation : Formative or on-going evaluation or diagnostic
study is undertaken both by the executing agencies as well as IMED. This type of evaluation
is done during the implementation of large projects which are of programme nature and
implemented over many years on a continuous basis. The projects are selected from major
 201

sectors facing implementation problems. ECNEC and the Planning Commission sometimes
ask IMED for undertaking on-going evaluation. In addition, agencies also request IMED for
undertaking such evaluation. Data collection is done through field visits, discussions with
project implementation authorities and study of the project document, previous reports,
inspection reports. review papers, etc. These data are compiled and analysed and the
evaluation report is prepared. A simple format for such evaluation is used. It contains
information on objective of the project, approval status, date of actual commencement,
expected date of completion, original and latest implementation period, original and latest
estimated/approved cost, cumulative and component-wise latest physical and financial target
and progress, existing implementation problems, general observations with suggested
solutions/recommendations etc. These reports are published as a part of the Annual Report
prepared for review by the National Economic Council. The NEC directs all concerned to
implement the recommendations made in these evaluation reports. IMED follows up the
implementation of the recommendations. Some agencies also undertake on-going evaluation
of their respective projects, e.g., Population Control & Family Planning Department, Rural
Electrification Board, Bangladesh Rural Development Board, etc.
11.4.2 Summative or terminal evaluation : Since 1983/84 IMED started evaluation of
completed projects on a limited basis immediately after its implementation is declared
complete by the executing agency. Subsequently, from 1986/87, all the projects declared
complete during a particular FY are being evaluated. Evaluation of projects immediately after
its implementation is complete, is termed as "terminal evaluation". Data collection procedure
for terminal evaluation is similar to that of on-going evaluation. Collected data are collated,
compiled and analysed for preparation of the evaluation reports. A simple format for terminal
evaluation is used which contains mainly information on project's latest approved estimated
cost and implementation period, actual expenditure and implementation period, cost and time
over-run analysis, component-wise planned physical target and actual achievement, planned
objective and actual achievement, etc. Measurement of "outputs" as against the PP targets is
mainly emphasised in these evaluation reports including the reasons for non-completion or
partial completion, if any, of any component as per project document. Problems faced during
implementation of the projects are analysed and possible measures for avoiding such
problems during planning and implementation of similar future projects are identified and
incorporated in these evaluation reports. These reports are also prepared as a part of the
Annual Report for review by the National Economic Council. Ministries/ divisions/ agencies
prepare a project completion report (PCR), designed by IMED, for each of the projects
declared complete by them. These reports contain information on seven major areas : (a)
Project Description; (b) Implementation Position; (c) Financial and Physical Program (d)
Achievement of Objectives of the Project; (e) Benefit Analysis; (f) Monitoring and Auditing;
and (g) Descriptive Report.
11.4.3 Ex-Post or impact evaluation :
a. Impact evaluation studies are comparatively a new activity in Bangladesh. As per
the current monitoring and evaluation practices, the lead agency in this area is
IMED though the basic responsibility of such evaluation lies with the respective
administrative agency of projects.
b. The IMED could not take the function of ex-post/impact evaluation on a systematic
and regular basis owing to lack of well-trained manpower in the techniques of ex-
post evaluation and other logistic support. However, since 1983/84, IMED started
ex-post evaluation of selected projects and incorporated them in the Annual
Reports. In the recent past IMED also implemented a pilot project with the
 202

assistance of ADB, to strengthen evaluation capabilities of the division. More

comprehensive technical assistance projects for enhancing evaluation capability of
IMED and the relevant ministries are required to be developed during the Fifth Five
Year Plan period. It is hoped that IMED will be in a position to undertake the
function of ex-post evaluation in a more systematic manner on regular basis after
the evaluation capability of IMED is increased through extensive training of the
existing manpower, increasing the existing manpower strength and other logistic
support. It may be mentioned that intensive impact evaluation has been carried out
in the population sector since 1992. However, in a limited scale within the existing
manpower of IMED, ex-post evaluation work has been taken in hand for all
sectors.
c. Some agencies also undertake impact evaluation. Among them Bangladesh Institute
of Development Studies (BIDS), Bangladesh Rural Development Board (BRDB),
Bangladesh Academy for Rural Development (BARD), etc. may be mentioned.
Some of the development partners also undertake independent impact evaluation of
their aided projects.
11.5 Monitoring and Evaluation Experiences
11.5.1 Pre-project appraisal
a. IMED was assigned from FY 93 the function of rationalisation of cost estimates of
development projects before the Project Concept Papers (PCPs) are finalised for
submission to the Planning Commission for processing the PCPs for approval. The
exercise was being carried out through discussion meetings. Cost rationalisation by
IMED was recently discontinued. IMED, however, strongly feels that cost
rationalisation is a very useful tool in project appraisal and must be carried out
diligently by whatever agency entrusted with the task.
b. IMED is represented in the different levels of project appraisal before investment
decisions are taken. Officers at the minimum of Director level are to attend such
meetings. But officers of appropriate level can not always represent IMED in these
meetings owing to a limited set-up. Other organisations also are not always
represented appropriately. This tells on efficient decisions.
11.5.2 Monitoring during implementation
a. Project inspection : On-the-spot inspection of physical progress of a project is the
most effective tool for monitoring its implementation. It has been observed that
higher physical progress was achieved in the years with greater field-level
inspections. With a view to achieving higher achievement of physical target,
IMED inspection program needs to be intensified. The IMED inspection reports
are sent to all concerned with foreseen identified problems and suggested solutions
thereof. Recommendations made in the inspection reports do not always get
proper attention of concerned quarters. Many senior officials including the
Finance and Planning Ministers observed on various occasions that if IMED
recommendations were implemented, there would be no obstacle to achieve
desired progress in development programmes. Inspection of projects by the
concerned administrative ministries and the executing agencies is also reported to
be inadequate.
b. Review meetings : Review of progress of implementation of development
projects/programmes at the Ministers'/Secretaries' level has established to some
extent a system of management accountability and closer interactions and mutual
 203

appreciation of problems between the decision makers and project implementers

facilitating actions and on-the spot decisions. It has been experienced that review
meetings at higher levels contributes greatly to the progress of implementation. It
is important to mention here that some ministries lack proper administration of
monthly review meetings. They take long time to record and communicate
decisions which jeopardise the subsequent corrective actions.
c. Special monitoring : In order to improve the progress of implementation, initially
40 projects were identified as high priority projects and are being intensively
monitored since January '92. To utilise the project aid allocation to the maximum,
some 16 ministries/ divisions having large share of ADP allocation of budget
(around 80%) have been identified and their projects are also being monitored
very intensively since July '92. IMED also monitors progress of large
procurements under development projects (above Tk. 20 million for goods &
works and above Tk. 5 million for consultancy services). These measures of
special monitoring are showing improvement in the case of high priority projects
and the selected large aid utilising ministries/ divisions thereby showing improved
overall performance under ADP.
d. On-going evaluation : IMED undertakes on-going evaluation as diagnostic studies
in a very limited way. This is mainly due to (i) inadequate knowledge of such
evaluation techniques on the part of the IMED officials and (ii) want of adequate
manpower. This aspect of monitoring during implementation needs more
attention. It is hoped that IMED will try to have improved on-going evaluation of
development projects.
e. Overall absorption capability of ADP : ADP implementation capability has
improved significantly from 56 percent of total ADP allocation in 1972/73 to 96
percent in 1995/96. But it is also observed that except for 4 years (FY'78, FY'81,
FY'89 and FY'90), during the remaining 19 years ADP allocations could not be
utilised fully. In case of PA, the allocation was utilised fully only in FY 1988/89.
It may be mentioned here that, during the recent years, ADPs have been reduced in
revised budgets. This situation of under-utilisation of even reduced ADP
allocations may be attributed to over or un-realistic programming. In pursuance of
an NEC decision a separate list of projects where foreign aid could not be lined up
is inserted in the ADP.
f. Identification of implementation problems : Identification of implementation
problems and recommendation of measures for their solutions are very important
aspects of monitoring of projects during implementation. It has helped reduce the
number of implementation problems as well as the number of projects affected by
those problems. As against 33 different implementation problems in FY'82, the
IMED's 1995/96 annual report identified only 10 major problems as follows :
i. Delay in approval of project/revised project;
ii. Delay in release of fund;
iii. Delay in land acquisition and handover;
iv. Delay in lining up of project assistance;
v. Delay in calling tender and observing formalities;
vi. Delay in appointment of consultant;
vii. Delay in executing agreement with donor country/agency;
viii. Delay in completion of civil works on deposit fund;
ix. Delay in appointment of project personnel; and
 204

x. Delay in fulfilment of conditions precedent for loan effectiveness

and disbursement.
Effective steps and decisions will be taken by the government to resolve these problems
during the Fifth Five Year Plan.
11.5.3 Ex-post evaluation : The function of ex-post evaluation is very limited in Bangladesh
as has already been discussed earlier. However, IMED undertakes evaluation of all completed
projects immediately after those are declared complete. But impact evaluation function is still
insignificant both in volume and in quality. This is attributed to the fact that there are very
few officials in the IMED with necessary skill and experience to undertake impact evaluation.
This area needs immediate attention in the interest of sustainability of development projects.
IMED has recently taken up an expansion program for its organisation and hopes to undertake
this function more systematically and effectively in future.
11.6 Monitoring of Private Sector Projects
11.6.1 Private Sector is visualised to be the engine of growth during the Fifth Plan. The
government policy is to pave the way for rapid expansion of the private sector for
transformation of the economy into a more effective market economy. The government will
play "promotional" rather than "regulatory" role for the private sector and act as a catalyst
through the sponsoring agencies, i.e. BSCIC for small and cottage industries, BEPZA for
industries located in export processing zones and Board of Investment for all other cases. To
facilitate the process, a Privatisation Board has been set up in order to review the
performances of the public sector enterprises and to privatise them in order to sustain
efficiency in operation. There is an Industrial Development Council under the chairmanship
of the Minister for Industries. The concerned sponsoring agencies collect information and
data on quarterly and yearly basis and furnish them to all sanctioning/registering authorities.
11.6.2 The Fifth Five Year Plan envisages 56 per cent of the Plan outlay to be in the private
sector. It is, therefore, imperative that monitoring of the private sector projects be given
proper importance. The Development Financing Institutions (DFIs) have their own system of
monitoring the progress of their own financed projects. But so far, the national monitoring
agency, IMED, has not covered private sector projects in its monitoring system. Considering
the importance of the private sector, IMED should devise a system to monitor the
implementation of the private sector projects also. In the process, Bangladesh Bureau of
Statistics, Board of Investment, Privatisation Board, Export Promotion Bureau, Bangladesh
Bank, BIDS, etc., may be involved.
11.7 Strengths and Weaknesses of Monitoring and Evaluation System
11.7.1 Strengths
a. Through IMED a system has been institutionalised and integrated for project
monitoring, information gathering and dissemination, problem solving, etc.
b. IMED's linkages with the planning processes of the country provides it with the
necessary planning-implementation feedback which is very vital for proper monitoring
of projects.
c. IMED's assessment of inherent weaknesses of the project managers in planning and
implementation techniques finally culminated in the creation of the Academy for
Planning and Development imparting regular training to managers in the techniques of
project preparation, implementation and management.
d. The system of field inspection and holding of review meetings at the
minister/secretary level has established to some extent management accountability and
 205

closer interactions and mutual appreciation of problems between the decision-makers

and project implementers facilitating actions and on-the-spot decisions.
e. In sum, the benefits of the central monitoring system have been manifold such as
establishment of some management accountability, improvement in implementation
and identifying institutional linkages between planning and implementation.
11.7..2 Weaknesses : In spite of the aforementioned contributions of the present monitoring
system, the following weaknesses may be recognised which affect its operational
efficiency :
a. The need and importance of efficient monitoring and evaluation(M&E) activities is
yet to be fully understood by the rank and file in the system;
b. The lack of proper and prompt response from top managers on monitoring reports
often frustrates the reporting authorities and agencies who then neglect the importance
of quality reports. This results in inconsistent reports, which in turn, affects accurate
decision-making;
c. Implementing officers often consider the problems as personal failures, and thus
instead of seeking help in solving these, try to hide them. They only report
achievements and sometimes put the deviations and delays in the dark. Top
management's lack of sensitivity and failure to appreciate problems and difficulties
faced by the lower functionaries have to a great extent, contributed to this situation;
d. Quality control of progress reports is absent or neglected at the project, agency and
ministry/division levels;
e. There are too few people in the central monitoring organisation to manage the
monitoring of large number of projects efficiently;
f. There is a lack of updated knowledge and techniques for efficient monitoring and
evaluation both at the centre as well as in the ministry/agency levels;
g. IMED's own lack of authority and at times inability to initiate problem-solving actions
seriously demoralise the project managers who in turn lose interest in reporting
problems. This also contributes to low quality and lack of accuracy of the reports.
h. Monthly project review meetings in some ministries are not held regularly and others
lack proper administration. It takes a long time to distribute decisions thus
jeopardising the subsequent corrective actions.
i. Submission of project completion reports after a project is declared complete by the
ministries/divisions has not yet been developed as a regular practice.
j. Physical units of measurement are sometimes not mentioned in the project documents
as also in the progress reports from projects, thus rendering any meaningful
interpretation of progress monitoring a difficult task.
k. Even large projects do not always have full-time PDs.
l. Sustainability monitoring lacks proper attention at all levels making investment
ineffective.
m. Monitoring and evaluation of private sector development activities have not been
developed.
11.8 Policy Measures for Implementation of Fifth Five Year Plan
11.8.1 In order to achieve a successful implementation of the Fifth Five Year Plan,
weaknesses mentioned in the previous sections will be removed. The following are some of
the steps which will improve the situation:
 206

a. Capacity building
i. There must be increased capacity building in executing agencies, planning wings
of ministries and IMED on project preparation, cost analysis and implementation
techniques.
ii. Monitoring and evaluation capability at agency/ministry level as well as at IMED
will be strengthened by providing specialised training to the relevant officers both
at home and abroad. Training institutions like the Planning and Development
Academy, Bangladesh Institute of Administration and Management, Bangladesh
Institute of Management, etc., may be conveniently used for this purpose.
iii. Planning wings in the ministries/divisions will be strengthened with appropriate
officers from the economic cadre so as to make them well equipped to handle
monitoring and in-house evaluation of projects.
iv. The administrative ministries/executing agencies will carry out close monitoring of
projects under their jurisdiction so that IMED can concentrate more on selected
priority projects.
b. Project preparation
i. Project preparation with correct identification of components, appropriate design
and specification, cost analysis, site selection, implementing agency,
implementation strategy/mechanism including review, monitoring and evaluation
procedure will be ensured.
ii. Donor and the government requirements for project preparation need to be
synchronised.
iii. Strategic objectives will guide development planning.
iv. Manpower requirement after completion of a project will be standardised and
incorporated in the P.P. In cases where fresh decision is required as to the actual
number of manpower to be retained it will be resolved jointly by Ministry of
Establishment and Ministry of Finance within 3 months of project completion.
c. Approval of projects/Revised projects
i. All unapproved projects in the ADP will be approved by September every year.
ii. ECNEC decisions will be communicated immediately and preferably within a
week after the ECNEC meeting for their speedy implementation.
iii. Approval of revised projects : More authority will be delegated to the
implementing Ministries to approve revised projects involving :
• cost increase up to 25 per cent without exceeding sectoral/sub-sectoral
allocation;
• In case of approved projects, inter-project reallocation (upto 25%) without
exceeding sectoral allocation;
• however, project revision involving additional sectoral allocation, change of
site, change of objectives, impact on environment, large-scale displacement of
people will need Planning Commission's/ ENCEC's approval irrespective of
cost involved; and
• In case of aided investment projects decision on implementation issues arrived
at tri-partite meetings will be considered as the basis for future project
revision, if necessary.
iv. A maximum time-limit of 3 months for approval of revised projects by competent
authority will be adhered to.
d. Execution of projects
i. Manual for procurement of goods, works and services for non-aided projects will
be prepared by the Cabinet Division.
 207

ii. Building codes will be updated and administered properly.

iii. Strict adherence to existing specified time limit in case of procurement of goods,
works and consultancy services will be ensured.
iv. Following time limit will be observed against respective activities :
• Appointment of PD's and project personnel during appraisal/ preparatory
stage;
• Setting up project office within 3 months of approval of the project;
• Fulfilment of conditions precedent for loan effectiveness and
disbursement as specified in PRODOC/Credit Agreements;
• Land acquisition/purchase: 3-6 months;
• Examination of bills : 7-10 days;
• Decision on payment of bills: maximum 2 weeks from the
date of receipt; and
• Submission of claims for RPA : maximum 2 weeks from the
date of receipt.
v. Project director/evaluation committee must strictly follow evaluation criteria/
procurement guideline of the government and donors for bid evaluation. Any
irregularity or deviation on the part of PD/evaluation committee will be penalised.
Likewise, any bidder trying to influence the decision of the project
director/evaluation committee or any other authority will be summarily
disqualified.
vi. Any complaint or allegation against bid evaluation or procurement decision will be
disposed of within 2 weeks at the maximum.
vii. Existing Secretaries' Committee on Finance and Development will be used where
necessary to resolve serious inter-ministerial issues.
viii. Immediate hand-over of completed projects for operation and maintenance will
be ensured.
e. Project Director
i. All large projects will have full-time PDs and their continuity in office will be
ensured even in promotion cases by upgrading their existing positions, if
necessary.
ii. Irrespective of their belonging to government or an autonomous organisation, all
PD's will be delegated the same financial and administrative power.
iii. Experienced persons will be appointed on contract as project directors in
accordance with the ECNEC decision.
iv. PD must promptly bring to the notice of his administrative ministry/higher
authority any shortcoming/problems in project implementation which he himself
cannot solve and the administrative ministry must promptly resolve the issue
either on its own or through the appropriate Secretaries' Committee depending on
the scope and nature of the subject.
v. Training of PDs and project staff is a critical input in efficient project
implementation. Appropriate measures will be initiated to promote institution
building, hold regular courses on project implementation procedures and
techniques, as well as refresher courses for PDs and to prepare handbook on
project implementation.
vi. A system for reward for good performance and punishment for unsatisfactory
performance will be introduced. Risk-taking and initiative will be encouraged.
 208

f. Monitoring
i. Monthly project implementation review meetings in all the ministries/division will
be held regularly and chaired by Minister/Secretary. Regular stock-taking of assets
and level of utilisation will also be carried out.
ii. Recommendations made in the IMED inspection/evaluation reports will be
regularly reviewed in the monthly meetings of the ministry/division concerned and
corrective actions taken.
iii. Head of executing agency and PD when not resident at site will regularly visit
project site and thoroughly supervise the work of consultants and contractors to
ensure adherence to design/specification, cost, time-schedule and quality of work.
iv. Joint field visits by the Planning Commission, IMED, concerned Ministry and PD
will be undertaken from time to time, particularly in respect of important projects/
programmes.
v. Planning wing officers will inspect projects as per government decision regularly.
vi. There will be frequent interaction with donors as soon as problems are identified.
Donors' review missions may coincide with the quarterly co-ordination meetings
of concerned ministries/division.
vii. Micro-management of projects/programmes by any second agency other than the
relevant one should be avoided. Donors also will be discouraged from micro-
management of individual projects/programmes.
viii. General Economic Division of the Planning Commission and Bangladesh Bank
and BOI will develop a working mechanism for monitoring implementation of
private sector projects : a Private Enterprise Council of the Prime Minister
composed of businessmen may be appointed to this end.
ix. There will be a standing liaison committee between the government and private
sector to resolve problems encountered by the private sector investors as practised
in the Ministry of Agriculture; BOI will be revamped and strengthened to this end.
x. An effective system for penalisation of consultants/contractors for bad performance
will be reviewed for either continuation or cancellation.
xi. Small projects, within Tk. 100 million, if not started within 3 months of approval
will be reviewed for either continuation or cancellation.
xii. Seminars on monitoring and evaluation for senior managers and decision-makers
will be arranged for effective functioning of the system.
11.8.2 Other measures : The Planning Commission will continue to oversee the
implementation process and to co-ordinate with the relevant ministries and agencies to
solve any problem that may arise. Special attention in this context will be given for
delegation of implementation responsibility to local government bodies and to devise
an institutional procedure to co-ordinate implementation in relevant administrative
units of the country.
11.8.3 Operations and maintenance : Following implementation adequate attention will be
given to operate and maintain the project. Needless to say, ICVR of the project will
suffer if operation and maintenance are not proper. Involvement of beneficiaries and
local government institutions will be the cornerstone of measures directed to this end.
Besides, adequate funds will be made available and contracts to the private enterprise
given in suitable cases for operation and maintenance.
 209

CHAPTER XII

RESOLUTION OF CONFLICTS
12.1 Introduction

12.1.1 Development or growth implies change in the relevant field. Any such change affects
the status quo in terms of position, entitlement, benefit or loss and expectation of the relevant
people. The relevance is connotive of their roles or ambits of work as producers, consumers,
change-agents or interested citizenry. In addition, change initiates, carries and at times
completes transformation of the environment and the eco-system. Control of river flow, use of
ground water, mining of hard rock and coal, building roads through hills and forests, use of
insecticides and pesticides, and other manifestations and ramifications of the development drive
transform the natural backdrop and the environment hitherto untouched, unexploited,
unmoulded out of quiet serenity and stately tranquillity acquired over years of motivational and
technological stasis and so much adored by the naturalists.

12.2 Need For Resolution of Conflicts

12.2.1 The resulting change in the status quo, the environment and the eco-system has to be
accepted and supported by those who are affected or benefited, touched or hurt. As the theory
has it, a change is justifiable when benefits emanating out of it are socially assessed to be more
than costs or hurts it imposes. In the process those who benefit may do well by carrying with
them those who may be adversely affected or are indifferent. Non-acceptance of, and opposition
to changes yield conflict, which may ,at times and on occasions, lead to rebellion. The process
of acceptance and gaining support is a process of resolution of conflicts. If conflicts are not
resolved yielding acceptance of, and support for the change, the scope of the latter does not
widen desirably, and its rate immerses back into the status quo, the unchanged environment and
the undisturbed nature or even worse. On the other hand, if conflicts are resolved institutionally
and without disruptive societal abrasions, stability in socio-economic management is attained
and sustained, the role players in all relevant fields of production and consumption are provided
with an enabling environment and motivation to contribute their best and the desired change
takes place to the end of socio-economic development of the society. All these contribute to
increase of capital accumulation or creation of productive capacity and increase in efficiency of
resource use. In the context of participatory planning, resolution of conflicts, around the
planned change in the status quo, the environment and the nature is important in as much it
defines, lays out, widens and sustains the conduit of change or development. Indeed, resolution
of conflicts is the spirit of participatory planning.

12.3 Existing Elements of Conflict

12.3.1 In the situational context of Bangladesh, a number of elements contributing to the

process of resolution of conflicts exists: contiguous location (excepting a few small enclaves) of
the country, linguistic unity (excepting some areas in the hill districts), constitutionally accepted
democratic ideals and commitment to prosper in freedom and rapid improvement in roads and
tele-links throughout the country in recent years and demonstrated public support for them have
brought the constituents of our society closer and made it more cohesive. To the end of
sustaining and strengthening solidarity these positive elements ought to be further applied and
used. Opening up of remote areas in hilly districts by roads and telelinks, signing of peace treaty
 210

with the insurgent tribals in hill tracts, connecting the offshore islands with regular water
transports, and out reaching tribal communities in Mymensingh and Rajshahi regions through
spread of education and communication facilities will have definite contributions in removing
conflicts latent in some regional differences and disparities. The opening of the Bangabandhu
Multipurpose Bridge in June ’98 will serve as the single most unifying bond between the
southern and the northern regions of the country. Despite these well identified positive
elements, in a number of areas, especially in the process of formulating and implementing
planned socio- economic change, possibilities of conflict need to be recognised and steps
delineated to resolve them over time.

12.4 Conflicts in Objectives and Mechanics

12.4.1 To start with, by way of enumeration, there may be conflicts while determining the Plan
objectives. Conflicts on this count may arise in terms of both vision and mechanics. The vision
of the society 15 or 20 years hence is likely to be different to different persons or groups. The
enterprising and the rich may like to work for a society different from the one aspired by the
labour or the poor. The expectations of the landless are likely to be different from that of the
land-rich. The consumer's views of societal interest may be different from that of the producer's
seeking protection. The difference in mechanics may centre round relative emphasis to be given
on relevant indicators as well as variables of growth: this may demand answers to questions like
those pertaining to, for example, employment creation or productivity generation, protection or
liberalisation, generation of surplus in agriculture for financing investment in industrial
development and others.

12.5 Constitutional Guidelines

12.5.1 The basic objectives of planned growth is constitutionally defined in Bangladesh. In

Article 15 of the Constitution, provision of basic needs in terms of food, clothing, shelter,
education, health service, gainful employment, reasonable recreation and social security to the
citizenry through planned economic growth is accepted as a fundamental responsibility of the
state. In this process, the state is to pursue (a) emancipation of the toiling masses, the peasants
and the labour, and the backward communities from all exploitations (Article 14), (b) gradual
removal of disparity in standard of living of the rural and urban areas through promotion of an
agricultural revolution, provision of rural electrification, development of cottage and other
industries and improvement of public health (Article-16),(c) adoption of free and compulsory
education and removal of illiteracy (Article-17), (d) equality of opportunity and removal of
social and economic inequality between man and man, equitable distribution of wealth and
uniform level of economic development in all areas (Article-19), and (e) creation of conditions
in which unearned income cannot be enjoyed (Article-20).

12.6 Promoting Consensus

12.6.1 Determined constitutionally as aforesaid, the objectives of planned growth have to be

taken as given by all role players. In other words, the vision that we all have is the vision of a
society meeting the basic needs of the people in an exploitation-free informed environment
encompassing social, economic and opportunistic equality. Within their broad frame, discourses
and deliberations in the parliament, political parties, professional associations, local government
bodies and research institutions are likely to build up consensus on components of these
objectives and relative emphasis to be given to them in changing contexts. In this process the
 211

parliament may serve as the apex deliberative body taking into account deliberations and
discourses in other bodies. Deliberations in the parliament will yield legislative decisions on
policies, projects and programmes and manifest as contributions of the relevant political parties
to the national strive at planned economic growth for meeting the basic needs of the people as
mandated by the constitution.

12.7 Mechanics of Growth

12.7.1 There are two main components of mechanics for attaining the set objectives of planned
development. In the first place, the constitution has laid down a set of premises. These are: (a)
affirmation of the national will to prosper in freedom (preamble); (b) recognition of the people
as the source of all powers of the Republic (article-7) and owners and controllers of all
instruments and means of production and distribution (article-3); (c) meeting basic needs of the
citizenry through attaining a constant increase of productive forces' (article-15); (d) return to
individuals on the principle of `from each according to his abilities to each according to his
work'; and (e) taxation and authorisation of expenditures under the authority of the parliament
(articles-83 and 90). Secondly, subject to the conditions set by the constitution, causative
process of change in one sector because of changes in the inter-related ones is to be taken into
account. Elsewhere, aggregatively these intersectoral relations have been spelt out in their
composition and effects, changes and ramifications. In the present context, these, in turn, are
implicative of gains or losses for individuals and groups and thus need to be understood,
evaluated and accepted. The question centring round distributive justice vis-a-vis incentives for
productive investment, or increase in defence expenditure vis-a-vis investment in education, for
example, will have to be answered in this context.

12.8 Parliamentary Conduit

12.8.1 For continuous resolution of conflicts and differences in the process of attaining these
objectives, subject to the constitutional mandates, the most effective conduit again is the
parliament. Exogeneously, free, fair and regular elections to the parliament coupled with the
freedom of information media will strengthen the parliamentary process. The other important
contributing element in this process will be freedom of speech, conscience, movement,
association and assembly for all citizens as guaranteed by the constitution. Endogeneously,
from the functional point of view, for an in-depth analysis of issues and realistic delineation of
the paths to be taken, strengthening of the relevant standing committees in the parliament seem
to be in order. Open hearings and deliberations in these committees working throughout the year
will contribute to transparent, accountable and responsive policy directions and decisions in this
regard. Dialogues and deliberations instead of boycott and confrontation are likely to facilitate
and converge at answers to issues at hand.

12.9 Role of Public and Private Sectors

12.9.1 Pertaining to this process, the parliament at the present time is expected to decide on two
major issues. These centre around the choice of the public sector in complementation or
supplementation of the instrumentality of the private sector as the major vehicle of growth. In
recent years, there has been a relative relegation of the public sector as the constituent of
`commanding heights' usable by the state to regulate and to promote the economy. All sectors of
the economy have been opened up for investment, production and operation by the private
sector. Despite such an opening, the role of the public sector in development of infrastructure is
acknowledged. Even in such an area, given the constitutional mandate to meet the basic needs
 212

of the people through planned economic growth based on 'a constant increase in productive
forces', choice between public and private sectors as a conduit for attaining productivity should
centre around considerations of relative capability and efficiency in production and equity in
distribution. If for building infrastructure facilities in certain areas or sectors, private enterprise
lacks in capacity, the public sector may be deployed. If following setting up a public utility by
the public sector, inefficiency in operation creeps in, a case for privatisation is built-up. For
directly productive investment in agriculture, industry and in services, if the private sector has
built-up capacity, generally public sector has no reason for deployment of additional resources
or for interference unless social circumstances warrant it in the interest of both producers like
small farmers and poor consumers. A consensus built on these principles will definitely
contribute to constrain as well as to rationalise roles of public and private sectors to the societal
benefit. Such a consensus will facilitate expeditious privatisation of the bloated and unprofitable
state owned enterprises. The process, in its all constituent parts will contribute to shape up ethos
involving market-orientation of the economy in support of democratisation of the political
system.

12.10 Market Failures and Government Failures

12.10.1 Related to the choice between public and private sectors, general questions centring
round market as well as government failures in the economic realm need to be answered. As the
recent theory has it, the market may fail in cases of (a) externalities, (b) public goods, (c) poor
information and (d) monopoly. Failure in this context in all these cases is connotive of inability
or incapacity to attain the desired allocative efficiency. Each case of market failure provides a
potential opportunity for government action garnering benefits in excess of costs. Consequences
of market failure in case of poor information and monopoly are well understood; inherent
conflict of interests that remain to be resolved through reformative measures in these two cases
are also well-articulated, though each requires public interventions of its own kind more
involved when information on market of future goods are non-existent. Such resolution may
not, however, call for supplementation of the market mechanism. Externalities, in terms of
costs, manifests in harmful effects of an individual's or a group's action on the welfare of
non-involved secondary persons. In such an event, social costs exceeds private costs. In terms of
benefits, externalities manifest in beneficial effects of group or individual action on the welfare
of non-paying secondary parties. In such a case private return is less than the social return
resulting in lower investment in the relevant ambit of production and consequent missed
opportunities if left to the private enterprise alone. In the situation involving externalities the
policy makers may carefully consider (a) the magnitude of external costs/benefits relative to the
cost of government action; (b) the ability of the market to devise means of dealing with the
problem without government intervention; and (c) the possibility that the political majority may
take the intervention too far if the external costs imposed on the minority are not fully
considered. Consumption of public goods result in spill-over benefits to secondary parties. It is
costly or impossible to withhold such a good (e.g. national defence) from persons who do not
pay for it. In such a case the market system breaks down as everyone gets an incentive to
become a free rider. And when everyone tries to get a free ride, production of public good
dwindles calling at times for intervention by the government. Private sector philanthropic and
entrepreneurial solutions to certain public goods problems show us that the government action is
not the only corrective way. In resolution of conflicts in such a field this limitation has to be
considered.
 213

12.11 Weaknesses in Public Sector Intervention

12.11.1 At least four factors weakening the case for public sector intervention or operation may
be identified. First, possibility of voter ignorance and inability to recognise costs and benefits of
public sector operation fully is quite high. In a representative democratic system, voters are the
originators of public sector intervention and operation. The applicable self-interest postulate of
free enterprise based democracy assumes propensity of voters to elect representatives offering
greatest personal gains relative to personal costs. The group decision - making delinks outcome
of an issue to the choice of the individual. Voters, as a result, are likely to remain uninformed on
many such issues. They may make their evaluation of representatives on the basis of subset of
issues that are of greatest importance at personal levels. In such a situation, legislative decisions
are not always expected to pass the economic tests of productivity or efficiency. Second,
working in the aforesaid backdrop, the politicians find it profitable to support special interests
reflective of rent seeking and individual or group advantage at the expense of others. This
follows from a postulate of public choice theory that pursuit of votes is the primary stimulus
shaping the behaviour of politicians. More often than not, interests of bureaucrats may
complement those of the interest groups in such cases. Bureaus may have propensities to expand
their programmes to deliver benefits to special interest groups who in turn may work with the
politicians to expand their bureau budgets and ambits and career prospects and pursuits.
Constitutional provisions in respect of equal treatment of all under law, removal of exploitation
and regional disparity, ensuring religious, racial and gender equality and their strict adherence is
one definite way to limit the power of special interests in using the political process at the
expense of others. Third, in the public sector, where decision-makers do not have private
property rights over the resources they control, the short-sightedness is another source of
conflict between good politics and sound economics. In the public sector, voters, politicians and
bureaucrats may support projects and programmes that promise eye-catching short-run benefits
at the expense of not easily-identifiable future costs. In such a situation, there is always a bias
against legislation that involves projects with immediate and easily identifiable costs and high
future returns. Finally, economic incentive for operational efficiency in public sector enterprises
is small. This does not indicate that employees in the public sector are necessarily incapable. It
means that in public sector operation there is no direct relation between work and creativity on
the one hand and public compensation on the other. No individual or group of individuals can
capture relatively small profits yielded by improved operational efficiency in the public sector.
Research over the last several years have shown that private enterprise, compared to public
ones, has provided goods and services in the same field more economically or efficiently.

12.12 Need For Developing Institutions

12.12.1 Public choice theory, in recent years, shows that political action or government
intervention can and, at times, does reduce economic inefficiency emanating from market
failure. At the same time it also indicates that unconstrained intervention may result in
programmes that waste resources. Understanding the shortcomings of both the market and the
public sectors is important if we want to improve our present economic organisations. In
delineating reform of the system, the challenge before us is to develop political, social and
economic institutions, capable of bringing, to the fullest extent possible, the interests of
producers, politicians, bureaucrats and voters into harmony with the general welfare of the
society. And this challenge can be taken up by the parliament functioning in a milieu of
democratic environment and partnership within and around. Likewise the challenge can be met
 214

better by the political parties and various interest groups through adequate awareness and
dialogues across the relevant income classes and voters.

12.13 Supporting Private Enterprise By Public Sector

12.13.1 Taking all these into consideration, as of now, the public sector will do well if it is
geared up and pressed into supporting the private enterprise in all productive sectors of the
economy. To this end, building up infrastructures, especially for flood control and large scale
irrigation and generation and transmission of power, will be important steps. Given the
preponderance of small and marginal farms throughout the country, large investment and
multisectoral approach are needed, and the riparian dimension of water management, flood
control and large scale irrigation are likely to remain as areas of selective and major intervention
by the public sector. Small scale and minor irrigation involving utilisation of ground and surface
water by individual or group of farms will be better accounted by the private owners and
operators. The other important area of intervention by the government seems to be the financial
sector in its parts meeting the needs for long term investment in capacity creation in the private
sector and targeted lending aimed at poverty alleviation. The structure of deposits as is prevalent
now may not allow the system to meet the need for long-term credit for industrial development.
Besides, there are requirements for sponsoring, if not setting up, venture capital institutions and
investment companies for deepening the finance. Credit for the poor, like wise, in the current
situational context of widespread assetlessness and pauperisation, needs innovative credit
support for amelioration and guarding against large scale social discontent. Added to these will
be provision for facilities for health care and human resource development. Private sector
enterprises are not likely to provide these in most and remote areas. All these will be taken up as
definite items in the agenda of action of the government. And finally, there remains quite a large
room for public investment in adaptive research and development in both industry and
agriculture. In this context governmental sponsorship and intervention may be well suited in
such fields as development and export of computer softwares, CAD and CAP, biotechnology,
genetic engineering, survey and exploration of natural resources, etc.

12.14 Organisational Reforms in Public Sector

12.14.1 Related to the governmental intervention in these and other areas in support and
supplementation of the private enterprise, is the issue of making organisational reform of the
public sector agencies. As experience has it, most of the public sector agencies (BADC, WDB,
PDB, BFIDC, etc.) were set up to attain objectives laid down at the time of their setting up. Due
to changes in circumstances and generations of demand for services or products in newer ambits
or areas, the objectives as well as the size and the nature of the relevant organisations warranted
change or modifications. As has been observed, such changes were not brought about in most
cases. This has made some parastatals somewhat aimless and ineffective in public estimation.
The recent decision to abolish or down-size BADC is a case in point. In order to sustain the
government's capacity to make the right kind of intervention in changing circumstances, such
organisational changes and modifications should be slated for. The process may create
discomfort or generate protests on occasions and at times. But despite that, a charted course is
likely to be cost-effective in the relevant field of service, regulation or promotion and
consequently, eliminative of avoidable conflicts.
 215

12.15 Fast Track in Public Sector

12.15.1 The other important area of reform in this field will comprise creating scope for fast
tracks in careers of employees serving the government and the parastatals. As of now, the track
is the same for all irrespective of merit and performance. As a result service and product
emanating out of the public sector as a whole are almost always inept and sluggish and often
unsatisfying. Really meritorious and ambitious people are not attracted into the government and
the parastatals these days. To attract the best and the brightest into public service and to obtain
the most out of them in their creative years, setting up a different and fast track for the best
performers and the standard setters will have to be evolved on the basis of logical analysis and
through consensus of the relevant role players. Service rivalry, postponement of reforms,
politicised and indisciplined conduct as have manifested out of the malaise thus far, testify to
both the extent of inherent conflicts and the urgency to resolve them expeditiously.

12.16 Relation Between Central and Local Governments

12.16.1 In Bangladesh context elements of conflict are existent in the relationship between the
central and the local governments. Despite a clear constitutional mandate to promote local
government institutions with special representation of peasants, workers and women (article -9),
no consistent programme has thus far been undertaken to this end. As of now, zilla parishads at
district level are without elected heads; union parishads so far formally delinked from political
affiliations at national levels are still not adequately heard and attended to; co-ordinating roles of
elected representatives at thana level are yet to be defined in legal and functional terms; and
local government bodies in three hill districts need to be organised to give shape and meaning
to the recently concluded peace treaty with the insurgent tribals. The local government as a
system have inadequate sources of locally raisable resources. As a result, responsibility,
responsiveness and accountability to the local people cannot be cherished very much as uniform
principles of administration and management at various levels and throughout the country. This
inadequacy has placed a limitation on the process of participatory development as is envisaged
now.

12.17 Needed Reforms of Local Government

12.17.1 Promotion of local government institutions, in the present context, may call for reform
in at least four areas. The process of reform in these areas, in turn, will require resolution of
conflicts, explicit and implicit, amongst the relevant role players. In the first place, appropriate
organisations headed by elected public representatives capable of management as well as
development at thana and district levels have to be set up. These bodies along with union
parishads and pourashavas should be given more functions (e.g. in fields of primary health care
and education and local irrigation infrastructure) and adequate co-ordinative and cohesive
authorities. Action along these lines may be conflictive with the current situation wherein local
MPs and officers of the central government tend to interfere and dominate. Secondly, all local
bodies should be made responsible to the local people. To this end, the relevant law should
provide for recall or removal of chairmen or members following passing of no-confidence
motions against them by the local constituents or other members of the local bodies. As of now,
even if a no- confidence motion is passed, chairman of a local body is removable only by or
under the authority of the central government. In such a situation, the representatives elected to
the local bodies tend to forge allegiance to the power that be at the central government vitiating
the principles of responsibility, responsiveness and accountability to the local constituents.
 216

Reform along these lines may not be implicative of erosion of the authority of the central
government; on the contrary, such reforms will yield desired societal gains for the local people
and in the process reinforce the central government in the mechanics of development. Thirdly,
all these bodies excluding city corporations and pourashavas may be given wider fields of
taxation or alternatively keeping their current fields of taxation unchanged, a pre-determined
percentage share, say 12% of all revenues raised by the central government. If decision to share
the revenues of the central government with the local bodies is taken, a principle for their
equitable distribution on the basis of, inter-alia, (a) population, (b) development needs, and (c)
level of local resource raising may be adopted to stave off exogenous considerations in
distributing the pie. Also, periodic finance commission may be set up and used in a
continuously changing context for determining the over all share of the local bodies in the
central government's revenue and its distribution amongst the relevant local bodies in
accordance with appropriate principles. This may imply a transient erosion of power and
authority at various levels of the central government. This is likely to be more than made up
through strengthening realistically the local government bodies for providing more and better
civic services and higher utilisation of physical and social capital in their respective areas. An
overriding adherence to the constitutional mandate by the legislators together with a strong
commitment of the executive organ of the state for obtaining the maximum yield out of a given
investment in physical infrastructure and social investment is likely to result in actions in right
directions and resolution of conflicts in this regard. The recently completed report of the Local
Government Commission has delineated actions and steps to these ends, which needs
expeditious consideration by the government and the parliament.

12.18 Functional Delegation

12.18.1 Finally, following the tradition built up in Japan, the central government may do well
by delegating responsibility for implementing selected local projects planned and funded by it to
the local government bodies. Primary schools within an union, health centres or bridges within a
district, for example, may be given to the relevant union parishad or zilla parishad for
implementing out of project specific grants made by the central government. This way the
technical capability of the local bodies may be enhanced as well as local participation and more
efficient use of resources ensured. In some cases, established facilities in fields of health care,
education, relief or welfare funded and implemented by the central government may be given to
the relevant local bodies for operation and maintenance. This way the delivery mode of services
may be desirably improved.

12.19 Local Government and NGOs

12.19.1 In recent years, quite a number of NGOs -private voluntary development organisations-
based largely on grants and assistances from external sources - have come up to cover almost
the entire country. Management of all these NGOs, excepting a few set-up by religious orders, is
in the hands of Bangladeshi nationals. They have come to cover disaster relief, education,
health, children's welfare, care of the old and infirm, afforestation, environment improvement,
consciencetisation and even election monitoring and voter's education. Most of them are
registered under the Society's Act; a few have been incorporated as non-profit making
companies under the Company Act as well. In all cases responsibility for management and
accounting are well defined and laid out under the relevant laws and by-laws as conditions for
receipt of external support. Given the traditionally weak functioning of the local government
bodies vis-a-vis rather resourceful operation of NGOs and their relative success in the fields of
 217

education, health care and consciencetisation in a few local areas, some seem like having an
idea that NGOs may over years make the need for local government bodies minimal or even
unfelt. In some local areas, seething conflicts as between the relevant local government body
and operating NGO apparatus have also been noticed.

12.20 Supplemental Role

12.20.1 In the future course of development such perception of conflict may not have a room
for serious consideration. NGOs in their resourceful and innovative operation in local areas may
supplement efforts of the central and the local government in the relevant fields; they cannot,
however, be projected or prepared for supplanting or substituting the formal bodies of the
central and the local governments. In fields of health care and education, innovative processes
and procedures developed by some NGOs may as well call for emulation and replication by the
relevant bodies of both central and local governments. Consensus, based on assessment of
needs, performance and resources need to be built up on canalising the efforts of NGOs and
vamping up the roles of local government bodies in this backdrop. Discussions and
deliberations across various fora and relevant organisations for example, in the recently formed
government-NGO Consultative Committee will be called for to fine tune the calling from time
to time in this regard.

12.21 Private Property Contractual Rights and Obligations

12.21.1 Use of the private enterprise as the main vehicle for development demands delineation
and enforcement of (a) private property rights and (b) contractual rights and obligations
expeditiously, firmly and at minimum costs to the parties or the disputants. As experience has it,
scope and span of economic transactions amongst multitudes of private producers, suppliers and
consumers cannot widen smoothly till these demands are met institutionally. The institutional
components in this field are: (a) the laws defining property rights and contractual obligations
and prescribing penal measures for their violations and (b) the administrative-judicial system
enforcing these rights and obligations and awarding penalties for their violations.
Knowledgeable observers in this field opine that the set of laws enacted till date and in force
now, despite their need for some marginal modifications, is adequate. The major problem,
however, lies in their enforcement. The administrative - judicial system seems to have wide
scope to improve upon its present level of performance in this regard. The procedure followed
and the pace maintained in enforcing this set of laws adjudicating disputes that arise in relation
to them are cumbersome, time consuming and costly. Shortfall in enforcement is perceived as a
weakness of the system and erodes public confidence on the system. This perception limits the
span of suo moto acceptance of legal rights and obligations by a large number of economic
transactors. It will remain yet another challenge for the leadership to reform the system and to
account for speedier, firmer and economic enforcement and adjudication to limit if not, to
remove, conflicts in the transaction process pursued by multitude of producers, suppliers and
consumers. Commitment at highest levels of the executive and judicial organs of the state
together with close monitoring and periodic target-oriented training of the relevant personnel
seem to be in order to this end. For supporting newer and smaller producers, suppliers and users
in this regard, setting up of small causes courts in selected urban centres is likely to be helpful
also. Adjudication of small disputes among small but budding entrepreneurs expeditiously and
economically makes the business environment beautiful for spurring small activists into larger
ambits of innovation and production. Obviously, the magnitude of the problem of enforcement
as a whole may appear somewhat awesome at the start. Initial success in this field, however,
 218

will make the relevant role players to take their rights as granted and obligations invariably
dischargable by the society. Following initial steps in a time-bound frame this realisation by the
majority is likely to lessen down conflicts and extend the scope and the span of economic
transactions in the free and primarily private enterprise system.

12.22 Modifications of Laws on Property Rights

12.22.1 The laws on property rights that need modifications, in order to meet the changed
circumstances, call for an in-depth examination and delineation. This will be undertaken by the
recently constituted law commission composed of legal experts and practitioners in the field.
The work of the commission and implementative actions on its recommendations will be a
continuous process.. In the interim period, a number of areas, however, may be identified for
immediate attention and correction for exuding confidence all around and spurring economic
activities across various classes of producers and entrepreneurs spearheading the free enterprise.
These areas are:
a. land tenancy and tenure, particularly in respect of definition of family/household,
agricultural use and agriculturist, subsoil or subterranean rights of 'maliks' (owners),
cognisance of offences and penal provision for violation;
b. vested lands and properties in the plains and common land in hill districts and tribal
areas;
c. copy rights, particularly in relation to the Berne Convention 1954, patent rights vis-a-vis
the Agreement on Trade Related Aspects of Intellectual Properties (TRIPs),
administered by the WTO and penal provisions for violations;
d. insolvency and liquidation of business firms and industries, particularly, in relation to
jurisdiction, cognisance, and expeditious processing and disposal;
e. execution of decrees in relation to money suits;
f. protection of minority shareholders of public limited companies and employer-employee
relations in formal or organised sectors;
g. strikes and lockouts and civil commotions; and
h. unfair or inequitable access to or treatment by public utilities.

12.23 Marketisation and Control of Private Property

12.23.1 Earlier, in the heat of the drive at development based primarily on collective efforts and
the public sector, the emphasis, clearly unexpressed though, was on the control of private
properties. Recognition of the people as owners and controllers of the instruments and means of
production as in the constitution, in the current context of marketisation should be understood as
an enabling provision for using private property rights as an effective spurrer of production and
commerce i.e. promoter of `constant increase of productive forces' throughout the country for
the benefit of people as mandated by the constitution. This understanding seems to have already
converged out of deliberation within major political parties. The labour in the organised sector,
however, still seems to remain largely outside this understanding.

12.24 Administration of Criminal Justice

12.24.1 Apart from the laws relating to property rights and contracts, administration of criminal
justice is another conduit for resolution of conflicts amongst individuals. In recent years as a
litany of the neglect and partisan administration in the past crimes did not decline. The crime
combating machinery of the government has definite scope for improving upon their present
 219

level of performance. Socio-economic development cannot be accelerated in a situation pegged

by frequent and widespread crimes and criminality. Observers point out that the current crime
situation is yielded by (a) eroded values; (b) inadequate and inequitable opportunities for
livelihood and social mobility; (c) anticipation of criminals based on past experience that
criminality is condoned for political partisans; and (d) loss of confidence in the establishment.
Erosion of values is partly the resultant of emphasis on individual effort or private enterprise
propelled by forces of greed and profit. There is no denying that greed and profit are the very
forces that propel private enterprise. In a value system conducive to private enterprise, greed is
satisfied and profit earned by savings, hardwork, and creativity, and not by peddling of
patronages centring around influence over, and access to the power that be at various levels of
the society or the government. In this context, greed and profit-centred values need to change
emulating of virtues of austerity, hard work and creativity. Seeming erosion in current values
may thus be corrected by including, sustaining and cherishing these positive elements of the free
enterprise system. Such an acquisition may come over time through the educational system and,
following cues and examples given by leaderships in respective ambits of production and
management, may enter into the cultural norm of the society as an important constituent.

12.25 Ad-interim Steps

12.25.1 In the interim period, however, a number of steps seem to be in order for attaining and
sustaining equal opportunity and social mobility. These are :
a. quickest possible spread of primary education and health care;
b. relatively more emphasis on scientific and technological education and training;
c. merit-based and need-blind admission into higher educational and training institutions
followed by need-based extensive and full financial support by central and local
governments and private bodies and endowments;
d. depoliticised merit-based affirmative recruitment, and performance-based promotion
and deployment in government and parastatals and other organisations receiving public
financial support or lawful recognition;
e. equitable access to public utilities and credit institutions; and
f. enactments enjoining, promoting, and compelling non-discrimination on grounds of
gender, religion, race or political affiliation in all public and private organisations.

12.26 Role of Political Leadership

12.26.1 Confidence in the establishment may be sustained and cherished by the

administrative-judicial system. The process is likely to be accelerated through provision of
positive cues by the political leadership both within and outside the government. Within the
government, the political leadership should always encourage dispensation and decision-making
within the formal structure and following the formal procedure of the government. Informal
structures and procedures may be used to supplement the formal ones - not to supplant them as
has been the case in the past. All concerned may note, loudly and clearly that if in the process of
governance informal structures and procedures supplant the formal ones, the state as an
organisation, as the theory has it, ceases to exist. Likewise, the political leaderships outside the
government has to be conscious of the societal requirement to correct the process of governance
as constructive critics, and not to supplant it in their drive towards political ascent and power.
 220

12.27 Impartial and Fair Dispensation

12.27.1 Impartial and fair dispensation by the administrative and judicial systems without fear
or favour is a major building-block of public confidence. An apprehension of partial or unfair
dispensation may make an accused, even if he is innocent, flee off as a fugitive or drive him out
of the society as a rebel. Similar apprehension will encourage people at various levels or local
areas to dispense out immediate justice as perceived by them without taking resort to the
institutional course. The other important building-block is expeditious dispensation.
Inexpeditious and cumbersome dispensation tantamounts to denial of decision or service desired
by the people from the establishment. This makes them avoid and ignore the establishment and,
at times, to take law in their own hands, thus undermining the establishment. Making
dispensations and decisions expeditiously at all levels need, therefore, be aimed at as a conflict-
preventive measure.

12.27.2 Three Needed Steps: At least three steps seem to be in order in transforming the
administrative-judicial system in the right direction. First, as mandated by the constitution
(article-77), the office of ombudsman should be set up. With powers to investigate any action
taken by executive organs of the state, this will provide an important input to make the decision-
making in the government appropriately transparent and create ethos cherishing accountability
and responsibility in public service by all public servants and authorities. Second, parliament
may expeditiously enact laws regulating service conditions of persons in the service of the
republic as mandated by the constitution (article-133). Till such time an appropriate legislation
follows, the constitutional recognition of the traditional government servants as persons in the
service of the republic, dispensation of services and decisions by them may not be as impartial
and fair as desired. Needless to mention, partiality and unfairness in this process are likely to
generate discontents, protests and other manifestations of social conflict. Third, the most
important conduit for resolving inter-personal and inter-body conflicts is an independent judicial
system. At levels where adjudication by the judicial system touches, affects and benefits the
multitudes, constituents of its independence, at times and on occassions may be lacking. To
obviate discontents and conflicts arising as such, the founding fathers enjoined in the
constitution separation of the judiciary from the executive organs of the state (article-22).
Despite rhetorics over years, this has not been done in relation to the lower judiciary. The task of
separating the judiciary from the executive organs of the state warrants completion for
sustaining amity and consequent stability of the societal frame.

12.28 Corruption

12.28.1 The administrative and judicial systems are usually perceived as responsible for
combating corruption. Corruption is a crime committing of which results through collusive
arrangement between committing persons and persons legally and morally responsible for
combating such crimes. When persons legally responsible for combating the relevant crime
abets such committing they also commit the same or similar crime. Viewed as such, prevalence
of corruption is indicative of not only scale commission of crimes but also erosion of the state
apparatus legally and morally responsible for combating crimes and punishing the criminals.
Corruption, as of now, is generally believed to be quite widespread. It is perceived as a societal
disease impairing the vitals of the society. This, in turn, is ramifiable in obfuscating and
limiting the process of socio-economic development of the country. Such an impairment and
obfuscation make people lose confidence in the system and breed conflicts as between those
 221

who are parties to and gainers from corruption and those who are not and as such stand to
suffer or lose from corruption.

12.28.2 Categories of corruption: Analytically, corruption may be grouped into four

categories. First, corruption may creep into the formal decision-making process of the state at
high levels. The constitution, the laws in force under the constitution, the state organs and the
authorities set up under the constitution or laws under the same, delineate the formal structure
and the procedure for decision making in the state. If in this process informal structures and
procedures supplant the formal ones, vital state decisions may not be taken in public interest.
Decisions in such cases are either reflective of abuse of formal power or extension of authority
not required or warranted under the relevant law. In such cases state decisions are the resultants
of access, influence and patronage and serve vested interests of groups or quoteries of the
decision-makers. As theory has it, these are the cases of state corruption or corruption at high
levels. Second, corruption creeps in administering regulations and providing services in non-
economic fields of state activities or operations. This may be categorised as departmental
corruption in non-economic fields or transactions. Undue and underhand payments for
correcting land records, servicing or avoiding warrants and summons issued by lower courts and
quasi-judicial authorities, issuing passports, admitting patients into hospitals or students into
better schools or colleges and getting driving licenses or fitness certificates for vehicles are
examples of corruption of this category. More often than not, such payments are made to
expedite the process of certification in respect of conformity with the relevant regulation or
receiving the needed administrative service. These do not result in giving benefits or services
which the underhand payers are not entitled to; these merely expedite or smooth out the arcane
or otherwise ineffective administrative process. The resulting transaction costs in such cases of
corruption is relatively lower. Third, there are cases of under-hand payments to departmental
decision-makers for economic transactions benefiting the payers at the cost of their competitors
or peers. These may be categorised as departmental corruption in economic fields or
transactions. Making specifications of a set of work or a plant in conformity with advantage to a
chosen contractor, supplier or manufacturer in preference to others, award of contracts for or
work orders to those having under-the-counter connections, false certification of works done or
materials received are examples of corruption of this category. In most cases such payments
yield direct pecuniary benefits to the payers to which otherwise they may not be entitled. The
transaction cost involved in such cases is relatively high. As observers perceive, such cost
usually accounts for a portion of pecuniary benefits accruable to the first party to the collusive
arrangement. Finally, corruption manifests in avoidance of lawful pecuniary obligations and
liabilities in collusion with those entrusted to enforce or adjudicate these. Evasion of tax
payment, over-invoicing of imports and under-invoicing of exports, usurpation of other's
properties, concealment and use of public properties for personal use, etc., are examples of
corruption of this kind. In one way or other, these are cases of misappropriation of public
resources or funds.

12.28.3 Corruption at High Levels: Of all these, corruption of the first category i.e. state
corruption seems to be the most destructive. Corruption of this type, as already indicated,
manifests in taking basic or vital decisions of the state on considerations other than public
interest. Constitutionally, all powers of the republic belong to the people and their exercise on
behalf of the people has to be effected only under and by the authority of the constitution
(article-7). Exercise of these powers has to be thus in, and in furtherance of public interest by
constitutionally defined authorities following constitutionally laid down procedures.
Considerations other than public interest in decision making in such cases or levels may centre
 222

round personal or group interest. Serving personal interest may yield pecuniary benefits to the
decision-maker; serving group interest may strengthen the position of the decision-maker in the
group to the detriment of others outside the group. The basic decisions emanate out of the well-
defined organs of the state: the executive, the legislature and the judiciary. In case of
Bangladesh, a sudden announcement of an erstwhile Minister for Foreign Affairs recognising
the government of an intermittent rebel group in Cyprus or appointment of a junior officer as the
head of our permanent mission in New York on the basis of his relationship with the head of
the government in the 1980s or giving away unaccounted amounts to MPs of the ruling party
out of the Prime Minister’s Relief Fund as was done in the past may be cited as examples of
state corruption originating from the executive organ; legislation providing for tax-exempt
import of automobiles for the law makers themselves borders on being an example of not a
very good law originating from the law makers themselves. Formation of a special tribunal
outside the normal courts for trying persons allegedly committing offences under the ordinary
law of the land as was done for the so-called Agartala conspiracy case and willing association of
judges at the highest level of the judiciary in such a kangaroo court in the late 1960s may be
cited as the other example of state corruption pertaining to or involving a few members of the
judiciary. If basic decisions of the state by the executive, the judiciary or the legislature are taken
on personal or group considerations, or sold to the highest bidders, then the very social contracts
underlying the formation of the state are violated and the public trust reposed on state authorities
or organs, betrayed and eroded. Entrenched behind the power of the state and its resources,
corruption of this category is the most difficult to combat and contain. Despite the difficulty,
given its serious destructibility, this type of corruption calls for utmost attention of all
concerned.

12.28.4 Corruption in Non-economic Fields: Corruption involving administering regulations

and providing services in noneconomic fields may be considered from the view points of both
the collusive parties. From the side of those administering the relevant regulations and services,
(a) low remuneration package (b) ineffective hierarchical supervision and (c) inadequate public
vigilance are the propelling inputs into this collusive arrangement. From the side of those
gaining or benefiting from administration of the relevant regulation or provision of the needed
service (a) scarcity and consequent large size of the perceived or the realised value accruing
from affirmative administration of the relevant regulation or expeditious receipt of services
needed, (b) mad rush for competing out other potential receivers of benefits or services, (c)
absence of group unity or action against unethical conduct of the relevant administrators,
regulators, service providers and peers and (d) inadequate public vigilance are the originating
elements. To combat corruption of this category, these propelling and originating elements need
to be controlled or eliminated. Of these one important step will be to increase the remuneration
package of the administrators of regulations and providers of services. In case of corruption in
such a field, social cost (legal fees payable to the state + payments made to the collusive
functionary for obtaining a service or a regulatory benefit) is more than the prima facie legal
cost. A part of this divergence may be captured for increasing the formal remuneration package
of the relevant regulators and service providers while giving the relevant benefits or service in a
corruption-free way. This may be supplemented by decreasing the bloated size of the relevant
organisation. The other important step will be in terms of reducing the scarcity value. This may
be done by dismantling the unneeded regulation and increasing supply of the needed services.
Opening of a clinic in the capital city for instance, may be made to require registration by one
authority instead of permission from as many as 3 as is reportedly the case now. All citizens
except insolvents and fugitives from the law may be made entitled to passports as a matter of
right. Likewise, more schools, hospital beds and street lights may be set up in areas of scarcity
 223

under well publicised programmes. Admission into publicly supported better colleges may be
made contingent on merit alone encouraging the gifted students to converge to centres of
excellence as a matter of course as is the case in Singapore.

12.28.5 Corruption in Economic Fields: Similarly, corruption involving economic

transactions may be considered from the sides of both supply and demand. Underhand payments
or gratifications may be demanded by a departmental decision maker only when he has sizeable
control over pecuniary benefits of the potential gratification provider. By pursuing (a) vigorous
deregulation, (b) expeditious privatisation, and (c) promotion of competition in all sectors of
production and consumption in appropriate cases or areas such a position of control can be sized
down to canalise departmental operations into promotion of economic activities. Likewise
illegal gratification may be supplied or provided by a producing or consuming person or unit
outside the government when such a supply is likely to (a) yield high pecuniary benefit, (b) goes
unprotested by competitors and (c) is not noticed by the relevant supervisors of the gratification
receiver. Promotion of competition in the relevant ambits of production and consumption
coupled with internal and external vigilance on transparency or otherwise in decision-making
obviously are the steps that are in order in this respect.

12.28.6 Other Corruptions: Corruption involving avoidance of lawful obligations and

liabilities is indicative of inadequate adherence to the rule of law and prevalence of elements of
a weak state or a banana republic. In such cases, avoiders reach collusive arrangements with the
administrators and adjudicators of the relevant laws defining and executing pecuniary
obligations and liabilities. Here again, from the side of demand (a) poor remuneration package,
(b) lack of professional pride, and (c) inadequate internal and external vigilance are the collusive
elements. From the side of supply, (a) ability to influence the enforcing agencies, (b) non-
imposition of tax on unhonoured pecuniary liabilities and restrictions on further asset
acquisition before meeting lawful pecuniary obligations and (c) inexpeditious adjudication by
the relevant courts contribute to the miasma. To make the matter worse, the malaise has its
lopsidedness: mostly the rich avoid meeting lawful obligations and liabilities while the poor
face stiff enforcement. The widespread loan default in development financing institutions and
nationalised commercial banks relative to default of small agricultural borrowers of the 2
agricultural development banks and almost no default in the Grameen Bank is indicative of this.
The recent infusion of additional capital in the nationalised commercial banks through bonds
guaranteed by the government has shown acquiescence of the state apparatus to absorb the loan
default of comparatively big borrowers through permanent transfer of the burden on the
shoulders of common tax payers. The legislation debarring candidacies of the loan defaulters for
election to the local government bodies and non-imposition of similar restrictions on
candidacies for election to the parliament is indicative of a not-very-well-appreciated
discrimination breeding discontent in the society. To combat corruption of this category, the
contributing factors both from the sides of supply and demand, need to be corrected.
Commitment of the government in particular and the society in general will be the basic
propellers to account for the needed corrections of the norm and associated circumstances.

12.28.7 Syndication of Corruption: As ardent observers in the field have it, corruptions in all
these areas tend to acquire elements of syndication. Syndication in collusive crime committing
yields benefits, pecuniary or otherwise, across hierarchies of relevant organisations responsible
for providing services or enforcing cleansing in accordance with law. Needless to say when
syndication covers the relevant segments of such an organisation, corruption becomes an
inseparable procedural element in it in-as-much as it is supported and encouraged across the
 224

relevant hierarchies. This makes it very difficult to combat. In such a situation, the sincere and
honest in their minuscule minority fades out as nonconforming and inefficient. This means, in
other words, corruption needs to be confronted at the beginning and, in the inherited situational
context, right now.

12.28.8 Public Awareness and Vigilance Against Corruption: Ultimately, public awareness
and vigilance turn out to be the price of a clean and corruption-free state. While building up
public awareness and vigilance as components of a tradition sustaining and promoting
democratic governance may take time beyond a life time, freedom of information and media and
independent judiciary have much to contribute in the interim span of time. Fortunately for
Bangladesh, the supreme court seems to have come up with effective guardianship in this
respect. The recent justifiability of judicial proceedings against a former president and a number
of ministers on charges of corruption irrespective of their future outcome in terms of innocence
or guilt, as upheld by the higher judiciary of the country has set up a tradition of adjudicatible
public accountability at highest levels. Freedom of press, following recent amendments of laws
relating to press and publications and special powers of the government and setting in of an
environment of tolerance for views have also come as important bases of vigilance against such
corruption. These need to be followed up by an enactment for and in favour of freedom of
information entitling and enabling the citizenry to obtain information on matters relating to
personal or public interest. Additionally, in the light of experience of other countries, full
verbatim recording of deliberations and decisions of meetings of the cabinet, its subcommittees
including the purchase committee and taking these outside the cover of secrecy or
confidentiality (except in case of security matters) will be helpful. Such procedural reform will
impart justifiability of executive decisions following the principle of open adjudication pursued
by the judiciary. Formation and operation of an ethics committee in the parliament along with
continuous functioning of standing and adhoc committees and open public hearings and
deliberations in them will provide restraining elements against possible corrupt conduct at all
levels. In addition to the public accounts and public undertakings committees, there should be a
standing committee on finance and budget in the parliament. Arrangement should be made for
holding more frequent sessions of the public accounts committee and providing adequate staff
support for investigation and analysis. All budgetary measures comprising revisions in budget
passed and supplementary appropriation should be processed through the committee on finance
and budget deliberating and deciding through hearings open to the public. Needless to say, the
legislative control over the budgetary expenditures of the executive may become meaningless in
functional terms if statements of such expenditures are placed before the parliament after these
have already been incurred as has been the inherited practice. To an extent these measures will
desirably limit perceived interference of the legislators into executive actions and decisions at
national, regional, and local levels vitiating the lawful procedure based on the principle of
separation of powers for discharge of executive responsibilities at various levels of the
government.

12.28.9 Two Other Steps: In addition to the measures specific to the type, at least two other
steps of general nature and to an extent, overlapping with others already mentioned, need to be
delineated to combat corruption. First, the political leaderships at various levels may provide
cues to the bureaucracy and the society for discharging duties and responsibilities honestly and
legally. Such cues should also encourage the political activists and the people to adopt the
desired values sustaining and cherishing legal and moral incorruptibility. In this context one
may cite examples of political leaderships in Singapore and Malaysia. It needs to be noted,
corruption in its various categories will be impossible to combat successfully unless the political
 225

leaderships at various levels of the government can and actually give cues in the right directions.
Second, following provision of conducive cues from the political leaderships, the risk of the
parties involved in corruption has to be demonastratively made higher than the pecuniary or
other benefits accruing to them from the collusive arrangement. This is largely the
responsibility of the administrative and judicial systems of the country-having a large scope to
improve upon the current level of performance.

12.29 Gender Question

12.29.1 In recent years, questions centring round gender equality have become important and
demand to be answered expeditiously. Women comprise 48 percent of the population of the
country. Of this, 86 percent live in rural areas. The average age of women at marriage is less
than 18 years; on average a woman produces four children in her life time. Social norm against
remarriage of widows coupled with an average age gap of 10 years between men and women in
wedlock result in 90 percent of widowed population being females. Likewise, women comprise
94 percent of the divorced population of which 54 percent are below 24 years of age. As of now,
participation of females in labour force amounts to over 12 percent; in the manufacturing,
female participation is over 34 percent; and over 20 percent of all households of the country are
functionally female headed. Constitutionally, women in Bangladesh have equal rights with men
in all spheres of the state and of public life; they cannot be discriminated against or subjected to
any disability or restriction with regard to access to any place of public entertainment or resort
or admission to any educational institution on grounds of being women; they are entitled to
special provisions in their favour to be made by the state (article 28); they cannot be
discriminated against in respect of any employment or office of the state (article-29). In addition
to these fundamental rights, prevention of prostitution (article-18) and ensuring participation of
women in national life (article-10) are constitutionally accepted as two fundamental principles
of state policy. Further, guaranteeing of fundamental human rights and freedom and respect for
the dignity and worth of the human person is adopted as a principle fundamental to the
governance of the country (article-11).

12.29.2 Situational Considerations: Despite these constitutional rights and entitlements,

women across both classes and religions, have quite a scope to improve upon their status and
condition in terms of equality with men. If progress in this respect is not made or slowed down,
conflict breeding out of gender inequality as already observed, will increase in intensity with
fuelling from the borderless information media and fast changing economic circumstances.
Specific to the conduits for making progress are the following considerations:
a. Women's lives are organised, (particularly in rural areas) within a framework of
biological, labour and social reproduction of a society in which management of female
sexuality is central to the dominant male interest; in this frame high value is attributed to
female sexuality; this makes females acutely insecure, requiring a cultural norm of
isolation and protection to avoid possible female violation; in this cultural norm, a
violated female irrespective of causes or manner of violation, is treated as a female
fallen from virtue and left to earn her livelihood in any way she can; in this process,
resort to the oldest profession or prostitution by her is acceptable without its being much
stigmatic on male customers and patrons.
b. Under changing economic conditions, the aforesaid cultural norm breaks down, a
continuous deviancy from the acquired cultural norm about womanhood starts to win
over degradation of women as human persons; to accentuate such a break-down,
dynamics of those who break the norm, those who tolerate the breaking and those who
 226

uphold the norm need to be assessed and understood; as is perceived such a breaking
down has its class dimension; for the poor material or economic circumstances may
make men encourage women to break the norm and come out of chains of isolation and
protection.
c. As women come out of isolation, veils and chains into a working and pulsating lives,
they are likely to confront the 'double day' and consequently even 'double exploitation'
through the interplay of gender and class relations; the prevailing gender relations do not
usually release them from the primary responsibility for homestead chores even when
and after they enter the formal work place or the job market. Thus an extension of
female participation in male dominated work-world needs to be accompanied by
changes in traditional codes of household duties enjoining amongst others, cooking of
meals and rearing of children on females alone.
d. Evidently, there is male bias in the set of family laws in force; women across both
classes and religions have to struggle over their (i) inheritance rights in natal family; (ii)
rights to choose husbands; (iii) sexuality and pregnancies in marriage; (iv) rights to the
dowry which usually accompanies her at marriage; (v) property rights in the event of
husbands' death; (vi) rights over property and to subsistence in the event of divorce or
desertion; (vii) custody rights over children, their subsistence and education; and (viii)
procedure of separation and divorce. The laws relating to nationality in marriage,
equality of pay, maternity leave, protection against sexual harassment at work places,
etc., are either absent or unenforced.
e. Equality apart, research across countries in recent years shows that female education has
marked negative relation with fertility and infant mortality and strong positive relation
with life expectancy; likewise schooling is found to have important influence on choice
of number and quality of children; these are effects that influence long term growth of a
society. Specific to Bangladesh, equality of women with men is likely to have positive
effects on poverty alleviation. The female headed households constituting over 20
percent of all rural households are about the poorest reflecting widowhood, divorce and
abandonment, all virtually uncared for by the society.

12.29.3 Policy Measures: These five considerations point out as many mutually reinforcive
policy measures fraught with elements of social and economic conflicts:
a. Breaking the cultural norm centred round high valuation and consequent protection of
female sexuality: this is likely to create and even intensify conflict with the
fundamentalists and uneducated male chauvinists; widespread liberal arts education,
female literacy and collective effort by conscious and educated women to break the
traditional gender codes are likely to limit such conflict down to its ultimate winning
over by the forces favouring gender equality;
b. Providing women access to power through access to material resources: to this end some
definite ways are: (i) credit support following the principles developed by the Grameen
Bank and some NGOs working in the field; (ii) adopting a system or norm for joint
registration of properties by married couples during marriage; (iii) reform towards
equitable inheritance law; (iv) affirmative female employment policy; and (v) election of
women members of the parliament and local government bodies (against seats reserved
for women) by universal adult franchise of the relevant constituencies;
c. Changing the traditional gender code of division of duties of males and females: this can
be done through education, orientation and consciencetisation; NGOs working in the
field have already shown ways following which an initial and widespread break-through
can be made; public debates, open dialogues and affirmative actions by women
 227

organisations are likely to have positive effects; opening up all modes of employment in
the government and parastatals to women is likely to provide the needed pilotage in this
regard;
d. Making appropriate reforms in laws relating to family, inheritance, parental
responsibility, work place equality and nationality in marriage; these have to be taken up
by the parliament in conformity with the constitutional provisions and mandates; and
e. Extending education and health facilities with an effective and affirmative bias towards
women: to this end, the recently adopted subventions and supports to female education
in secondary schools and physically extended health care and family planning facilities
are steps in the right direction; these steps need to be strengthened through curricular
reform and improvement of the health and related service delivery system.

12.30 Structural Adjustment

12.30.1 In the economic realm, Bangladesh has already set its course on structural adjustment.
The starting point on this course - macro-economic disequilibrium - has largely been corrected
and already been almost passed. At this time, restructuring calls for (a) expeditious deregulation
and privatisation in keeping pace with trade liberalisation and reform in the financial sector; (b)
increasing savings and investments by linking them to high returns and profits; (c) decreasing
the bloated size of government and parastatals and state owned enterprises and (d) increasing
exports through more efficient use of labour. These are fully consistent with broad based growth
sharable across all income groups and capable of reducing poverty over time. In the short run,
programmes aiming at these objectives have elements of conflict; existing distortions and
privileges are likely to be defended by politically powerful groups, e.g. protected industries and
organised and politicised labour; domestic demand-reducing measures like withdrawal of
subventions and subsides are likely to hurt the poor; cuts in public spending at least in the short
run may limit down social services, transfer payments and safety nets. Given the commitment
for adjustment, these elements of conflicts may be sized down in terms of adverse effects, by
carefully designing the adjustment programmes in the light of poverty profile and its short term
indicators. These profile and indicators may be used to establish a base line for monitoring
poverty so as to associate the structural adjustment programmes with the socially corrective
measures aimed at target groups directly and by widening access to the relevant public services.

12.31 Areas of Attention

12.31.1 Specifically, three major areas call for attention in this context. First, reduction in the
size of the government will call for shaking off redundant employees, mostly at lower levels and
freezing the size of organisations in areas where marginal productivity is low or zero (e.g.,
defence and regulatory areas after some points). The pains in the process may be turned into
gains by encouraging and attracting the thrownouts and fresh employment seekers into directly
productive self-employment through opening up access to technology and credit and cherishing
higher productivity through increasing the size of return envelope for the remaining productive
ones. This can be facilitated through reaching an understanding among major political parties
and labour groups accepting structural adjustment as an economic sine qua non in the present
situational context. Second, the problem of landlessness and assetlessness has to be addressed in
the short and medium terms. The long term growth potential may not be justification enough to
postpone ameliorative measures at the initial stages. At these stages, extensive investment in
flood control and irrigation is likely to increase the labour component of agricultural production.
In the process, intensity of land utilisation coupled with the spread of water-seed-fertilizer
 228

technology will increase farm employment. Added to that will be required firmer enforcement
of the provisions of Land Reform Act, 1984, prescribing the shares of the landlord and the
sharecropper. At the same time, opening up opportunities for off-farm employment and
providing access to credit and technology to this end will have to be targeted in order to obviate
discontinuity in the social frame in the country side. And third, investment in social sectors will
have to be increased. To an extent this will be possible through reduction in or freezing of
unproductive expenditures in the government and parastatals. But even then, it needs to be
noted, investment in social sectors can be increased sizeably only on the basis of deep political
commitment of, and firm consensus amongst major political parties and interest groups.

12.32 Dictates of Comparative Advantage

12.32.1 In an opened-up competitive economy, following the postulates of structural

adjustment, production for consumption within and export abroad can continue and expand on
the strength of comparative advantage. Potentially, we have 3 elements of such advantage: (a)
gas-based cheap power; (b) abundant and cheap labour; and (c) efficient and economic
management. For keeping unit price of power lower in comparison with that charged, say, in
Mayanmar, India, Nepal or Srilanka, enormous system loss that pervades power distribution in
this country has to be arrested. This will bring the policy makers in serious conflict with the
robbers and suckers of the system-unscrupulous users of power and predatory workers. Given
the importance of power and its required cheap availability, an iron-fisted action is called for to
eradicate the malaise. Any softening down in this regard will pose a threat to the nation's
survival in the current globalised context. Likewise, despite rhetorics and platitudes poured out
or used in the realm of labour relations, economic necessity will require us to keep labour cost
in relation to a unit of production comparatively lower than that in other competitor countries.
Given this starting point, wages of labour should be monitored and promoted so as to allow
increase in them only in sync with increase in labour productivity. To attain and sustain societal
success on this front, consensus will have to be built up among the major political parties and
labour groups around the aforesaid postulates or principles. To this end, segmented collective
bargaining within the bounds of the relevant laws instead of politicised control or manipulation
at national levels as is the practice now, should be encouraged. This will yield higher wages in
sub-sectors as will be permitted by increase in productivity without disrupting cost of
production elsewhere. Considered currently, unquestionably management in private as well
public sectors has wide scope to improve upon. This can be done over time through revamping
the education system in terms of directions as well as quality of management. The newer and
needed directions may include extensive facilities for turning out more MBAs and BBAs and
lesser MAs and BAs in literature and culture, for example, emphasising newer fields like
process engineering, construction management, quality assurance, technological development,
informatics and even educational and health administrations. Besides a management culture
based on hard work, sincerity, creativity, innovative attitude and hands-on approach to problems
at hand need to be created, sustained and cherished. Various professional bodies may be
encouraged as catalysts in the process. The advantage that a manager in Bangladesh equally
productive on the floor as one in a developed country, for example, can be hired and retained at
one-fifth of the modal cost in the latter has to be secured and turned into a continuous process of
making profit and expanding production within and without.
 229

12.33 Caveat in Population Control

12.33.1 Nutrition and Education: The country has already attained marked success in
population control measures. This success is not, as observers in relation to experiences in other
developing countries point out, without caveats. First, birth rate accounted by affluent families
has gone quite down in relation to that accounted by the poor. One result of this is manifested in
malnutrition of the majority of the nation's children. As an estimate has it, out of every 4
children born this minute in Bangladesh, given the continuance of the current nutrition pattern,
only 1 will be physically and mentally healthy person in 15-18 years from now; the remaining 3,
for want of nourishment and continuance of wastage will be physically and mentally
handicapped or retarded. The possibility of the nation's becoming a collection of retarded lesser
beings in its majority looms rather large. This needs to be attended through delineating long
term general programmes as well as short-term target-oriented measures. Second, more children
produced and reared by the poor seems to have put up a social demand on continuance and
extension of the public education system. As experience has it, cost-based education in a private
system mostly meets the needs of children of the relatively affluent. In this context, while
encouraging setting up and operation of private schools and institutions for higher education,
extension of education by the central and local governments and increasing their utilisation for
overall human resource development will have to be provided for.

12.34 Promotion of Social Tolerance

12.34.1 Conflict in the process of socio-economic development is generated out of social

intolerance as well. As tradition of tolerance needs to be created, sustained and cherished to
accelerate and stabilise the process and as experience has it in other countries, educational
system perhaps provides the most significant input for creating ethos sustaining and cherishing
tolerance, freedom of thought and non-conforming attitude required to break though the
frontiers of knowledge and technology. The inherited emphasis on madrasha education, in
relation to religious education otherwise pursuable by other religious communities on their own
and consequently, at the expense of scientific and technological pursuits in general, may be
latent with elements of discomfort in this context. The education system on this ground needs
moulding and reforming. In the absence of liberal arts based education and science-centred
pursuit of knowledge, the system in its parts may degenerate into springboards of
fundamentalism, intolerance and consequent conflicts. All relevant role players - politicians,
educators, social opinion leaders and intelligentsia will do better by debating these issues for
arriving at a consensus.
230
 231

CHAPTER XIII

AGRICULTURE WATER RESOURCES AND RURAL DEVELOPMENT

Agriculture

13.1 Introduction
13.1.1 Agriculture plays a vital role in the growth and stability of the country’s economy as is
indicated by its share in GDP, employment and export earnings. At present, it accounts for
about one-third of GDP and employs about two-thirds of the labour force. Exports of
agricultural primary products accounted for about 12 per cent of total exports in 1996/97 and
if exports of agriculture based intermediate and industrial products (leather, jute) are taken
into account, its contribution comes to nearly 24 per cent. If the newly emerged ready-made
garments which contribute as much as 51 per cent of export earnings is viewed in domestic
value added terms, agriculture is the main source of export earnings of the country. Apart
from these, the role of agriculture is unique for food security and nutritional status of people.
However, as industrialisation proceeds, the output of agriculture will represent a declining
share of the gross output of the economy while the share of manufacturing and services
sectors will increase. Although the contribution of agriculture to the economy is likely to
decline, it will continue to be the single largest contributor to income and employment of the
rural population in the foreseeable future.
13.1.2 Crop agriculture represented a share of about 24 per cent in total GDP and about 73
per cent in agricultural GDP during 1996/97. Within crop sub-sector, foodgrain, particularly
the rice crop dominated the country’s agricultural scenario in respect of both cropped area and
production claiming a share of 74 per cent and 54 per cent respectively in 1996/97. Thus,
development of rice crop has substantial impact on the sector’s performance. There has,
however, been shift in the composition of agriculture over the past few years as indicated by
gradual decline in the share of crop agriculture and increase in the share of non-crop
agriculture (NCA) which consists of livestock, fisheries and forestry. The NCA, particularly
the livestock and fisheries, have, of late, taken off largely through private sector initiatives
showing robust growth of 7.98 per cent and 8.60 per cent respectively in 1996/97. Hence, it
is envisaged in the Plan to develop an integrated agriculture including crops, along with food
management, livestock, fisheries, forestry and environment through more efficient utilisation
of available land and water resources for sustainable agricultural growth.

A. Crops

13.2 Review of Past Performance

13.2.1 Bangladesh made steady progress in crop agriculture in the post-Independence period.
The cropping intensity increased from 148 to 179 per cent and foodgrain production almost
doubled during the period from 1969/70 to 1992/93. Contributing about 75 per cent of the
value added, crops form the largest sub-sector of agriculture. Rice is the dominant crop and
largely determines the rate of progress in the agriculture sector and to a significant extent, that
of the non-agricultural sectors. It covers about 75 per cent of the cropped area and accounts
for about 70 per cent of the value of crop output. In fact, the entire growth in crop production
is due to the growth in foodgrain production, particularly rice. Yield of other non-cereal crops
such as pulses, oilseeds and vegetables almost stagnated, while that of wheat did not increase
markedly.
 232

13.2.2 In 1993/94 and 1994/95, foodgrain production declined as a result of depressed prices
and natural disasters, particularly floods and droughts in the north-west, which is the
country’s surplus grain production region. The average foodgrain production during these two
years dropped to 18.71 million metric ton (mt) from the average of 19.31 million mt during
the preceding three years from 1990/91 to 1992/93. While drought conditions prevailed
during these years, the decline in rice production in 1993/94 also was due to both damages by
floods and the farmers’ response to the fall in the price of rice in the preceding year as
evidenced by more than 4 per cent decline in fertiliser consumption, more than 2 per cent
reduction in area sown and similar decline in irrigation command area. In 1994/95, total
foodgrain production was only 18.17 million mt as against the expected production of 20
million mt. This trend started improving from 1995/96 with a foodgrain production of 19.14
million mt. The year 1996/97 witnessed an all time high foodgrain production of about 20.43
million mt. Foodgrain production, though continues to depend on the vagaries of nature,
increased substantially over the years, following the introduction of high yielding varieties
(HYV) and application of modern inputs like fertilisers and pesticides; but its dependence on
weather continues resulting in fluctuations in production. Wide fluctuations in production
leads to large instability in foodgrain prices having serious implications for household food
security and also for the welfare of the people.
13.2.3 Production of jute fibre reached as high as 8.66 million bales in 1985/86. The
production level declined to 4.92 million bales in 1992/93 and hovered around this level since
then. Sugarcane production has remained more or less around 7.50 million mt since 1987/88.
Production of potatoes has shown a steady increase. It increased from 0.89 million mt in
1975/76 to 1.47 million mt in 1994/95. Other crops like pulses and oil seeds have shown only
marginal improvement nationwide. However, implementation of a crop diversification
programme (CDP) during 1990-95 in 125 thanas gave promising results in terms of yield per
hectare of maize, pulses, oilseeds, potatoes, vegetables, etc.
13.2.4 As regards performance of modern inputs, the irrigated area increased to about 4.00
million hectares in 1996/97 from the level of 2.65 million hectares in 1990/91. Ground water
irrigation covered 68.5 per cent of the total irrigated area while the surface water irrigation
was only 31.5 per cent in 1996/97. The ground water irrigation witnessed significant
expansion during the last two decades. Use of chemical fertilisers increased from 2 million mt
in 1990/91 to 3.02 million mt in 1995/96. Public sector seed distribution (mainly rice and
wheat) occupies only about 5 per cent of the total requirements. The large part of the seed
requirement is met by the private sector.
13.2.5 The reforms of the agriculture sector have been quite pronounced and visible. For over
a decade, a wide range of policy reforms have been implemented in the agricultural sector.
Few of these are privatisation of input distribution, withdrawal of input and food subsidy,
import liberalisation and a broadening of the scope of private investment in agriculture. In
recent years, the coverage of policy reforms in the agriculture sector has substantially
expanded to include minor irrigation equipment, agricultural machinery, seeds and
agricultural trade.
13.3 Fifth Five Year Plan
13.3.1 Sustainability of high yield and environmental protection remain the principal concern
in recent years. Loss of soil fertility followed by unbalanced use of chemical fertilisers, lack
of adequate quantity of water in some areas as well as their appropriate conservation and
management are the major factors causing divergence between potential and actual output of
 233

major agricultural commodities. Various studies indicate that the yield potential of the
existing HYVs of rice is more than 4 mt/ha, whereas the average yield of most of the other
varieties of rice is around 2 mt/ha. Major tasks during the Fifth Five Year Plan will be to
address these issues. The specific objectives of the Plan will be to:
a. increase productivity and real income of farming families in rural areas on a
sustainable basis;
b. attain self-sufficiency in foodgrain production along with increased production of
other nutritional crops;
c. encourage export of agricultural commodities, particularly vegetables and fruits
keeping in view domestic production and need;
d. promote adoption of modern agricultural practices in dry land, wetland and coastal
areas;
e. ensure sustained agricultural growth through more efficient and balanced utilisation of
land, water and other resources; and
f. encourage comparatively large farm to graduate into commercial farming.
13.3.2 Policies and Strategies : In order to achieve the objectives, the strategies/policies will
be evolved and adopted to bring about necessary technical change. The following will be the
specific policies and strategies:
a. improvement of the quality of seeds, particularly HYV and hybrid seeds and
increasing their quantity;
b. development of modern, irrigated and least-risk agriculture with greater reliance on
competitive markets through supply of agricultural inputs at low cost; making public
investment more effective and keeping it limited to key areas as required to
supplement private initiatives;
c. strengthening of the agricultural research and extension systems in order to develop
new technologies relating to crop varieties, integrated farming system, organic
farming, improved agronomic and agro-processing technologies, and for diffusion of
the proven technologies;
d. development and dissemination of ecologically sound and sustainable technologies
such as integrated pest management (IPM) techniques, and organic and bio-fertiliser
use;
e. increasing profitable production of minor crops and thereby maintaining a balanced
crop production and improving the nutritional status of the people;
f. development of suitable technologies in rain-fed, dry land and wetland farming system
to enhance the productivity;
g. restoration/improvement of soil fertility through better management of the organic
matter of soil to improve yields of crops; towards this end, production and use of
bio-manure will be encouraged;
h. assistance to small and marginal farmers in forming groups and associations which
can (i) enhance production and productivity, (ii) sustain agro-business enterprises on
their own, (iii) absorb more credit fund and (iv) adopt/disseminate technologies;
i. participation of NGOs in the agricultural development process;
j. improvement and conservation of plant and genetic resources through collection and
conservation of germ plasm;
k. facilitation of access to markets and the promotion of efficient marketing system;
l. formulation of integrated land use policy conducive to optimum use of agricultural
resources;
 234

m. implementation of measures to cushion and minimise the damage to agriculture and

rural economy brought about by natural calamities;
n. development of the capabilities of rural women and the youth to contribute more to
agricultural and rural development;
o. restructuring of the existing institutional set-up to cope with the changed need;
p. development of human resources through education, training and motivation;
q. development and dissemination of appropriate location-specific and cost-reducing
production and post-harvest technologies for reduction of post-harvest losses and the
removal of transport bottlenecks; and
r. adoption of policies and regulations that will ensure sustainable agricultural
development;
13.3.3 Major areas of public sector promotional activities : The crop production strategy
of Bangladesh will be based on the following central thrusts: (a) increased distribution of high
quality HYV seeds by the public sector; (b) accelerated transformation into irrigated
agriculture to increase and stabilise crop yields; (c) intensification of the cropping systems;
(d) decreased dependence on draft power through mechanisation and bridging of the yield
gaps in irrigated areas; (e) improvement of productivity and minimisation of production risks
in the rainfed, wetland, high land and coastal farming system; (f) diversification of farming
systems to take advantage of favourable agro-ecological conditions; (g) responding to
changing consumer demands and developing a more sustainable agricultural system; (h)
vertical co-ordination of the production, harvesting and marketing chain; and (i)
strengthening of extension, research and other support services.
13.4 Crop Production
13.4.1 Projection of crop production during the Plan has been worked out keeping in view the
production possibilities, agronomic consideration, availability of production inputs and
farmers' accessibility to resources and willingness to increase production within the prevailing
agro-economic condition. Emphasis will be put on increasing yield per hectare rather than
increasing cropped area and shifting from local variety to the HYVs. The purpose of
foodgrain production, in addition to attaining self-sufficiency, will be to provide nutritious
food for the entire population.
13.4.2 Bangladesh is endowed with favourable climate and soils for the production of a
variety of crops throughout the year. The winter crops are greater in number than the summer
monsoon crops. The production of major and minor crops lost balance in recent years due to
greater emphasis given on cereals, especially rice and wheat. The situation needs to be
improved for balanced diet of the people.
13.4.3 The production of minor crops such as pulses, oilseeds, vegetables, fruits, spices, etc.,
is currently inadequate to provide required nutrition in the daily diet of the people. Such
situation will not be allowed to continue. Accelerated production of minor crops,
complementary but not competitive with major food crops production as per requirement for
reducing pressure on cereals, will be pursued during the Fifth Plan period. This will improve
the daily diet of the people, generate rural employment by intensive cropping with improved
technologies, increase farm income and thereby increase the purchasing power of rural
masses. It will also improve the balance of payments by promoting import substitution and
export oriented crops.
 235

13.4.4 Fruits and vegetables are important sources of minerals and vitamins and provide a
part of calorie requirement in the daily diet of the people. They also provide most of the food
roughage which contributes to prevention of disorder of digestive system. Besides, vegetables
protein appear to be superior to animal protein. The nutrition status of the Bangladeshi diet is
on a declining trend due to low intake of vegetables, fruits and spices. The increased
production and intake of vegetables by the people will help compensate for debilitating
nutritional deficiencies.
13.4.5 The foodgrain production in the terminal year of the Fifth Plan has been projected to
be 25.12 million mt. Out of this, rice production is expected to be 23.40 million mt as against
the production of 18.88 million mt in 1996/97. The estimates of wheat and other coarse grain
production have been made at 1.60 million mt and 0.12 million mt respectively in the
terminal year of the Plan. The projected production of important crops have been shown in
Table 13.1
Table 13.1
Projection of Important Crop Production During Fifth Plan
(area in million hectare
and production in million m. tons unless otherwise noted)
Crops 1996/97 (Benchmark) 2001/2002 (Projection)
Area Production Area Production
1 2 3 4 5
Rice 10.40 18.88 10.11 23.40
Wheat 0.71 1.45 0.70 1.60
Sub-Total 11.11 20.33 10.81 25.00
Other coarse grain 0.10 0.10 0.12 0.12
Total Foodgrain 11.21 20.43 10.93 25.12
Potato 0.15 1.85 0.16 2.43
Sweet Potato 0.05 0.50 0.05 0.66
Oilseeds 0.50 0.37 0.70 0.76
Pulses 0.65 0.53 0.78 0.85
Spices 0.15 0.33 0.22 0.50
Vegetables 0.25 1.45 0.30 1.82
Fruits 0.19 2.14 0.26 3.54
Jute (million bales) 0.51 4.87 0.57 7.24
Cotton (million bales) 0.04 0.10 0.11 0.26
Sugarcane 0.18 8.10 0.18 12.37
Tea (million kg) 0.05 54.00 0.05 60.00
Tobacco 0.03 0.04 0.03 0.04

13.4.6 Maize and other coarse grains: Maize is now considered as a substitute for both
rice and wheat since it can be grown in all seasons. From maize one may get food, oil, fuel,
and fodder and feed. The present yield potential is too low. It can be increased to the level of
HYV wheat provided adequate demand is created and fair prices to the growers can be
ensured. The genetic yield potential of maize is very high. Bangladesh Agricultural Research
Institute (BARI) has already developed five high yielding medium duration maize varieties
with grain yield potential of 5-7 mt/hectare, suitable for flood prone areas. The maize
production is planned to increase by 250 per cent to 12,500 mt in 2001/2002 from the
benchmark production of about 5,000 mt. Besides maize, other coarse grains consisting of
barley, sorghum, bajra, and millets have considerable importance from the point of use of
water resource and development of agro-industries. Considering the increased importance of
these minor crops as supplementary food, cattle feed and industrial raw materials, increased
production programme for these crops will be taken up during the Fifth Plan period.
 236

13.4.7 Fruits vegetables and horticultural products: Environment in Bangladesh is quite

rich for production of a large variety of fruits and vegetables. Some fruits such as mango,
banana, pineapple, jackfruit, etc., have world demand. The main problem of fruit production
is its seasonal nature. Year-round production variety is yet to be evolved. Special efforts will
be made during the Fifth Plan to produce at least major fruits and vegetables on a year-round
basis and commercialisation of their production through appropriate research and
development programmes. At the same time, emphasis will be given on the qualitative and
quantitative improvement of various fruits and vegetables production, including production of
mushrooms, flowers, orchids and shrubs, etc., Production of fruits and vegetables has been
projected to be 3.54 million mt and 1.82 million mt respectively by the end of the Plan period.
13.4.8 Potato : Potato is suitable as a security crop in times of rice shortages due to its high
carbohydrate content contributing to improved food security. This is also used as a vegetable
by various income groups of the country. Since it is a short duration crop, its increased use
can reduce the pressure on rice and wheat. Considering the production potential of the crop,
potato production is projected to grow to 2.43 million mt in 2001/2002. The increased
production is expected to come from expansion in cropped area and increase in yield per
hectare. To this end, true potato seed technology will be encouraged and adopted.
13.4.9 Sweet potato : Sweet potato is considered as a subsistence as well as a poor people’s
food. Hence, its production will be encouraged on marginal lands, homestead areas, road
sides and elsewhere as a low input crop to ensure its continued availability to, and
affordability by low income consumers. Sweet potato production is projected to be 0.66
million mt in the terminal year of the Fifth Plan.

13.4.10 Pulses: The pulses of Bangladesh comprise of six major crops, namely, lentil,
khesari, blackgram, mungbean, chick-pea and pigeon pea. Cowpea occupies an important
place in the Chittagong area. The cropped area and production of these pulses have been on
the decline over the past few years mainly because of the increased emphasis on HYV rice
and wheat. But pulses are very important because of protein supply to the human diet and
nitrogen fixation for soil nutrition. Since improved technology can increase per hectare yield
of pulses substantially, pulse production is projected to grow to 0.85 million mt in the
terminal year of the Plan as against the benchmark production of 0.53 million mt.
13.4.11 Oilseeds: Vegetable oil from oilseeds are the main sources of fats in the average
Bangladeshi diet. Its present level of consumption is only 25 per cent of FAO/WHO
recommended level. Efforts will be made to increase oilseeds production to 0.76 million mt
by the terminal year of the Fifth Plan. Groundnut, sunflower and soyabean have been included
in this projected production. New seed varieties are being used in the defined area to avoid
cross-pollination. Production of foundation and certified seeds of improved varieties and
demonstrations of modern technology are important strategies to increase oilseeds production
of the country.

13.5 Cash Crop Production

13.5.1 Jute: Jute is the major fibre crop of the country. Despite the relative decline in
importance of jute in agriculture, potential still exists for the fibre to increase its contribution
to the economy through productivity increases and diversification. The share of raw jute and
jute goods in the total exports of the country has been declining but this still remains
significant. In this situation, special measures will be taken during the Plan period to
 237

encourage farmers to further intensify jute production in order to satisfy domestic and export
demand. To enable jute to compete with synthetics, emphasis will be given to related
agricultural and technological research efforts. The raw jute production is projected to go up
to 7.24 million bales in 2001/2002 as against 4.87 million bales in 1996/97 through per
hectare yield increase, availability of better quality seeds, improved provision of extension
and credit support to growers.
13.5.2 Tea: Tea is one of the most dynamic agro-based, labour intensive, export oriented
industries of Bangladesh. It plays a vital role in the national economy in both export earnings
as well as in employment generation. Plantation and production of processed tea are the two
main activities in the private sector. In the public sector, green leaf production was promoted
through development projects implemented by the Bangladesh Tea Board. With the
introduction of high yielding varieties, quality planting materials, timely application of
production inputs and installation of modern machinery, tea has undergone further
improvement and enabled Bangladesh to compete more effectively with other exporting
countries. Increased production is expected to come from higher yields and by reducing tea
vacancies now existing in the garden.

13.5.3 Tobacco: Tobacco is one of the important cash crops of the country. The crop grows
well in sandy, well-aerated, well-drained soils and cool climate. Hence, it is grown as a rabi
crop and most of the area is concentrated in the greater districts of Kushtia and Rangpur.
Due efforts to expand tobacco cultivation since 1973/74, through support from big cigarette
manufacturing firms, made it possible to achieve self-sufficiency in tobacco production by
1980/81. However, recognising tobacco’s adverse effects on health, policies will be adopted
to limit its production with gradual reduction of cropped area in favour of cotton and pulses.
The production of tobacco has been projected to be 0.04 million mt by the terminal year of
the Fifth Plan.

13.5.4 Cotton: Cotton has played a very important role in improving the socio-economic
conditions of the farmers during the previous Plan period. The production has gone up from
45,800 bales in 1983/84 to about 1,00,000 bales in 1996/97. The yield of seed cotton per
hectare has reached a reasonably high level; yet the yield of cotton in the country is low
compared to world standards. The major constraints to increased production are inadequate
ginning capacity and seed multiplication programme, insufficient expertise and material
resources, inefficient system of management and ineffective extension and marketing
organisation. Textile mills should encourage commercial plantation through co-operatives in
suitable cotton belts. During the Plan period, efforts will be made to provide loans to farmers
to ensure supply of improved seeds, fertilisers, plant protection measures, irrigation and credit
facilities to the growers along with the practising of improved technologies in the cotton
fields. The cotton production has been projected to be 0.26 million bales by the terminal year
of the Fifth Plan as against 0.10 million bales in 1996/97.

13.5.5 Sugarcane : Sugar is the country’s most important agro-industry and sugarcane is
one of the important cash crops. Sugarcane is grown as a 12/15 month crop in a two year
rotation with aus rice crop during the monsoon season followed in the dry months by oilseeds,
wheat, or vegetables. Sugarcane yields in the country are low by world standards and the
quality is poor. The average yield of sugarcane is about 6.1 mt per hectare with a sugar
recovery rate of 8-10 per cent. Sugarcane is grown on about 0.18 million hectares of land. Of
this, about 0.95 million hectares are in the sugar mill zone areas and the rest in the non-mill
zone areas which produces sugarcanes mostly for making gur consumed by the rural people.
 238

Research efforts will be strengthened to raise yield per hectare through varietal improvement,
better management of water resources, fertilisers and other inputs, improved cropping
systems and development of sugarcane delivery system from farms to mills. Considering the
past consumption trend, milling capacity and possible growth rate of production, sugarcane
production is projected to be 12.37 million mt in the terminal year of the Fifth Plan as against
the benchmark production of 8.10 million mt.
13.5.6 Crop diversification : Bangladesh is endowed with a favourable climate and soil for
the production of a variety of crops all the year round. Thus, ample opportunities exist for
crop diversification balancing the production of major crops with that of minor crops. The
minor crop production has substantial potential, if seasonal fallow land is brought under
cultivation with seed-fertiliser-irrigation technology packages. Crop rotation, i.e., exhausting
crops followed by recuperative ones, shallow rooted crops by deep rooted ones, legumes
followed by non-legumes, etc., is envisaged to enrich and maintain soil fertility. Besides,
diversification of cropping pattern, particularly towards the production of high value crops,
will contribute to enhance farmers’ income and to help maintain a better soil structure for
long term sustainability. Efforts will be made to explore the possibility of introducing a non-
rice crop in between aman and boro through adoption of shorter duration rice varieties and
shifting of the timing of crop establishment and harvesting. Lack of technological
advancement is the main constraint to diversification of crops. In order to accelerate
technological advancement, possible strategies will be to:
a. develop HYVs and use hybrid technology and genetic upgradation of non-cereal crops
and strengthen seed production programmes, particularly in the private sector;
b. introduce diversified cropping systems in order to free upland areas in winter season
for non-rice crops so as to facilitate introduction of third crop on the land and under
irrigated condition; short duration mustard can be introduced in between boro and
aman seasons; and
c. introduce extensive extension services, improve drainage and water management,
ensure timely planting and soil fertility management, develop infrastructure and post-
harvest processing and provide marketing facilities.
13.6 Special Agricultural Zones
13.6.1 Apart from plain land agriculture, there are special agro-ecological zones which have
quite high growth potentials. Specific development policy, strategy and programmes for
these zones are needed to exploit the existing potentials of the areas: (a) the upland in the
hilly areas of Chittagong, Chittagong Hill Tracts and Sylhet, (b) the wetland in greater
Mymensingh, Sylhet, Jessore, Pabna, Rajshahi, etc., and (c) the coastal areas of southern part
of Bangladesh. Each requires distinct set of policies, strategies and programmes because of
differences in agro-ecological environment. Research, extension and input delivery will be so
designed as to meet the specific requirement of these special agro-ecological zones.
13.6.2 Rainfed farming: Crop production in Bangladesh is predominantly monsoon
dependent. Of the total rainfed areas, about 3 million ha is estimated to be prone to severe
drought. The entire Barind and Modhupur Tracts constituting about 12 per cent of the total
arable areas are characterised by shallow soil depth having low moisture holding capacity and
heavy sub-surface clay. Crop production in these areas and in the Gangetic flood plains is
mainly dependent on rainfall and on the inundation from the Ganges river and its tributaries.
However, for the whole of the Ganges belt, including the Barind and Modhupur Tracts, no
rainfed farming practice specially suited to the prevailing soil and agro-climatic condition has
 239

yet been developed. There is, thus, an urgent need to develop drought tolerant crop varieties
and drought mitigating technologies that will make maximum use of the land resources of the
rainfed farming systems. Rainfed farming practices will also include supplementary irrigation
which will help increase crop production during the kharif season.
13.6.3 Wetland farming: Large areas of wetland commonly known as beels, baors and
haors in the greater districts of Sylhet, Mymensingh, Jessore, Rajshahi and Pabna hold quite
high potentials for the development of crop agriculture and fisheries, in particular. Crop
agriculture and fish production can grow simultaneously. Besides, preservation of bio-
diversity of the wetland will be given high priority. Greater attention will be given during the
Fifth Five Year Plan to exploit the potentials of crop agriculture and fisheries through
provision of situation specific package of development programmes for research, extension,
input supply, etc.
13.6.4 Coastal farming: Coastal areas in the southern part of Bangladesh constitutes a
specific ecological zone having its specific problems and possibilities. Cyclones, tidal bores,
salinity, etc., visit these areas frequently affecting agricultural output. Therefore, there is need
for developing salinity resistant variety of rice, for example, for these areas. Coconut, betel
nut, palm and mangrove are major cash crops in these areas. Location specific research,
extension and other programmes will be developed and provided for the purpose of exploiting
the potentials.
13.6.5 Hill farming: The upland in the hilly areas of the greater Chittagong district,
Chittagong hill tracts and Sylhet district constitute a special agricultural zone requiring
location specific services and programmes. High potentials exist for production of fruits and
vegetables in these areas. Agricultural development potentials in these areas are quite
substantial. Resources will be provided to develop appropriate technology that are suitable for
upland agriculture.
13.6.6 Cropping intensity : Bangladesh has, by 1996/97, achieved an estimated cropping
intensity of about 185 per cent. Out of the net cropped area of 7.60 million hectare, about 55
per cent is double cropped and approximately 15 per cent triple cropped. However, about 30
per cent is still single cropped. Since all the suitable land is already under cultivation, raising
the intensity of land use is needed. It is expected that cropping intensity will reach 192 per
cent by the terminal year of the Fifth Plan. Cropping intensity from 1992/93 to 2001/2002 is
shown in Table 13.2.
Table 13.2
Cropping Intensity From 1992/93 to 2001/2002
(area in million hectare)
Net Land Area Total Cropped Area Cropping Intensity
1992/93 7.64 13.70 179
1996/97 7.60 14.08 185
2001/2002 (Projection) 7.50 14.41 192

13.7 Agricultural Inputs

13.7.1 Fertilisers: In Bangladesh, despite manifold increases in fertiliser consumption, per
hectare use of it is still one of the lowest. With the privatisation policy of the government,
fertiliser distribution programme has fully been handed over to the private sector. Total
fertiliser consumption during 1996/97 was about 3.45 million mt — urea 2.41 million mt,
TSP and SSP 0.69 million mt and MOP 0.35 million mt. These are projected to increase in
aggregate to about 4.50 million mt, of which urea will be 2.90 million mt (64%), TSP and
 240

SSP 1.00 million mt (22%) and MOP 0.60 million mt (13%) by the end of the Fifth Plan.
Actual application of various types of fertilisers is disproportionate to standard NPK ratio of
1 : 0.5 : 0.5. Fertiliser use at farmer level is dominated by urea (about 70%) followed by TSP
and SSP (20%) and MOP (10%) causing damage to soil structure and thereby constraining
per hectare production of various crops. Following withdrawal of explicit subsidy from
phosphatic and potash fertilisers and also transfer of its trade to private hands, relative prices
of these items have gone up, while urea is reported to be sold at below the cost of production.
The price of urea was reduced in July, 1994 and early, 1995. This distortion of relative price
of urea is said to have aggravated unbalanced use of fertilisers in favour of nitrogenous
fertilisers or inadequate application of non-nitrogenous fertilisers such as TSP and MOP.
Therefore, in view of actual field position and experiences gained so far, it is realised that the
public sector interventions might be required in case of market failure for (a) ensuring
balanced use of fertilisers, (b) maintaining a buffer stock of fertilisers to meet emergency
needs, (c) distribution of fertilisers in the remote areas, (d) encouraging increased use of
organic and bio-fertilisers, and (e) training the farmers by the extension people in using
appropriate doses and combination of fertilisers.
13.7.2 Seeds: Quality seeds in right quantity are recognised to be one of the key elements
for enhancing agricultural production. At present, BADC, as per seed policy 1992,
concentrates its efforts on the production of HYV seeds of paddy, wheat, potato, jute and
sugarcane in the seed farms and also uses farmers to multiply seed on contract basis.
Production programme of all other crops beyond foundation seed will be done by contract
growers. With the introduction of seed policy, emphasis has been given to private seed
growers development. However, the public sector will conduct basic scientific research,
support or conduct breeding work for self-pollinated and minor crops for greater suitability to
divergent agro-ecological zone. Public sector will also carry out programmes for training and
support services for private research and development, variety testing and registration, plant
material inspection and maintaining germplasm, supporting seed associations and promotion
of farmer or community-based seed programme. The concerned agencies under the MOA will
be further strengthened in order to ensure quality of seed at all stages of its production —
breeder, foundation and certified seed. Emphasis will be given on creating facilities and
infrastructure support for hybrid seed research, marketing and development. Farmers will be
given training and technical assistance to extend improved methods of seed production,
testing and storage. Total production of all types of certified and foundation seeds has been
around 45,000 mt during 1996/97. This is expected to reach 62,000 mt by 2002. At present,
only about 5 per cent of total certified seed requirement is met from BADC sources. This
needs to be raised to at least 10 per cent to match 25.12 million mt of foodgrain production
as projected in the Fifth Plan. To this end, BADC seed wing will be strengthened and
restructured. Agricultural Research Institutes (ARIs) along with other research organisations
under National Agricultural Research System (NARS) will upgrade and strengthen research
in order to give full support to augmenting breeder seeds of new varieties. Seed development
accounts for about 28 per cent of total financial provision for the agriculture sector during the
Fifth Plan.
13.7.3 Irrigation: Availability of appropriate quantity of irrigated water from (a) surface
water through gravity flow and LLP, (b) ground water through DTW, STW, HTW FMTW,
DSSTW and VDSSTW, etc., and (c) other sources will be the main factors behind the
growth of agriculture during the Fifth Plan. Total coverage of irrigation through all these
sources in 1996/97 is estimated to have been around 4.00 million ha which is projected to
increase to 5.04 million ha in 2001/2002. This is about 67 per cent of total potential irrigable
 241

areas of 7.56 million hectare. In addition, flood control and drainage facilities are projected to
cover 4.90 million ha during 2001/2002 as against the estimated coverage of 4.20 million ha
in 1996/97. Flood control and drainage programmes will support and assist increased
agricultural production during the Fifth Plan.
13.7.4 Plant protection: Actual plant protection activities are in the private hands. However,
the public sector programmes are confined to qualitative and quantitative aspects of plant
protection: pests surveillance, monitoring and early warning against pest attacks, advisory
service to farmers, traders and others dealing with pesticides and quality control of pesticides
marketed by the private sector. In the Fifth Plan period, the integrated pest management
(IPM) programme will be intensified and expanded in order to safeguard crops from pest and
combat environmental degradation due to pesticide uses. Agricultural extension workers are
responsible for providing advice to the farmers on appropriate plant protection measures.
Collaboration among the local government representatives, extension workers and the NGOs
will be sought to expand IPM programme. Farmers will be given training in the use of
different pesticides through demonstration.
13.7.5 Agricultural credit: Till recently, the major part of agricultural credit to farmers has
been channelled by informal sources catering to the needs of short term credit. Semi-formal
institutions, NGOs, Grameen Bank, etc., also provide target groups credit in the rural areas.
The third source in terms of credit volume is the formal sources comprising the nationalised
commercial banks and agricultural and specialised banks, i.e., Bangladesh Krishi Bank
(BKB), Rajshahi Krishi Unnayan Bank (RAKUB) and Bangladesh Samabaya Bank (BSB).
During the Fourth Plan, the total volume of agricultural credit increased by 150.20 per cent;
the highest increase being for fishery (831.50%) followed by livestock (341.30%), crop sub-
sector (214.30%) and others (93.40%). However, in recent years, there has been a significant
cut in the share of crop sub-sector in the total credit delivery to the agriculture sector from
formal sources. The share declined from 46.38 per cent in 1994/95 to 42.29 per cent in
1996/97. A major reason for this is the serious problem of low repayment due to weak
lending and recovery operations, inappropriate use of loans, frequent occurrence of natural
calamities and loss of crops and weakening of the public price support policy. The low
interest rate to this priority sector dissuades financial institutions from further lending to
agriculture. Moreover, since 1991/92, central bank discontinued its refinance facility for
extending agricultural credit except for the BKB, RAKUB and the Sonali Bank. These factors
dampened the expansion of agricultural credit. In the Plan period, agricultural credit,
especially for marginal and small farmers will be geared up in order to encourage steady
expansion of agricultural output supported by appropriate public policies to ensure fair prices
to farmers. Otherwise, over 6 million farm households will be exposed to uncertainty. In
addition to the existing programme, special credit programme will be launched aiming at
providing credit, particularly to the small and medium farmers. The commercial banks will be
encouraged to provide funds to large farms to enable these to operate on a commercial basis.
Keeping this in view, the Fifth Plan envisages to increase yearly agricultural credit
disbursement. An amount of Tk.30,000 million is projected to be delivered as credit to
agriculture in the terminal year of the Plan.
13.7.6 Mechanisation of agriculture: There is a serious dearth of animal draft power to
cater for the growing needs of an expanding modern agriculture. The available animal draft
power is inefficient and unreliable. As against this, agriculture mechanisation can help in
improving productivity, reducing cost of production, increasing efficiency, increasing inputs
use (water, seed, fertiliser, labour) and achieving timeliness of crop production operations.
 242

Agricultural mechanisation is needed for quick turn-over time and high input use efficiency.
Land preparation, irrigation, insecticides spraying, threshing, crushing and shelling, husking
and milling have been partially mechanised and their magnitudes are expanding gradually
throughout the country. There is a need for continuous development of more efficient and less
costly equipment so that farmers can benefit. Since agriculture is still the mainstay of the
economy, promotion and development of agro-related metal working industries to provide
support to agricultural production is a major concern. Selective mechanisation based on the
traditional devices conducive to productivity will be adopted. In the context of market
economy, emphasis will be given to the collaborative role of public and private sectors in
technology development and its diffusion. An appropriate policy framework for sustainable
development of farm machinery manufacturing will be pursued in the Fifth Plan period.
13.7.7 Agricultural Insurance: Agricultural insurance has been recognised as an important
component of agricultural development strategy. It seeks to protect farm investment through
indemnification of losses to crops, forestry, livestock, fisheries and other farm resources that
are vulnerable to natural hazards and other insurable perils and thereby provides security to
farm income. It can also be significant to the agricultural credit agencies in times of natural
calamities with insurance policies standing as collaterals for loans. With this end in view,
crop insurance programme was at first launched in Bangladesh in 1977. Being entrusted with
it, Sadharan Bima Corporation (SBC) carried out a pilot project to provide multi-peril
coverage to major cereal crops (aus, aman, boro and wheat) as well as to major cash crops of
jute and sugarcane for stabilising farm income. Livestock component was included in 1981.
But, for various reasons, the performance of the project, particularly in respect of crop
insurance was quite poor. Due to weak loss assessment system, indemnity payments far
outstripping premium incomes resulted in mounting losses to SBC. In the absence of any new
initiative to revamp the crop insurance programme, it was discontinued with effect from mid
1995. Livestock insurance has, however, been retained as it has continued to perform
relatively well. During the Fifth Plan, efforts will be made for the development of a
comprehensive agricultural insurance programme.
13.7.8 Agricultural marketing and prices: With a more intensive system of crop
production and the increasing emphasis on diversification, marketing problems, particularly
with perishable crops, have already multiplied and are likely to multiply further unless the
needed remedies are introduced. Marketing costs are already high because of inadequate
infrastructure, high price risks and the lack of credit to traders for marketing activities.
13.7.9 Among the vast number of primary and secondary markets in the country (about
7,800), the Department of Agricultural Marketing (DAM) is responsible for fixing market
charges in 393 markets only. The market centres are under the control of the Ministry of Land
which owns the land and collects marketing fees from sellers. The DAM, during the Fifth
Plan period, will be strengthened to provide improved marketing services with a view to
ensuring fair returns to the growers for their produces and adequate supply to the consumers
at reasonable prices through the improvement of market conditions, reduction of marketing
costs, regulation of market practices and market promotion for agricultural crops like maize,
soyabean, potato, sunflower, etc. Wholesale market development, promotion of agro-
processing industries, market management, creation of MIS in DAM, classification, grading
and standardisation of agricultural products, improvement of storage facilities, particularly for
marginal and small farmers, setting up an Agricultural Price Commission to make price
forecast, production estimate and to make recommendations on the economics of productions
and marketing are some of the specific programmes that will be undertaken during the Fifth
 243

Plan in order to ensure (a) fair price, (b) quality of agricultural products both for domestic
consumption and export and (c) increased production with stable price.
13.8 Agro-processing
13.8.1 Bangladesh experiences seasonal surpluses in several agricultural commodities of
perishable nature. Development of agro-processing facilities can prevent post-harvest losses
and enhance farmers' income. The agro-processing industries are at present in their nascent
stage of development . Most of the technologies and facilities for handling, storage,
processing and packaging of farm products and by-products are substandard and outdated as
they cater primarily to the domestic market. There is considerable under-utilisation of
capacity also.
13.8.2 The scope for the privatisation of support services such as research and extension is
likely to remain limited. However, agricultural research institutes like BARI and BRRI will
carry out research on technology development for agro-processing. Meanwhile, some
technologies are already available with these institutes for the development and growth of
agro-processing industries in the country. Nevertheless, some specialised extension activities
could be delegated to the private sector such as those related to fruits and vegetables
enterprises.
13.8.3 This process of supporting agrobusiness will be continued and strengthened during
the Fifth Plan period. In this regard, two institutional developments in recent years are
noteworthy: the establishment of HORTEX, a private board for horticulture promotion and
the Agro-based Technology Development Project (ATDP) which conducts regular monitoring
of the country's agrobusiness markets and provides information about the development in
foreign markets and opportunities for agro-industries. These projects also support
entrepreneurs with credit facilities.
13.9 Agricultural Research
13.9.1 Autonomous research institutes like BRRI, BARI, BJRI, BINA and BSRI were
established with specific mandates for crop agricultural research in order to make the research
system more service oriented and dynamic. National Agricultural Research System (NARS)
with all the agriculture related research institutes under the co-ordinated leadership of
Bangladesh Agriculture Research Council (BARC) has been established.

13.9.2 The research system needs to re-examine its focus and re-order its priorities, avoid
fragmenting and duplicating its efforts, orient its approach from commodity based to farming
system or integrated production system and strengthen its planning, programme monitoring
and co-ordination. The research system should also strengthen its linkages with extension in
the Plan period. Agro-ecological zone-based research will be undertaken. The criteria for
evaluation of research programmes towards rates of adoption of research output by end- users
and the system of accountability of individual research institution, research administration
and personnel will be reviewed and made consistent with actual needs. Problem-solving
researches will be given priority. Criteria for identification and selection of contract research
programmes by the private sector and NGOs will also be developed in response to the
changing environment at farm level. In the same way, priority list will be evaluated annually
to accommodate changed needs and circumstances. Keeping in view these objectives and
strategies, the following tentative research priority areas have been identified:
a. improvement of foodgrain quality with more digestible protein;
b. increase in efficiency in water use in rice cultivation;
 244

c. integrated plant nutrients and soil quality;

d. post-harvest technology, preservation and relevant agricultural machinery;
e. higher photosynthetic efficiency;
f. nitrogen fixation by non-legumes;
g. technologies for maximum use of commodities and their by-products for value
addition;
h. fruits and vegetables for off-season production including preservation, storability and
tolerance to transportation damage;
i. environmental issues and IPM;
j. development of varieties tolerant to stresses (e.g. drought, salinity, water logging);
k. development of hybrid technology for vegetables, maize and sunflowers;
l. management of soil and plant nutrients with balanced use of organic nutrients;
m. management of on-farm water resources in both irrigated and rain-fed agriculture;
n. conservation of soil, plant and genetic resources;
o. assessing the environmental impacts of declining ground water level;
p. research on tillage operation to reduce turn-around time, multiple cropping and relay
cropping;
q. rainfed technology with major thrusts on development of crop cultivation and
management practices (e.g. zero/minimum tillage, relay cropping, appropriate planting
schedule and use of fertilisers including micro-nutrients);
r. post-harvest handling and storage, primary, secondary and tertiary processing of farm
products and by-products, including pulses, oilseeds, potato, vegetables and fruits;
s. development and pilot testing of different scales of producers-processors agrobusiness
schemes, including contract growing schemes;
t. management of hill agriculture in the eastern and south eastern parts of the country, to
harness the agriculture in largely mono-cropped Barind tract, characterised by
drought, low organic matter and sub-surface heavy clay through identification of
suitable crops varieties and soil/water management and agronomic practices;
management of coastal saline soils; and
u. genetic engineering and tissue culture.
In terms of financial outlay, the agricultural research will absorb about 12 per cent of this
sector’s total development outlay during the Fifth Plan period.
13.10 Agricultural Extension
13.10.1 Transfer of technologies and diversification and intensification of crop production
programme through appropriate extension services are of crucial importance to Bangladesh
agriculture. The extension services must be able to render the needed technical advice and
management support at the appropriate time and place. Currently, the extension service draws
its strength from research findings as well as from farmer’s innovation. On the one hand, it
acquires up-to-date findings from research and transfers them to the farmers, and on the other
hand, it brings feedback in the shape of farmers' problems to the concern of research for
possible solution and again takes back the results to the farmers for their field adoption.
Strengthening of these three way linkages among research, extension and farmers community
is vital for the development of a strong and effective new agricultural extension policy
(NAEP). The Regional Technical Committee (RTC) and District Technical Committee
(DTC) have been replaced by 18 Agricultural Technical Committees (ATC), each covering
2-6 districts in similar agro-ecological zone (AEZ). The composition of National Technical
Co-ordination Committee (NTCC) has been amended to include representatives from NGOs
 245

and farming community also. Agricultural extension together with nutritional awareness
programme will receive about 8 per cent of the agricultural development Plan outlay .
13.10.2 Strategies to develop extension services: The following will be constituents of
strategies to develop extension services:
a. development of qualitative demonstration, field days, agricultural exhibition;
b. farming system approach to extension system;
c. non-commodity approach, i.e., irrigation technology, seed technology, on-farm water
management technology and uses, IPM;
d. strengthening of field level activities through proper delegation of authority from
headquarters to field level;
e. priority to marginal and small farmers;
f. development and promotion of environmentally sound farming practices; and
g. involving local government bodies, especially union and thana parishads in the
process;
13.10.3 Local government bodies will co-ordinate, monitor and supervise the activities of
agricultural extension service at the grassroots level. The NGOs, local government
institutions and the extension personnel will work jointly for extension services. The role of
BADC will be re-structured in accordance with the findings and recommendations of the
recently formed Agriculture Commission.
13.10.4 Agricultural and rural training: In addition to higher education at agricultural
colleges and the University, several other training institutions teach and train personnel who
serve the agricultural sector. These institutions are Central Extension Resources Development
Institute (CERDI) at Joydebpur, Graduate Training Institute (GTI) attached to Agricultural
University at Mymensingh and 12 Agricultural Training Institutes (ATIs) located throughout
the country; although the training facilities vary considerably among institutes, they are
generally inadequate and need support for overall improvement. The curricula equally
emphasise both academic and field trainings. During the Fifth Plan period, two ATIs will be
established to meet the growing needs of extension personnel including women extension
agents. Besides, Academy for Rural Development at Comilla and that at Bogra will train
agriculture personnel of the Ministry of Local Government, Rural Development and Co-
operatives in addition to pursuing their training programme for model farmers and managers
of village co-operative societies on various aspects of agricultural development. To make the
agricultural extension service efficient and effective, the training and communication support
of extension system needs to be reorganised, strengthened and improved. The ATIs and
CERDI will emphasise the qualitative aspects of training in agricultural management,
instruction in the production of training materials, training of trainers and of extension agents.
Training institutes will be given responsibilities for extension work in the nearby villages of
their locations with the objective of achieving better organised extension work in the rural
communities which will, in turn, result in an improvement in the quality of training. In
support of the agricultural extension services, agricultural information service will
concentrate on the systematic planning of multi-media communication activities to assist crop
production and on taking initiatives in other relevant areas and fields.
13.11 Agricultural Education
13.11.1 The objectives of agricultural development can be realised through the effective
spread of education and application of science and technology. The improvement in the
prevailing educational system is essential, if progress and development are to occur in
 246

agriculture. Increased levels of literacy and education among rural people are important
factors conditioning the rate of adoption of improved technologies.
13.11.2 Recognising the need for development of scientific base for modernising agriculture,
the country requires a continuing flow of efficient and qualified human capital to upgrade,
maintain and implement development programmes and projects in a wide variety of public
and private institutions serving agriculture. The responsibility of training these people lies
mainly with the system of higher agricultural education. There is already a base of physical
facilities at Bangladesh Agricultural University (BAU) at Mymensingh, Bangabandhu
Agricultural University at Joydebpur and in agricultural colleges at Dhaka, Patuakhali and
Dinajpur. The existing infrastructural base for higher agricultural education at Mymensingh
and Joydebpur is under-utilised, though broad enough to meet the requirements of the
country for various levels of agricultural experts and extension personnel.
13.11.3 Agricultural education system will be reorganised and strengthened and will be
brought in line with the country's agricultural needs. Teaching will be linked to actual farming
practices in specific farming conditions. Syllabi for agricultural education will be suitably
modified so as to contribute effectively to the requirements of a dynamic agricultural sector.
The major attention will be given to improve the quality of teaching and training and related
student output so that the overall response of the system of agricultural education is sufficient
to underpin the development of human capital and the science and technology base for
agricultural modernisation.
13.11.4 Setting up of agricultural colleges in the private sector will be encouraged in the
Fifth Plan period. Agricultural education has already been introduced at the secondary and
higher secondary levels which will be further improved in years to come. Special emphasis
will be given to the training of the teachers.
13.12 Private Sector
13.12.1 During the Fifth Plan, private sector investment in agriculture will be encouraged,
particularly in areas of manufacturing of farm machinery and implements, irrigation
equipment, fertilisers and pesticides, development of quality seeds, processing and storing of
food, vegetables, fruits and others agricultural products. Adequate fund is likely to be
available for these purposes. For a sustainable growth of the agricultural sector, appropriate
fiscal and monetary measures will be framed taking into account the economy-wide and
transboundary circumstances and issues. The public sector will provide public goods and
services (research, extension, agricultural education, etc.), which may not be efficiently and
adequately supplied by the private sector, support development of technical know-how and
promote access to foreign markets, technology and capital.
13.13 Land Use
13.13.1 The Bangladesh National Conservation Strategy identified six important areas of
conflicting land uses in rural areas. These are: crop agriculture vs. shrimp and capture
fisheries, forest land vs. shrimp and capture fisheries; crop agriculture vs. livestock;
agriculture vs. settlements; agriculture vs. brick fields; and agriculture vs. newly accreted
char lands. Traditional systems found ways to make these various land uses compatible.These
manifested in traditional seasonal shrimp culture and rice cropping, fallow periods and
community grazing land for livestock. Due to population pressure on land, however, these
traditional approaches are breaking down; available agricultural land per capita is roughly
half of what it was 25 years ago. As a result, more intensified uses such as intensified mono-
 247

cropping, intensified shrimp cultivation, and extensive brick fields are degrading soil fertility.
Cropping on fragile char land before it has stabilised invites rapid erosion. Flood control and
drainage structure have altered land and water use pattern and led to the decline of fish stocks
and production by more than 25 per cent in recent years.
13.13.2 To replace traditional land use systems, more careful attention will be given to the
impacts of current land uses. More can be done to maximise land productivity in order to
continue to maintain per capita level of agricultural output. Bangladesh can functionally
expand its 'land' base by more intensive cropping, better use of water and coastal resources,
rational forest management, more attention to integrated land use and development of mixed
cropping systems.
13.13.3 Resolving land use conflicts will be given special attention for sustainable
agricultural development. Formulation of appropriate land use/zoning policy to ensure
optimum use of land, prevent the use of prime agricultural land for brick making and
industrial production, protect land from degradation, reclaim unutilised or degraded land for
suitable use and improve the land resources for future generation will be taken up.
13.13.4 Priority of use of land between competing sectors is to be fixed in consideration of
different physiographic units and sub-units which have different use potentials. While
agriculture will receive a high priority in allocation of all the naturally fertile land, other
sectors of production of renewable resources like forestry, fishery and livestock should also
receive due importance. Forestry will have additional consideration in the policy due to its
importance in environmental protection. The land use policy will clearly enunciate that good
agricultural land is not allotted for or converted to non-agricultural uses like indiscriminate
urban and industrial development.
13.14 Agricultural Development and Poverty Alleviation
13.14.1 Crop agriculture and minor irrigation served as the prime generators of income and
employment in the rural Bangladesh over the past two decades. There is no doubt that the
modern HYV seed-fertiliser-irrigation technology has made a significant impact on rural
poverty alleviation. Modern agricultural technology has also helped generate employment in
the rural areas, particularly for the landless. The diffusion of agricultural technology has also
helped changing the nature and terms of the tenancy market impacting on income distribution
and poverty. Some possible technology interventions with reference to the asset status of
households in the Fifth Five Year Plan period will be the following:
a. assetless: Value adding activities utilising the biomass available within the village,
raising plant nursery, seedlings, compost making, processing fruits and vegetables,
feed preparation for poultry and livestock, mushroom production, silk worm rearing,
etc. and development of common property resources including utilisation of
wastelands, road sides, embankments and derelict ponds for fisheries;
b. marginal and small farmers: Labour intensive production activities such as dairy
and poultry raising, vegetable growing, flower production, hybrid seed production,
integrated resource management systems including recycling and value added
agricultural products;
c. medium and large farmers: Technology interventions including those which will
save farm inputs, e.g., bio-fertiliser, bio-pesticides including integrated pest
management system and inter multiple and relay-cropping systems;
 248

d. promoting rural small-scale enterprises: Small-scale enterprises in fertilisers, seeds,

irrigation equipment and other agricultural machinery and small-scale processing units
by the rural poor; and
e. support to rural women: Investments in collective and labour-saving activities such
as grain mills, alternative sources of water within easy reach of households,
appropriate technology for food processing like homestead horticulture, post-harvest
processing and storage of agricultural produces, small scale agro-based industries
and child care centres.
13.15 Agriculture and Nutrition
13.15.1 The objectives of nutrition in agriculture commensurate with those of the crop
production consist of crop diversification and increased production of fish, livestock and
poultry. However, specific objectives in this respect will be to: (a) create nutritional
awareness at the farm family level for changing food habits and to create effective demand for
nutrient-rich food items; (b) increase balanced production and consumption, especially of
oilseeds, pulses, nutrient-rich vegetables and fruits in order to ensure household food security;
(c) encourage homestead gardening for production of fruits and vegetables; (d) adopt and
promote rearing small scale poultry and fisheries at the household level to ensure nutrition
security as well as income generation; and (e) minimise post-harvest loss through food
processing and preservation at household level to ensure gender equity and empowerment of
distressed people.

13.15.2 Following actions will be pursued for creating awareness and increasing
consumption of nutritious food during the Fifth Plan period:
a. nutritional consideration and objective will be incorporated in development projects
and programmes of agriculture as one of the themes of International Conference on
Nutrition (ICN);
b. the nutritional problems in all the agro-ecological zones (AEZ) will be identified as a
basis for developing crop production plan to improve nutrition situation in the
country;
c. short term nutrition training programmes for the personnel of the Department of
Agriculture Extension (DAE), Department of Livestock and Department of Fisheries
and informal training for social workers, religious leaders, farmers and consumers will
be organised;
d. workshops and seminars at thana level will be arranged and farmers rally and field-
days at farm level will be held;
e. incorporation of nutrition into curriculum of agricultural education and training will
be made;
f. training on nutrition and food demonstration for wider dissemination of nutrition rich
practices will be organised;
g. nutritional motivation through mass media campaign and school and mosque based
campaign in collaboration with extension workers/agencies and NGOs will be
organised;
h. food and nutrition fair to create increased nutrition awareness through demonstration
of proper cooking and food preservation methods will be undertaken;
i. all actions and programmes identified in the National Plan of Action for Nutrition
(NPAN) for the agriculture sector will be implemented through government
organisations, NGOs, and other relevant agencies; and
 249

j. the Bangladesh Institute of Research and Training on Applied Nutrition (BIRTAN)

will implement and co-ordinate all nutrition activities in the agriculture sector.
13.16 Environmental Protection
13.16.1 Strategies for sustainable development of the agriculture sector during the Fifth Plan
period will be devised to ensure environmental protection/conservation by way of addressing
the major problems such as:
a. resource utilisation according to potentials;
b. policy options for environmental protection; and
c. location-specific technologies and their proper diffusion;
13.16.2 Agricultural development policy will pay due attention to environment protection.
Efforts will be made to combat natural hazards like floods, storm surges, drought and river
bank erosion and consequential environmental problems such as salinity, drainage, etc.
Human induced problems such as accelerated soil erosion, desertification, deforestation,
salinity, organic matter depletion, soil degradation, water logging, etc. will also be effectively
addressed to improve environment. In course of utilising physical resources of land and water
and human resources for agricultural development and making other related development
intervention, an appropriate protection measures for the country’s complex environmental
system will be carefully adopted.
13.17 Women in Agriculture
13.17.1 One of the major advances made in the last two decades in the agricultural sector is
the recognition of women as important contributor to the food security in Bangladesh. The
role of women in increasing yield potentials of agricultural production, in post-harvest
operations, in homestead or home-based activities, in resource conservation and in
agricultural decision-making is now well recognised. Policy will be formulated for
implementing WID in all programmes that will be undertaken in the sector. Women's
participation will be envisaged in all development programmes/projects. Increased female
participation will be encouraged at the planning, implementing and evaluation stages of any
programme. Raising gender awareness, enhancing access of women in agro-business and
strengthening equal participation are some of the specific areas on which development
programmes/projects will be taken up during the Fifth Plan. NGOs will be directly involved
in WID.
13.18 Area Development
13.18.1 During the last two decades, the government has initiated a number of area
development projects, focusing on regional agricultural and infrastructural development.
Increased understanding about the nature of underdevelopment in the rural area and concern
for balanced and regional development have led to the emphasis upon undertaking regionally
based agriculture-led development projects. Also, the need for target programmes for
disadvantaged groups such as landless, marginal and small farmers and women is widely
recognised. Therefore, programmes envisaged for less developed regions and disadvantaged
groups have been developed with assistance from various donor agencies and by the
government's own initiatives during the Third and Fourth Plan periods. Their impact on
reducing rural poverty and accelerating socio-economic development of the lagging areas has
been moderate and vast number of the target group population and many lagging areas are
still without effective programme support. The objectives of the area development
programmes are poverty alleviation, reduction of malnutrition and assurance of food security
 250

for the disadvantaged people. There will be three strategic thrusts in such programmes during
the Fifth Plan:
a. an integrated farming and resource systems approach to area development;
b. special consideration of the major disadvantaged groups in all programmes; and
c. increased co-ordination with, and contracting out to, the Grameen Bank and NGOs.
13.19 Financial Outlay During Fifth Plan
13.19.1 The public sector financial outlay for crop agriculture has been estimated at
Tk. 21,425.38 million. The programme wise financial outlay is presented in Table 13.3.
Table 13.3
Financial Outlay for Crop Agriculture During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Programme Total Percent
1 2 3
Agricultural Extension 1,650.00 7.70
Applied Nutrition 50.00 0.23
Agricultural Research 2,500.00 11.67
Crop Diversification 1,900.00 8.87
Seed Development 6,000.00 28.00
Fertiliser and Soil Improvement 550.00 2.57
Agricultural Marketing 500.00 2.33
Women in Agricultural Development 50.00 0.23
Environmental Protection 500.00 2.33
Human Resources Development 250.00 1.17
Other Essential Agricultural Sector Investment
Programmes/Projects
(a) Area Development Programmes 3,860.00 18.02
(b) Agro-business Development, Mechanisation and 2,600.00 12.14
Private Sector Development
(c) Agricultural Rehabilitation Programmes 950.00 4.43
(d) Agricultural Insurance Programmes 5.00 0.02
Agricultural Statistics and Others 60.38 0.29
Total 21,425.38 100.00

13.19.2 In addition to the public sector outlay, an amount of Tk. 65,038.91 million is
expected to be invested for the development of crop agriculture in the private sector.

B. Food Management
13.20 Past Performance
13.20.1 Vulnerability of domestic production of foodgrain necessitated the building up of an
elaborate public food distribution system (PFDS) over the years. PFDS aimed at both meeting
emergency needs as well as normal demand of the poor households in addition to meeting
institutional demand originating in hostels, hospitals, jails, etc. While the distribution of
public foodgrain continued to expand, it acquired a new emphasis through domestic
procurement on a voluntary basis as a tool for stimulating foodgrain production with price
support and open market sales (OMS) for price stabilisation at consumers level. Thus, it has
both consumption and production objectives and in respect of both, of late, it has undergone
changes with the growth of domestic output and greater availability of foodgrain in markets.
13.20.2 During the Fourth Plan period, sale of foodgrain through the statutory rationing
channel of the PFDS was almost withdrawn. As a result, there was a significant change in the
 251

shares of foodgrain distribution through monetised and non-monetised channels. For

example, the PFDS distribution through monetised and non-monetised channels were 63 per
cent and 37 per cent respectively in 1990/91 which reversed to 32 per cent and 68 per cent
correspondingly in 1994/95. During the period, overall increase in the production of HYV
boro rice due to expansion of irrigation facilities in the dry season, expansion of foodgrain
trade with the development of transport system, opening of import of foodgrain to the private
traders and improvement in the institutional capability to face crisis situation like drought,
flood, cyclone, etc., largely contributed to much dampened seasonal fluctuations in the supply
and prices of foodgrain.
13.20.3 In support of the public food distribution system, foodgrain storage capacity built up
to about 1.80 million mt till 1985 increased to 1.86 million mt at the end of the Third Plan
(1985-90). The Fourth Plan proposed to maintain this capacity keeping in line with its
privatisation policy. During this period, its main emphasis was on repair and rehabilitation of
the existing silos, CSDs, LSDs, etc., and construction of storage capacities at strategic places.
13.21 Fifth Five Year Plan
13.21.1 Objectives: Attainment of foodgrain self-sufficiency and food security remain the
stated objectives of the national food policy and strategies. However, the objective contents of
the food sub-sector during the Fifth Plan are as follows:
a. ensuring food security for all, elevating nutritional status of the people living below
poverty line;
b. preservation and maintenance of security stock of foodgrain to meet any natural
calamities, production shortfalls and supply hazards;
c. development of a social safety net programme for vulnerable groups through
improvement and enlargement of targeted food distribution;
d. maintenance of price stability within a band to protect interests of producers and
consumers;
e. expansion of private sector in storage, distribution and trade of foodgrain; and
f. development of a sound quality control, grading and standardisation system of all
foodgrain and foodstuff.
13.21.2 Policies and strategies: Food sector has undergone major structural improvements
over years both in market operations and in Public Foodgrain Distribution System (PFDS).
The present policy and strategy to further liberalise the food trade will continue. However,
though the private sector is expected to play a greater role in foodgrain management and trade
in future, the government involvement in some specific areas will be continued in foodgrain
management in consideration of the susceptibility of domestic production to natural hazards.
The following issues relating to food security in particular, will continue to engage the
government’s attention:
a. Maintenance of buffer stock: Buffer stock will be maintained to make up
anticipated production and stock losses due to periodical droughts, floods and
cyclones. An estimated 0.80 million mt of foodgrain will be required to be
maintained as security stock.
b. Procurement of foodgrain: Internal procurement of foodgrain will be continued to
(i) ensure floor price to the growers and (ii) provide incentive and confidence to
growers for further production.
c. Price stabilisation: The government will formulate an effective mechanism to
avoid wide price fluctuations. One of the current public policy is to hold food
security stock for price stabilisation. Open market sale is one of the short term
instruments used for avoiding temporarily wide fluctuations in market prices.
 252

Private sector will be encouraged to own food storage facilities at strategic places
such as food deficit/surplus areas. This will enable the traders to augment market
supply in response to rise in prices, reducing thereby both seasonal and regional
price spreads.
d. Targeted support for vulnerable groups: National level foodgrain availability
does not necessarily mean household food security. In spite of increasing foodgrain
production and falling real prices of rice, over half of the country's population
cannot afford an adequate diet. Hence, the case for public intervention remains
strong and clear. Consequently, targeting the poor for supply of food remains
squarely within the public domain. Vulnerable Group Development, Food for Work
Programme and Food for Education in wider ambits will be some of the specific
programmes of public interventions.
e. Government role: To meet any shortfall in the flow of required quantum of food,
the public sector may have to intervene for:
i. preservation and maintenance of security stock;
ii. development of a safety net programme by improvement and enlargement of
targeted food distribution;
iii. providing incentive to growers through procurement of foodgrain at
remunerative prices;
iv. stabilisation of price of foodgrain in relation to production cost and purchasing
power of the consumers; and
v. modernising and maintaining existing storage capacity by renovating old food
godowns and, if necessary, constructing new godowns in strategic areas of the
country.
f. WTO and measures for food security: Members of the World Trade Organisation
(WTO) are currently implementing various reforms agreed upon in the area of
agriculture during the Uruguay Round of multilateral trade negotiations. The central
element of these reforms which will vitally affect the foodgrain price and food
security of net food importing countries like Bangladesh is substantial progressive
reduction in agricultural protection so as to establish a fair and market-oriented
agricultural trading system. This measure, though expected to eliminate protections
and to correct distortions in world agricultural markets, is likely to push domestic
prices of agricultural products up, at least in the short and medium terms. As a
result, Bangladesh, a least developed and net food importing country, may
experience negative effects in terms of availability of adequate supplies of imported
food-stuff on reasonable terms and conditions, and short term difficulties in
financing normal level of commercial imports of basic food-stuff. To offset these
adverse effects and, thus strengthen food security, Bangladesh will have to initiate
negotiations in appropriate forums to establish a level of food aid commitment
sufficient to meet its needs and to adopt measures to ensure that an increasing
proportion of food-stuff be provided as grants for meeting needs of the target
groups. Bangladesh will also pursue the case for increased quantum of technical and
financial assistance to improve its agricultural production/productivity as well as
relevant infrastructure. Besides, Bangladesh will work out with its development
partners an arrangement under food aid for domestic procurement of foodgrain from
the surplus regions and for distribution to deficit regions.
13.21.3 Food balance: The necessity of food budgeting and management in Bangladesh
arise due to a variety of factors. The country is densely populated having a small area and
bulk of the population suffers from malnutrition. The food crops are often affected by
vagaries of nature such as drought, flood and cyclone. Thus, there is continued insecurity in
domestic food supply which remains one of the major concerns for the country. In spite of
efforts to reach food self-sufficiency, the country remains food deficit mainly because the
 253

population growth could not be controlled as desired and the growth of food production could
not be achieved to a level as required for feeding the additional population. However, the
situation is projected to improve during the Fifth Plan period. The projected food balance
during the terminal year of the Plan vis-a-vis the base year is shown in Table 13.4.
Table 13.4
Projected Food Balance in Fifth Plan
(in million mt)
1996/97 2001/2002
(Base Year) (Terminal Year)
Population (million) 123.80 132.50
Food Requirement * 20.50 21.94
Production of Foodgrain 20.43 25.12
Seed and Wastage (10%) 2.04 2.51
Net Production 18.39 22.61
Food Balance (-) 2.11 + 0.67
*Total foodgrain requirement has been calculated on the basis of per capita per day requirement of 453.59 grams (16.0 Oz).

13.21.4 During the terminal year (2001/2002) of the Fifth Plan, the total size of the
population is estimated to reach at 132.50 million. In order to feed them, the country will
need 21.94 million mt of foodgrain. Foodgrain production has been projected to be 25.12
million mt in 2001/2002. After deducting 10 per cent for seed and wastage from the gross
production, 22.61 million mt of foodgrain will be available for consumption. Thus, the
country is likely to attain food self-sufficiency and may have a surplus of 0.67 million mt by
the terminal year (2001/2002) of the Fifth Plan. But since this estimate is based on a
normative demand at the rate of 453.59 gm a day per capita, while effective demand will be
lower due to lack of purchasing power from income and employment, actual surplus will be
correspondingly higher. Lest this causes a slump in domestic price level and consequently,
discourages farmers to increase production, public intervention will be necessary to ensure a
remunerative price to farmers. On the other hand, shortfall in effective demand will need
income transfer to the poor households till income and employment generation can raise
purchasing power adequately.
13.21.5 Financial outlay: The programme-wise financial outlay in the public sector for the
Fifth Plan is given in Table 13.5.
Table 13.5
Financial Outlay for Food Management Facilities in Public Sector During Fifth Plan
(at 1996/97 prices )
(in million Taka)
Programme 1997/98 1998/99 1999/ 2000 2000/ 2001 2001/ 2002 Total
(1997/98-
2001/2002)
1 2 3 4 5 6 7
Repair and rehabilitation of existing
silos, CSDs, LSDs etc. 195.00 214.00 214.00 220.00 225.00 1,068.00
Construction of silos/new storage
capacity at strategic places and the 140.00 140.00 140.00 150.00 186.00 756.00
related infrastructural facilities.
Establishment of food testing
laboratories throughout the country. 1.00 24.00 25.00 - - 50.00
Research/Monitoring/ Training on
food management /operation and 100.00 100.00 100.00 20.20 - 320.20
strategy/ computer network.
_Total 436.00 478.00 479.00 390.20 411.00 2,194.20
 254

C. Fisheries
13.22 Past Performance
13.22.1 Fisheries play a major role in nutrition, employment and foreign exchange earnings.
About 60 per cent of animal protein is supplied by fish alone and about 1.2 million people are
directly employed by this sub-sector. Another 11 million people indirectly earn their
livelihood out of activities related to fisheries. The production of fish was estimated to be
1,373 thousand mt during 1996/97 as against 847 thousand mt in 1989/90. It is estimated that
production of inland fish was 1,079 thousand mt and that of marine fish about 294 thousand
mt. The growth rate of fish production during the last seven years averaged at 6.5 per cent
which fell short of increase in demand; however, the present rate of fish production has
increased to 8 per cent per year. Over the last decade, price of fish increased at an annual rate
of 2.5 per cent.
13.22.2 There are various impediments to fisheries development, some of which are
particular to sources of fisheries. In case of capture fishery, inadequate knowledge, over-
fishing and indiscriminate killing of juveniles and destruction of spawning grounds,
obstruction of migration routes due to unplanned construction of dams and embankments
under the flood control, drainage and irrigation projects, degradation of water quality,
breakout of fish diseases, defective fish conservation laws and inadequacy of processing,
marketing and other facilities are some of the major factors affecting the desired rate of
development. The major constraints limiting fish culture relate to problems of property rights,
competing water uses and related conflicts, lack of equipment and credit, lack of trained
manpower and quality fish feed, etc. In case of marine fishery, inadequate knowledge and
information of fisheries resources, lack of proper management policy and modern fishing
know-how, use of inefficient fishing equipment and inadequacy of harbour and landing
facilities as well as credit are important impediments.
13.23 Fifth Five Year Plan
13.23.1 Objectives: The major thrust for fisheries development will be on culture and capture
fisheries, promotion of rice-fish farming system in the vast flood plains and conservation and
management along with institutional and manpower development for equitable distribution of
benefits from common property water resources through research on social engineering. The
major objectives of fisheries sub-sector development during the Fifth Plan are to:
a. generate additional employment opportunities in fisheries and ancillary industries to
help poverty alleviation;
b. increase fish production and improve nutritional level;
c. improve the socio-economic conditions of the fishermen, fish farmers and others
engaged in the fishery sub-sector;
d. increase export earnings from shrimp, fish and fish products;
e. improve environmental conditions;
f. improve the biological and institutional management mechanisms for judicious use of
fisheries resources; and
g. strengthen research, extension, management and co-ordination in order to transfer
technology and encourage production activities in the private sector and to ensure
sustainable development of fisheries resources, particularly utilising water resources
of the vast flood plains.
13.23.2 Policies/Strategies: Keeping in view the objectives stated above, the
policies/strategies to be taken up for the development of fisheries are as follows:
 255

a. semi-intensive poly-culture of fish will be ensured in all ponds, dighis and other
closed and semi-closed water bodies;
b. stocking of fish fry in flood plains and semi-closed water and flood control, drainage
and irrigation (FCDI) project areas will be continued to halt the declining trend of
open water capture fisheries;
c. sanctuaries will be established to conserve fish spawning grounds at different areas of
the country; measures will be taken to stop indiscriminate fishing of gravid female
and undersized fish; spawning grounds of the main fish species like Rui, Katla, Hilsa,
Pangas, Golda Chingri, etc. will be identified to establish fish sanctuaries;
d. adequate credit facilities for the fish farmers will be created and credit guarantee
scheme will be introduced for marginal farmers; import of machinery and equipment
for private sector hatchery, feeds and feed ingredients will be further liberalised and
duties and taxes thereon will be reduced;
e. training facilities for development of suitable manpower and entrepreneur groups will
be extended both in the public and private sectors and multi-sectoral development
approach will be followed;
f. bio-technological elements will be applied in conservation of fisheries resources in all
large water bodies, viz., baors , haors, beels, rivers, canals, and lakes;
g. fisheries management policy will be implemented to improve the socio-economic
conditions of fishermen;
h. all precautionary and mitigatory measures will be taken so that fishing grounds may
not be affected during the development works of other sectors like flood control,
drainage and irrigation projects, agriculture, industries and urban development
programmes;
i. physical facilities like electricity, roads, transports, fresh water, etc., will be created
and made available to develop brackish water fish and shrimp resources;
j. traditional methods of shrimp culture will be improved by introducing modern
technology for increased production; shrimp culture extension service will be
strengthened to take necessary steps for the establishment of shrimp hatchery at
private level;
k. marine fisheries resources survey will be strengthened to ascertain the exact stock of
resources in the interest of fish harvest at maximum sustainable yields;
l. programmes will be undertaken to improve the socio-economic conditions of the
coastal fishermen communities;
m. quality of fish and shrimps will be ensured for the export of fish and shrimps through
creation of facilities and modern quality certification system; and
n. khas ponds, dighis, canals, road-side ditches, etc., will be excavated/re-excavated/
developed for fish culture through participation of the rural unemployed youth,
marginal farmers and distressed women;
13.24 Major Programme Areas
13.24.1 Open water capture fisheries: A 2.8 million ha fish habitats in the flood plains
remain as unutilised resources of fish production. In order to increase production in open
water fisheries, programmes will be undertaken to (i) conserve resources through rigorous
implementation of the laws on fish protection and motivation of fishermen, (ii) establish fish
sanctuaries, (iii) increase production by massive stocking of fast growing carp fingerlings in
the natural depressions and flood plains, and (iv) develop fish culture in paddy fields through
protective measures against adverse effects of flood control, drainage and irrigation projects,
roads and high ways projects and township and housing projects. Observing the declining
 256

trend of the stock of open water fisheries in the recent past, efforts were made to augment the
stock through release of fish fries in the flood plains. But these programmes did not yield
good results. Appropriate procedural and management systems will be evolved to ensure
accountability and transparency in the execution of programmes for open water fisheries in
the Plan period.
13.24.2 Closed water culture fisheries: There are over 1.3 million ponds covering an
estimated area of 147,000 ha, some 6,000 ha of ox-bow lakes and over 130,000 ha of shrimps
farms. Currently, the average production in fresh water ponds is 1.4 mt./ha. and that of
brackish water shrimp farms only 160 kg/ha. Programmes will be undertaken to bring all of
1.3 million ponds under extension programmes of DOF, BFDC, FRI and NGOs during the
Plan period to raise the present total production of 331,900 mt to at least 450,000 mt of fish.
13.24.3 Brackish water aquaculture: An estimated 0.143 million ha of coastal land is
under brackish water shrimp farming. The method is largely traditional where an average
production of 160 kg/ha is currently obtained. Recently, farmers, especially in Bagerhat and
Perojpur areas, have started shrimp farming in their paddy fields. Farming area is rapidly
expanding. Development of brackish water fisheries will be contingent upon the provision of
infrastructures, supply of seed, feed and other inputs, security, technical advice, disease
control and training of the farmers on improved scientific farming system. With more support
from DOF, BFDC, FRI and other extension agencies, it will be possible to raise production in
shrimp farms to a level of 400 kg/ha which will yield an additional production of at least
60,000 mt by the terminal year of the Plan. Semi-intensive farming is currently practised in
5,000 ha area by a number of entrepreneurs where production of 3-5 mt/ha has been achieved.
The DOF is currently identifying suitable areas for semi-intensive farming and suitable sites
for establishment of shrimp hatcheries. Private entrepreneurs will be encouraged to invest in
hatchery operation. The government will support development of suitable land with road,
electricity and other infrastructures. Private sector joint venture investment including foreign
investments in hatchery operation, feed production and other related activities will be
encouraged .
13.25 Marine Fisheries
13.25.1 With the extension of exclusive economic zone (EEZ) upto 200 nautical miles
beyond our shore lines in 1974, Bangladesh resumed the responsibility for exploitation and
management of living and non-living resources within its 1,64,000 sq. km. sea area. Since
unlike the mineral resources, fish is a renewable living resource, only judicious exploitation
and scientific management and development can ensure maximum benefit out of it. Over the
last two decades, the share of marine fisheries in the total national landing rose from 10.6% in
1970 to about 22% in 1996. If appropriate technology can be adopted, this can be increased
manifold.
13.25.2 The increasing pressure on the coastal resources in Bangladesh has caused decline of
many marine fishes and shell fishes in the Bay of Bengal. The artisanal fishing which
contributes about 95% of the total marine landing is largely composed of post larvae and
juveniles which are seriously damaging the stock due to use of crude traditional technology.
The number of artisanal fishing gears including estuarine set bag nets, beach seine nets and
shrimp seed push nets are increasing alarmingly causing serious over exploitation of stocks.
So, the following measures/programmes will be undertaken to improve the marine fisheries
resources during the Fifth Plan period:
a. assessment of pelagic, demersal and other marine resources and their development;
 257

b. studying and monitoring of oceanographic parameters of the EEZ of Bangladesh;

c. imparting training to the coastal fishermen and providing support services to improve
the socio-economic conditions of coastal fishermen community ;
d. issuance of licences to mechanised and non-mechanised boats and identity cards to
fishermen;
e. continuous supervision and monitoring of fishing;
f. ensuring replacement of destructive gears like estuarine set bag net and beach seine
nets by other appropriate fishing gears;
g. reduction of mortality of fish and shrimp larvae during shrimp seed collection;
h. conservation of marine fisheries resources in the mangrove reserve forest;
i. stopping sea piracy by trawl fishing of neighbouring countries with the help of the
Coast Guards/Naval Forces;
j. pollution control and environmental conservation through strict enforcement of
marine fisheries laws; and
k. proper utilisation of trash fish, now thrown away by the trawlers;
13.25.3 Post-harvest technology and marketing: Fish marketing carried out at four
different stages, largely in the hands of the private sector, is managed, financed and controlled
by a group of intermediaries known as "aratders" and "mahajans." The "aratders" provide
advances to fish traders who in turn are required to bring fish to them for sale. The fish
marketing system is thus traditional and complex though not very competitive. However, it
faces serious problems including heavy losses, waste and poor fish quality. It is believed that
in Bangladesh, 30 to 33 per cent of all fish caught become unsuitable for human consumption.
This economic waste will be reduced through provision of cold-storage facilities, insulated
and refrigerated transport systems and adequate supplies of ice. The marketing system will
also adjust to (a) expanding export demand for quality frozen sea food, (b) expanding
domestic demand for quality fresh and frozen fish and (c) large seasonal fish catches in areas
far from the main markets and fish landing centres.
13.25.4 Peoples participation in fisheries: Fisheries sector is considered to be the thrust
sector for sustainable development and socio-economic advancement of rural fishermen and
fish farmers. Almost all the activities of fish breeding, nursing, feeding, fisheries training,
harvesting, transportation, marketing, exporting and other ancillary activities are done by the
private sector. Research, development, extension and regulatory activities are performed by
the public sector. Twenty five technology packages have already been developed and are
being implemented on experimental basis from 1996/97. Recently, some NGOs and private
development organisations are involved in group formation, motivation, training and income
generating activities of the fishing community and marginal farmers. A strong and effective
linkage system will be developed between the government, especially local government
bodies, non-government and private organisations in respect of planning, implementation and
monitoring of the fisheries development programme. About 10,000 entrepreneurs will be
developed in different fields of fisheries during the next five years. Job opportunities for
42,500 poor people will be created in this sub-sector.
13.26 Fisheries Research
13.26.1 Lack of technical knowledge, fish seed, proper management, disease control and
suitable manpower account for the present low level fish production in Bangladesh. The
onslaught of viral epidemics destroying substantial quantity of pond and fresh water fishes as
well as brackish water shrimps has caused concern to the government and the people.
Appropriate research support will be provided to address these issues. In particular, it is
 258

proposed to commission a comprehensive study to analyse the sources and causes of fish and
shrimp diseases and find out remedial measures.
13.27 Production and Export Projection During Fifth Five Year Plan
13.27.1 The current level of per capita daily fish consumption is about 25.6 gm. In order to
raise the level of consumption to about 34.43 gm per capita per day at the end of the Plan
period, the required production of fish will be 1.67 million mt. This is based on estimated
projection of 132.5 million population by the terminal year of the Plan. In addition, it is
assumed that during 2001/2002, the export of shrimp and fish and fish products will be
95,000 mt and another 15,000 mt of fish will be required for industrial and other uses. In view
of this demand, the fish production target at the terminal year of the Fifth Plan has been set at
2.075 million mt. Table 13.6 gives the details of projection of fish production in the terminal
year of the Fifth Plan.
Table 13.6
Projection of Fish Production During Fifth Plan
(in '000' metric Tons)
Source of production 1996/97 2001/2002
(Benchmark) (Projection)
1 2 3
1. Inland Fisheries 1,079.00 1,675.00
Ponds 331.90 450.00
Baors 3.50 27.00
Coastal aquaculture 85.00 100.00
Rivers and estuaries 165.00 180.00
Beels and haors 70.00 95.00
Kaptai lake 7.60 9.00
Flood plain 395.00 751.00
Irrigation canals, road side ditches, 21.00 63.00
fresh water polders and enclosures, etc.
2. Marine Fisheries 294.00 400.00
Total (1+2) : 1,373.00 2,075.00

13.27.2 Export earnings from shrimp, fish and fish products and other aquatic organisms
during 2001/2002 are expected to be Tk.38,045.00 million as against estimated earnings of
Tk.16,000.00 million in 1996/97. The export projection for the Fifth Plan is shown in Table
13.7.
Table 13.7
Export Projection of Fish and Fish Products in Fifth Plan Period
(Qty in ‘000’ m tons, Value in million Taka.)
Items 1996/97 2001/2002
(Benchmark) (Projection)
1 2 3 4 5
Qty. Value Qty. Value
Shrimp 28.00 13,150.00 70.00 32,900.00
Fish and fish products 9.80 2,250.00 20.00 4,600.00
Others 5.50 600.00 5.00 545.00
Total : 43.30 16,000.00 95.00 38,045.00

13.27.3 Financial outlay: In order to implement the fisheries development programmes,

Tk.5,861.80 million has been earmarked for the public sector during the Fifth Plan.
Programme-wise financial outlay is shown in Table 13.8.
 259

Table 13.8
Financial Outlay for Fisheries Development in Public Sector
During Fifth Plan (at 1996/97 prices)
(in million Taka)
Programme Financial
Outlay
Survey, investigation, feasibility study, research, etc. 400.00
Fisheries education, training, extension and community development 890.00
Culture and capture fisheries development (including inputs and waterbodies development) 4,360.00
Fish landing, storage, processing, marketing, transportation, distribution, etc. 211.80
Total : 5,861.80

13.27.4 Private sector: Appropriate programmes and projects will be promoted for
implementation in the private sector with support services from the public sector in such areas
as fish hatchery, feed mill, culture of fish and other aquatic organisms, fish processing, fish
preservation, fish production, domestic sale and export. An amount of Tk.21,847.00 million
is expected to be invested by the private entrepreneurs--local and foreign, for implementation
of these programmes/projects. Expectedly, investment by the private entrepreneurs will be
much more than what is envisaged for the public sector.

D. Livestock
13.28 Past Performance
13.28.1 Livestock sector has the makings of a highly viable sector for generation of
employment and income for the landless, unemployed youths and destitute women. Little
attention was given to livestock sub-sector until the recent past. In spite of that, about 50,000
private poultry farms, 26,000 duck farms and 26,000 dairy farms have been set up in the
country in the private sector. Consequently, there has been a 60 per cent fall in the import of
milk powder. Implementation of various development programmes as well as changes in
fiscal and commercial policies resulted in the establishment of 26 thousand dairy farms in the
private sector. The production of milk, meat and eggs between 1991 and 1995 as against their
requirements are shown in Table 13.9.
Table 13.9
Requirement and Production of Livestock Products During Fourth Plan
Year Population Milk Meat Egg
(million number) (million mt) (million mt) (million number)
Requirement Production Requirement Production Requirement Production
1 2 3 4 5 6 7
1991 108 9.86 1.34 4.26 0.45 8,985.60 2,046.60
(13.59%) (10.56%) (22.78%)
1995 121 11.04 1.41 4.77 0.51 10,067.20 2,539.00
(12.77%) (10.69%) (25.22%)

13.28.2 The production of milk and meat increased by an annual compound growth rate of
1.3 per cent and 3.2 per cent respectively. The growth rate of egg production was, however,
satisfactory which was 6.5 per cent between 1990/91 and 1994/95. There are ample potentials
for increasing production of milk, meat and eggs in the country. The main problems of this
sector are inadequate supply of vaccine, medicine, equipment, feed, health care facilities,
quality breed, parent stock, credit facilities and other inputs.
 260

13.29 Fifth Five Year Plan

13.29.1 Objectives: The main objectives for the development of livestock sub-sector during
the Fifth Plan are to :
a. increase people's participation through development of entrepreneur groups and
create new employment opportunities for small farmers, landless labourers and
women and other target groups in livestock development;
b. generate income and alleviate poverty of the rural poor through livestock
development;
c. increase the supply of milk, meat, birds, eggs, hides and skins, etc., through
improvement in breed, feed and disease control of animals and birds;
d. undertake adaptive research on breeding, feeding, disease control for cattle, Bengal
goat and sheep and poultry bird by BLRI and to transfer appropriate technologies to
the users;
e. improve the quality of draft power of both cattle and buffaloes through genetic
improvement, better veterinary services, adequate feed supply and improved
management;
f. increase foreign exchange earnings through the export of quality hides and skin, and
to reduce dependence on import of powder milk;
g. involve the private sector, local government bodies and NGOs in livestock industry
for credit distribution, production of cattle and poultry feed, milk processing, input
supply and marketing and to improve distribution network for these products in
collaboration with Department of Livestock and Livestock Research Institute;
h. privatise input supply and to provide fiscal support, if needed, for sustainable
development of the sub-sector.
13.29.2 Strategies: In order to achieve the above objectives of the Fifth Plan, the following
strategies will be adopted:
a. improvement of the quality of animals and birds through genetic upgrading,
preservation of native breeds and selection of exotic breed;
b. wider provision for treatment of infectious diseases and parasitic infections and large
scale production of vaccine at home;
c. increasing fodder supply through intensive use of available land;
d. improvement of livestock management through manpower training and skill
development;
e. improvement of the quality of draft animals and expansion of single animal ploughing
system;
f. emphasising development of dairy cattle and encouraging establishment of mini dairy
farms through support services;
g. encouraging goat and sheep production through supply of inputs;
h. giving special emphasis on poultry husbandry for increased supply of meat and eggs;
i. giving credit for livestock and poultry farming on reasonable terms in the private
sector;
j. improvement of marketing facilities for realisation of competitive prices by the
farmers;
k. discouraging import of powder milk and other livestock products;
l. strengthening of the organisational and institutional framework of the Bangladesh
Livestock Research Institute for undertaking research on livestock production and
expanding the data base on socio-economic aspects of livestock development;
 261

m. training of the target groups like the landless, destitute women, unemployed youth and
poor farmers in livestock management, inputs production, product processing and
marketing for poverty alleviation and income generation.
n. pricing of vaccines for cost recovery and commercialisation of Veterinary Vaccine
Productions Laboratory under the Department of Livestock Services.
13.30 Major Programmes
13.30.1 Feed and fodder development: Feed mill will be established in the private sector at
important places of the country. The government will provide support services in the form of
credit and technologies. Fodder production will be encouraged through crop diversification,
inter-cropping and plantation of fodder trees with timber trees.
13.30.2 Animal health and disease control: The programme consists of diagnosis,
prevention and treatment, vaccine and medicine production and distribution. Qualitative and
quantitative improvement will be made in disease control. Facilities will be expanded and
number of veterinary surgeons will be increased by 350 during the Plan period. About 10,000
youths will be trained as veterinary health workers.
13.30.3 Animal breeding and breeder multiplication: Programmes will be directed
towards multiplication of breeding of cattle, buffalo, goat, sheep, fowl and duck. Increase in
milk, meat and egg production will be achieved mainly through quality improvement of local
cattle by cross-breeding with deep frozen semen through artificial insemination and
improvement of poultry through introduction of high breed commercial birds for eggs and
meat production. The poultry population is expected to increase significantly during the Plan
period.
13.30.4 Extension training and education: In order to increase livestock productivity,
improved production technologies will be spread all over the country. Training of farmers,
farm owners and NGOs for all kinds of related activities of this sector will be given through
extension services and formal and informal education. Number of veterinary colleges and
veterinary training institutes will be increased from 2 and 3 to 6 and 21 respectively which
will be located in 6 divisions and 21 former larger districts.
13.30.5 Input production: Input production like production of vaccine, semen, day old
chick, duckling and eggs through different projects included in the Plan will increase
significantly. Vaccine production will increase from 350 million doses in 1996/97 to 400
million doses in 2001/2002, semen production from 1.8 million doses to 4.5 million doses,
day-old chick production from 4 million to 6 million, duckling production from 0.5 million to
1.0 million and egg production from 2,815 million to 4,730 million during the Plan period.
Limited input production still in the public sector will be gradually transferred to the private
sector. Meanwhile, existing input supply programmes in the public sector will be run on full-
cost recovery basis.
13.30.6 Employment creation and poverty alleviation: Programmes undertaken during the
Fifth Plan will create positive impact on self and wage employment in livestock farming,
chick and goat rearing, feed selling, and other income generating activities under different
package programmes of the Department of Livestock. Credit programmes of various NGOs
are supporting women’s involvement in livestock production around homesteads using
surplus labour and agricultural by-products. The government encourages these programmes.
The total number of man days involved in the livestock development activities is likely to
 262

increase from 12.50 million in 1996/97 to 16.00 million in 2001/2002. The beneficiaries like
poultry workers will increase from 22,600 to 45,000, chick rearers from 8,000 to 12,000, key
rearers from 5,00,000 to 14,00,000, feed sellers from 1,000 to 3,000, egg collectors from
2,600 to 6,500 and mini hatcheries from 200 to 1,000.

13.30.7 Projection of livestock products for Fifth Plan: The production of milk, meat and
eggs will show a significant increase during the Fifth Plan period. Details may be seen in
Table 13.10.
Table 13.10
Projection of Milk Meat and Egg Production During Fifth Plan

Products Unit 1996/97 1997-2002

(Benchmark) (Projection)
1 2 3 4 5 6 7 8 9
Projection Achievement 1997/98 1998/99 1999/2000 2000/01 2001/02
.
Milk ‘000’mt 1,600 1,510 1,680 1,764 1,850 1,942 2,058
Meat ‘000’mt 600 575 630 662 702 744 788
Egg million number 3,005 2,815 3,260 3,550 3,890 4,280 4,730

13.30.8 Marketing: Marketing of livestock products and by- products in our country is not
properly organised. Livestock market places are under-developed and unhygienic. As
marketing network of livestock products and by- products is not properly maintained, the
producers are being deprived of their benefits. During the Fifth Plan, programmes will be
taken up for improving marketing channel to ensure quality and equitable distribution of
benefits at different stages of production process.
13.30.9 Research: Adaptive research on breeding, feeding, disease control, etc., will be
undertaken by BLRI and appropriate technologies will be transferred to the users. Research
result on fodder production, processing and preservation and vaccine production already
tested and certified will be released shortly, while on going programmes in these areas will
receive priority. Particular emphasis will be given to different aspects of poultry. Locally
suitable poultry and cattle breed will be developed. Attempt for poultry parent and grand
parent stock development will be made. Technology transfer through collaboration with
international and advanced research institutions abroad will be promoted.
13.30.10 Role of NGOs: NGOs will perform major role in group formation, training,
extension services, credit disbursement, supervision and recovery and conducting socio-
economic studies related to development projects. Government-NGO co-operation will be
more extensive for development of this sector.
13.30.11 Private sector: In the Fifth Plan period, one of the major and most important
thrust of the public sector programme will be to support the private sector for the
development of livestock and poultry. Towards this end, adequate technical, material and
financial support, training on breeding, feed production, marketing, credit management,
adoption of new technologies, disease control, etc., will be given to the private entrepreneurs.
Some 23 technology packages have been developed and are being implemented on
experimental basis since 1996/97. About 10,000 entrepreneurs will be trained up in different
trades in the next five years. Major trainees will be poultry farmers, egg collectors, chick
producers, chick rearers, feed producers, feed sellers, dairy farmers, goat rearers, etc.
Integrated approach of developing livestock and fisheries will be encouraged. Fiscal supports
 263

for importing quality breeds, feeds, feed-ingredients, equipment and medicine will be
continued and further expanded, if necessary. Some productive units of the public sector will
be transferred to the private sector to increase efficiency and for reduction of government
subsidy for this sector.
13.30.12 Financial outlay during Fifth Plan: In order to implement the livestock
development programmes during the Fifth Five Year Plan, an estimated amount of
Tk.5,435.60 million will be spent in the public sector. Year wise break up is given in
Table 13.11.

Table 13.11
Public Sector Financial Outlay for Livestock Development During Fifth Plan
(at 1996/97 prices)
(in million Taka)
Year Financial Outlay
1996/97 690.00
1997/98 1,000.00
1998/99 1,000.00
1999/2000 1,012.00
2000/2001 1,164.00
2001/2002 1,259.60
Total (1997-2002) 5,435.60

13.30.13 In addition to the public sector development outlay of Tk.5,435.60 million, an

amount of Tk.20,646.40 million is expected to be invested for the development of livestock
by the private entrepreneurs. With increasing supports from the government, private
individuals, groups and companies are coming up in a big way in different fields of livestock
development. By and large, the main fields will be the establishment of poultry-duck
hatchery, poultry-duck farms, dairy farms, goat farms and feed mills, fodder cultivation, beef-
fattening farms, etc.

E. Forestry and Environment

Forestry

13.31 Past Performance

13.31.1 An estimated 2.45 million ha (17 per cent) of the total land of the country is under
forest or potential forests. Out of this, 2.18 million ha is owned by the government as
classified and unclassified forests and the rest 0.27 million ha is owned privately. In the past,
wide-spread destruction, unplanned extraction, clearing of forest land for agriculture, etc.,
have reduced the forest coverage to about 8 per cent as against the minimum requirement of
25 per cent.
13.31.2 In the past plans, the main emphasis was to expand forests and to increase supply of
timber and wood. Besides, qualitative improvement of natural forest through artificial
regeneration was also given priority. During the Fourth Plan, extraction of forest resources
and afforestation of the newly accreted lands continued. Later, due to increased need of
environmental conservation, extraction was discouraged. Major thrust during the Fourth Plan
was on people’s participation and private sector investment in the management and
development of forests. Forest plantation during the Fourth Plan was 43,619.84 ha against the
 264

target of 46,947.50 ha showing 93 per cent achievement. The plan target of 16,158 km. of
strip plantation was achieved by almost 100 per cent. Rubber plantation covered 1,261.78 ha
of land and 7.83 million kg. of rubber was produced. Moreover, the coastal afforestation
programme, bamboo, cane and murta plantation and industrial and strip plantation showed
good performance.

13.32 Fifth Five Year Plan

13.32.1 Objectives: The main objectives during the Fifth Plan are to expand forest
resources, make forests productive, develop institutional capabilities, and to encourage
people's participation. By the end of the Fifth Five Year Plan, it is envisaged that the tree
coverage will be increased to 14 per cent of the land area of the country and a sustainable
status of existing forest resources will be achieved with the active participation of the local
populace. Specific objectives will be to:
a. expand and rehabilitate the forest resources to increase productivity;
b. conserve and protect the eco-system for bio-diversity and overall environmental
stability;
c. continue and expand people-oriented afforestation programme to elevate socio-
economic well-being of the people;
d. promote multiple land use technology like agro-forestry to ensure increased
productivity and supplement agricultural production;
e. effectively conduct forestry extension activities to transfer improved technology and
research information to end-users, e.g., local people and private homesteads;
f. conduct need-oriented co-ordinated research and experimental works;
g. initiate development of quantitative and qualitative human resources;
h. achieve meaningful participation of local people, local government bodies, NGOs and
government agencies in forestry programmes; and
i. encourage private plantation of rubber, teak, mango, jackfruit and other high-value
trees.

13.33 Policy Strategy and Programme

13.33.1 In line with the above objectives, policies, strategies and programmes for the forestry
sub-sector during the Fifth Plan will be as follows :
a. The natural forests of the country will be set aside for conservation purpose. That
means, the productivity of plantations will have to be increased manifold. People’s
participation will be incorporated in all forest development as far as practicable
including maintenance. In this regard, zoning system might be initiated. People's
participation will be encouraged in the peripheral and buffer zones. Integration of tree
plantation and crop cultivation will be practised. Multi-purpose trees will receive
special attention.
b. Existing low productive plantations, both mature and deforested, will be replanted in
the hill forests. Scientific management principles will be strictly observed to restore
productivity of these lands. A business enterprise system will be introduced to manage
forests for profit. A total of 1,05,000 ha of plantations will be raised in the reserved,
protected and unclassified state forest land of hilly areas during the Plan period.
c. The existing coastal afforestation, including mangroves, will also be continued. The
existing mature coastal plantations will be cut and replanted. An area of 18,000 ha
will be planted and replanted in the coastal areas. The Sundarbans Reserve Forest
 265

(SRF) is the largest single natural mangrove forest in the globe. However, SRF is
presently engulfed with severe ecological problems. The most important species of
this forest, Sundari is affected with top dying. Other aquatic, floral and faunal
diversity are fast disappearing or on the verge of extinction. Following the integrated
development approach for the forest sub-sector, an Integrated Resource Management
Plan has been prepared. Another programme for bio-diversity conservation in SRF is
in the pipeline. Extraction of top-dying Sundari trees and enrichment plantation is also
a priority issue of the forestry sub-sector. During the Plan period, 2.5 million cft. of
Sundari will be extracted and enrichment planting of 2000 ha will be carried out in the
Sundarbans. The sal forests of the country has been degraded and deforested for many
years. The programme to rehabilitate the sal forests will gradually be taken up as
before. A total of 32,000 ha of agro-forestry and woodlot plantations will be raised
under different projects in the sal forest regions.
d. To prevent the extent of damage by cyclones and tidal surges, a programme will be
undertaken under which 24,500 km. of strip forests will be raised during the Plan
period.
e. The reedlands of Sylhet has long been lying unutilised. In addition to the existing
reedland development project under implementation in these areas, some more
programmes will be taken up in future. Under the Fifth Plan, 7,000 ha of reedlands
and 1,000 ha of wetlands will be planted by local government bodies with people’s
participation at grassroots level. In addition to this, 7,000 ha of char land will also be
planted under the Forestry Sector Project.

13.33.2 Farmland forestry: Potentials for increasing productivity of the farmlands which
are degraded due to drought condition and in the gully areas especially in the north west,
exist. A project will be undertaken to afforest the farm lands/farm land ridges. Agro-forestry
will be made popular gradually. About 8,000 ha of farm land plantations will be raised during
the Plan period.

13.33.3 Social forestry: Social forestry has now become a social movement in Bangladesh.
The programme includes expansion and strengthening of 335 thana nurseries, establishment
of 2,000 union level nurseries, expansion and strengthening of 80 forest extension and
nursery training centres, distribution of 40 million seedlings and raising of 19,000 km. of strip
plantations. The local government bodies will co-ordinate the afforestation programmes at the
grassroot level under this programme. During the Fifth Plan, NGOs will be more directly
involved in afforestation programmes. They will be motivating people through informal
training and other extension sources and will help the Forest Department to implement its
programmes. In some cases, they will be co-sharers of benefits of the plantation projects.

13.33.4 Rubber plantation: Three hill districts and parts of greater Mymensingh, Sylhet and
Tangail are specially suitable for rubber cultivation. Rubber plantation in Bangladesh was
started on a pilot scale in 1961 by BFIDC. So far an area of 31,118 ha (1995) has been
planted which yields 7.83 million kg raw rubber in the public sector. A total of 16,527 ha has,
of late, come under rubber plantation in the private sector with a production of 0.25 million
kg. Taken together, these account for about 35 per cent of the country's requirement for raw
rubber. The yield rate, however, is not satisfactory. This is mainly because of poor seed and
management, inadequate technical knowledge, lack of infrastructural facilities like access to
roads and electricity, support services and credit. These problems will be addressed properly
 266

in the Plan period. Inter-cropping with fruits and vegetables will be attempted. Joint
participation of local and foreign investors will be explored.

13.33.5 Wood energy development : Wood energy contributes 13 per cent of the total fuel
consumption of the country. Wood fuel is the most important form of energy for domestic use
in rural areas. In Bangladesh, domestic cooking consumes 65 per cent of fuel wood and the
rest 35 per cent is consumed by the industrial and commercial sectors. There is a wide gap
between supply and demand of fuel wood in the country. To meet high demand relative to
supply, recently through social forestry, short/medium rotation fast growing tree species have
been planted along the roads and embankments, and on marginal and fallow lands with active
participation of local people. BCSIR has developed efficient wood burning oven. Further
research programmes on development of wood fuel, efficient use of wood, etc., will be
undertaken in the Plan period to reduce strain on wood supply. Technical assistance may be
required for this purpose.

13.33.6 Non-wood forestry products: As a subsidiary product of forests, non-wood forest

products have substantial potentials for economic benefit. Bamboo, cane, murta, medicinal
plants, honey, wax, gol-patta, etc., did not receive proper attention in the past. Non-wood
forest products will be developed during the Fifth Plan in a systematic way. The Fifth Plan
projects to cover 8,000 hectare with non-wood forest products.

13.33.7 Forestry survey and research: Emphasis will be given to homestead private forests
in terms of genetic research (tissue culture) to improve productivity. Supply of inputs will be
made cheaper and easier. Emphasis will be given for maximum utilisation and multiple use of
land. Research on non-wood forest products, especially for rural use, will be conducted. The
forest soil survey will be completed so that site-species matching can be ensured. In addition,
detailed inventory of forest resources will be carried out to prepare specific forest
management prescriptions. Moreover, detailed survey of about 400,000 ha forest lands will be
conducted and forest areas will be demarcated to avoid unlawful encroachments.
13.33.8 Forest institutions, policies/legislation: The responsibility of development of
forestry in the country rests largely with the Forest Department (FD). But the FD has long
been constrained by shortage of skilled manpower, logistics and legal backing. Development
of forestry to a large extends will be contingent on the institutional development/reforms of
FD and other allied institutions. Future actions during the Fifth Plan will be in accordance
with the new Forest Policy and the Master Plan. New laws pertaining to the conservation of
forests and wildlife will be introduced. FD will be reorganised and participation of local
people will be emphasised. The role of BFIDC as a public sector corporation will be
reviewed, especially considering the declining scope of mechanical extraction from
Chittagong Hill Tracts and opening up of rubber plantations to the private sector.
13.33.9 Extension and training: Recently, high emphasis is being given to participatory
approach for development. Involving local people in implementing and maintaining
development programmes is the cardinal principle of such approach. Thus, during the Fifth
Plan, people-oriented programmes will receive special attention. There is a need for vigorous
forestry extension activities and training to implement these programmes. The Fifth Plan
projects to train about 100,000 persons, especially in social forestry at the grassroots level.
Besides, as mentioned earlier, to develop the skills of manpower in the forestry sector, a total
of 1,550 persons will be trained in professional, sub-professional and bottom level of the
Forest Department and allied agencies.
 267

13.33.10 Conservation: Presently, about 1.5 per cent of the total land area falls under
protected land area category which is about 10 per cent of the total forest land. The protected
area will be increased to 15 per cent during the Plan period. Effective management plan for
all the protected areas will be prepared with the introduction of zoning system. People’s
participation will be effectively utilised in conserving resources in the respective zones.
Along with this, eco-tourism will be introduced in a selective way based on the carrying
capacity of the eco-system. Use of alternatives to forest products like steel/plastic furniture
and aluminium structures will be encouraged. This will ease the pressure on forest products.
Ban on the use of fuelwood in brick fields will continue and be made more effective and
other modes of efficient use of energy will be promoted, e.g., improved cooking stove.
Moreover, programmes will be developed and implemented to protect the
threatened/endangered species of flora and fauna and the fragile eco-system. Wildlife farming
of deer and reptile like crocodiles, iguana, snakes and frogs, etc., will be encouraged and
promoted on a commercial basis through private initiatives.

13.33.11 Financial outlay: An amount of Tk.6,982.10 million has been provided for
development of forestry in the public sector during the Fifth Plan. Details are given in
Table 13.12.

Table 13.12
Physical Programme and Financial Outlay for Development of Forestry in Public Sector
During Fifth Plan
(in million Taka)
Item Physical Activities Financial Outlay
FORESTRY SUB-SECTOR
1. Plantation and Maintenance (hectare) 209,938 2,729.20
a. Hill forests (RF, PF, USF) (ha.) 105,000 1,365.00
b. Coastal afforestation and enrichment 20,000 260.00
plantation in the SRF (ha.)
c. Reed land, wetland and charland plantation (ha.) 15,000 195.00
d. Agroforestry, woodlot and farmland afforestation (ha) 40,000 520.00
e. Strip plantation (24500 km) equivalent to (ha.) 19,000 247.00
f. Bamboo, cane and medicinal plants (ha.) 8,000 104.00
g. Vacant land in tea garden, around pond banks and in 2,938 38.20
Barind tract gullys (ha.)
2. Seed orchard establishment (Seed orchard division) 4 129.74
3. Seedlings distribution (million number) 56.6 468.00
4. Jhumia Rehabilitation (family no.) 3,000 233.00
5. Development of Wildlife Conservation, Environment, - 996.66
Education, Recreation etc.
6. Physical Infrastructure - 650.00
7. Vehicles/Equipment - 191.00
8. Survey, Demarcation, Inventory and Work Plan Preparation - 203.00
9. Manpower 3,000 708.20
10. Extension and Training - 203.20
11. Research - 270.00
12. Miscellaneous - 200.10
TOTAL 6,982.10
 268

13.34 Private Forests

13.34.1 In Bangladesh the village forest area is comprised of only 0.27 million ha. But this
forest has been meeting most of the demand for forest products like timber, firewood, etc.
Over the years the village forests including the homesteads have grown into a major source of
forest products, especially with the initiative and involvement of local people. However,
during the earlier plan periods, supports were provided from the government, mainly in terms
of technical back-up and extension services. More support is necessary to establish this as a
sustainable source of forest resources especially for promoting multi-purpose tree species of
high productivity. Extension, training and credit facilities will be provided to encourage the
private sector to undertake rubber, teak, jackfruit and other high value crop plantation on a
commercial basis.
13.34.2 With the successful implementation of social forestry, thana afforestation, homestead
forestry, farm forestry and agro-forestry programmes/projects, increasing investment is
coming up in the private sector as well as in the public sector. An amount of Tk.4,732.00
million is projected to be invested by the private sector for nursery development, seedling
raising, plantation, maintenance, etc., in the Fifth Plan period.
Environment
13.35 Past Performance
13.35.1 Bangladesh is facing a number of environmental problems. These have originated
mainly from population pressure, extreme poverty, natural disasters, depletion of forest
resources, energy crisis, unplanned urbanisation and industrialisation, water pollution, air
pollution in major cities, soil degradation, etc. Bangladesh has been trying to combat
environmental degradation and correct the same with limited facilities and resources.
13.35.2 The main theme of programmes of the Department of Environment (DOE) in the past
was to develop institution and policy and programme tools to fulfil its mandate. During the
last plan period, one of the vital projects of the Department was the ''Improvement in Dhaka
Urban Environmental Infrastructure Project'' to the end of strengthening DOE's capabilities in
environmental planning, pollution control and monitoring. Under this project, a laboratory
and functional building was constructed at Dhaka along with procurement of 24 items of
laboratory equipment and logistic supports. There was a plan for development of other
regional laboratory/office building during the Fourth Five Year Plan. Due to various
constraints these works could not be undertaken till the last financial year.
13.35.3 Ministry of Environment and Forest completed a comprehensive study on National
Environmental Management Action Plan (NEMAP) for identifying probable environmental
concerns/issues and their remedial measures in different sectors of the economy. A good
number of programmes and projects have been recommended for implementation under
different ministries/organisations. Subsequently, another TAPP 'Bangladesh Environment
Project (BEP)' was taken up to formulate investment projects in the light of NEMAP
recommendations.
13.36 Fifth Five Year Plan
13.36.1 Objectives: The main objectives of the Environment sub-sector during the Fifth
Five Year Plan are as follows:
a. promoting appropriate environment management system for sustainable development;
b. ensuring conservation of bio-diversity and its sustainable utilisation;
 269

c. ensuring active participation of the poor, especially the women, in environment

management activities;
d. promoting environment-friendly activities in development programmes/projects;
e. preserving and protecting the natural resource base;
f. strengthening the capability of public and private sectors to manage environmental
concerns;
g. minimising environmental pollution from different industries;
h. monitoring and controlling present environmental pollution and degradation related to
soil, water and air;
i. fulfilling obligations under international treaties and conventions for minimising
adverse impacts on global environment;
j. promoting co-operation with regional and international institutions/organisations to
address global environmental problems;
k. undertaking research and development for innovating technology in national
perspective and application of modern technology, information exchange and benefit
sharing with other countries; and
l. creating public awareness in order to participate in environment promotion activities.
13.37 Policy and Strategy
13.37.1 The following policies and strategies will be taken up during the Fifth Five Year
Plan to attain with the above objectives of the environment sub-sector:
a. National Environment Council headed by the Prime Minister and Executive
Committee of National Environment Council headed by the Minister for Environment
and Forest will be more active for policy designs and programme directives;
b. Environment committees at division, district and thana levels with people's
participation will be strengthened; attempts will be made to form this committee at
union parishad level also;
c. Department of Environment will be strengthened in the light of existing Environment
Policy, Laws and Action Plan in order to co-ordinate, monitor and implement these
activities;
d. Drafting of rules, regulations and guidelines under the Environment Protection Act
(EPA) 1995 will be finalised soon in order to ensure effective enforcement of EPA;
e. Sectoral legislations are to be reviewed and redrafted in the light of Bangladesh's
commitment expressed through signing and ratifying a number of International
Conventions and Protocols on environment;
f. ‘Polluters Pay Principle’ will be followed in order to ensure strict compliance of
environmental legislation; and
g. Incentives in the form of tax-rebate, tax-holiday, etc., will be provided and
incremental cost incurred by the environment-friendly entrepreneurs will be met in
various forms and from multiple sources;

13.37.2 Programmes : In considering the socio-economic and environmental aspect of the

country, the following activities/programmes/measures will be taken in the environment sub-
sector during the Plan period :
a. Raising manpower and infrastructure development of the DOE in order to fulfil its
mandate; there is an urgent need to create and establish 2 (two) new divisional offices
in Sylhet and Barisal Divisions and 12 (twelve) sub-regional offices with laboratory
 270

and other necessary facilities of local government at old districts of the country during
this Five Year Plan period;
b. Skilled manpower is essential for better environmental management and co-
ordination. In this regard, DOE will undertake training programmes on different
subjects concerning environment;
c. Survey, research and development activities in different fields and subjects will be
taken up to combat environmental degradation and other environmental problems. A
research and training centre will be set up during this Plan period;
d. Facility of data-base and documentation of different environmental subjects and fields
will be created to help decision makers, other professional groups, institutions and
government departments and ministries to formulate an appropriate plan of action to
protect environment. United Nations Environmental Programme (UNEP) is going to
establish electronic information network in DOE shortly;
e. Public awareness is a key to achieve success in any national programme. With the
help of electronic and other media, it has now become very easy to reach all the
people within a short time. DOE is trying to use all kinds of modern media in order to
disseminate information on environmental issues and encourage entrepreneurs to
come up with more investment;
f. DOE will formulate projects and undertake activities to the end of environment
protection of Bangladesh, Agenda-21 and NEMAP and take initiative to implement
international protocols and agreements on environment;
g. "Environmental Court" may be established to resolve all cases of violation against
any clause under the Environment Protection Act, '95 and other rules, regulations and
policies meant for preserving and protecting the environment;
h. Establishing treatment plants for industries (e.g., cement, fertiliser, paper, textiles,
handloom, leather, etc.) and making their use mandatory;
i. Introducing self-monitoring system in Export Processing Zones and other industrial
areas; and
j. Strengthening drinking water quality surveillance.
13.37.3 Physical programme and financial outlay of the public sector for development of
environment during the Fifth Plan are shown in Table 13.13.

Table 13.13
Physical Programme and Financial Outlay for Development of Environment
in Public Sector During Fifth Plan
(in million Taka)
Programme Physical Activities Financial Outlay
Strengthening of DOE at regional and sub- 18 offices 120.00
regional levels.
Phasing-out of ozone depleting substances - 20.00
Biodiversity management 11 Centres 110.00
Environmental quality control, monitoring and 19 Air Monitoring 120.00
management. Stations and 6
Treatment Plants.
Public awareness on environmental standards - 10.00
Alternative energy development. - 10.00
Agenda-21: Implementation follow up. - 10.00
Total 400.00
 271

13.37.4 Private entrepreneurs are expected to invest in environmental protection and

development. In setting up and maintaining places of scenic beauties, in preventing wanton
destruction of good and pulsating environment and in keeping Bangladesh beautiful, private
sector is expected to come up in a larger way hitherto not accounted for in the recent past.
Private investment for environmental development in the Fifth Plan is projected to be at least
Tk.100 million, i.e., a fourth of the envisaged public sector investment.

Water Resources

13.38 Introduction
13.38.1 The twin problems of shortage of water during the dry season and its abundance in
the rainy season are critical to the development and management of water resources in
Bangladesh. During the winter months, optimum use of available water resources will have to
be made taking into consideration the multifarious demand for use of water for domestic
need, irrigation, navigation, fisheries, livestock, forestry, environment, etc. On the other
hand, in the wet months, the main tasks, in addition to provision of supplementary irrigation,
are controlling, regulating and managing of floods to protect human lives, properties, crops,
etc. It is estimated that 7.56 million ha could be developed for irrigation as against the current
irrigated area of 4.00 million ha while 5.76 million ha will require flood control and drainage
(FCD) facilities as against 4.2 million ha covered in 1996/97. Bangladesh, being in the lower
riparian areas of three major rivers of the world, the Ganges, the Brahmaputra and the
Meghna, could not since long undertake any meaningful water resources development
programme to harness the water flows of these rivers for the benefit of its people. Now,
following the treaty for sharing the Ganges water with India, vista of opportunities have been
opened up for regional, sub-regional, basin and sub-basin wise development and management
of water resources for the benefit of all peoples of the region. It is in this backdrop that the
Ganges Barrage is being taken up for implementation during the Fifth Plan period.

13.39 Major Issues: Physical Environment

13.39.1 Most of Bangladesh is located within the flood plains of the three great rivers
mentioned above and their tributaries and distributaries.
13.39.2 The three rivers drain a total catchment area of about 1.72 million sq km, of which
only about 7 per cent lies within Bangladesh. This limits the ability of the country without co-
operation of the upper riparian to have any control over the inflow of water and sediment that
flow over it to discharge into the Bay of Bengal. There are five major adverse effects of this
which are described below:
a. Flood and drought
i. The country's unique geo-physical setting makes it extremely vulnerable to both flood
and drought. The annual minimum flow of rivers near the Bay of Bengal is only one-
twentieth of their peak monsoon discharge. The high water levels in the major rivers
during monsoon cause drainage congestion and over-bank spillage of their tributaries
which is often exacerbated by runoff from coincident high local rainfall. Over the
1954-93 period, this resulted in seasonal and fairly predictable inundation over an
average of about 26,200 sq. km. or about 27 per cent of the country's net cultivable area
of 95,600 sq. km. However, periodic severe flooding is also common and during the
aforesaid 39-year period, flooding covered 37 per cent or more of the country in one out
 272

of every 10 years. The record was in 1988 when almost 60 per cent of the country was
inundated.
ii. Certain parts of Bangladesh are also subjected to drought during the monsoon season
which adversely affects the cultivation of kharif crops. The upstream withdrawal of
water from some rivers by the upper riparian during the dry season has aggravated the
situation, giving rise to need for supplementary irrigation and combating salinity and
other ecological problems.
b. Siltation: The combined annual average sediment load entering Bangladesh and conveyed
to the Bay of Bengal via the main rivers is estimated to be about 0.77 billion mt, varying over
a range of 0.45-1.84 billion mt during the period 1956-88. A part of this sediment load is
deposited on the floodplains during the flood season, gradually changing its topography and
drainage conditions. Bangladesh has an estimated total of 25,000 km of drainage channels
and their water conveyance capacity and navigability have been seriously threatened by
continuous morphological change of river beds. The problem has not been properly attended
to in the past on the ground that dredging is expensive. However, such generalised assertions
must be tested against specific cases where very selective dredging and desiltation
programme, combined with developing raised platform could provide cost-effective solution
of the problem and also assist in poverty alleviation and environmental upgradation.
c. River bank erosion
i. The floodplains and coastal delta are in a constant state of slow morphological change.
The large seasonal variation in river flow results in a varying sediment transportation
capacity and causes river-bank erosion, migration of river-banks and meandering river
channels. Recent satellite image studies of the Ganges-Brahmaputra-Meghna rivers
show that 106,300 ha were lost to erosion, while only 19,300 ha were accreted over the
period 1982-92. The net area of 87,000 ha lost to erosion is equivalent to an annual
erosion rate of 8,700 ha. Most of it is agricultural land.
ii. River bank erosion has significant economic and social impacts. The loss of land, crops
and property has led to landlessness and impoverishment of thousands of households.
A study showed that out of the total population of 1.88 million living in the
Brahmaputra floodplains, 450,000 live within the banklines or reverine chars and the
remainder within a kilometre of the river. Over the period 1980-92, land capable of
supporting 405,000 people was eroded and new char land created from the eroded
sediment could only support 55,000 people causing a net displacement of 350,000
people.
iii. Since river training and river bank protection work involve huge sum of money, major
investment in these areas was not encouraged in the past by our development partners.
But lately, there has been a growing concern and reassessment of the economic and
socio-political benefits of protecting important towns, infrastructure, hats and bazars as
well as agricultural land.
d. Cyclonic storm surges: Natural calamities are recurring phenomena in Bangladesh, the
most severe ones occurring in the form of cyclonic storms which mainly affect the coastal
districts. The country has over 700 kms of coastline on the mainland and several offshore
islands in the Bay of Bengal. Vulnerable areas include the important port towns of
Chittagong and Khulna and heavily populated islands of Sandwip, Kutubdia and Hatiya.
During the last 125 years, over 42 cyclones hit the coastal belt; 14 occurred during the last
25 years. Cyclones often take a heavy toll of human life, livestock, crops, properties, and
physical infrastructure. Such cyclones also tax the country's institutional and financial
 273

capabilities, since resources have to be diverted to provide immediate relief to the affected
population and to restore damaged or destroyed physical facilities.
e. Salinity intrusion: Since the Farakka Barrage in West Bengal went into operation, the net
availability of surface water to Bangladesh via the Ganges during the dry season was
reduced below critical level. The impact of this reduction is demonstrated by a marked
increase in salinity in southwestern Bangladesh. The southern part of this affected region
is subject to tidal action from the Bay of Bengal and saline intrusion from the tides is
normally pushed back by upland flows of fresh water from the Ganges through its
tributaries in which the Gorai plays a vital role. Due to flow reduction since 1975, tidal
limits and the salinity front have moved northward. Around Khulna, some 146 km.
upstream from the Bay, the salinity (in terms of electric conductivity) has increased from
380 micro-mhos/cm in the pre-diversion period to 29,000 micro-mhos/cm. This is a major
problem in over 25,900 sq. km of the Ganges dependent area and is causing both short
and long-term problems in crop production, fishery, forestry, power generation, industrial
development, health care and domestic water supply. Following the ganges water sharing
treaty with India signed on December 12, 1996, the situation seems to be improving; the
desired improvement will not take place till the proposed Ganges barrage is constructed
and water flowing down the Gorai and other relevant distributaries is augmented.
13.40 Water Resources Potential
13.40.1 The net cultivable area of the country is estimated at 9.03 million ha of which 7.56
million ha is suitable for irrigation. The primary mode for increasing agricultural production
for the last two decades has been an expansion of irrigation coverage during the rabi season.
Irrigated land in Bangladesh comprises approximately 3.99 million ha. Of this, large
irrigation systems currently service about 0.40 million ha; shallow tubewells, about 2.23
million ha; low-lift pumps, 0.58 million ha; deep tubewells, 0.52 million ha and traditional
and other methods, about 0.26 million ha.
13.40.2 Investment in barrages, reservoirs, pumps and canals is likely to provide adequate
access to fresh water supply in the future. The Ganges water sharing treaty has removed some
degree of uncertainty in the quantum of surface water available to south west Bangladesh
during the dry season. However, with increasing use of water by a growing population and
increasing industrial and agricultural uses, there may be a need for surface water storage and
additional ground water augmentation. In this context, reaching agreement with the upper
riparian in respect of sharing of water of other common rivers is of vital importance. Both for
intermediate and long term planning accurate assessment of surface and ground water
availability throughout the year will be necessary as only then conjunctive use could follow.

13.40.3 Proper drainage planning is also necessary for removing excess water during the wet
season. Development in drainage infrastructure, both on public and private accounts, will
have to be carefully thought out and the enabling environment created for public
participation.
13.40.4 Managing the supply of water has been addressed in piecemeal fashion in the past.
Flood management has been a top priority for decades, but an environment-friendly
mechanism for doing so is yet to be designed for protecting the interest of navigation and
fisheries. However, once the total resource picture is clear, the upcoming water management
plan will address the issue properly.
 274

13.41 Institutional Framework

13.41.1 Since time immemorial, water has been viewed in Bangladesh as a free gift of nature.
Systematic exploitation of water resources began in the country in the early sixties with the
start of the flood control, drainage and irrigation (FCDI) projects as prepared under the
National Water Management Plan. It was then believed that crop vulnerability to flooding
could be reduced by the construction of embankments and polders to create flood-free areas.
Though Land and Water Resources Sector Study (1972) by the International Bank for
Reconstruction and Development de-emphasised major FCD projects and recommended
substantial public investment in minor irrigation, the preference for FCD along with major
civil engineering work did not diminish very significantly. A National Water Plan (NWP)
completed in 1991 proposed an ambitious programme costing US $4.2 billion for 20 years for
construction of FCD projects to increase monsoon rice production and to complement minor
irrigation development. The plan also recommended studies to establish the engineering and
economic feasibility of Ganges and Brahmaputra Barrages and measures to control salinity in
the south-west region. The latest studies under the aegis of the Flood Action Plan (FAP) also
stressed structural measures along with consideration for such aspects as impact of these on
fisheries, project-affected people and environment.
13.41.2 The dominance of structural measures as the primary mode of water resources
development led to the empoldering of over 3 million ha or about one-third of the net
cultivated area at a cost of over US $1 billion over the past 30 year period. This fixation has
deeply influenced the institutional evolution of the BWDB.
13.41.3 Past water sector planning has been criticised on the ground of its heavy reliance on
structural measures that caused major externalities and sacrificed the interest of other groups
like the fisherman, boatman, landless labourer and women. In a country with severe water
imbalances during different periods of the year, it is inevitable that any solution will have
impact on one or the other users of water adversely to some extent. The issue then becomes
one of minimising the hardships to all by developing an approach that will protect the
minimum interests of the most important constituencies (the poor and underprivileged, for
example), ensure water availability for critical needs (drinking water for example) and
prevent environmental degradation (by taxing polluters for example). All of these require
development of a systematic policy and programme for equating the demand and supply of
water through economic measures and socially and environmentally friendly means keeping
in mind the legitimacy of claims of all user classes.
13.41.4 The Water Resources Planning Organisation (WARPO) is charged with overall
integrated water sector resources allocation and macro level planning while the BWDB is the
principal executing agency for carrying out those plans into action after conducting micro
level planning. The WARPO is a new organisation and is primarily run by engineers
borrowed from the BWDB. There will be vast improvements in its institutional capability
when its own multi-disciplinary staff will be recruited which is under way.
13.42 Review of Past Performance
13.42.1 Water sector development strategies and policies have undergone numerous changes
overtime and consequently the medium and short term plans had to be modified and guided
by these policy objectives. For example, minor irrigation, which covers about 90 per cent of
the total irrigated area, was gradually privatised and now it is entirely operated by the private
sector. During the Fourth Plan, emphasis was given on the small scale FCDI projects with
minor irrigation development to optimise both irrigation coverage and flood control and
 275

drainage improvement to the required direction. Necessary policy measures have been taken
to reduce the capacity gap between big and small farmers through formation of water users
groups and by providing technical support services and credit to small farmers.
13.42.2 At the end of Fourth Plan period (June '95), surface water irrigation covered an area
of 1.14 million ha. On the other hand, cumulative achievement of ground water irrigation at
the end of June '95 was 2.17 million ha as against the target of 3.02 million ha.
13.42.3 During the past plans, BWDB constructed about 8,515 km of embankment, 4,774 km
irrigation canal and 3,462 km of drainage channel to protect valuable crops, lives and
properties. It was estimated that an area of about 4,084 million ha was brought under flood
control and drainage facilities at the terminal year of the Plan period.
13.43 Fifth Five Year Plan
13.43.1 Objectives: The objectives of the Plan in the water sector stretching over the period
from 1997 to 2002 will be to:
a. alleviate poverty and generate employment opportunities;
b. ensure ecological balance;
c. promote water conservation for irrigation and other uses;
d. enhance conveyance capacity of water courses through desiltation;
e. protect towns, commercial centres, agricultural lands, etc., from erosion of inland and
border rivers;
f. promote culture fisheries in the completed projects;
g. promote optimum use of available flows of the common rivers in domestic,
agricultural, fisheries, navigation and industrial sectors;
h. fulfil the need of irrigation for achieving foodgrain self-sufficiency by ensuring year-
round sustainable irrigation through conjunctive use of surface and ground-water thus
avoiding over-extraction of sub-surface water;
i. control floods to protect crops, lives and properties and promote both HYV rice and
fish cultivation through controlled flooding;
j. prevent saline water intrusion;
k. ensure people's active participation in planning, implementation and maintenance of
water sector projects; and,
l. carry out studies on future water resources development projects.
13.43.3 Strategies: In order to achieve the Plan objectives, the following short and long
term strategies will be adopted:
a. short term strategy will lay stress on maximum utilisation of existing facilities
through command area development, effective operation and maintenance and
rehabilitation of existing projects, quick completion of carry-over projects and
balanced use of surface and ground water and desiltation of rivers and channels. In
case of new projects, an integrated basin/sub-basin planning approach will be
followed. Avoidance of conflicts between in -stream and off-stream users of water,
delineation of coastal areas for shrimp culture on a scientific basis and zoning of areas
for shrimp cultivation and paddy cultivation, development of data base and
encouraging local participation in project planning, implementation and operation and
maintenance, protection of towns, commercial centres and agricultural lands from
erosion of inland and border rivers including repair and maintenance of existing river
bank protection works will be pursued;
 276

b. the long term strategy envisages major interventions. Ultimate solution to water
resource problems lies in the development and utilisation of the major river waters.
Investigations, surveys and studies must, therefore, start for a balanced long term
development utilising major river waters through a system of barrages. The recently
concluded the Ganges water sharing treaty has unveiled a new vista for a wide range
of possibilities in this direction;
c. comprehensive flood control/management measures will be undertaken to protect
lives, properties, and crops keeping in view open water fishery production needs and
requirements. Cropping patterns will be changed and improved varieties will be
introduced in the protected areas for increased foodgrain and fish production;
d. needs and programmes to sustain open water fish resources will be included in the
irrigation and flood control and drainage projects for long term development; and
e. As IWTA Master Plan for navigation is under implementation, its effectiveness will
gainfully be used in the long term water resources planning, where applicable.
13.43.4 The core strategy: The following proposed measures will carry the water resource
management strategy to the year 2010:
a. Increasing efficiency of completed projects: In the previous section, it was noted that,
in the past FCDI projects concentrated on irrigation, neglecting other competing needs
for water. In addition, these facilities, for a variety of reasons, have not been able to
perform to their optimal capacity. Given the need for irrigation expansion, it makes
good sense to try to rehabilitate these completed projects through redesign and suitable
modifications to remove, as far as practicable, their negative impact on other sectors
such as navigation, fisheries and environment. There has to be another parallel effort to
organise the beneficiaries for command area development and its long term
sustainability.
b. River bank protection and environmental upgrading
i. The havoc created by continued erosion by all the rivers in Bangladesh has been
highlighted in the previous section. Unfortunately, this problem so far has not been
systematically handled. For long, the government has been spending quite a
substantial amount on river bank protection. But its impact has been marginal for the
reason that the resources are distributed over too many projects covering innumerable
sections without completing any section. This type of piecemeal work does not lead to
any permanent solution but, more often than not, results in wastage of scarce
resources. There is a need for massive investment, and since everybody cannot be
satisfied all at once there will be need for prioritisation.
ii. Towns, river ports and markets have traditionally been developed by the side of rivers
for obvious reasons. These are the growth centres of Bangladesh and they constitute
life-line of the economy. Scarcity of resources and larger claim of agricultural needs
have so long prevented reasonable allocation for their protection. Out of 240 identified
town protection schemes, only 75 have been completed upto June 1996, 96 are at
various stages of implementation and the rest are yet to be taken up.
iii. Side by side with protection work, there is need for reasonable investment on
upgradation of environment. Water supply, improved road network, sewerage
disposal, drainage system and other municipal services will be developed fast. With
donor support, a modest beginning has been made. This will be intensified and carried
out further.
 277

c. Increasing conveyance capacity of rivers

i. Ever since the birth of Bangladesh, siltation has become a major problem. This has
not only adversely affected the navigability in major parts of 25,000 km long riverine
routes but has also increased the level of salinity. About one fourth area of Bangladesh
has been subjected to the hazard of either desertification or salinity.
ii. In the past, meaningful desiltation programmes for sustaining desired navigability and
water conveyance could not be taken up due to huge cost involvement. The problem
has now compounded and it can no longer be ignored. A few surveys and pilot
programmes carried under the FAP have revealed the prospect of selective dredging.
If a method for partial cost recovery can be found, selective dredging can be a viable
programme.
d. Major new investments
i. As has been mentioned elsewhere, regional surface and ground water development
will be reaching near saturation by early next century. This indicates the urgency for
development of major rivers by constructing the Ganges and the Brahmaputra
barrages. The National Water Plan ( NWP-II) recommended feasibility studies of the
two major proposed barrage projects in the Fifth Plan. When fully developed, the
Ganges barrage, according to the feasibility study carried out in 1984, will be able to
irrigate 1.33 million ha. Additionally, round the year sweet water flow through the
distributaries of the Ganges will push back salinity intrusion thereby restoring the
ecological balance of the Ganges development area. All these will help pursue
environment-friendly agricultural and industrial activities which, in turn, will help
alleviate poverty.
ii. The potential to expand irrigation further brings up the question of increasing crop
production by increasing production in the kharif (rainy) season. For that, flood
protection will need to be provided in order to reduce the risk of flood losses and /or
boost production of high yielding crops. Studies carried out under the FAP provides a
policy and implementation framework under which HYV rice and fish can be
cultivated through controlled flooding.
e. Strengthening and developing relevant institutions
i. Pursuit of the Plan as outlined above will call for requisite capable institutions. Water
sector agencies, particularly BWDB, suffer from many deficiencies. These are well
documented in the relevant reports. Through efficient restructuring and over time,
steps will be taken to strengthen the institutional capacity of BWDB.
ii. While doing this, special efforts will be made to develop institutions for local level
planning, people's participation at all stages of the project cycle, for ensuring
accountability, transparency and long term sustainability of completed projects.
Programmes will have to be designed in such manner that these can ensure
participation by women and the landless. Finally, allout efforts will be made to
minimise the adverse effects of water sector projects on environment. The
environmental impact assessment (EIA) guidelines developed under the FAP will be
helpful in this regard.
13.44 Programmes For Fifth Plan
13.44.1 Since the scope of further exploitation of surface water from the minor rivers and
channels is gradually declining due to shortage of water, more emphasis will be given on the
 278

immediate harnessing and use of main river water to augment the supply in smaller rivers and
channels.
13.44.2 Small early implementation projects implemented in the past and currently under
implementation by BWDB have created water conservation facilities by way of regulating the
post monsoon outflow of the drainage system. Development of such facilities by way of
command area development of completed projects will receive priority during the Plan
period.
13.44.3 Gravity flow, Low Lift Pump (LLP) and other methods of surface irrigation are, at
present irrigating about 1.15 million ha of land. This area is projected to increase to 1.32
million ha (about 15 per cent increase) by the terminal year of the Fifth Plan. Double lifting
will be necessary to augment water availability in secondary channels for irrigation purpose.
13.45 Flood Control and Drainage
13.45.1 During the Plan period, small flood control and drainage projects will be continued
in addition to phased implementation of specific river bank protection programmes. It is
expected that drainage programmes may extend further to cover an area of about 4.9 million
ha by the terminal year of the Plan period as against the actual coverage of 3.8 million ha
achieved by the end of the Fourth Plan. Comprehensive flood control and management
measures will be undertaken to protect lives, properties and crops keeping in view the needs
of fisheries, environmental and navigational requirements, etc. For augmenting flows of the
Gorai river and other selected rivers and canals, re-excavation of river-beds under Food for
Works Programme and also by capital dredging will be carried out during the Plan period.
13.45.2 A prioritised portfolio of strategic vulnerable location of river banks will be
identified for phased implementation of river bank protection programme. FAP studies have
so far identified a number of hard points along the Brahmaputra and the Meghna rivers. A
number of hard points along the Padma banks have also been proposed for protective works.
The protective works of other minor rivers proposed to be implemented will be studied
carefully before making any investment on these projects.
13.46 A Special Note on Construction of Ganges Barrage
13.46.1 The signing of the historic treaty on the sharing of the Ganges Water at Farakka on
December 12, 1996 between Bangladesh and India has added a new dimension to the water
management strategy.
13.46.2 Background: The Ganges has been flowing through Bangladesh from time
immemorial; the life and livelihood of its people, along with the flora and fauna, have been
shaped by this great river. The well-being of more than 40 million people in the south-
western region of the country is entirely dependent upon the Ganges. The river provides
drinking water, sustains agriculture, forestry and fisheries, helps operate a quarter of the
country's industrial activities, prevents salinity intrusion from the Bay of Bengal and plays a
determining role in maintaining the ecological balance of the country. The balance between
man and nature in the Ganges dependent area (GDA) in Bangladesh rests essentially on the
Ganges water as this is the only major source of water in the area and all other rivers receive
water directly or indirectly from it.
13.46.3 Past studies: Ever since the preparation of the Master Plan in 1964, the importance
of development of the surface water resources has been stressed time and again and the
barrage over the river Ganges in Bangladesh has been envisaged for more than three decades
 279

for an overall integrated water resources development in the GDA in Bangladesh as well as
for overcoming the adverse effects of large scale diversion of the Ganges water at Farakka.
Studies conducted thus far have identified the tentative location of the barrage from the point
view of optimal water use and various other engineering and environmental considerations.
13.46.4 Objectives: The proposed Ganges barrage will be constructed at a location near
Pangsha about 64.40 km downstream of Hardinge Bridge on the Ganges River. The main
purpose of the barrage will be to supply irrigation water to the south-west region of
Bangladesh. The project will provide irrigation to an area of 1.35 million ha from the Ganges.
The net benefited area of the project will be 1.31 million ha. The time for construction of the
Ganges barrage is estimated to be about eight years and the full benefit will be achieved after
nearly 18 years.
13.46.5 Salient features: The following are the salient features of the Ganges barrage;
a. the Ganges barrage, a 1,940 metre long structure is proposed to be constructed
incorporating a road and rail bridge and gas, power and other services lines as
required to be connected to either bank by the structure;
b. a right bank main command canal, 74 km long, running south-west from the barrage
to feed water into the Gorai, the Kumar, the Nabaganga, the Chitra and the Kobadak
Rivers, with a headwork's capacity of 26,500 cusec will be one integral part of the
project ;
c. a second right bank main command canal, 43 km long, running south-east from the
barrage to feed water into the Chandana, the Old Kumar and the Sitalakhya rivers,
with a headworks capacity of 10,600 cusec will be the second integral part of the
project ;
d. a third right bank canal of 10 km long from the barrage pond near the Hardinge Bridge
to serve the area to the west of the Ganges-Kobadak Scheme with headworks capacity
of 3,000 cusec will be the third integral part of the project ;
e. irrigation development by a combination of surface water gravity supplies, low lift
pumps and shallow tubewells, which will serve an area of 100,000 ha will be the main
components of operational ambits ; and
f. drainage and flood control by embankments and sluices in low-lying areas covering
1.44 million ha within the command area will be the related objective in addition to
irrigation.
13.46.6 Benefits: On its completion, the Ganges Barrage Project will:
a. restore the basic resource (land) to its original position and safeguard it from further
degradation;
b. increase agricultural production through intensive use of modern techniques;
increase in agricultural production following the introduction of irrigation, drainage
and flood control will be from 2.20 mt/ha/year to 7.41 mt/ha/year, an increase of 5.21
mt/ha/year. The net economic benefit out of the increased agricultural production
only will be about US $1020 million a year;
c. provide the required quantum of flows through the Gorai in the dry season to check
the salinity intrusion in the south-west region of Bangladesh to maintain ecological
balance and protect environment of the region;
d. restore the natural bio-mass (including the Sunderbans) and safeguarding further
destruction;
e. safeguard the industries in the area;
f. restore livestock and fisheries resources;
 280

g. improve soil moisture condition;

h. increase job opportunities in many sectors including agriculture;
i. provide crossings for traffic, gas and power across the Ganges and improve the
communication system in the region ;
j. revive economic potential for proper growth of regional economy ;
k. safeguard public health and sanitation condition ; and
l. help developing a balanced ecosystem of the region to safeguard environmental
degradation.
13.46.7 Costs: The tentative cost of the project which includes barrage, main irrigation and
drainage canals, has been estimated at Tk.141,000 million. A provision of Tk.17,175.50
million has been made in the Fifth Plan to undertake detailed feasibility and to prepare
engineering works as well as to complete a part of the barrage construction.
13.47 Flood Action Plan (FAP)
13.47.1 Following the devastating floods of 1987 and 1988, Flood Action Plan (FAP)
covering a number of regional and sub-regional studies were undertaken to find out the
technical, social and environmental issues required to be addressed in formulating long-term
flood control, drainage, irrigation and river management programmes. Based on the
recommendations of some of the FAP studies, a number of follow-up investment projects
have been taken up with donors' assistance. FAP started with 11 main components and 15
supporting studies and pilot projects for implementation during 1990-95. Most of the original
programme of studies under FAP have been completed. The regional studies identified and
evaluated a number of projects. Some other flood mitigation projects have also been
identified in regional context. A few priority projects such as the protection of Dhaka city and
a number of secondary towns, erosion protection on the Brahmaputra right bank and the
rehabilitation of the coastal embankments are currently under implementation. Besides, there
are a number of on-going long term studies and pilot projects.
13.48 Ground Water Irrigation
13.48.1 Shallow tubewell (STW) and hand tubewell (HTW): There have been changes in
the rate of growth and utilisation of irrigation equipment following changes in the
government policy during the last few years. For example, it is observed that withdrawal of
subsidies from irrigation equipment has slowed down the pace of minor irrigation
development. Future growth of minor irrigation will, therefore, depend on adjustment of
policies and implementation of suitable programmes to encourage the private sector and
individual farmers' participation in minor irrigation development. Strengthening of
institutional mechanisms and required support services to the private sector will be provided
by the government for accelerated development of STW and HTW irrigation technologies.
13.48.2 Deep tubewell (DTW): Because of high capital and operating cost, DTWs are not
commercially attractive to the farmers at full cost. As a result, DTWs are projected to cover
an area of 0.51 million ha during terminal year of the Plan as against the current level of 0.52
million ha. It is, therefore, felt that in the areas where DTWs are the only technically feasible
modes of irrigation, adequate measures will be taken to make DTWs attractive to the farmers.
Such measures will include introduction of high value crops, increasing the command area of
individual tubewells through improved onfarm water management practices and formation of
DTW users’ groups, strengthening support services to water users' groups, including access to
electricity, credit, market facilities, etc. Irrigation coverage under traditional methods of
ground water equipment, i.e., Deep Tubewell (DTW), Shallow Tubewell (STW) and Hand
 281

Tubewell (HTW) is projected to decline from the estimated 2.81 million ha in 1996/97 to
1.31 million ha by the terminal year of the Plan. Continuation of policy changes in terms of
withdrawal of site restriction and subsidy, non-availability of water at required depth, etc.,
resulting in higher cost, particularly of DTW, are likely to lead to a decline in the use of these
equipment by the poor farmers. However, reduction in irrigation area through these traditional
methods is expected to be compensated by additional irrigation coverage of 2.23 million ha
under relatively new technologies of Forced Mode Tubewell (FMTW), Deep Set Tubewell
(DSTW) and Very Deep Set Shallow Tubewell (VDSSTW). It is expected that private sector
investment in irrigation development during the Fifth Five Year Plan will be about Tk.5,010
million.
13.49 Involvement of Women in Development
13.49.1 Participation of women in the development and construction of irrigation and flood
control infrastructure was found to be insignificant in the past. Presently, local women are
working along with men as construction workers in the Food for Works Programme,
embankment construction, tree plantation and other projects implemented by the Water
Development Board (BWDB). Under the Fifth Plan, steps will be taken to involve distressed
and unemployed women in such projects/programmes implemented by the BWDB. In
addition, more avenues for employment of women are expected to be created in O & M
activities of flood control projects and tree plantation and fish culture activities of BWDB
projects. It has been estimated that 0.92 million person-days of incremental employment will
be generated by the terminal year of the Fifth Plan which will include a sizable share for
women.
13.50 Private Sector Participation
13.50.1 The government is fully committed to promoting the participation of the private
sector in increasing irrigation coverage and command area development. As per existing
policy measures, sales, marketing, distribution of fertilisers, irrigation equipment, farm
machinery, etc., have been entirely transferred to the private sector.
13.50.2 It is noted that irrigation need by farmers is closely linked to rice and commodity
prices. For example, if the rice price is low, farmers will be discouraged to spend more for
irrigation to produce more agricultural commodities and as such, the expected command area
is likely to be diminished. It is, therefore, necessary to evolve mechanisms for price
stabilisation. Import of irrigation equipment and machinery will be further liberalised and
fiscal policy turned in favour of private sector's participation. At the same time, necessary
measures will also be taken to encourage efficient domestic manufacture of irrigation
equipment and farm machinery as well as maintenance spares.
13.51 Cost Recovery from Irrigation Projects
13.51.1 Presently, BWDB is collecting irrigation tax from 12 irrigation projects out of 22
completed projects as per Water Rate Irrigation Ordinance of 1963. BWDB started collection
of water rate since 1976/77. During 1995/96, the target of collection of water rate was
estimated at Tk. 25.00 million against which the amount realised was Tk. 8.77 million.
During 1996/97, the revenue collection target was estimated at Tk.30.00 million against
which the amount realised till April/97 was Tk.8.59 million. The reasons for low collection
was due to evading practices, power failure for which timely irrigation was not possible and
lack of proper legislation and punitive measures against the defaulters.
 282

13.51.2 Water pricing will be such as to convey the scarcity value of this resource to the
users and beneficiaries to foster their motivation in the economic and social context. The
water rate/charge will be adequate to cover the recurrent O & M cost and part of the capital
cost. The objective of pricing policies will be to improve efficiency in water use. The users
will have incentives to use only the amount of water they need and additional quantities will
entail higher cost per unit. The present system of collection of water rate from the irrigation
projects is not satisfactory due to procedural reasons and as such revenue generation from the
irrigation projects is much lower than expectations. The collection of water rate will be
initiated from all irrigation projects as soon as irrigation infrastructure/facilities are created
and the beneficiaries will be motivated to pay the price for irrigation soon after they start
getting benefits from construction of irrigation infrastructure. The water pricing for surface
and ground water irrigation will be rationalised and collection mechanism improved through
legislation and improvement of procedural practices.
13.52 Physical and Financial Programmes
13.52.1 Physical: Benchmark position of irrigation, flood control and drainage as of 1996/97
and projection for the terminal year of the Fifth Plan are provided in Table 13.14.
Table 13.14
Irrigation Flood Control and Drainage Projections During Fifth Plan
(area in million hectare)
Programme 1996/97 2001/2002
(Benchmark) (Projection)
1 2 3
I. Irrigation :
A. Surface Water Irrigation
i. Gravity Flow 0.40 0.59
ii. LLP 0.58 0.66
iii. Traditional 0.17 0.07
Sub -Total (A) : 1.15 1.32
B. Ground Water Irrigation
i. DTW 0.52 0.51
ii. STW 2.23 0.73
iii. HTW 0.05 0.07
iv. FMTW - 0.01
v. DSSTW - 2.10
vi. VDSSTW - 0.12
Sub-Total (B) : 2.81 3.54
C. Others 0.04 0.18
(Minor Irrigation)
Sub-Total (C) : 0.04 0.18
Total (A+B+C) : 4.00 5.04
II. Flood Control and Drainage 4.20 4.90
Sources : i National Minor Irrigation Census (1995-96)
ii National Minor Irrigation Development Project
iii Bangladesh Water Development Board.

13.52.2 Financial: The projection for public sector financial outlay for the development of
water resources during Fifth Plan is Tk.73,373.13 million. The detail break-up is shown in
Table 13.15. In addition, an amount of Tk.5,500 million is likely to be invested in water
resources development by the private sector.
 283

Table 13.15
Public Sector Financial Outlay for Development of Water
Resources for Fifth Plan (1997/98-2001/02)
( in million Taka)
Programme Financial Outlay
1. Surface Water Irrigation 12,961.00
2. Ground Water Irrigation 3,600.00
3. The Ganges Barrage 17,175.51
4. Flood Control and Drainage including River and Town Protection 34,131.00
5. Surveys, Studies and Investigation 4,640.00
6. Others (Satellite Imagery, Mapping, Char Development etc.) 865.62
Total 73,373.13
13.52.3 Private sector's investment in development of water resources is estimated at about
10 per cent of the public sector's. The nature of investment required for development of water
resources limits the scope for an enlarged role for the private sector in the continuing
situational context.

Rural Development and Institutions

13.53 Introduction
13.53.1 Bangladesh is one of the most densely populated countries of the world and a vast
majority of the population live in the rural areas. Poverty is widespread in the country and
more so in the rural areas. It is estimated that around 50 per cent of the population lives below
poverty line and about half of them is considered to be the hard-core poor. The rural poverty
is characterised by landlessness, over-crowding in agriculture, underdevelopment of rural
non-farm sector, colossal unemployment, low savings and acute shortage of credit facilities.
Women are the disadvantaged group in the country and more so in the rural areas in their
traditional setting with little literacy and almost no skill training. Rural infrastructure in the
country consists of 2,100 identified growth centres, 14,400 km of feeder 'B' roads, 87,000 km
of rural roads and some 8,300 km of water ways during the monsoon. These infrastructure
that contribute towards rural development are mostly underdeveloped and poorly maintained.
13.53.2 For socio-economic development of the country as a whole, reduction of rural
poverty is a must. Towards that end, RDI programme will aim at increasing income through
productive employment generation in the rural areas and rural infrastructure development,
including development of marketing network, to boost up economic activities. These call for
undertaking intensive, expanded and multi-dimensional programme during the Fifth Five
Year Plan.
13.54 Performance During Fourth Five Year Plan (1990-95)
13.54.1 Under the Rural Development and Institutions Sector, three major types of
programmes were under implementation during the Plan period. These were production and
employment programmes for the poor, development of physical infrastructure and small
scale irrigated agriculture, drainage and flood control works.
13.54.2 Under production and employment programme, about 0.78 million members were
enrolled in various formal and informal groups. Most of these group members became self-
 284

employed on receipt of certain amount of credits. The credit disbursed to various formal and
informal groups amounted to Tk. 3,019.00 million under BRDB.
13.54.3 Under LGED, the targets for construction of feeder roads seem to have been largely
exceeded. Over 3,709 km of roads were constructed against the target of 2,399 km. Similar
was the case with construction and rehabilitation of bridges and culverts. Around 42,000
metres of bridges and culverts were either constructed or rehabilitated against the target of
over 30,000 metres. Tree plantation on the slopes of the feeder roads, rural roads and
embankments were inbuilt in the construction programmes. LGED created over 112.0 million
person-days of employment against the target of 133.1 million.
13.54.4 Ministry of Land established some 384 self-reliant ideal villages to rehabilitate
17,315 landless and rootless families. Chittagong Hill Tracts Development Board undertook
some programmes for development of the hilly areas, particularly in the field of community
development. BARD, Comilla and RDA, Bogra implemented some small projects, mostly
experimental and pilot ones. The targets and achievements under the various programmes
during the Plan period are shown in Table 13.16.
Table 13.16
Targets and Achievements of Major Programmes for Rural Development and
Institutions During Fourth Plan (1990-95)
A. Production and Employment Programme (PEP)
Programme Units Targets Achievements
Formation of primary societies/group number 23,581 16,882
Enrolment of members number 529,621 777,660
Skill training number 166,695 616,800
Shares/savings million taka 159.6 449.33
Credit million taka 330.3 3,019.00
Realisation of credit million taka - 2,559.15
Small Farmers Development Programme (SFDP)
Formation of groups number 1,982 5,625
Enrolment of members number 12,145 35,597
Share/savings million taka 7.3 30.4
Disbursement of credit million taka 60.7 166.4
B. Development of Physical Infrastructure
Development of growth centres number 316 277
Development of feeder road Type -B km 2,399 3,709
Construction of bridges and culverts metre 15,039
41,987
Rehabilitation of flood/cyclone metre 15,057
damaged bridges and culverts
Rehabilitation of flood/cyclone km 2,929 2,574
damaged pucca roads
C. Irrigated Agriculture and Irrigation Management Programme (IMP)
IMP coverage (DTW) number 1,556 1,499
(LLP) number 207 156
IMP training persons 8,555 6,215
D. Other Minor Programmes
Settlement of families in Adarsha Gram number 35,140 17,315
E. Employment Generation
Infrastructural programme million person-days 133.1 112.0
Self-employment under PEP million persons 0.53 0.78
 285

13.54.5 The allocation for the RDI sector during the Fourth Five Year Plan was
Tk. 16,500.00 million at 1989/90 prices. In the revised ADPs during the plan period, an
allocation of Tk. 25,622.20 million was given to this sector against which an amount of Tk.
21,823.5 million was utilised. ADP allocations and expenditures incurred during the period
are shown in Table 13.17.
Table 13.17
Revised ADP Allocations and Expenditures for Rural Development and Institutions
During Fourth Plan (at current prices)
(in million Taka)
RDI Agencies Revised ADP Allocations Expenditure
1. BRDB 2,845.97 2,460.00
2. BARD 133.45 75.20
3. RDA 21.78 17.60
4. Co-operatives 578.41 123.70
5. Ministry of Land 937.40 509.60
6. LGED 20,028.37 17,682.90
7. NILG 3.64 3.60
8. Ministry of Relief 112.04 108.70
9. Special Affairs Division 646.14 537.20
10. Ministry of Finance (Ag. Bank) 10.00 -
11. Ministry of Agriculture 5.00 5.00
12. Planning Division 300.00 300.00
Total 25,622.20 21,823.50

13.54.6 Performances during 1995/96 and 1996/97: All the three major programme
components, i.e., production and employment programme, infrastructural development
programme and irrigation related infrastructure were under implementation during 1995/96
and 1996/97. Under the production and employment programmes, employment for 0.39
million persons was created. These were mostly self-employed members of the various formal
and informal groups. Under the infrastructure construction programme, some 2,856 km of
metalled roads were constructed in addition to 20,800 metres of bridges and culverts. Apart
from these, 163 growth centres were developed by constructing sheds, internal roads and
lanes in the hats and bazars. An amount of Tk. 17,689.9 million was provided in the Revised
ADPs for 1995/96 and 1996/97.
13.55 Fifth Five Year Plan (1997-2002)
13.55.1 Objectives: The following are the objectives of the Fifth Five Year Plan for the RDI
Sector:
a. reduction of poverty in the rural areas;
b. productive employment generation in the rural areas;
c. self-employment creation for the rural poor ;
d. development of rural infrastructure; and
e. development of small and landless farmers.

13.55.2 Strategies: The elements of the strategy for achievement of the above objectives
will include, among others, the following:
a. provision of skill training mostly for self-employment in non-farm sectors;
b. formal and informal group formation and group development for co-operative
activities;
c. resource mobilisation through individual/group savings;
 286

d. creation of enabling environment for availing of credit facilities;

e. social mobilisation for awareness creation on various aspects of rural life;
f. development of small and landless farmers;
g. development of rural infrastructure such as growth centres and roads, bridges and
culverts connecting such centres;
h. provision of small irrigation and flood control related infrastructure;
i. preventing destitution through rural maintenance programme; and
j. covering at least one full administrative district under any project with one or more of
the programme components of productive employment, rural infrastructure and small
scale irrigation and flood control infrastructure to find out the replicability.

13.56 Major Thrust

13.56.1 Facilities for self-employment: It is obvious that it will not be possible to create
enough wage employment even for a significant proportion of the vast army of the rural
unemployed and under-unemployed labour force. As such facilities for self-employment will
be created through skill training and micro-credit, particularly in the non-farm sector under a
well-conceived pro-poor programme. An employment bank will be set up in the Fifth Plan
period to support self-employment. Since provision of microcredit from the public sector fund
will not be sufficient to create enough employment, local resources will be mobilised through
savings of the beneficiaries.
13.56.2 Facilities for Bittaheen: There is a large number of landless and assetless people
who are known as bittaheen. They will have priority in the scheme of poverty alleviation and
separate institute for the bittaheen will be set up. To meet the credit needs of such people,
opening separate counters in the existing banks for the bittaheen may be necessary.
Alternatively, separate banks for the bittaheen will be established.
13.56.3 Social mobilisation and empowerment of the poor: On the top of all efforts
towards reduction of poverty, social mobilisation for awareness creation on various social,
economic, environmental, skill development and institution building matters and supporting
local government bodies will remain in-built in the process of participatory bottom-up
planning and poverty alleviation. Empowerment of the poor in identifying their needs and
directly involving them in planning, designing and implementation of self and community
based projects will be a mechanism for nation building activities in this context.

13.56.4 Women in development: Since women are the most disadvantaged group in the
society and the victims of extreme poverty, special attention will be given to reduction of
poverty among women. In appropriate cases, separate programmes for the women will be
taken up.
13.56.5 Environment protection: Environmental concern is an important element in any
programme of rural development. RDI programme will have elements of environment
protection, environment conservation and re-generation, social mobilisation and input supply.
Environment -friendly activities will remain in-built in all programmes of rural development.

13.57 Programmes
13.57.1 Poverty alleviation will be one of the major concerns of the RDI programmes during
the Plan period, and conscious and deliberate attempts will be made to substantially reduce
poverty, particularly of the hard-core rural poor. The programmes will include the following:
 287

a. Production and employment programme: Under this programme various projects will
be undertaken for skill training, awareness creation, human resource development and
empowerment of the poor. Credits will be disbursed for undertaking income generation and
for self-employment activities. There will be separate projects for rehabilitation of the
landless and assetless people, particularly women. Specific projects will be undertaken for
the bittaheens and the people of the special areas. Poverty alleviation programmes will be
designed and suited to the need and creativity of the people and be financed with local
resources as far as possible.
b. Rural infrastructure development programme: Under the rural infrastructure
development programme, projects will be taken up for development of growth centres and
growth centre connecting roads, bridges and culverts on the one hand and small-scale
irrigation and flood control related infrastructure projects on the other. Road maintenance
programmes, mostly rural roads, will be implemented through the rural destitute women and
eventually they will accumulate savings to undertake income generating activities by
themselves.
13.58 Projections for development of RDI in the public sector during the Fifth Plan are
shown in Table 13.18.

Table 13.18
Projection for Development of RDI in Public Sector During Fifth Plan

Programme Unit Projection

Productive employment generation million person 1.3
Employment under infrastructural programme million person-days 175
Growth centre development number 600
Feeder road category 'B' kilometre 7,000
Rural road kilometre 15,000
Bridges and culverts metre 100,000
Small scale water management related infrastructure:
- Embankment kilometre 1,000
- Khal/canal kilometre 4,000
- Water control structure number 350
Maintenance of physical infrastructure kilometre 10,000

13.59 Land Reform and Land Use

13.59.1 Control over asset, particularly access to land is a major determinant of household
income in Bangladesh, particularly in the rural areas. Two-thirds of the rural people are
landless or functionally so. The high degree of income inequality in the country is closely
related to unequal distribution of land ownership. The average size of land holding is
declining due to population pressure coupled with inheritance laws and the need for other
uses of land such as human settlements and roads. Share cropping is widespread as the
smaller pieces of land are not enough for subsistence.
13.59.2 The Land Reform Ordinance of 1984 has provision for the protection of tenants and
sharecroppers. The basic issue is lack of enforcement of the ordinance. Farm holdings in
Bangladesh are generally very small and big farms are limited in number. In this context,
scope for a comprehensive redistribution of land and further reduction of land ownership
ceiling is considered to be limited.
 288

13.59.3 Against this backdrop, effective implementation of the ongoing land reform activities
including Adarsha Gram, Khas Land distribution, ideal village programmes and providing
rights to bargadars will get priority in the Fifth Plan period. Further, improving land records,
distribution of appropriate land titles and speedy settlement of disputes on land will create
opportunities for small farmers to avail of credit facilities.
13.60 Area Development Approach
13.60.1 Rural Development during the Fifth Five Year Plan will be undertaken following
Area Development Approach which is commonly understood as comprehensive development
or integrated multi-sectoral development. This approach conforms to the over all national
sectoral development strategy. Under the Area Development Approach, programme for the
total development of a particular geographical area covering development activities in various
fields such as education, human resources, family planning, agriculture, water resources,
infrastructure, housing, etc. will be undertaken. Projects will be drawn up by the concerned
sectors and will be integrated and co-ordinated at some convenient administrative units.
Considering the complexity of integration and efficiency at the operational level, one at
administrative district, for example, may be considered as the point of co-ordination and
integration of the projects which conform with the rural development strategy, presently being
pursued under the RDI Sector.

13.60.2 Under the Area Development Approach, there will be one area development
programme covering the projects of different sectors which will be co-ordinated at the
district level for which appropriate mechanism will be developed as soon as the new local
government structure becomes operational. The area development programme will essentially
involve the local government authorities and will be co-ordinated by such authorities at the
district level. The programmes of all development agencies including government,
parastatals, NGOs and private organisations will be co-ordinated with a view to avoiding both
duplication of efforts and unbalanced allocation of resources. The area development
programme drawn for the comprehensive and multi-sectoral development of the entire
geographical area of a particular district will be decomposed at the upazila level and further
down to union parishad.
13.61 Financial Outlay During Fifth Plan
13.61.1 An amount of Tk.87,002.48 million has been projected for the development of RDI
in the Public Sector. The programme wise breakup of the outlay is shown in Table 13.19.

Table 13.19
Public Sector Financial Outlay for Development of RDI During Fifth Plan
(in million Taka)
Programme Financial Outlay
Production and employment programme (PEP) 20,000.00
Infrastructural development programme 56,000.00
(including irrigation related infrastructure)
Other programmes 11,002.48
(including special programmes and action research)
Total 87,002.48

13.62 Given the nature of social investment, private investment for rural development and
institutions will be very limited. Some investment outside the public sector will be based on
savings mobilised and institutional investment by NGOs. A tentative amount of Tk. 2,000
million is likely to be invested for the development of RDI in the private sector during the
 289

Plan period. The return against such investment is expected to be more per unit than what is
projected to be in the public sector.

CHAPTER XIV

INDUSTRIES

14.1 Introduction
14.1.1 Manufacturing combines human ingenuity - science, technology and innovations with
natural endowments of a nation. The fountain of the wealth of today's developed nations
receives the perennial flow from trade in manufactures which lie at the back of their highly
remunerative employment, high level of income and the high standard of living. This is why
international trade is dominated by manufactures which accounted for around 75 per cent of
the world merchandise exports of US$ 4,880 billion in 1995. Primary products comprised the
rest in which the shares of food, fuel, minerals and metals and agricultural raw materials were
9.1 per cent, 7.1 per cent, 6.3 per cent and 2.8 per cent, respectively. It is, therefore, no
wonder that the demolition of the tariff wall against trade in manufactures had been at the top
of the agenda of all multilateral and plurilateral trade negotiations conducted under the
auspices of the General Agreement on Tariffs and Trade (GATT), the predecessor institution
of the present World Trade Organisation (WTO), and that the developed countries, who are
the greatest beneficiaries of trade in manufactures, have brought down the tariffs on
manufactured goods traded amongst themselves to a level as low as 4 per cent only.
14.1.2 Failure of most of the developing economies, excepting the newly industrialised
countries, to generate adequate purchasing power in their respective domestic market led
them to look for purchasing power outside the national boundaries and pursue the export-led
growth strategy. The bulk of exports from these countries, however, still comprises of
primary commodities and historically, world prices of primary commodities have been
volatile, unstable and least rewarding. Besides, these countries, more often than not, suffer
from adverse terms of trade. As a result, trade has been neither a source of resource flow nor
an 'engine of growth' for these countries. These stark realities, combined with the
overwhelming weight of manufactures in the global export trade, make the success of the
export-led development strategy contingent on the development of a viable manufacturing
sector.
14.2 Past Industrial Development
14.2.1 Bangladesh is a late starter in the process of industrialisation. Before liberation, some
simple process industries like jute, textiles and sugar mills, two pulp and paper mills, a small
urea fertiliser plant, a cement factory, a 'mini' steel making plant with imbalanced
downstream rolling facilities for making mild steel bars, sheets and plates, a few
pharmaceutical units with capacities for formulation, bottling and packaging and several
minor dockyards and light engineering workshops comprised the industrial base of the
country. After liberation, within the overall objective of attaining a self-reliant economy, the
First Five Year Plan (1973-78) of the country adopted an import-substitution strategy for
industrialisation with emphasis on domestic production of basic needs and investment goods.
However, with the unfortunate change in the government that was brought about in August
1975 a perceptible shift in the self-reliant economic goals and objectives occurred, making
the country increasingly dependent on foreign aid and aid-financed imports covering all types
 290

of commodities - food, consumer goods, consumer durables, raw materials, intermediate

inputs and of course, investment goods.
14.2.2 During the last twenty five years, the nation's industrialisation efforts were channelled
mainly through the public sector. A major portion of public investment was devoted to new
capacity creation in chemical fertilisers and in the establishment of several basic engineering
industries, while both the public and private sectors invested in textiles and clothing. Some
investments were also made in balancing, modernisation and expansion of some of the
existing jute and textile mills. Besides, significant promotional investments were made by the
government by way of setting up a large number of industrial estates for small and medium
sized industrial units as well as two export processing zones (EPZs) to provide infrastructural
facilities, utilities and other services for the entrepreneurs - both foreign and local. However,
most of the industrial estates remained under-utilised and the strategy for labour-intensive
industrialisation as well as spatial dispersal of industries, by and large, ended in a failure.
With the exception of export-oriented ready made garments industries (RMGs), which
achieved a commendable growth over a relatively short span of time, the country's
industrialisation efforts in other areas, particularly in producing consumer goods, RMG-
linkage inputs and high value added consumer durables and producer goods, did not bear
much fruit. The vast potential that exists for development and diversification of agro-based
and agro-support industries remains to be tapped. Indeed, even the existing industrial units
gradually lost operational viability due to lack of investments in balancing and modernisation
as well as loss of protective domestic markets due to liberalisation of the trade regime at a
pace which did not permit necessary adjustments and relocations. Industrial units awaiting
privatisation also have landed in the same situation as uncertainty and apprehension about job
losses have besieged both the management and the labour equally as a result of which they
have lost interest in running these units. On the contrary, in the context of conscious policy
decisions to allow progressive erosion of the public sector's role in the country's
industrialisation efforts, a standstill position has been reached with respect to any significant
investment by the public sector in the establishment of any new production capacity.
14.2.3 Bangladesh is a densely populated country, with a narrow natural resource base, an
extremely limited per capita availability of arable land and very low purchasing power of the
population. The low purchasing power of the population is responsible for the small size of
the domestic market which has shrunk further, particularly in the 1990s, due to opening up of
the economy with attendant liberalisation of the trade regime. Given the small size of the
domestic market, Bangladesh has to pursue an export-led development strategy with emphasis
on industrialisation for sustained economic growth and social development. Such a strategy
holds out the potential for eventual solution of problems like acute unemployment, abject
poverty, low rate of savings and investment as well as high dependence on foreign aid.
14.2.4 The country has a vast pool of easily trainable manpower resources. It also has the
advantage of relatively low wage level. But its technological base is weak and it lacks
dynamic entrepreneurship, managerial expertise and efficiency, work forces with requisite
skills and above all, adequate investible surplus. To raise the manufactures' share from the
present 9.28 per cent level to 12.70 per cent of GDP by the terminal year of the Fifth Plan
obviously is a challenging task. This will not only call for the necessary enabling
environment, but also require an upbeat efficiency of the private sector with ability to
compete in a globalised market economy and liberalised trade regime. It is, nevertheless,
achievable as has been demonstrated by a number of East and Southeast Asian countries.
 291

14.2.5 The crucial and logical transformation of the Bangladesh economy that is needed for
an accelerated pace of industrialisation, is yet to take place. Over the last quarter of a century,
the economy of Bangladesh has gone through a slow and rather erratic structural
transformation. It defied the classical relationship between the structural composition of an
economy and its stage of development. The share of her agricultural sector, though dropped
from about 58 per cent in 1972 to about 33 per cent in 1995, the share of the manufacturing
sector limped from 9.0 per cent in 1973 to a mere 11.4 per cent in 1994/95. The services
sector, on the other hand, jumped from 26 per cent to about 48 per cent over the same period.
To bring about a visible improvement in the quality of life of the people, the pivotal role that
the manufacturing sector has to play in the desired transformation of the economy, still
remains to be displayed.
14.2.6 The sector's share in GDP for some selected years, including benchmark years of the
past Plans, and its growth over the periods under discussion are shown in the Table 14.1.
Table 14.1
Manufacturing Sector's Share in GDP and Past Growth Rates
(at constant prices)
Year Share in GDP Period Annual Compound
(per cent) Growth Rate Over
Period (per cent)
1972/73 9.00 1973 - 1978 7.35
1979/80 11.22 1978 - 1980 6.21
1984/85 9.86 1973 - 1980 7.02
1989/90 9.91 1980 - 1985 0.93
1994/95 11.36 1985 - 1990 4.22
1995/96 11.37 1990 - 1995 7.00
1996/97 11.08 1995/96 5.33
1996/97 3.31
Source: BBS
14.2.7 Despite its potential for growth, the manufacturing sector in the past failed to meet
expectations. In 1994/95 this sector achieved a growth rate of 8.6 per cent compared to 7.2
per cent in 1989/90. Over the period from 1990/91 to 1995/96, the manufacturing sector grew
at an average annual rate of 6.3 per cent and there have been fluctuations also. The first year
of the Fourth Plan registered the lowest growth rate (2.39 per cent), while the highest growth
rate (9.1 percent) was achieved during the year 1992/93. The growth rates during 1995/96 and
1996/97 were 5.3 per cent and 3.3 per cent, respectively. Among the industrial sub-sectors,
ready-made garments (RMG) and pharmaceuticals recorded the highest growth performances
(greater than 10 percent), while growth rates of jute and cotton textiles declined.
14.2.8 The total investment during the period 1990/91-1994/95 stood at Tk.131,457 million,
at current prices, in which the share of the private sector was 85.89 per cent, including foreign
direct investment (FDI) of 10.54 per cent. Investment in the years 1995/96 and 1996/97 stood
at Tk.34,919 million and Tk.34,513 million, in which the share of the private sector was 95
per cent and 97 per cent, respectively. Major portion of the investment went into fertiliser
and pharmaceuticals as well as export production. Ready-made garments and knitwears
jointly accounted for over 70 per cent of the total investment in the manufacturing sector.
Details of year wise total investment as well as agency wise public sector expenditure in the
manufacturing sector for the period under review are given in Tables 14.2 and 14.3.
 292

Table 14.2
Investment in Manufacturing Sector1
(at current prices)
(in million Taka)
Year 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 Total
Total Investment 23415 22699 24319 25825 35199 34919 34513 200889
Public Sector Investment 8331 3338 1240 2273 2227 1718 1082 20209
Private Sector Investment 15084 19361 23079 23552 32972 33201 33431 180680
Domestic Private 12579 17927 21248 20595 19053 16346 15003 122751
Investment
Foreign Direct 1568 428 894 1367 12392 15555 15506 47710
Investment
Investment in the EPZs 937 1006 937 1590 1527 1300 2922 10219
Percentage Share
Public Sector 35.58 14.71 5.10 8.80 6.33 4.92 3.14 10.06
Private Sector 64.42 85.29 94.90 91.20 93.67 95.08 96.86 89.94
Domestic Private Sector 53.72 78.98 87.37 79.75 54.13 46.81 43.47 61.10
Foreign Direct Investment 6.70 1.88 3.68 5.29 35.20 44.55 44.93 23.75
Investment in the EPZs 4.00 4.43 3.85 6.16 4.34 3.72 8.46 5.09

Table 14.3
ADP Expenditures by Major Ministries and Parastatals During Fourth Plan Period
(1990-95), 1995/96 and 1996/97
(in million current Taka)
Sl. Name of Agencies 1990/91 1991/92 1992/93 1993/94 1994/95 Total 1995/96 1996/97
No. 1990-95
01. Bangladesh Chemical 7,694.47 2,575.94 465.939 1,046.41 851.927 12,634.69 666.40 105.811
Industries Corporation. (92.36) (77.15) (0.38) (46.04) (38.22) (72.89) (38.79) (9.78)
02. Bangladesh Steel & 16.20 24.70 - - - 40.90 2.50 -
Engineering Corporation (0.18) (0.15)
(0.19) (0.74)
03. Bangladesh Textile - - - 35.00 43.58 78.58 76.50 60.00
Mills Corporation. (1.54) (1.69) (0.45) (4.45) (5.54)
04. Bangladesh Jute Mills 57.77 - - - - 57.77 4.00 -
Corporation (BJMC) (0.69) (0.33) (0.23)
05. Bangladesh Sugar & 189.25 74.90 214.70 301.22 107.13 887.20 68.00 20.10
Food Industries (2.27) (2.24) (17.32) (13.25) (4.81) (5.08) (3.96) (1.86)
Corporation (BSFIC)
06. Bangladesh Forest - - - - - - - -
Industries Development
Corporation (BFIDC)
07. Bangladesh Small & 178.50 312.80 217.30 333.80 349.30 1391.70 287.50 118.40
Cottage Industries Corp. (2.14) (9.37) (0.18) (14.69) (15.69) (8.03) (16.73) (10.94)
08. Bangladesh Handloom 92.50 37.40 20.00 10.35 180.40 340.65 22.15 35.10
Board. (1.11) (1.12) (0.02) (0.46) (8.10) (1.97) (1.29) (3.24)
continued to next page

1
Private sector investment figure has been taken from GED, Planning Commission (Table- 1.8, Chapter -1). Investment in EPZs has been Collected from BEPZA. Foreign Direct
Investment has been estimated to be 40% of registered FDI with Board of Investment and it is based upon a survey conducted by BOI in 1993/94. Domestic private sector investment has
been derived as residuary after deducting investment in EPZ and FDI.
 293

Table 14.3 (continued)

ADP Expenditures by Major Ministries and Parastatals During Fourth Plan Period
(1990-95), 1995/96 and 1996/97
(in million current Taka)
Sl. Name of Agencies 1990/91 1991/92 1992/93 1993/94 1994/95 Total 1995/96 1996/97
No. 1990-95
09. Bangladesh Sericulture 40.00 80.00 61.90 115.00 146.25 443.15 121.90 15.00
Board. (0.48) (2.40) (0.05) (5.06) (6.57) (2.56) (7.09) (1.39)
10. Bangladesh Export 50.00 220.00 220.00 280.00 249.20 1019.20 134.30 484.03
Processing Zone (0.60) (6.59) (17.74) (12.32) (11.19) (5.12) (7.82) (44.73)
Authority(BEPZA)
11. Bangladesh Industrial 10.00 0.83 4.67 44.77 - 60.27 9.20 -
Technical Assistance (0.12) (0.02) (0.38) (1.97) (0.35) (0.54)
Centre (BITAC)
12. Ministry of Industry - - 0.015 29.648 15.167 44.83 15.00 -
(0.0012) (1.30) (0.68) (0.26) (0.87)
13. Ministry of Textiles 1.44 1.78 3.43 2.70 8.38 17.73 6.00 2.30
(0.02) (0.05) (0.28) (0.12) (0.38) (0.10) (0.35) (0.21)
14. Department of Textiles - - - - 64.71 64.71 57.30 10.00
(DOT). (2.91) (0.37) (3.33) (0.92)
15. Ministry of Jute (MOJ). - - - - - - 133.7 145.00
(7.78) (13.40)
16. Department of Jute - - - - - - - 26.60
(DOJ). (2.46)
17. Department of Printing, - 7.50 28.67 40.00 52.75 128.92 5.0 (0.29) 59.89
Stationery, Forms and (0.22) (2.31) (1.76) (2.37) (0.74) (5.53)
Publications
18. Patent & Design 0.365 1.187 1.60 0.363 0.450 3.965 - -
(.005) (0.04) (0.13) (0.016) (0.02) (0.02)
19. Trade Mark Registry 0.365 0.900 1.60 0.400 0.360 3.625 - -
(0.005) (0.03) (0.13) (0.02) (0.016) (0.02)
20. Board of Investment - - - 11.20 67.40 78.60 1.10 -
(0.49) (3.03) (0.17) (0.06)
21. Tariff Commission - - - 21.46 25.492 46.96 16.70 -
(0.94) (1.14) (0.27) (0.97)
22. NPO - - - - - - 0.10 -
(0.005)
23. Privatisation Board - - 0.365 40.173 40.54 59.00 -
(0.16) (1.80) (0.23) (3.43)
24. Export Promotion - - - - 23.200 23.20 15.00 -
Bureau (EPB) (1.04) (0.13) (0.87)
25. Bangladesh Institute of - - - - - - 2.00 -
Management (BIM) (0.12)
26. Ministry of Commerce. - - - - 0.842 0.84 7.500 -
(0.04) (0.005) (0.44)
27. Dhaka Chamber of - - - - - - 5.00 -
Commerce and Industry (0.29)
(DCCI)
28. Micro-Industries - - - - - 2.30 -
Development Assistance (0.13)
and Services (MIDAS)
Total 8,330.86 3,337.94 1,239.82 2,272.69 2,226.71 17,408.02 1,718.15 1,082.23
(100) (100) (100) (100) (100) (100) (100) (100)

Note: Figures in parentheses are corresponding percentages of total annual expenditures

 294

14.2.9 Over the same period, manufactured exports grew at an average rate of 16 per cent per
annum, reflecting a significant rise in the sector's share in the country's total export earnings,
from 67 per cent in 1989/90 to 84 per cent 1996/97. In terms of value, export on account of
manufactures increased over the period by US$ 2,554 million, from US$ 1,150 million in
1989/90 to US$ 3,704 million in 1996/97. Share of the ready-made garments and knitwear
was the largest (about 67 per cent) in this increase.
14.2.10 The share of the manufacturing sector in country's total employment is 7.4 per cent
only. It provides employment to about 3.63 million people (of ages 15 years and over) in
which the share of the private sector is just over 95 per cent. Women folk accounts for some
37 per cent of the sector's employment. About 62 per cent of this employment is in the rural
area in which the share of women is about 39 per cent. Informal sector accounts for about 52
per cent of the sector's total employment. The large, medium and small industries account for
one-third of this employment while cottage industries employ one-third and the remaining
one-third is in the handloom sub-sector.
14.2.11 Production of major consumer goods, however, remained low partly due to closure
of a large number of medium and small manufacturing industries and partly due to the
depressed demand for domestic manufactured goods in the context of liberalisation of
imports. In their place, non-traditional exports such as garments and frozen food have become
important sources of industrial growth. In recent years, major source of industrial growth has
been textiles, with ready-made garments manufacture expanding from an insignificant level in
the early 1980’s to the present position of the country's leading export earner. Leather exports
have also grown modestly.
14.3 Objectives and Strategies for Industrialisation
14.3.1 The government has clearly enunciated its industrialisation objectives and strategies.
These are: industrial development with emphasis on optimum utilisation of indigenous
endowments, promotion of employment and catalysing the growth of production and exports.
14.3.2 In the above context, the specific objective of the industries sector during the Fifth
Plan will be to bring about a structural change in the economy to make it conducive to
accelerated growth of overall GDP and to face boldly the challenge of a free market economy
in the twenty first century. This will be brought about, within the overall context of poverty
alleviation, through maximisation of its contribution to:
a. Gross Domestic Product : The sector will not only contribute to the growth of the
total value added directly but also will facilitate the growth of overall economy
indirectly through forward and backward linkages.
b. Balance of Payments : This will be strengthened through efficient import substitution
and export orientation. The key aspect of this will be to attain international
competitiveness through efficient allocation and use of resources and enhancement of
total factor productivity.
c. Strengthening of Technological Base : This will be achieved through building of
indigenous capacity in science and technology as well as enhanced access to the
frontier of international technology shelf by way of adoption and adaptation. Such
access to modern technology will be both an end as well as a means to industrial
development during the Fifth Plan.
d. Generation of Productive Employment and Poverty Alleviation : Skill
development will be a hallmark of the Fifth Plan in order to exploit the country's
comparative advantage in the international market. At the same time, development of
 295

self employment with particular focus on the poor and the disadvantaged especially
women, will be a major thrust of the industrial development during the Fifth Plan. As
such entrepreneurship development with easy access to complementary resources and
inputs will receive high priority.
14.3.3 For modernisation and expansion of the sector, necessary steps will be taken to gear
up production and distribution system for supplying necessary inputs to the sector. Practical
steps will be taken for skill development of people engaged in various vocations. Principles
of free market economy will be pursued and all assistance and encouragement will be given to
the private entrepreneurs. All laws, regulations and procedures related to industries, trade and
investment will be reformed and simplified. For balanced industrial growth and spatial
dispersal, appropriate policies will be designed and implemented for establishing industries at
District and Thana levels. For the unemployed youth, employment opportunities will be
created through the establishment of labour-intensive medium, small and cottage industries.
Efficiency and productivity of the parastatals will be improved by bringing about radical
change in their operation and management so as to enable them to be competitive and
commercially viable. While pursuing the free-trade policy, adequate measures will be taken to
remedy the imbalance between the import and export trade as well as to prevent unfair trade
practices. Necessary reforms of the economy will be implemented at a faster pace. Specific
strategies to achieve the overall objectives of the Fifth Plan will be to:
a. promote the private sector as the main agent for industrial development, while at the
same time undertaking public investment in some strategic industries as well as in
those areas where the private sector is not forthcoming; public-private joint ventures
will particularly be encouraged in all areas as may be expedient for industrial growth;
b. strengthen the enabling policies and remove all distortions to the extent possible in
order to achieve efficient operation of the market and at the same time uphold the
interest of the consumers;
c. undertake massive efforts to develop efficiency culture in all walks of life particularly
in industrial premises; particular attention will be given to improve the efficiency of
the public sector;
d. pursue and accelerate the process of privatisation of state-owned enterprises in an
efficient manner;
e. encourage domestic and foreign investment for overall industrial development;
f. develop export-oriented, export-linkage and efficient import-substitution industries;
g. promote diversification of markets as well as products; such efforts will include, but
not limited to, marketing assistance to the exporters and implementation of
appropriate package of incentives including flexible exchange rate;
h. exploit the opportunities opened up by the General Agreement on Trade in Services of
WTO, and to develop, with an eye to the export market, those service sectors in which
Bangladesh enjoys comparative advantage;
i. develop data base at the frontiers of international technology shelf and disseminate the
same to the users in both private and public sectors; in particular, modern technologies
will be required in areas such as electronics, biotechnology, cybernetics (both hard
and software); R&D facilities will be developed in these and other modern technology
areas. To facilitate this, research in basic science will be encouraged;
j. develop skill, extend vocational training;
k. develop entrepreneurship in general, particularly in rural areas through extensive
training, both formal and informal and easy availability of complementary resources
and inputs;
 296

l. undertake appropriate measures to build healthy and productive relations between

employers and employees;
m. encourage development of labour intensive small and cottage industries through
acquisition and development of appropriate technology;
n. encourage development and diversification of agro-based and agro-supportive
industries;
o. encourage development of industries based on indigenous raw materials and
indigenous technology;
p. formulate policies and strategies for balanced industrial growth in different regions of
the country;
q. put special emphasis on the growth of productivity in industries and to ensure
optimum utilisation of the existing capacities;
r. explore modalities and establish institutional arrangements for revitalising and
rehabilitating sick industries through shared responsibilities and obligations of all
concerned parties;
s. strengthen quality control practices so as to ensure that the country's manufactures
conform to international quality standards; and
t. take appropriate measures for preventing environmental pollution by the industries
and maintain ecological balance.
14.4 Thrust Sub-sectors
14.4.1 In keeping with the overall objectives and strategies of the industrial sector during
Fifth Plan, traditional sub-sectors like textiles and clothing, jute, tea, leather and leather
products, along with agro-based small and medium industries, will be given priority and the
jute sector will be consolidated through privatisation, restructuring and rationalisation. In this
context, given the demand condition at home and abroad, the following sub-sectors have been
identified as the thrust sub-sectors for promoting actively during the Plan period:
14.4.2 Textiles and Clothing : The textiles sector, whose contributions to industrial GDP
and employment are the highest and which supplies one of the basic needs of the economy
will continue to be focused during the Fifth Plan. In pursuance of the implementation of the
GATT-1994 and with the phasing out of the Multi-Fibre Arrangement (MFA) by the year
2005, the facilities that are being enjoyed by Bangladesh as a least developed country for
export of its textile products will be phased out progressively. In the globalised trade scenario,
the sub-sector will have to pursue the following objectives:
a. To attain self-sufficiency in fabrics by ensuring availability of 17.0 metres of fabrics
per capita per annum by the year 2005, to meet the requirement of RMG industry
through establishing backward linkages and to ensure direct export of textile goods by
expanding production of quality fabrics at competitive prices;
b. To create enabling environment and to provide the means by which the textile
industry can serve as the prime mover of industrialisation for generating employment,
increasing export earnings and encouraging contribution to national income by
enhancing value addition;
c. To establish linkages among the various textile sub-sectors, both upstream and
downstream, by ensuring their healthy and harmonious development, to undertake and
implement various integrated and related plans and programmes for the development
of spinning, weaving, knitting, hosiery, dyeing, finishing, and the export-oriented
RMG industry, etc. on a priority basis and in keeping with the goals and objectives of
the Fifth Plan; and
 297

d. To create a congenial industrial environment for attracting local and foreign

investment in the expansion of local textile industry by taking all the necessary
measures and to provide various incentives.
14.4.3 To remain competitive, productivity of the sector has to increase and so also the
quality of products. Establishment of backward and forward RMG-linkage industries is a
must. Besides, Bangladesh will switch over gradually to high value products. Adequate
marketing skills will be developed so as to eliminate dependence on the middle-men.
Facilities such as textile design training schools will be built. Development of fashion
industry will be encouraged. Marketing assistance will be provided by the government to
garments industry. Bangladesh will have to shift its emphasis from political diplomacy to
economic diplomacy and all Bangladesh missions abroad will be geared up for rendering to
the entrepreneurs all necessary services in connection with marketing of products and access
to needed technologies.
14.4.4 Leather and Leather Products Industry : In view of its tremendous export
potential, development of leather and leather products industry will be given priority. Joint
ventures will be encouraged in this area. Varieties of high value added leather products can be
made using locally manufactured crust and finished leather and, as long as domestic supplies
remain inadequate, using finished leather imported on back-to-back basis in the same manner
as fabrics for RMG industries. Appropriate measures will be taken to encourage investments
in leather and leather products as well as linkage industries to support the sub-sector through
supply of various accessories. To be successful, leather and leather product industry will be
closely linked to the market as fashions change frequently; the industries will take measures
to improve the quality of the product through upgradation of technology and skills. In this
context, strengthening of the Institute of Leather Technology will be called for.
14.4.5 Computer Software Development and Data Entry Industry : Computer Software
and Data Entry Industry has tremendous prospect in the international market and has the
prospect of substantial employment generation. In 1992 the total world market for software
and services was US$190 billion, growing at an annual rate of over 15 per cent . The share of
data entry/data processing segment in the global market was nearly 30 per cent in 1990 (about
US$ 43 billion). Bangladesh, which has one of the lowest cost of educated labour in the world
has comparative advantage in the area of mid-level skill. In order to develop this industry
following steps will be taken during the Fifth Plan:
a. Development of skilled manpower: Some universities like BUET, Dhaka University,
Shahjalal University of Science and Technology, etc. offer under-graduate and graduate
programmes in Computer Science. These graduates may find gainful employment in
the software industry. For increasing their numbers, intake capacity of all these
institutions will be enlarged. However, for data entry/data processing industry lesser
skill is necessary. In the private sector, several training institutes are providing training
for data entry/data processing. There is, however, no quality control over the content
and implementation procedure of such training programmes. Measures will be
undertaken to extend and improve these training facilities and courses;
b. Marketing assistance: In order to develop export in this area the private sector needs
to be assisted with information on market. Export Promotion Bureau needs to be
entrusted with the responsibility of building a data base on such market information on
a priority basis. It should be assisted by the commercial section of the Bangladesh
missions abroad. Overseas relation is vital in such industries. Hence, the commercial
wings in these missions will have to play an active role in procuring orders for these
 298

industries through directly approaching potential customers, organising trade shows,

mobilising Bangladeshi communities abroad, etc. Formation of joint ventures with
European and American companies established in the field will be encouraged;
c. Credit: In order to encourage the development of this industry bank loans will be
given on a priority basis;
d. Fiscal Measures: Fiscal incentives will be given to encourage the development of this
industry;
e. Monitoring: Being an export oriented service industry, the personnel involved in its
monitoring will be given extensive training on its nature and working; and
f. Telecommunication Facilities: Development of telecommunication facilities is a
prerequisite for development of this industry; increasing participation of private
entrepreneurs will be encouraged in this area through removal of hurdles that stand on
their way; policies in this area will be rationalised in order to reduce both cost and time
of such services to this industry. Customs services will have to be improved and
modernised to facilitate speedy development of the sector. Among the charges which
need to be substantially reduced is the cost of dedicating the satellite time.
14.4.6 Electronics Industry : Electronics industry has tremendous prospect for efficient
import substitution as well as exports. Through subcontracting substantial employment can be
generated in this sector. An embryo of this industry already exists. Internationally some of the
electronics industries, particularly those with low level of technology content, have become
sunset industries in countries like Japan, Hong Kong and Singapore. During the Fifth Plan,
efforts will be made to attract foreign direct investment in these areas. Trade in
semiconductor is very large and it is relocating to developing countries. Feasibility of setting
up such industries will be explored during the Fifth Plan.
14.4.7 Selected Agro-based Industry : Selected agro-based industries using agricultural
inputs such as fish, vegetables, fruits, flowers, etc. will be developed in view of growing
demand for such products in international markets. But as many of these are perishable goods,
air cargo facilities at a competitive cost will have to be developed during the Fifth Plan on a
priority basis. Private sector will be encouraged to expand services in this area. Besides,
appropriate policies and strategies will be pursued for the establishment of more direct
flights/routes to connect markets of major interest to Bangladesh which will be of great help
in boosting its exports.
14.4.8 Fisheries Industry : There is a large domestic demand for fish; foreign markets are
sizable and ever growing because of its proven superiority over meat proteins. Bangladesh
currently exports shrimp worth US$ 700 million each year. The fishing industry contributes
about 3 per cent of the country’s GDP which is also a significant foreign exchange earner.
Given the large number of water bodies and excellent climatic conditions, the country has a
great potential for development in fisheries industry including fish processing and canning
and expansion of employment generation in this sub-sector. There is also a great potential for
development of intensive and semi-intensive shrimp cultivation as well as for development of
hatcheries in the country’s 140 to 150 thousand hectres of coastal area.
14.4.9 Light Engineering Industries : Light engineering industries in Bangladesh produce a
multitude of labour intensive goods including toys, consumer items, small tools, spare parts,
and paper products for a large domestic market. Further development of these industries
offers various investment opportunities.
 299

14.4.10 Chemicals and Gas-based Industries : Bangladesh has a sizable demand for
chemical products to meet local needs in industries such as food and agro-processing,
pharmaceuticals, tanneries, cosmetics, paints and varnishes, printing, packaging and textile
processing. At present, most chemicals are imported. There is also vast potential for gas-
based down stream linkage industries and petro-chemical industries.
14.4.11 Garments Linkage Industries : To meet the challenge of time all out efforts will be
made to develop garments-linkage industries and adequate promotional support will be
provided in the Fifth Plan period.
14.4.12 Grameen Check and Dhaka Check : Handloom industry at present shares 61 per
cent of the total cloth production of the country, meeting 36 per cent of the local demand.
About 52 million metres of different types of cloth in the form of saree, lungi, bed sheet,
curtain, shirting, grey cloth, etc. in intricate designs and texture are woven in handlooms.
RMG-industries export a large quantity of handloom fabrics, in the form of different sorts of
dresses and costumes. Different types, design and colourful match of check fabrics are used
in making these dresses and costumes. Currently, Bangladesh imports about 120 million
metres of check fabrics from neighbouring countries in order to meet the demand for check
fabrics for the garment industries. It is expected that demand for check fabrics will exceed
300 million metres by the end of the Fifth Plan period. The same quality check fabrics can be
produced in Bangladesh. Indeed, it is already being produced in the country by Grameen
Uddog - a subsidiary organisation of Grameen Bank. Grameen Bank has succeeded in
penetrating into the international market by exporting this item and also in generating sizable
employment for the handloom weavers. At present, Bangladesh Handloom Board has given
special attention for boosting up production of check fabrics. For easy identification,
Bangladesh Hand Loom Board also developed Dhaka Check similar to Grameen Check. To
fulfil the future demand for check fabrics about 125 thousand handlooms will be engaged
exclusively for production of check fabrics generating employment opportunity for some 365
thousand people.
14.4.13 Hotel and Tourism Industries : With growing international interest in travelling
through Asia, tourism has taken roots in Bangladesh. Attractive places like Sylhet’s tea
gardens, water-falls at Baralekha, sea-beaches of the Cox’s Bazar and Kuakata provide
attractive scenery and seclusion for the tourists. A glimpse of the Royal Bengal Tiger might
be exciting on a trip to the Sundarbans, the largest mangrove forest in the world with unique
bio-diversity. Historical relics and monuments, ancient mosques, Buddhist monasteries,
Hindu temples, and other landmarks are witnesses to the country’s glorious past. Most of all,
in its tribal areas, Bangladesh harbours a history and culture which is still untouched by much
of the changes occurring elsewhere. To cater to the increasing need of services in this sector,
additional hotels and tourists resort facilities in the Cox’s Bazar, Dhaka, Chittagong and
elsewhere will be developed and necessary support services will be provided in terms of
physical infrastructure and utility services.
14.5 Policy Issues
14.5.1 Achieving an average annual economic growth rate of about 7 per cent during the
Fifth Plan period depends heavily on considerably faster growth in manufacturing, energy and
services sectors. Amongst these, the share of the manufacturing sector is projected to rise
from 9.28 per cent of GDP in 1996/97 to 12.70 per cent in the year 2002. Such a rise is
expected to occur mainly through private sector investments. With 96 per cent of the total
manufacturing sector outlay earmarked for investment by the private sector, the Fifth Plan
 300

relies heavily on the private entrepreneurs-both local and foreign for investment in
industries. Generally, the public sector will be more visible through policy and institutional
support rather than investment in the industries sector through the ADPs. The public sector
inputs will be provided mainly through right policies, institutional and infrastructural support,
legal reforms and good governance. The public sector investment will be limited only to the
BMREs of strategic and essential industries such as jute, steel, chemical, fertiliser, paper,
newsprint, etc. The government does not intend to invest in new industrial capacity creation
except in such areas where the private sector will not be forthcoming. Divestiture of existing
industrial units will be accelerated. Private enterprises and joint ventures in Export Processing
Zones will be encouraged. Special economic zones will also be set up.
14.5.2 Bangladesh enjoys Most Favoured Nation (MFN) status with the leading economies
of the world. Besides, the country is a signatory to MIGA and International Centre for
Settlement of Investment Disputes (ICSID). The Export Promotion Bureau (EPB) is
facilitating country’s exports in every possible manner. Fiscal and monetary policies have
been tuned to faster growth in the manufacturing, export and services sectors. Bangladesh
also enjoys GSP facilities. However, as the MFN tariffs will progressively be lowered in
pursuance of the relevant WTO Agreements leading to increasing erosion in the margin of
preference, the benefits out of the GSP schemes will soon become insignificant and the
comparative edge of Bangladesh over others will disappear.
i. Industrial Policy
14.5.3 The policy environment surrounding the private sector started improving with the
liberalisation of the industrial policy in July, 1974 and subsequent introduction of a series of
promotional measures. These included virtual elimination of the investment ceiling, extended
tax holidays, concessional rate of import duty on machinery, curtailing the reserved list of
industries for public sector investments, introduction of a free list of industries for which no
prior approval is required, enactment of a law for promotion and protection of foreign private
investment, activation of the National Stock Exchange, and revival of the Investment
Corporation of Bangladesh for underwriting public issues of shares and for providing bridge
finance to private industrial units, etc. Perhaps, the most salutory effect had been the
government decision for progressive disinvestment of the industrial units which, following
Independence, had to be taken over by the government for management. During the period
1973-80, a total of 199 industrial units were disinvested by the government at a total sales
price of Tk.115.8 million.
14.5.4 The industrial policy of 1982 was revised in 1986 providing further relaxation and
changes in which all industries, except seven strategic industries, were opened up for private
investment. No approval for investment was then required if the investors imported
machinery and equipment using their own resources and/or through Secondary Exchange
Market (SEM) provided imported raw-materials constituted less than 50 percent of total
requirement. The public sector enterprises were intended to be converted into public limited
companies in order to make up to 49 per cent of their shares available for pubic subscriptions
and to facilitate their operation in a competitive market. They were given operational
autonomy in pricing, procurement, etc. Under the Revised Industrial Policy (RIP) a large
number of fiscal and other incentives were also introduced/expanded in order to promote
rapid industrial development of the country. A number of import bans and quota restrictions
were relaxed to promote industrial efficiency. During the Third Five Year Plan there was
considerable investment in power loom and ready-made garments industry. The export of
ready-made garments increased substantially.
 301

14.5.5 The industrial policy of 1991 which was formulated in the light of promoting a
competitive market economy and which was further revised in 1992 laid down basic
strategies required for industrial development of the country. All industries have now been
opened up for private investment, both local and foreign, except a selected few related to
national security like arms and ammunition, nuclear energy, minting and security printing,
mechanised extraction in the reserved forests and the railways. Under the policy, the
government has been pursuing privatisation of selected public sector enterprises. A number of
public sector units have already been privatised or downsized/closed down and others slated
for privatisation. Main policy objectives under the Industrial Policy are to:
a. develop industrial sector in order to increase its contribution to gross domestic
product, income, resource mobilisation and employment;
b. expand industries by putting more emphasis on development of the private sector and
in this respect to make the role of the government more promotional rather than
regulatory;
c. encourage domestic and foreign investment in overall industrial development;
d. develop export-oriented, export-linkage and efficient import-substitution industries;
e. especially encourage the development of small and cottage industries;
f. expedite development of the labour intensive industries through acquisition and
improvement of appropriate technology;
g. attain self-sufficiency in essential consumer goods through efficient and cost-effective
production;
h. encourage development of agro-based and agro-support industries;
i. encourage development of industries based on indigenous raw-materials and
indigenous technology;
j. encourage balanced industrial growth in different regions of the country;
k. encourage investment in the intermediate and basic industries;
l. limit the role of the government generally to establishing strategic and heavy
industries and to improve efficiency of the public sector;
m. put special emphasis on the increase of productivity in industries and to ensure
optimum utilisation of the existing industrial capacities;
n. create possible opportunities for revitalising and rehabilitating sick industries;
o. make effective arrangements for improving standards and controlling quality of
products; and
p. take appropriate measures for preventing environmental pollution and maintaining
ecological balance.
ii. Fiscal and Monetary Policies for Industrialisation
14.5.6 Some important changes were made in the monetary management including interest
rates to revive economic activities by increasing the flow of credit to the productive sectors
of the economy including trade and industry. New interest rate bands were refixed for loans
and advances by reducing floor and ceiling by different degrees effective from December 1,
1991. In order to make interest rate more market oriented and competitive, interest rate bands
for all lending categories except agriculture, jute and jute goods exports, other export and
small and cottage industries, were withdrawn and in these cases banks were given freedom to
determine their own interest rates effective from April, 1992. In April, 1994 interest rate
bands for priority sectors such as agriculture, export and small and cottage industries were
fixed within 10-14 per cent, 8-10 per cent and 9-12 per cent respectively. The policy of
liberalisation of interest rate, which was introduced for moving towards market oriented
 302

competitive economy by reducing administrative control coupled with other necessary

measures, will be further geared up to build up a healthy banking system.
14.5.7 Within the above overall framework, effective policy measures will be pursued to
provide the entrepreneurs with the following incentives:
a. Tax holiday, from five to fifteen years, depending on the type of industries as well as
their locations such as the developed, less developed, least developed and special
economic zones; the period of such tax holidays will be calculated from the month of
commencement of commercial production; the eligibility of tax holiday will be
determined by the National Board of Revenue and the time of commencement of
commercial production will be certified by the respective sponsoring agencies;
b. The National Board of Revenue in consultation with the Ministry of Industries will
publish in the official gazette area-wise classification for the application of concessional
duties and tax holidays and this will be revised from time to time to keep pace with
industrial expansion;
c. There will be no discrimination in case of duties and taxes for the same type of
industries set up in the public and private sectors;
d. Local industrial products will be protected through tariff rationalisation keeping in view
the interests of the entrepreneurs and the consumers with a time-bound phasing for
eventual elimination of protection;
e. To create internal market for jute products and to discourage industries producing jute
substituting and environment polluting synthetic fibres, especially polypropylene bag,
necessary tariffs will be imposed on related imports; in addition, effective steps will be
taken for compulsory use of jute bags for packing of foodgrains, sugar, cement,
fertiliser, etc.;
f. Duties and taxes on imports which compete with similar domestic goods will be
rationalised so that the incidence of duties and taxes on imported raw materials and
intermediates used to produce such goods remain at a level below that on the finished
imports;
g. Energy price equalisation measures, as deemed appropriate, will be put in place for
those least developed areas where the price of fuel oil in BTU terms will be higher than
the ruling natural gas prices, as long as gas can not be made available in those areas;
h. In cases where credits/loans obtained from foreign institutions or government for private
industrial investments are relent to commercial banks/DFIs through the government, the
following conditions will be applicable:
i. The government will relend the above mentioned credits/loans through commercial
banks/DFIs; the concerned banks/DFIs will disburse the credits/loans to the
entrepreneurs with applicable service charge at relending rates as determined by the
government; and
ii. The entrepreneurs shall undertake full responsibility for repayment of the
loans/credits and the concerned banks/DFIs will provide guarantee to the
government for repayment of the loans/credits. The concerned banks/DFIs will,
however, be entitled to claim collateral from the entrepreneurs;
i. Special incentives will be provided to encourage non-resident Bangladeshis for
investment in industries. In case of their investment in Bangladesh they will enjoy
facilities similar to those given to the foreign investors. They will be able to buy any
newly issued shares/debentures of Bangladeshi companies. Moreover, they will be able
to maintain foreign currency deposit in the NFCD account;
 303

j. Provision will be made for accelerated depreciation allowance, in lieu of tax holiday, if
entrepreneurs so opt for; and
k. Special financial incentives for small and cottage industries, particularly those located in
the backward areas, will be provided.
iii. Sick Industries
14.5.8 A large number of industries, over years, have turned into sick ones. The main reasons
for their sickness may be enumerated in terms of :
a. depreciation of Taka in relation to dollar or yen or pound in which loan capital was
obtained for setting up the relevant industries; this resulted in sizable increase in taka-
burden of the repayable loan capital;
b. technological obsolescence of the process or the product;
c. withdrawal or lowering of protective tariff wall;
d. management inefficiency;
e. inadequate working capital support by the banking system; and
f. pilferages by the sponsors, in collusion with the personnel of the lending bank or
financial institution.
14.5.9 In the Fifth Plan period concrete steps will be afoot to remove the relevant causes of
sickness. Ways and means will be found out to draw up realistic schemes for getting out of
sickness through joint effort of owners, management, labour and the funding agencies, i.e. all
the stakeholders.
iv. Some Specific Promotional Measures
14.5.10 In recent years, considerable reforms and positive changes have been brought about to
promote the manufacturing, trade and services sectors. Tariff rates have been considerably
lowered and rationalised generally in line with the trade liberalisation approach pursued by
the government. The Board of Investment (BOI) is playing a positive role in facilitating
private investment with focus on foreign direct investment (FDI). Some of the fiscal and other
specific incentives that the government is offering to attract private investments, in general,
and foreign direct investments, in particular, include but not limited to the following:
a. Cent per cent ownership of enterprises by expatriates;
b. Generous tax holiday for 5 to 7 years, depending on the industrial subsectors, and
10 years for all types of units established in the export processing zones; tax
holiday for power generation plant will be 15 years;
c. No import duty on capital machinery for 100 per cent export-oriented industries;
for other industries, import duty on machinery and spares will be levied at the rate
of 7.5 per cent ad valorem only;
d. Facilities for easy repatriation of profits, invested capital, royalties, technical fees
etc. for foreign investors;
e. Exemption of taxes on wages/salaries of expatriates working in industries as well
as on royalties and technical fees;
f. Bilateral arrangements with different countries concerned for avoiding double
taxation;
g. Granting of citizenship to foreign investors who will invest in Bangladesh at least
US$ 500,000 or to those expatriates who will deposit at least US$ 1 million in a
non-repatriable account with a recognised financial institution, and granting of
permanent residentship to those foreign nationals who will invest at least US$
100,000 in Bangladesh;
 304

h. Issuance of multiple-entry visas as well as work permits to foreign nationals

without any discrimination;
i. Enactment of the Private EPZ Act under which the private sector will be allowed to
set up EPZs; and
j. Establishment of a Permanent Law Commission to make the administrative-legal
system more responsive to the needs of the civil society, in general, and those of
the entrepreneurs, in particular.
v. Trade Policy
14.5.11 Tariff Reductions : In the last decade, tariff rates have been lowered significantly.
The average tariff has come down to about 22 per cent of the annual import value. While
lowering the averages, attention was given to keep the rate of customs on raw materials and
capital goods lowest, on intermediate goods in-between and on finished goods consumed by
the affluent highest. The aim has been to make industrial production competitive and bereft
anti-export bias.
14.5.12 Elimination of Non-tariff Barriers (NTBs): Like tariff rationalisation, substantive
progress has been made in eliminating or reducing quantitative restrictions (QRs) to points
where only a small number of items remain subjected to NTBs at present primarily on
grounds of security, health and religion. Besides, the current Import Policy Order (IPO)
covering the period 1995-97, brings about a greater transparency by restoring two separate
lists - one for the banned items and the other for the regulated items. Non-tariff barriers to
imports have been significantly eased also through the abolition of the need for maintaining
import passbooks for industrial importers, except for regulated imports.
14.5.13 Tariff reductions along with overall improvement in other policy areas carried out so
far have played a major role in liberalising and boosting imports. However, the surge in
imports resulting from liberalisation of the trade regime has affected adversely some
domestic industries.
vi. Supportive Institutions and Special Measures : In the Fifth Plan period institutional
development will be pressed in for giving support to the private enterprise, specially for
setting up and operating industries. The main emphasis will be on (i) improvement of
development management (ii) creation and sustenance of private sector development and (iii)
improvement of key public social and infrastructure services. These objectives will be
achieved through reorientation and strengthening of the following major institutions and
organisations:
14.5.14 a. EPZs and Special Economic Zones: At present, 73 industrial units in Chittagong
EPZ and 23 industrial units in Dhaka EPZ are operational. Besides, 34 industrial units in
Chittagong EPZ and 46 industrial units in Dhaka EPZ are under implementation. Total
investment in the operational units has figured at US$ 236.56 million with a total
employment of over 46,000 persons. In order to accelerate economic development and
employment generation during the Fifth Plan period, Bangladesh Export Processing Zone
Authority envisages establishing as many as three more EPZs in various parts of the country.
14.5.15 The determinants and directions of international investment have been changing
rapidly in the recent times. Because of new candidates like the East European countries and
the CIS (Commonwealth of Independent States that emerged out of the erstwhile USSR), the
share of both official development assistance and foreign direct investment to developing
countries has been on the wane. In view of changed circumstances, EPZs, encompassing
necessary infrastructural facilities, utilities and other support services, can be used as conduits
to attract foreign direct investments. At a time when industries are being re-located to low
 305

cost production areas, Bangladesh with its hard working, intelligent, and cheap labour force,
should not miss the opportunity of making the best use of its EPZs to attract foreign direct
investments. In order to attract foreign investment, besides development of infrastructure and
support services, such as warehouses, communication network, gas and water supply,
electricity, telephone and modern electronic links, etc. the government will also continue to
provide the following incentives:
a. income tax exemption for ten years and proportional income tax rebate between 30
and 100 per cent on export earning after this period;
b. duty free import of raw-materials, machinery, construction materials and other
materials used in manufacturing process;
c. income tax exemption on salaries for foreign executives and technicians for three
years;
d. tax exemption on interest on foreign loans;
e. tax exemption on royalties, technical know-how and technical assistance fees;
f. tax exemption on the profits on account of transfer of shares by foreign companies;
g. permitting export linkage inputs to be imported through back-to-back L/Cs by
recognised export-oriented/export-linkage industries which will be provided with
necessary bonded warehouse facilities, even if they are located outside the EPZ areas;
and
h. offshore banking facilities.
14.5.16 b. Board of Investment (BOI) : In order to boost up and promote private
investment during the Fifth Plan, the Board of Investment will continue to perform its
following mandated functions:
a. promotion of investment;
b. providing facilities for capital investment and rapid industrialisation;
c. registration of industrial projects, foreign loan agreements, royalty, technical know-
how and technical assistance agreement wherever required;
d. providing assistance to provide infrastructural facilities for industries;
e. issuing work permits to expatriate personnel working in the private sector industrial
enterprises;
f. providing import facilities to industrial units in the private sector;
g. approval of the payment of royalty, technical know-how and technical assistance fee
to foreign nationals/organisations beyond the prescribed limits; and
h. recommendations for acquisition and allotment of land in the industrial areas/estates
for industrial purpose.
14.5.17 The government has recently embarked upon a policy initiative for private
participation in areas of infrastructure development and provision of utility services. Already
a few economic sectors such as gas exploration and exploitation, power generation and
telecommunication have been opened up for local and foreign private investment. Some
projects in the areas of ports and shipping as well as roads and highways have already been
identified by the concerned ministries/agencies for implementation by the private sector. In
the Plan period, public sector areas of operation will be progressively reduced and private
investors will be induced to take up the place.
14.5.18 One key element for the success of export-led growth is the availability of abundant
skilled manpower. Skill development at all levels, therefore, will be given top priority in the
Plan period. Environment will be created to attract more private entrepreneurs in the field of
 306

training, research and development. In order to boost-up the private sector, the following
additional measures will be taken:
a. higher level of investment will be encouraged in manufacturing, infrastructure and
service industries by the private sector;
b. the existing list of reserved sectors will be reviewed to further widen the areas for
private sector investment; and
c. the pace of privatisation or denationalisation process will be accelerated.
14.5.19 c. Privatisation Board : The Privatisation Board was established by a resolution of
the government in March, 1993. It is entrusted with the overall responsibilities of privatising
state-owned enterprises (SOE) identified for privatisation. Ministries having state-owned
enterprises under their control have set up privatisation cells for assisting the Privatisation
Board in identifying, preparing, processing, implementing and monitoring SOEs for
privatisation. The process of privatisation till the end of 1996 was not very satisfactory.
During the Fifth Plan, the Privatisation Board will be reinvigorated to hasten the process of
privatisation of industrial, commercial and state owned enterprises. With this end in view the
Privatisation Board will take-up the following measures to:
a. develop selection criteria, prepare list of enterprise for sale/transfer, and subsequently
implement or arrange for the transfer of such enterprises to the private sector;
b. determine the priority and sequencing of such privatisation, including a detailed work
plan and time table for the various enterprises proposed to be transferred;
c. identify the optimal methods such as public offering, private placement, sale of assets,
management contracts, leasing or management/employee buy outs by which the process
of privatisation will be implemented in particular cases;
d. co-ordinate among and recommend to the Ministry of Finance, Ministry of Jute,
Ministry of Textiles and other relevant ministries and agencies steps which may be
necessary for the successful privatisation of the enterprises, such as revaluation of the
enterprises, restructuring of debt in accordance with sound financial principle,
retrenchment of redundant workers, closure of obsolete facilities of the enterprises;
e. formulate policies for and advise the government with regard to private sector
development, investment and participation in previously reserved sectors such as
telecommunications, energy and power etc.;
f. organise public information campaign about the merits and benefits of privatisation; and
g. undertake any other activities connected with privatisation.

14.5.20 With a view to attracting private buyers, capital restructuring has been carried out in
several manufacturing units like jute mills under the Bangladesh Jute Mills Corporation.
Overdue loans of both private and government sector jute mills have been restructured
through waiving one-third and rescheduling the remaining two-third. Around 39,000 workers
were released from the jute sector between June 1990 and June 1995 under the normal
‘severance benefit scheme’. Four jute mills have been closed down and one mill has been
downsized. The Bangladesh Jute Corporation which was previously dealing in trade of raw
jute was wound up, but its assets are yet to be disposed off. Non performing loans of the
Nationalised Commercial Banks (NCB), due to public sector manufacturing corporations like
the Bangladesh Textile Mills Corporation (BTMC), the Bangladesh Jute Mills Corporation
(BJMC) etc. have been settled and process is under way for settling overdue loans of other
public sector manufacturing units. Collection of debt service liabilities (DSL) and settlement
of arrear dues among corporations have also been strengthened. Sale of 21 public
manufacturing sector units have so far been finalised. The process has been stalled due to
 307

non-payment of instalments by the buyers. The manpower of public enterprises remaining

with the government is being rationalised and their overhead expenses curtailed with the
objective of making these more efficient and dynamic.
14.5.21 With the exception of a few intermittent years, the jute industry has been passing
through a critical time since independence by incurring huge losses due to manifold reasons-
internal and external - which warrant some positive actions for restoration of its commercial
viability. In order to address the deteriorating situation of jute sub-sector, the government has
taken a number of reform measures under a programme implemented with the assistance of
the World Bank. The main features of the programme are down-sizing of industry,
rationalisation of employment, restructuring of past debt, loss financing for jute goods export,
privatisation of the jute industry, reforming wage policy, elimination of government
intervention in the industry, training of workers and managers in retained mills, social safety
net programmes, etc.
14.5.22 The ultimate objective of jute mills privatisation programme is to maintain export of
Bangladesh jute goods at the minimum level of 450 thousand tons per year. Towards this end,
the programme aims at bringing down the public sector loomage capacity to 4,000 and
raising that of the private sector to around 16,000 so that the sub-sector becomes viable,
efficient and competitive. Under the programme, 23 public sector jute mills, out of 31, have
already been enlisted for privatisation. The Privatisation Board almost completed evaluation
of the asset values of these mills. It may be mentioned that the private sector jute mills have
failed to operate their existing capacity; about two-third of its loomage capacity has remained
in operation during the last four years resulting in the short fall of targeted jute goods
production in and export from Bangladesh. During the Fifth Plan, attempts for privatisation of
public sector jute mills will continue and privatisation programme will be followed
vigorously.
14.5.23 Privatisation and private sector development have been very difficult till the end of
1996. During the 1993-96, the Privatisation Board managed to privatise only 12 industrial
units. But due to restructuring of the Privatisation Board, the process of privatisation has
gained momentum. The government is fully committed to privatisation and by the terminal
year of the Fifth Plan, the process of privatisation will be completed. It may be mentioned
here that the Privatisation Board has so far identified 217 SOEs for privatisation covering
nearly all the economic sectors, out of which a total of 113 SOEs were taken up for
privatisation until June 1998. Besides, the Privatisation Board is continually reviewing the
existing policies and strategies for privatisation and recommending appropriate policy
reforms for approval of the Cabinet Sub-committee on Economic Affairs. New strategies are
also being formulated by the Board for efficient and effective implementation of the
privatisation programme.
14.5.24 In accordance with the privatisation policy of the government, 24 textile mills under
BTMC having 182,168 spindles and 681 looms are to be privatised. Out of these, 6 mills
were privatised and handed over to the private owners, and remaining 18 mills are in the
process of privatisation by the Privatisation Board/Ministry of Textiles.
14.5.25 d. Chamber of Commerce and Industries : Under the present policy of private
sector led export-oriented growth, the responsibility of the private sector has increased
tremendously. Private Sector is now considered to be the pivotal economic player. During the
Fifth Plan the institutional capability of the Federation of Bangladesh Chambers of
Commerce and Industry (FBCCI) and its member organisations will be developed and
strengthened so that they can lead the private sector to perform its role so as to attain higher
 308

growth target. To prevent unfair trade practices, in particular, circumvention of domestic and
foreign laws, rules and regulations, these bodies will be encouraged to put in place
appropriate code of conduct for their members to observe. With this end in view necessary
promotional and support services will be provided to FBCCI and other chambers to improve
their institutional capability so that they can discharge their functions for promotion of trade,
investment and industry.
14.5.26 e. Export Promotion Bureau : In the wake of the establishment of the World Trade
Organisation to administer GATT 1994, GATS (General Agreement on Trade in Services)
and TRIPS (Trade Related Aspects of Intellectual Property Rights) under an integrated
Dispute Settlement Mechanism, the Bangladesh Export Promotion Bureau (EPB) will have to
play a dynamic role to achieve the following objectives: (i) to identify obligations of the
government to the business and industrial community of the country, to customers abroad as
well as under contracts, agreements, arrangements, conventions, etc. of WTO and other
relevant international/regional organisations and take all necessary steps towards meeting
these obligations; (ii) to remove existing regulatory constraints; (iii) to provide policy support
comparable with those of other competing countries; (iv) to provide improved services for
export promotion activities; (v) to provide access to supportive infrastructure services; (vi) to
improve entrepreneural and managerial capabilities through human resources development
and (vii) to implement export development programme to help expand and diversify the range
of exportable products. Towards the fulfilment of the above objectives, EPB will be required
to be revamped in conjunction with effective private sector co-operation and collaboration,
including establishment of a joint institute of foreign trade involving representatives of both
public and private sectors.
14.5.27 f. Bangladesh Tariff Commission (BTC) : The Tariff Commission will carryout in-
depth studies and formulate policies for further tariff rationalisation, liberalisation of the
import regime and evolving an incentive structure for strengthening the domestic production
and export base. It will review, on a continuing basis, the tariffs on imported inputs - raw
materials and intermediate inputs - as well as on capital goods. While rationalising the tariff
structure, adequate attention will be given to ensure that inputs for any domestic product are
not subjected to rates of duties and taxes higher than those on competing finished imports
and that the domestic industries do not suffer loss because of dumping on the one hand and
denial of access to foreign market on the other. The BTC will establish effective co-
ordination with the National Board of Revenue (NBR), the Bangladesh Bureau of Statistics
(BBS), the Bangladesh Bank (BB), the Ministry of Planning/Planning Commission and the
Ministry of Commerce for establishment of a rational and dynamic tariff structure consistent
with existing government policy of pursuing free market economy. For discharging its
functions more effectively, BTC will build up its capacity further through necessary
strengthening and upgradation as well as human resources development.
14.5.28 g. Bangladesh Standard Testing Institute : Standardisation is the gateway to trade
and industrialisation. A well conceived standardisation programme lays the foundation for
growth of domestic production, protection of consumer interest through ensuring requisite
product quality and progressive assimilation of imported technology through adoption and
adaptation. Standardisation of products as well as of inputs minimises wastage of resources
and ensures compatibility of manufacturing processes and practices. In view of these factors,
during the Fifth Plan period, the performance of the Bangladesh Standard Testing Institute
will be reviewed and effective measures will be introduced to enhance its functional
capability through necessary expansion and modernisation. Some vital components of
 309

modernising the Institute will be strengthening its methodology, quality control and testing
sections and induction of sufficient number of quality professionals into it.
14.5.29 h. Bangladesh Institute of Management : In the Fifth Plan period, BIM will
conduct research on management development and will impart training on socio-economic
and other functional areas of management. The main objectives of the institute will be to : (i)
upgrade the existing centre to a self-sustained higher institute of training , research and
learning, (ii) train and develop managers at all levels of the economy, (iii) assist, develop and
maintain higher productivity in business and industry through adoption of technological and
engineering innovation and services, (iv) give consultancy services for solving management
and related problems faced by various sectors of the economy, and (v) carry out research in
different fields of management, economics and business. Activities and courses will be
designed and implemented to support private sector industrial and business units.
14.5.30 i. Bangladesh Industrial Technical Assistance Centre (BITAC) : The Bangladesh
Industrial and Technical Assistance Centre (BITAC) has been providing technical and
advisory services to the entrepreneurs. Presently BITAC Dhaka, Chittagong, Chandpur and
Khulna are in operation. During the Fifth Plan the performance of existing centres will be
duly evaluated and new centres will be established keeping in view the needs of the industrial
areas. BITAC will assist the private sector entrepreneurs, particularly the small entrepreneurs,
to solve their technical problems as well as in adopting/adapting new technologies in their
production practices.
14.5.31 j. National Productivity Organisation (NPO) : The National Productivity
Organisation (NPO) was established in 1989 under the Ministry of Industries. The
institutional capability of this organisation will be further developed to create productivity
consciousness and awareness to the people for launching productivity as a national objective
to be pursued by a national movement in the country, undertake programme for human
resource development for productivity improvement, build productivity infrastructure and
convert industrial enterprises into an efficient and profitable organisation, work as a catalyst
to promote plant-level productivity through consultancy services, conduct survey, study and
research work on productivity, and assist the government in formulating productivity policy.
14.5.32 One of the major issues in the industrialisation of a country is to use trade and
industrial policies in a co-ordinated manner so as to accelerate the pace of industrialisation.
This was done in Japan and the Newly Industrialised Countries. For this purpose, a Trade and
Industrial Policy Co-ordination Council will be set up during the Fifth Plan period.
14.5.33 Other General Measures : Other major institutional supports to the growth of
private enterprises and industrialisation by the private sector will have to come through
reforms in under-performing public administration, backlogged judiciary, costly banking
system and also from reduction in transaction costs in getting services from the public
utilities. These are monumental works and will be undertaken for completion with
determination. As a general principle the government will support institution of the civil
society, and rule of law and the private sector to help build constituencies that will in turn
support accountable, responsible and responsive and performing public institution. Of the
public utilities, power will be the major determinant of industrial investment. Concrete
programmes in both private and public sectors have been drawn up to meet this need.
14.6 Development Programmes and Targets
14.6.1 Textiles and Clothing Sub-sector : Domestic supply of fabrics from the existing
capacity was 1,129 million metres in 1995/96, including 200 million metres for the RMG
 310

industry. Corresponding estimates for 1996/97 are 1,163 and 210 million metres respectively,
while the supply from the existing mills in the terminal year (2001/2002) of the Fifth Plan is
projected at 1,348 million metres, including 268 million metres for the RMG industries. On
the other hand, the total demand for fabrics in the year 2001/2002 is projected to be 5,265
million metres, including 3,228 million metres for export. Consequently, the total demand-
supply gap of fabrics will increase from 2,633 million metres in 1996/97 to 3,917 million
metres in the year 2001/2002, out of which 2,960 million metres will be on account of RMG
industries, unless more fabric manufacturing capacities are established, in the mean time, as
backward linkage industries. The actual and estimated/projected demand for and supply of
fabrics for the local and export market for the years 1995/96, 1996/97 and 2001/2002 and the
corresponding supply-demand gaps are shown in Table 14.4.

Table 14.4
Demand-Supply Gap of Fabrics : 1997-2002
(in million metres)
Sl. Fabrics Actual Benchmark 2001/ 2002
No. 1995/96 (Estimated) (Projected)
1996/97
i. Demand for Fabrics 3,520 3,796 5,265
a. For domestic consumption 1,520 1,596 2,037
b. For export (for RMG and other forms of export) 2,000 2,200 3,228
ii. Supply of Fabrics From Existing Facilities 1,129 1,163 1,348
a. For domestic consumption 929 953 1,080
b. For export 200 210 268
iii. Demand-Supply Gap of Fabrics 2,391 2,633 3,917
a. On account of domestic consumption 591 643 957
b. On account of export 1,800 1,990 2,960

14.6.2 The excess demand for yarn over the local production in 1995/96 was 390 million kg.
which is expected to increase to 639 million kg. in 2001/2002. About 67 per cent of this total
demand will be for cotton yarn, while the rest 33 per cent will be on account of yarn from
man-made fibres. The projected demand for yarn by 2001/2002 and the demand-supply gap of
all types of yarn for the same years are given in Table 14.5.
Table 14.5
Demand-Supply Gap of Yarn: 1996-2002
(in million kg.)
Particulars 1995/96 1996/97 2001/2002
Actual Estimated Projected
Demand of yarn 503 542 752
Production of yarn 113 113 113
Demand-Supply Gap 390 429 639

14.6.3 The demand-supply gaps of raw cotton and man-made fibres were 369 million kg. and
169 million kg. respectively in 1995/96 which are projected to reach 555 million kg. and 254
million kg. respectively by 2001/2002 assuming wastage for raw cotton at the rate of 10 per
cent and for man-made fibres at the rate of 3 per cent. The existing and projected requirement,
domestic production, and demand gaps of raw cotton and man-made fibres are shown in
Table-14.6.
 311

Table 14.6
Demand-Supply Gap of Raw Cotton and Man-made Fibres : 1996-2002
(in million kg.)
Items of Raw Materials 1995/96 1996/97 2001/2002 (Projected)
(Benchmark)
a. Raw-Cotton
Demand 374 403 560
Production 5 5 5
Demand Gap 369 398 555
b. Man-made fibres
Demand 171 184 256
Production 2 2 2
Demand Gap 169 182 254

14.6.4 With a view to progressively increasing domestic production of yarn and cloth the
Fifth Plan envisages to overcome the shortage of manpower through human resource
development, creation of an investment friendly environment, reforming the textile sector
through fine tuning of policy objectives, creation of new capacity in spinning and weaving
and BMRE of un-economic units in the private sector and some selected public sector mills.
The private sector will be at the cutting edge of investment and technological advancement
keeping in view the global and domestic opportunities. The following strategies will be
pursued for the overall development of the textiles and clothing sub-sector:
a. New capacity will be created to cater to the needs of the export-oriented RMG
industries as well as the domestic markets. To this end market response will determine
the nature of investment to allow horizontal and vertical expansion. Investment fund
will be sought from domestic banking sources, joint-ventures, foreign direct investment
and relocation of units by foreign entrepreneurs either independently or through joint
venture arrangement with local sponsors;
b. BMRE of the old and uneconomic existing units in the private sector and in selected
cases in the public sector will be undertaken to ensure their financial and commercial
viability through increased productivity;
c. The existing specialised textile mills and power looms will be organised into groups on
area basis and around 200 looms in each area will be taken as a package for intra and
inter-unit balancing;
d. Till adequate domestic supply capacity is created, grey fabrics will be allowed to be
imported under extended bonded warehousing facilities for dyeing and finishing
locally; and
e. Tariffs on all imported inputs for the textiles and clothing subsector will be rationalised
on a continuing basis; raw cotton and synthetic chips/fibre will be treated at par while
levying duties and taxes on them.
14.6.5 Handlooms : The growth of the traditional sector comprising handlooms and
sericulture will promote rural employment, import-substitution and export industries. The
handloom industry plays an important role in the economy of Bangladesh. Next to agriculture,
it is the second largest source of rural employment and income. About 5 million people are
directly or indirectly engaged in this industry. The Handloom Census 1990 recorded
1,027,407 weavers in the country and 501,834 handlooms out of which 317,026 were
operable. Handlooms produce some 757 million yards of cloth. Monthly demand of yarn for
handloom is 12.7 million kg. Fixed capital and credit demand per loom was Tk.10,008 and
Tk.8,904, respectively. The Handloom Board has undertaken different programmes/projects
for implementation in order to improve the handloom industry to a satisfactory level in
 312

producing quality products. To address the problems of the handloom industry, well identified
strategies will be undertaken during the Fifth Plan period.
14.6.6 The strategies for development of handloom sub-sector will include:
a. strengthening of the Bangladesh Handloom Board (BHB) to perform promotional
activities for boosting up production at competitive prices;
b. revitalisation of idle looms and linking up demand sources through organising the
supply sources of handloom products;
c. improvement of loom technology and changing of traditional handlooms into power
looms in phases;
d. activating the institutional credit sources for financing the working capital
requirements of the handloom weavers and mobilising banking institutions to meet
their credit needs as well as to do profitable banking business;
e. ensuring availability of yarn, dyes and chemicals at competitive prices to the
handloom weavers and to make appropriate arrangements for marketing their products
locally;
f. establishment of export-linkages through more concerted efforts to market handloom
products abroad and also to feed the export-oriented RMG industry by encouraging
non-traditional product base to produce handloom woven shirting, suiting and
furnishing fabrics of upgraded quality;
g. improvement of technology of handloom through research and adaptation;
h. reaping the productive potential of handloom weavers through re-organisation of co-
operative societies as well as through development of skill and improvement of
designs; and
i. promotion of export of Grameen Check and Dhaka Check to overseas markets.
14.6.7 Sericulture: Sericulture is an important sector which can play an important role in
generating employment and alleviation of poverty. About 8-9 hundred thousand families are
engaged in this occupation directly or indirectly. It is not a primary occupation in Bangladesh.
It is more or less a subsidiary occupation providing part time jobs for women at family level.
This sub-sector is labour intensive and its value addition is high. But it is lagging behind due
to some problems, such as scarcity of disease free layings, lack of capital or loan, traditional
technology of rearing and reeling, low quality of cocoons, poor marketing facilities, shortage
of trained and skilled manpower and slow expansion of mulberry cultivation. As sericulture
farmers are unskilled and they do not have appropriate rearing house, about 25 per cent to 30
per cent disease-free layings and cocoons are damaged in the rearing process. This in turn
makes sericulture farming uneconomic. Farmers lose their interest and leave the occupation.
There is a strong need for increasing the number of skilled bosnis (small sericulture farmer)
and skilled reelers. Therefore, the Fifth Plan envisages to set up chaki rearing-cum-
minifiliature centres where intensive training will be imparted for development of skilled
bosnis and reelers.
14.6.8 The strategies for development of the sericulture sector will include:
a. restructuring and strengthening of sericulture activities to perform research and
provide extension services, supply disease free layings, disseminate high yielding
variety of mulberry cultivation and silk worm rearing technology and help increase of
income of silk farmers through qualitative and quantitative improvement of products;
b. encouragement of NGOs for greater participation in different stages of production and
marketing activities;
 313

c. ensuring access of bosnis (small sericulture farmers) to various inputs and facilities
conducive to production of quality cocoons through adopting appropriate policy
measures;
d. extension of mulberry plantation, production of cocoons, and local marketing of silk
products of bosnis and large farmers by a combination of efforts by entities involved
in sericulture sub-sector;
e. development of export-linkage to market sericulture products abroad and to feed the
export-oriented RMG industry;
f. improvement of technology in the silk sector and design of silk products; and
g. setting-up chaki rearing cum minifiliature centres where intensive training will be
given for development of skilled bosnis and reelers.
14.6.9 To over come the problems of this sub-sector the Fifth Plan envisages to undertake the
following programmes to promote:
a. expansion of mulberry plantation in all possible places;
b. expansion of extension services;
c. production of quality cocoon;
d. new reeling technology for improvement of quality silk yarn;
e. marketing and credit;
f. establishment of chaki rearing and minifiliature centre (CRC) under the zonal or
regional offices of Bangladesh Sericulture Board (BSB); and
g. strengthening Bangladesh Sericulture Research and Training Institute (BSRTI) to
enhance the skill of manpower engaged in sericulture farming and silk reeling.
14.6.10 In order to bring about sustainable development of the silk sector, the Fifth Plan
seeks to undertake a long term multi-faceted programme for introducing improved technology
through strengthening institutional arrangement and policy improvements. This programme
envisages establishment of a non-profit private sector institution- Bangladesh Silk
Foundation. It will be established to provide necessary support and training activities in silk
sector as well as to co-ordinate the efforts and initiatives of the NGOs and private
entrepreneurs. The main objective of Bangladesh Silk Foundation will be to assist in
increasing the income of small scale silk producers, most of whom are poor women, through
introducing improved technology and to develop institutional and policy support for
sustainable development of silk and sericulture sub-sector. During the Plan period
Bangladesh Silk Foundation will undertake programmes to (a) enhance productivity of silk
worm through dissemination of improved technology and undertaking adaptive research
through BSRTI, (b) develop Germ Plasm Maintenance Centre, (c) improve management of
grainages, (d) disseminate silk worm rearing and reeling technologies to the farmers, NGOs,
rearers and reelers, and (e) undertake product development, design improvement and market
promotion of silk yarn and fabrics. These programmes envisage to enhance the volume of
production of silk yarn from the present level of 29 tons in 1996-97 to 181 tons by 2002 and
to raise silk farmers’ income and create employment opportunities. Besides, appropriate steps
will be taken towards rationalisation of tariff rate on the imported silk yarn to enable local
production stand the competition of imported silk yarn.
 314

14.6.11 Other strategies for overall development of the textile sub-sector will be as under:
a. For development of human resources for the textile sector, the existing training
institutions under the Ministry of Textiles (MOT), Department of Textiles (DOT),
Bangladesh Handloom Board (BHB) and Bangladesh Sericulture Board (BSB) will be
strengthened and some new training facilities will be created- to stay with time,
additional trade courses will be designed and offered to the trainees;
b. A central testing and quality control laboratory will be established in the public sector
to serve both the public and private sector units;
c. The facilities being created in the National Institute of Textile Training Research and
Design (NITTRAD) will be utilised for product testing and adoption of market
sensitive design enabling sophisticated marketing and merchandising high value added
garments in the process of transforming fashion business into an economically viable
proposition;
d. Dependence on imported machinery and spares will be reduced through transfer,
adoption and adaptation of technology and development of cost-effective indigenous
technology;
e. Currently women's participation in the export-oriented RMG industry of Bangladesh is
more than 85 percent of total employment; but in other modern textile sub-sectors, it is
very negligible compared to 50-60 per cent in developed countries; keeping in view the
national objective of poverty alleviation of the socially disadvantaged groups
particularly distressed women, adequate measures will be taken for greater
participation of women labour force in the modern textile sector.
14.6.12 Projected Productions: The projected production of fabrics has been estimated at
3,651 million metres out of which fabrics for domestic consumption will be 2,037 million
metres. If the projected production is achieved, per capita consumption of cloth will be 15.37
metres in 2001/2002.The estimated production for yarn and fabrics during the Fifth Plan
period is shown in Table 14.7.
Table 14.7
Projected Production of Yarn and Fabrics 1997-2002
Textile Products Benchmark Projections
(estimated) 1996/97 2001/2002
Yarn production1 (million kg.) 113 522
Fabric for domestic consumption (million metres) 953 2037
Fabric for RMG production 210 1614
Total fabrics 2 production (million metres) 1163 3651
Population (million) 123.8 132.50
Per capita demand for fabrics (metres) 12.9 3 15.37
Notes :
1
Of total yarn requirement for projected production of fabrics, 100 per cent will be produced by 2001-2002.
2
Cent per cent of domestic fabric requirement and 50 per cent RMG fabric requirement will be domestically
met by 2001/2002.
3
Demand for domestic market in 1996/97 is estimated at 1596 million metres.
14.6.13 Fabrics from the modern sub-sector (which includes composite textile mills,
specialised textiles and power looms and knitting and hosiery units), handloom, sericulture
and others (tents, soft luggages, gloves, socks, tarpaulins, inter-linings, under-garments,
umbrella-cloth etc.) is projected to increase from 564 million metres in 1996/97 to 2953
million metres in 2001/2002. The benchmark production and projected production in these
sub-sectors during the Fifth Plan period are given in Table 14.8.
 315

Table 14.8
Projected Production of Fabrics During 1997-2002
(in million metres)
Textile Sub-sectors Benchmark (estimated) 1996/97 Projected Production
(2001/2002)
Modern Sector 564 2,953
Handloom 595 690
Sericulture and others 4 8
Total 1,163 3,651
14.6.14 While fabric production in handloom is assumed to grow at an annual compound
growth rate of about 3 per cent, in sericulture it is assumed to grow at the rate of about 15 per
cent per annum, that in modern sub-sector at the annual rate of 39 per cent during 1997-2002.
The overall annual growth rate of fabrics in the textile sub-sector is envisaged to be 25.7 per
cent during 1997-2002. A comprehensive programme for the creation of new capacity in
spinning, weaving, dyeing and finishing and export-oriented garments will be launched in
order to attain self-reliance in fabric for domestic market by the year 2002 and to meet 50 per
cent of the fabric requirements of export-oriented RMG industries. Table 14.9 shows the
number of units proposed to be set up during the Fifth Plan.
Table 14.9
Number of New Units Proposed to be Established in Different Subsectors
During Fifth Plan
Sub-sectors 1997/98 1998/99 1999/2000 2000/2001 2001/2002 1997-2002
Spinning 42 42 42 42 45 213
(Each unit of 25,000 Spindles)
Weaving 46 46 46 46 46 230
(Each unit of 120 Shuttleless Loom)
Dyeing and finishing 49 49 49 49 53 249
(Each unit of 10 million metres per annum)
RMG 153 153 153 153 153 765
(Each unit of 0.6 million pieces per annum)
14.6.15 Employment Generation in the Textile Sub sector: In the textile sub-sector it is
estimated that a total of 1,779,560 persons will be employed during the Plan period, of which
8,40,760 will be in the public sector and 938,800 will be in the private sector. In the private
sector 130,800 persons will be employed in spinning, 46,000 in weaving and knitting,
373,500 in dyeing and finishing, 382,500 in RMG, 6,000 in specialised textiles and 6,000 in
miscellaneous industries. In the public sector 1,500 persons in BTMC, 3,260 in Department
of Textiles, 670,000 in sericulture and 166,000 in handloom will be employed.
14.6.16 Jute Industries: Jute is a vital sector of the economy from agricultural, industrial
and commercial points of view. About 5 million bales of raw jute is produced in the country
every year of which about 1.5 to 2 million bales are exported, 3 million bales are consumed
by local mills and about 0.5 million bales are used for domestic consumption and kept as
carry over stocks. About 50 per cent of world import demand for jute goods (approx. 0.90
million metric ton) annually is met by Bangladesh. Jute is the third biggest export earner
(Tk.15,960 million annually) of the country.
14.6.17 As this sector provides large scale employment and earns substantial foreign
exchange, the government continued to provide hidden subsidies and financial assistance to
jute mills from the very beginning. Consequently the sector's debts to the banks stood at about
Tk. 40 billion in 1993 when the government launched Jute Sector Reforms Programme
(JSRP) with financial and technical assistance from IDA. The Programme envisaged to create
 316

a viable, essentially privately owned jute industry to be operated on a commercial basis.

Major thrust of the JSRP was privatisation of the public jute mills within 30th June, 1996.
The Privatisation Board tendered and re-tendered a number of jute mills for privatisation
during the last few years but not much satisfactory response was received from the market.
14.6.18 The performance of the private sector mills till the end of 1996/97 has been
disappointing and frustrating. In spite of receiving debt write-off, restructuring facility and
loss financing support from the government under JSRP, the private sector could not utilise
its existing installed capacity of 10,000 looms. As a matter of fact, the private sector utilised
less than 50 per cent of their capacity and closed down 8 mills.
14.6.19 The JSRP was a difficult and complex programme. The government made sincere
efforts to carry it forward. The government spent more than double the amount of the IDA
Credit Line (Tk. 10,000 m.) in this project. The government issued bonds worth Tk. 18,060
million to pay off the debts of BJC and 4 closed jute mills and provided loss financing
support to the running jute mills. It also paid Tk. 3,360 million to meet the separation cost of
the workforce of the public jute mills. But the purpose for which the programme was
undertaken has not been achieved. The commercial viability of the jute industry has not been
established. Privatisation was recognised as an effective means to strengthen the role of the
private sector in trade and industry with a view to accelerating economic development and
augmenting resources for the same. Accordingly, the government adopted a comprehensive
privatisation policy and laid down detailed procedure to facilitate the process of privatisation.
In order to create a viable, essentially privately owned jute industry to be operated on a
commercial basis in a reformed policy environment, the government has been pursuing the
jute sub-sector restructuring programme since July, 1993. The government has already
decided to reduce its ownership of jute sector investment from 64 per cent to 20 per cent.
Some 23 jute mills, out of 31 in the public sector, are enlisted for privatisation. The
Privatisation Board has almost completed evaluation of the asset value of these mills with a
view to unloading them to the private sector with utmost speed.
14.6.20 The loss of production of the jute industry to the extent of 15 per cent to 20 per cent
is attributable to erratic power supply. It is expected that the power need of the jute industry
will be met by the later part of the Fifth Plan. The future of jute and jute industry lie in their
diversified uses and aggressive market promotion. For this, there is an immediate need for
strengthening the R&D and institutional capacities of the Ministry of Jute and its various
organs.
14.6.21 In order to achieve the objectives of the Fifth Plan, the following strategies will be
pursued for the jute manufacturing sub-sector during the Plan period :
a. Improvement in Productivity and Capacity Utilisation: Improvement in productivity
and capacity utilisation will be done through rehabilitation of the existing jute mills
through BMR programmes, enforcement of industrial discipline and exploring
possibility of participation of labour through profit-sharing and participation in
management, adequate and timely supply of raw-materials and spare parts, privatisation
of maximum public sector jute mills and rationalisation of man power therein,
improvement in managerial efficiency through skill development training and
improvement in the quality of conventional jute products and reduction in the cost of
production through improvement in per loom production and reduction in raw jute cost
by increasing per acre productivity.
 317

b. Diversification of End Uses of Jute: Diversification of end uses of jute through

production of pulp and paper, geo-textiles, absorbents, hard-boards, handicrafts, mats,
decorative wall covering, shopping bags, carpets, blankets etc. will be pursued through
undertaking appropriate development programmes. Development and extension of
appropriate varieties of jute, kenaf and rami fibre to enable round-the-year supply of
these items for establishment and smooth operation of pulp and paper industry will be
undertaken. Improvement in the quality of jute products will continue to remain a
central strategy for attracting higher prices for Bangladeshi jute goods.
c. Market Promotion: Attempts will be made to promote and develop market for jute
goods through identifying the constraints of the existing marketing system of jute goods
and taking appropriate measures to overcome such constraints, assessing the market
demand both at home and abroad, conducting studies on a continuous basis on the jute
goods demand with a view to overcoming the demand and supply gap, formulating
appropriate pricing policies, opening required number of sales centres in Bangladesh
missions abroad, organising display of jute goods in major importing countries,
participation in the international trade fairs and contacting foreign buyers to gear up
exports, making institutional arrangement to monitor export prices of competing goods
to prevent dumping by the competing countries and formulating appropriate export and
import policies. Commercial Sections of Bangladesh Missions abroad will be revamped
for this purpose.
d. Financial and Other Policy Incentives: Financial and other policy incentives strategy
includes rationalisation of monetary and fiscal incentives, viz. reducing interest rate
from existing 15 per cent to about 10 per cent or less, exemption of excise duty on
electricity, reduction in the prices of oil and gas for generation of electricity for jute
mills to the level fixed for Bangladesh Power Development Board (BPDB) and
exemption of advance income tax in case of jute yarn and twine, adopting suitable and
appropriate mechanism to maintain parity with dollar value among the competing
countries to match the external competition for our jute and jute goods.
e. Strengthening of Institutional Capability and R&D: Strengthening of institutional
capability and R&D involves evaluation of the existing R&D institutions for clear
identification of technological gaps. In order to bridge the gaps, establishment of a new
“Jute Industry Development Centre” under Bangladesh Jute Research Institute (BJRI)
will be pursued with necessary technical assistance to undertake research activities to
develop technologies for improvement of quality and yield of traditional jute fibres as
well as for diversification of jute products. To evolve new high yielding varieties of
jute seeds to increase per acre yield which, in turn, will lead to substantial reduction in
the cost of production to make jute and jute goods competitive in the international
market will be at the top of R&D priority. Research and Development of rami fibre by
sharing experience with China will be promoted.
f. International Jute Organisation (IJO): For undertaking research and development in
the areas of jute, jute goods and related products as well as accessing markets, necessary
assistance will be sought from the International Jute Organisation (IJO).
g. Improvement of Environment and Natural Resources: Retting of jute is perceived to
contribute to water pollution where there is insufficient availability of water. In such
areas, canals and small ponds will be dug for retting of jute. If necessary, promotional
measures will be undertaken to motivate the jute growers by the local government
bodies for retting their jute in a proper way to reduce/eliminate adverse environmental
 318

effects. New techniques for retting of jute will be explored. The government policy on
banning the production of polythene bags as substitutes for jute bags will be enforced
and towards this end, polythene bag factories may be converted into jute bag
manufacturing factories. Setting up of more polythene industries in the country will not
be allowed. To reduce the acreage under jute and at the same time maintain a higher
volume of supply for its diversified end uses, including use of green jute for pulp
making and thus to ease the burden on insufficient forest resources of the country,
efforts will be made to produce jute throughout the year through necessary
augmentation of soil nutrition.
h. Social Safety-net Programme: Programmes will be undertaken to provide
retrenchment benefits and retraining for self employment to support affected workers.
i. Planning and Implementation of Development Programmes Through Local Level
Institutions: With the introduction of proposed institutional structure at Zilla, Thana
and Union levels, small and cottage industries planning activities could be included in
the functions of such local government bodies. During the Fifth Plan, BSCIC will
provide necessary services for industrial development including industry based on jute
and will maintain effective liaison with the development programmes of such
institutions. The process of interaction between BSCIC and the local level institutions
will ensure effective local level participation in such industrial planning and
development. Moreover, the NGOs who have emerged as a new force for development
in the rural areas are expected to play an effective role in the skill development of the
poor and disadvantaged groups through motivation and training and help them in
producing varieties of industrial goods including jute goods.
j. Employment Generation and Poverty Alleviation: The jute and jute manufacturing
sub-sector has immense potential for employment generation and poverty alleviation in
Bangladesh. Jute production, jute industry and trade and the related services employ
about 10 per cent of our labour force and jute industry is the second largest industrial
employer after textiles. The new and diversified use of jute plants and fibres for pulp
and paper, textile yarn blended with cotton and wool, geotextiles, jute reinforced plastic
materials, luggages, shopping bags, handicrafts, accessories, etc. will open new horizon
for employment opportunities. The women will find job opportunities in the rural areas
by utilising finer jute yarn in cottage industries. In the agricultural sector, increased
yield per unit area will bring down the production cost of jute which will help growers
to alleviate their economic hardship by raising their income.
14.6.22 Chemical Industry: In the Fifth Plan, the objectives of the chemical sub-sector will
be as follows:
a. to increase the contribution of chemical industries sub-sector (fertiliser, paper,
newsprint, etc.) to GDP;
b. to meet the needs of the country in respect of fertiliser, paper, news print, etc.;
c. to identify and exploit the comparative advantages of the economy in different sub-
sectors and to direct public sector investment in those desirable sectors where private
investment is still shy;
d. to identify and give emphasis on thrust sectors;
e. to develop human resources for efficient management and operation of enterprises;
f. to develop a sound technological base in the country; and
g. to provide facilities and services to attract private investment, including foreign direct
investment.
 319

14.6.23 In order to achieve the objectives and targets set for the chemical industries sub-
sector, the following strategies will be pursued for accelerating the contributions of this sub-
sector towards a self sustained economy:
a. Public sector dominance in this sub-sector will be gradually reduced and the private
sector will be encouraged to set up new industries either alone or jointly with the
public sector. All the sub-sectors under chemical sector are open to the private sector.
But the private sector has not come forward to take up the challenge except
participating in a joint venture with a foreign company (KAFCO). The investment
size, technological complexities and the mandatory price structure may be attributed
as main reasons standing in the way of private sector participation in the fertiliser
sector, particularly in urea manufacturing. A private company has recently come to set
up a joint venture SSP fertiliser with BCIC. There are great prospects for participation
by private sector in all areas of chemical sector. Necessary technical support such as
project analysis, project preparation, demand and supply analysis, sourcing and
pricing of machinery, market information, etc. will be provided to the private sector in
setting up joint ventures and/or new enterprises in the private sector.
b. Excess manpower in the corporations/enterprises will be rationalised to economise
revenue expenditure. At the same time necessary power/authority will be delegated to
the corporations/enterprises and they will be made accountable for failure and
rewarded for success.
c. One of the major problems and impediments to the growth of this sub-sector is the
dearth of finance, technical know-how and skilled manpower. In this context, besides
local currency support through ADP, the following source of financing will be
vigorously explored:
i. alternate sources of financing for projects from the capital market will be
explored. BCIC will be given freedom in exploring and arranging alternate sources
of finance outside the country;
ii. more emphasis will be given on building projects on BOT/BOO/BOOT model; the
public sector will identify viable projects, process them for approval and
implementation; after implementation they will operate the projects for some time
and subsequently transfer them to private entrepreneurs; and
iii. local currency financing, inter-alia, public subscriptions of shares through the
capital market will be explored; joint venture companies, with participation of
BCIC, will be encouraged to issue shares/debentures.
d. In case of sick industries, viability where possible will be restored inter-alia, through
screening out inefficient manpower and replacing them by efficient, dependable,
sincere and committed manpower. Necessary training, both local and foreign, will be
imparted for building up efficient management for restoring their viability. Technical
support in the form of studies, equipment and machinery will be provided to put the
industries/enterprises on a viable footing. All stakeholders - owners, management,
labour and the concerned lending institution will be asked to bear out rehabilitation.

14.6.24 Projected production for some major chemical products during the Fifth Plan are as
follows:

a. Urea Fertiliser: Bangladesh is a major producer of Urea Fertiliser in the region having
6(six) factories with annual installed capacity of 2,500 thousand metric tons of urea. In
1995/96 BCIC produced 2,134 thousand metric tons of urea. According to the projection
made by BCIC the actual demand of urea fertiliser during 1995/96 was approximately
 320

2,300 thousand metric tons. The projected urea production was 2,110 thousand metric tons.
The demand of urea is rising by 10 per cent per annum. In 1996/97 the government has taken
action to import 200 thousand metric tons of urea to meet the local demand. A recent study
indicated that future demand of urea will further increase as shown in the Table 14.10 .
Table 14.10
Demand Projection of Urea Fertiliser (1997-2002)
(in million metric ton)
Year Urea Demand Local Production Net Import Requirement
1996/97 Benchmark 2.40 2.05 0.35
1997/98 2.45 2.10 0.35
1998/99 2.67 2.10 0.57
1999/00 2.92 2.10 0.82
2000/01 3.19 2.49 0.70
2001/02 3.49 2.55 0.94

This leaves room for setting up more urea fertiliser factories in the country. For this
purpose NGFF will be replaced by Shahjalal Fertiliser Co. Ltd. increasing annual
production capacity from 106,000 metric tons to 330,000 metric tons and another new
urea fertiliser factory will be set up in northern/southern part of the country by the year
1999/2000. There is a plan to increase capacity of urea production in JFCL and
ammonia production in CUFL by 1999/2000 to 2000/2001.
b. TSP: The present annual demand of TSP in the country is about 700 thousand metric
tons. TSP Complex produces about 150 thousand metric tons of TSP/SSP (TSP-
50,000 metric tons and SSP 100,000 metric tons). The rest of the demand is met
through import. In order to meet a big chunk of the demand the annual production
capacity of TSP Complex will be increased to 275 thousand metric tons (TSP-75,000
metric tons and SSP-200 thousand metric tons) through balancing and full capacity
utilisation. There is a plan for setting up a three hundred thousand metric ton SSP
Factory by a foreign sponsor in collaboration with BCIC. There is also a plan for
setting up a DAP factory with a capacity of 360 thousand metric tons in the country.
c. Paper: The present demand for writing and printing paper is 80,000 metric tons. The
demand for various grades of paper has been increasing. In 1995/96 BCIC produced
41,889 metric tons of paper and the rest of the demand was met from the supplies of
private sector and import. The projected production of paper in 1996/97 is 44,000
metric tons. The growth rate of demand for different grades of paper has been
assumed to be 6 per cent to 10 per cent. In order to cater to the future demand the
present capacity of producing paper and pulp in public sector including joint ventures
will be increased through BMRE of the existing mills and setting up of new mills
preferably under joint venture/private sector.
d. Newsprint: The demand for newsprint has increased rapidly during the last few years
because of its use as writing paper and the government policy of cherishing the
freedom of the press. The present demand for newsprint is about 60,000 metric tons
per annum. The lone newsprint producer in the country, Khulna Newsprint Mill
(KNM) having installed capacity of 48,000 metric tons per annum is no longer in a
position to meet the domestic demand. In 1994/95 and 1995/96 KNM produced
43,061 and 40,479 metric tons newsprint respectively. A large quantity of newsprint is
being imported into the country to meet the short-fall. To meet the demand for
newsprint BCIC will undertake BMRE of KNM in the Fifth Plan period.
 321

e. Cement: The present annual demand for cement in the country is 0.28 million metric
tons. In 1994/95 and 1995/96 BCIC produced 0.147 million and 0.153 million metric
tons cement respectively. The only integrated plant Chhatak Cement Factory having a
capacity of 0.233 million metric tons is under BCIC. There are about 6-7 cement mills
in the private sector and based on imported clinker.
14.6.25 Under chemical industries sub-sector the major programmes/projects will include
inter alia Shahjalal Fertiliser Factory, capacity increase of urea in Jamuna Fertiliser Factory,
capacity increase of amonia in Chittagong Fertiliser Factory, Di-Amonium Phosphate Plant
(DAP) at CUFL, setting up of a paper machine in SPPM, BMRE of Karnaphully Paper Mills,
BMR of Khulna Newsprint Mill (KNM) and one Urea Fertiliser Factory in the northern or
the southern zone. Projected production for different chemical products is summarised in the
Table 14.11.
Table 14.11
Projected Production for Chemical Industries
(in metric ton)
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002
Urea 2,049,810 2,150,000 2,150,000 2,150,000 2,330,000 2,363,000
TSP/SSP/DAP 104,181 150,000 176,000 209,000 220,000 220,000
Newsprint 23,903 45,000 45,000 45,000 45,000 45,000
Paper 23,239 45,000 45,000 53,400 72,600 79,200
Cement 107,300 150,000 186,000 221,000 221,000 233,000
Source : BCIC

14.6.26 Sugar Industry: Objectives of the sub-sector during the Fifth Plan is to increase
the contribution of sugar sector to GDP, create new job opportunities specially in rural areas
and reduce sugar import by increasing the domestic sugar production.
14.6.27 In the current industrial policy additional investment in sugar industry by the public
sector has been discouraged and the private sector has been given preference with various
incentives. But so far, response from the private sector in sugar industry has been
disappointing. So the public sector will continue to play some role. BMRE programmes of
existing sugar mills will continue to be implemented for their progressive unloading to the
private sector.
14.6.28 Dry and low rain-fall belt in the north, north-west and western regions of Bangladesh
comprising the greater districts of Rajshahi, Dinajpur, Bogra, Rangpur, Pabna, Kushtia,
Jessore and Faridpur are considered as the best sugarcane growing areas of the country. In
fact, almost all of the existing sugar mills are located in these regions where sugarcane has
emerged as the main cash crop over the years. There is ample scope for capacity expansion of
some existing sugar mills as well as establishment of new sugar mills in different locations of
the cane growing regions.
14.6.29 Demand for sugar in the country is estimated to be about 371 thousand tons in
1996/97 for a population of 123.8 million based on per capita sugar consumption of 3.0 kg. a
year. Assuming the consumption rate remains constant, demand for sugar will increase to
about 400 thousand tons in 2001/2002 for an estimated population of 132.5 million. If per
capita sugar consumption increases due to growing urbanisation and change of food habit,
total demand of sugar will increase further. Against this demand, total sugar production
capacity of the 15 operating sugar mills is now 215 thousand tons per annum based on total
 322

cane crushing capacity of 21,044 tons per day, 120 effective crushing days and 8.5 per cent
sugar recovery. However, depending on the availability and quality of sugarcane, actual sugar
production may vary from 200 thousand tons to 225 thousand tons per annum. Thus, at
present there is an annual deficit of about 150 thousand tons of sugar which is met through
import at the cost of Tk.2,500 million in hard earned foreign currency. The deficit will
increase nearly to 200 thousand tons in 2001/2002, unless additional sugar production
capacity is created at suitable locations of cane growing regions of the country.
14.6.30 Estimated demand, domestic production and import of sugar up to 2002 are given
in the Table 14.12.
Table 14.12
Estimated Demand for Production and Import of Sugar
Year Population Demand @ 3.0 kg. Local Production Deficit/ Import
(million) (million ton) (million ton) (million ton)
1996/97 123.80 0.37 0.14 0.23
2001/2002 132.50 0.40 0.200-0.23 0.17-0.20

14.7 Obstacles to Growth of the Sugar Industry in Bangladesh

14.7.1 With the exception of a few, most of the sugar mills in Bangladesh do not have cane
plantations of their own and they have to depend on a large number of small farmers in their
respective mill zones for sugarcane supply. But owing to several factors including fragmented
and small cane holdings, high initial input cost, year round waiting time for cane, incidence of
pest and disease, lack of high yielding variety of cane, high risk involvement etc., per acre
yield of sugarcane in Bangladesh (which is 20-21 tons/acres) is relatively low. As a result,
sugarcane faces hard competition from other crops, especially paddy which has a much
shorter growing period. Besides, sugar content in the cane is also low mainly because of
climatic factors. This stands in the way of increasing the sugar recovery which at present
varies from 8.0 per cent to 8.5 per cent.
14.7.2 Sugar industry in Bangladesh was originally started by the private entrepreneurs
during the mid-thirties. But since then no further investment by the private sector has been
made in the sugar industry. Investment in sugar industry is now open to both the public and
the private sectors. In the new industrial policy, the role of the public sector has been shrunk
and new investment by the public sector in sugar industry has been discouraged in order to
encourage the private sector investors. Though private investment in different industrial
sectors has increased significantly in recent years, no private entrepreneur has so far come
forward to set up new sugar mills in the country. As it is neither desirable nor advisable to
withhold investments from the sugar subsector altogether, an appropriate policy package,
along with adequate incentive measures, will have to be worked out to make the sugar
subsector attractive for private investments.
14.7.3 Total cane crushing capacity of the existing 15 sugar mills of the country is 21,044
metric tons cane per day (TCD) with which 200-225 thousand tons of sugar can be produced
per annum. Based on present performance and future prospect of sugarcane production in
their respective mill zones, cane crushing capacity of 8 (eight) of the existing sugar mills
namely, Carew, Zeal Bangla, North Bengal, Natore, Faridpur, Kushtia, Mobarakganj and
Panchagarh Sugar Mills, can be increased by 1000-1250 TCD each during the Fifth Plan. In
addition to the expansion programme, 3 (three) new Sugar Mills of 2000 TCD each may be
set up at Shibganj of Chapai Nawabganj district, Serajganj of Serajganj district and
Jhikargacha of Jhenidah district. The private sector will be encouraged to establish these new
 323

mills. This will increase the cane crushing capacity by another 6,000 TCD. On completion of
the development programme proposed above, total cane crushing capacity of the country will
increase from 21,044 TCD in 1996/97 to 35,294 TCD and sugar production capacity will
increase from 215 thousand tons to nearly 400 thousand tons per annum by 2001/2002. This
will help reduce sugar import. In addition, the proposed three new sugar mills will create
direct employment opportunity for 3,225 persons (1,075 persons in each) and will also bring
about benefits to a large number of people including marginal farmers in areas surrounding
the mills.
14.7.4 Besides the sugar mills, there is a bright prospect for setting up an export oriented
molasses-based distillery having a capacity of 5-6 million litres per annum. This project may
be set up as a joint venture with foreign entrepreneurs who will ensure export of the same.
This will increase the value-addition of molasses which is obtained as a by-product from the
sugar mills and will also create job opportunity for about 200 persons.
14.7.5 Steel and Engineering: The engineering industries produce investment goods which
determine the technological capability and consequently the production level and efficiency
of an economy. The engineering industries are also suppliers of important consumer durables.
This is particularly so in the electrical and transport equipment industries. In the developed
economies, the growth of the subsector generally exceeds that of the manufacturing as a
whole. In the developing economies, on the other hand, the sub-sector lags behind.
14.7.6 Bangladesh has a 'mini' steel plant at Chittagong which has been out of operation for
quite sometime. Its engineering base is very weak despite the fact that the country has a
machine tools factory, a diesel engine manufacturing plant as well as a plant for
manufacturing general electrical equipment. The performance of the sector has not been
satisfactory for various reasons though this is the basic sub-sector for industrial development.
During the first four years of the Fourth Plan (1990-95), the production volume of this sub-
sector showed downward trend because of the low capacity utilisation, low productivity, lack
of investment fund in the public sector, major constraints in the private sector consisting of
demand constraints, inefficient operation of existing units both in the private and public
sectors, dearth of skilled and trained personnel, inadequate R&D, inadequate infrastructures,
inconsistent tariff policies etc.
14.7.7 Under the current industrial policy, the growth of this sub-sector has come to depend
on private sector initiative. In pursuance of the government's privatisation policies, BSEC is
endeavouring to increase the efficiency of the enterprises under its control. Proposals for
financial re-structuring of some of the enterprises are under consideration by the government.
In the meantime BSEC has already issued public shares to the extent of 49 per cent in four of
its enterprises. Again, the remaining 51 per cent shares (held by the government) of the two
enterprises out of the above mentioned four enterprises have been earmarked for sale to the
public. Dhaka Steel Works Ltd. along with two other enterprises (i.e. Quality Iron & Prantik
Traders Ltd.) is under the process of handing over to one of the previous Bangladeshi
shareholders. Besides, seven more enterprises namely, Bangladesh Machine Tools Factory
(BMTF), Bangladesh Diesel Plant, Bangladesh Blade Factory, Bangladesh Can Co. Ltd.
General Electric Mfg. Co. Ltd., Mehar Industries (B) Ltd. and Chittagong Steel Mills Ltd. are
earmarked for outright sale. However, the disinvestment of SOEs is a continuous process and
to be implemented in phases. Keeping in view the importance and prospect of steel,
engineering, ship-building, electrical will be and electronic products, the objectives for the
Fifth Plan of the steel and engineering sub-sector will be to:
 324

a. support the agricultural sector with the ultimate objective of transforming the age-old
agricultural practice into a semi-mechanised one;
b. supply capital goods and spares to various sectors of the economy, e.g., agriculture,
power, gas, natural resources, transport, communication, construction as well as
manufacturing sector itself;
c. substantially reduce dependence on import of machinery and essential spares and
components for jute, textile, sugar mills and electronic industries, thereby improving
the balance of payments of the country;
d. strengthen and diversify the existing export structure through production and export of
engineering goods;
e. maximise capacity utilisation of the existing capital intensive industries through
necessary balancing, modernisation, replacement and expansion;
f. provide linkage, through sub-contracting, to light engineering industries throughout
the country and thus create gainful employment opportunities with special emphasis
on rural employment through promotion and development of industries in rural areas;
g. create employment opportunities through development of skills in major sectors like
steel, engineering, ship-building and electronics;
h. accelerate transfer of appropriate technology through establishment of project design
and engineering company and thereby reducing dependence on expatriate
consultants/experts with regard to undertaking feasibility study, project design,
engineering services, etc.; and
i. accelerate research and development activities for consolidating the industrial base as
well as for the development of indigenous technology.
14.7.8 The general development strategies for the steel and engineering sub-sector as a whole
are outlined as follows:
a. consolidation and effective utilisation of existing capacities will be achieved through
planned capacity expansion, product diversification, BMREs and introduction of
additional working shifts;
b. with a view to improving the balance of payments position, reducing dependence on
imports and promoting self reliance, necessary programmes will be undertaken to
diversify the industrial base and to set up import substitute industries for the
progressive manufacture of agricultural equipment, jute textile, sugar, electrical
machinery and equipment as well as their spares and accessories;
c. measures will be taken to develop viable products which are high technology based
and require venture capital for which private investment is not forth coming;
d. a significant feature of the strategy for industrial development in general and for steel
and engineering industries in particular will be to set up projects under joint-venture
with the reputed local/foreign manufacturer mainly to create strong export base and
thereby to improve country’s balance of payments position;
e. new capacity will be created in the areas of steel making, electrical cables and
conductors and basic electronic components manufacturing; and
f. viability of sick projects like Bangladesh Machine Tools Factory, Bangladesh Diesel
Plant and other projects will be restored through improvement of management
capability of the enterprises and also through phasing out of inefficient manpower for
progressive transfer to the private sector.
 325

14.8 Development Programmes

14.8.1 The government has undertaken a programme for restructuring of BSEC to make it
commercially viable. To make Chittagong Steel Mills Ltd. (CSM) profitable, a restructuring
proposal is under consideration of the government. All out efforts will be made to run CSM
on commercial and profitable basis.
14.8.2 The other important projects which will be implemented during the Fifth Plan period
are: a plant for production of 1,000 M.T. per annum of cross-linked polyethylene (XLPE)
cables, a light engineering complex at a suitable location in the north-west region of the
country, progressive manufacturing of buses, trucks and cars at Progati Industries Ltd., setting
up of a plant for manufacturing of black plain steel sheet, an alloy and special steel
manufacturing plant and a new plant to manufacture cars. At the same time the uneconomic
enterprises under the corporation will be sold and some enterprises will be disinvested
partially.
14.8.3 Projected Production of Major Engineering Products: Steel & Engineering
Corporation mainly produces products like steel ingot, billet, corrugated galvanised iron
(CGI) sheet, mild steel plate, GI/MS pipe, electric cables, fluorescent tube light, super-
enamelled copper wire, ceiling fan, diesel engine, water vessel, bus, truck, jeep and motor
cycle, etc. The projected production of major engineering products is given in Table 14.13.
Table 14.13
Major Products of BSEC (1996-2002)
Items Unit 1995/96 1996/97 1997/ 98 1998/ 99 1999/ 00 2000/ 01 2001/ 02
(Benchmark)
Steel Ingot M.T. 21898 60000 60000 60000 60000 65000 75000
Billet 110/85mm M.T. 15197 15380 25000 30000 35000 35000 40000
Billet 50/65mm M.T. 4624 10000 10000 10000 12000 12000 15000
C G I sheet M.T. 5439 25000 15000 15000 20000 20000 25000
M S Plate M.T. 3175 7500 7500 7500 7500 8000 10000
GI/MS Pipe M.T. 6134 8000 8000 9000 10000 10000 10000
Electric Cables M.T. 3172 3200 3000 3000 3600 3800 3850
FL. Tube Light Mil.No 0.95 0.95 0.97 0.97 0.98 0.98 1.00
SEC Wire M.T. 394 350 350 350 375 400 400
Ceiling Fan Nos. 28491 60000 60000 60000 65000 65000 70000
Diesel Engine Cyl. 604 2500 2500 3000 3500 4000 4000
Water Vessel M.T. 2319 6200 6200 65000 6500 7500 7500
Bus, Truck, Jeep etc. Nos. 1232 1200 1200 1225 1250 1300 1350
Motor Cycle etc. Nos. 6700 7000 7000 7500 8000 8000 8000

14.8.4 Small and Cottage Industries: Small and cottage industries occupy a unique
position in the economy of Bangladesh. Its contribution to poverty alleviation cannot be
underestimated. During the Fourth Plan, against the projection of 0.4 million employment
generation, 0.35 million job opportunities were created. The contribution of the sub-sector to
the GDP is about 5 per cent. The SCI sector now employs 5 million people directly and
indirectly which accounts for 82 per cent of the total industrial labour force. The agriculture
sector is not likely to provide the required employment opportunity in the long run. The
establishment of large scale industry to offer large scale employment is not considered to be a
feasible option at the moment because of resource constraint. It is, therefore, imperative to
develop means outside the agricultural sector for creation of employment opportunities. The
SCI is an area where large scale employment opportunities exist. Compared to large and
medium industries, the SCI has some inherent advantages; these are:
a. lower capital investment;
 326

b. more jobs per unit of invested capital;

c. lower capital-output ratio;
d. lower infrastructure requirement;
e. shorter start-up time;
f. creation of micro entrepreneurial talent;
g. lower consumption of energy;
h. less environmental risk; and
i. stimulation of personal savings and promotion of agro-industrial linkages.
14.8.5 Keeping in view the industrial and socio-economic policies of the government, the
major objectives of SCI during the Fifth Plan are :
a. to reduce unemployment through generation of new employment opportunities,
especially for the rural people;
b. to increase the income of poor people by self-employment through indigenous
resources and technology;
c. to generate employment through entrepreneurship development;
d. to meet the local demand for essential commodities;
e. to discourage influx of the rural people to the urban areas through rural
industrialisation;
f. to encourage geographical dispersal of industries and ensure balanced regional
development;
g. to promote sub-contracting linkages among the various types of large, medium and
small scale industries;
h. to encourage production of export-oriented and import-substitute products through
promotion of small agro-based industries; and
i. to increase the contribution of SCI sector to GDP.
14.8.6 In order to achieve these objectives of the SCI, the following strategies will be
followed :
a. to assist the SCI entrepreneurs through rendering pre and post investment promotion
and extension services;
b. to develop and improve efficiency of SCI entrepreneurs including women
entrepreneurs through management training programmes;
c. to obtain optimum utilisation of existing capacity through measures for balancing,
modernisation, rehabilitation and expansion (BMRE) of existing industries;
d. to assist and promote local industries with comparative advantage through tariff
rationalisation and appropriate fiscal measures;
e. to encourage growth of linkage industries and subcontracting, agro-based and agro-
support industries, export oriented and import substitute industries, engineering,
electrical and electronics industries;
f. to extend credit facilities to the SCI entrepreneurs;
g. to develop the quality of the SCI products;
h. to develop marketing facilities of the SCI products;
i. to strengthen co-ordination among the agriculture and others related sectors;
j. to diversify the industrial activities in the new potential areas;
k. to promote joint venture with local and foreign collaboration; and
l. to take appropriate measures for ensuring optimum utilisation of the facilities created
in the existing industrial estates; establishment of any new industrial estate, though
being generally discouraged, will only be allowed if justified by regional needs.
 327

14.8.7 In view of the objectives and strategies set forth the following projections have been
made for the SCI sector in the Fifth Plan:
a. to increase the SCI sector’s contribution to GDP from 5 per cent to 7.5 per cent; and
b. to create employment opportunities for 0.478 million people.
14.8.8 Programmes: In order to achieve the above objectives a comprehensive programme
for development of small and cottage industries has been proposed. This programme can be
classified into two types - public sector programme and private sector programme. An outlay
of Tk.1,089.89 million has been envisaged for the public sector, while Tk. 125,246.97 million
is earmarked for private sector investment. Of this, credit requirement has been estimated at
Tk.12,800 million including a foreign exchange component of Tk.6,144.4 million during the
Fifth Plan period for setting up small and cottage industries in the private sector.
a. Public Sector Programme: In the public sector a number of projects will be
implemented during the Plan period through investment of Tk.1,089.89 million. Out of
these investment projects, 12 are spill-over projects and the rest will be new projects.
Under technical assistance one project is a spill-over project. Public sector programme
aims at providing infrastructure facilities including common facilities, dyes and
chemicals, credit facilities, training to the entrepreneurs, extension services and
research, market promotion and also self employment facilities for the people. Besides,
some new projects such as development of salt industry in Khulna-Satkhira region,
Women Entrepreneurship Development (4th phase), Skill Development Centre at
Gopalgonj will be established during the Plan period. Bangladesh Small and Cottage
Industries Corporation (BSCIC) has been constantly monitoring the utilisation position
of developed industrial plots in the existing industrial estates. It also takes appropriate
measures to expedite allotment process whenever there is a genuine need. Construction
of any new industrial estate will be undertaken only in response to a clearly
demonstrated demand for it.
b. Private Sector Programme: In the private sector a programme of Tk.125,246.97
million is proposed for investment. The objective of the private sector programme is to
encourage establishment of small and cottage industries in various important areas.
These are: agricultural tools and equipment, affixation pumps, motors and other
equipment, fertiliser and insecticides, dyes and chemicals, leather and rubber products,
rural transport and transportation equipment, sports good and toys, food, fruits and
vegetables, preservation and processing of semi-intensive shrimp culture, fish, poultry
and cattle feed, cotton spinning, textiles, handloom, hosiery and silk products, machine
tools, electrical and electronics equipment and goods, spares and accessories,
intermediate products, dairy supplies and services etc. Also priority will be given to the
development of rural, cottage and handicrafts industries.
14.9 Benchmark Production and Terminal Year Projection for Major Manufactures
14.9.1 Benchmark production of major manufactures and projection of production for the
terminal year of the Fifth Plan are presented in Table 14.14.
 328

Table 14.14
Projected Production of Major Industrial Output During
Fifth Plan Period
Items Unit 1996/97 2001/2002
(Base Year) (Terminal Year)
Urea 000 M.T. 2,049.81 2,363.00
T.S.P/S.S.P 000 M.T. 104.18 220.00
Paper, Pulp and Newsprint 000 M.T. 70.00 124.20
Cement 000 M.T. 107.30 233.00
Yarn Production Million KG 113.00 522.00
Cotton Yarn Million KG 75.71 349.74
T.C.& Others Million KG 37.29 172.26
Fabrics Production Million Metre 1,163.00 3,651.00
Cotton Cloth Million Metre 779.21 2,446.17
T.C. & Others Million Metre 383.79 1,204.83
Fabrics for Garments Million Metre 210.00 1,614.00
Cotton Fabrics Million Metre 140.70 1,081.38
T.C. & Others Million Metre 69.30 538.62
Jute Textiles 000 M.T. 435.00 500.00
Hessian 000 M.T. 139.20 160.00
Sacking 000 M.T. 252.30 290.00
C.B.C. 000 M.T. 43.50 50.00
Sugar Million M.T. 0.14 0.23
Spirit 000 Litre 2,500.00 4,000.00
Bus, Truck & Car Nos. 1200 1350
Motor Cycle Nos. 7000 8000
Diesel Engine Nos. 750 4000
Steel Ingot 000 M.T. 21.90 75.00

14.10 Manufacturing Sector Outlay During Fifth Plan

14.10.1 The Fifth Plan provides an outlay of Tk.310,569.86 million for investment in the
manufacturing sector. About 96 per cent of this outlay (i.e.Tk.298,776.16 million) is expected
to be in the private sector and the residual 4 per cent is earmarked for the public sector.
Outlay for the public sector will be utilised mainly for promotional and support services for
the private sector, providing the equity share in case of joint ventures between the public and
private sectors as well as in establishing industrial undertakings in those areas where the
private sector will not be forth coming. During the execution of the Plan if the private sectors
response is inadequate investment in the public sector may have to be made in critical areas
such as chemical fertiliser, chemicals etc.
14.10.2 The tables 14.15 and 14.16 show agency wise tentative public sector investment
outlay and sub-sector wise private sector investment outlay respectively during the Fifth Plan
period.
 329

Table 14.15
Public Sector Investment Outlay for Fifth Plan
(at 1996/97 prices)
(in million Taka)
Agency/sub-sector Spill-over New Projects Total Investment
projects
A. Investment Amount Amount Amount %
Bangladesh Chemical Ind. Corpn. 1,040.00 3,883.37 4,923.37 41.75
Bangladesh Steel & Engg. Ind. Corpn. 150.00 212.00 362.00 3.07
Patent, Design & Trademark - 4.00 4.00 0.03
National Productivity Organisation (NPO) - 6.70 6.70 0.06
Bangladesh Sugar & Food Ind. Corpn. - 297.00 297.00 2.52
BEPZA 500.00 560.48 1,060.48 8.99
BFIDC - 6.26 6.26 0.05
Bangladesh Small & Cottage Ind. Corp. 1,000.00 89.89 1,089.89 9.24
BITAC - 31.79 31.79 0.27
BFDC (Bangladesh Film Dev. Corpn.) - 6.26 6.26 0.05
BIM 10.00 4.85 14.85 0.13
Department of Printing & Stationery 20.00 15.67 35.67 0.30
BJMC 30.00 121.20 151.20 1.28
Department of Jute 150.00 31.30 181.30 1.54
Bangladesh Jute Research Institute - 40.58 40.58 0.34
BTMC 150.00 138.76 288.76 2.45
BHB (Bangladesh Handloom Board) 500.00 34.85 534.85 4.54
Bangladesh Sericulture Board 27.00 58.10 85.10 0.72
Department of Textiles 1,060.00 255.00 1315.00 11.15
Sub-total (A) : 4,637.00 5,798.06 10,435.06 88.48
B. Other Outlay: 115.80 1,242.84 1358.64 11.52
Total (A+B) 4,752.80 7,040.90 11,793.70 100

Table 14.16
Private Sector Investment Outlay During Fifth Plan Period
(at 1996/97 prices)
(in million Taka)
Sl. Sub-sector/Group Outlay
No. Large & Med. Small Cottage Total
Allocation % Allocation % Allocation % Allocation %
1. Food & Allied Industies. 11,544.07 6.65 16,461.44 14.12 1,274.55 14.71 29,280.06 9.80
2. Textile Products. 51,199.23 29.50 40,302.55 34.57 2,463.32 28.43 93,965.10 31.45
3. Jute Products and Allied Industries. 1,903.11 1.10 641.20 0.55 84.92 0.98 2,629.23 0.88
4. Forest Products and other Agro-based 3,804.97 2.19 2,867.93 2.46 1,274.55 14.71 7,947.45 2.66
Industries.
5. Paper, Board, Printing & Publishing 7,673.89 4.42 4,196.97 3.60 169.82 1.96 12,040.68 4.03
and Paper Converting & Packaging.
6. Tannery, Leather and Rubber Products 9,502.85 5.53 3,427.52 2.94 424.56 4.90 13,444.93 4.50
7. Chemical, Pharmaceutical & Allied 40,332.93 23.24 13,162.16 11.29 254.74 2.94 53,749.83 17.99
Industries.
8. Glass, Ceramic & other Non-metallic 5,129.52 2.96 1,014.27 0.87 339.65 3.92 6,483.44 2.17
Mineral Products.
9. Engineering, Electrical & Electronics 14,403.36 8.30 15,890.19 13.63 2,123.67 24.51 32,417.22 10.85
Industries.
10. Service Industries (Warehousing, 15,354.75 8.85 11,564.98 9.92 - - 26,919.73 9.01
Transportation, Construction, etc.)
11. Trade & Industries Promotion: 209.14 0.12 - - - - 209.14 0.07
12. Misc. Industries 12,381.37 7.14 7,053.24 6.05 254.74 2.94 19,689.35 6.59
Total 173,529.19 100 116,582.45 100 8,664.52 100 298,776.16 100

14.11 Sub-sectoral Investment Outlay

14.11.1 Projected Investment Outlay for the Private Sector Textile Industry: The
estimated investment requirement for creation of new capacity in spinning, weaving, dyeing
 330

and finishing, export-oriented RMG sub-sector and other textile industry is estimated at
Tk.93,965.10 million and shown in the Table 14.17.

Table 14.17
Projected Investment in Private Sector Textile Industry During Fifth Plan Period
(in million Taka)
Textile Sub-sector 1997/98 1998/99 1999/2000 2000/2001 2001/2002 1997-02
A. New Capacity Creation
Spinning 9,105.55 9,195.25 9,305.10 9,129.80 8,913.57 45,649.27
Weaving 5,625.10 5,205.35 4,923.20 4,712.20 4,410.52 24,876.37
Dyeing & Finishing 2,712.85 2,203.15 2,512.85 2,610.15 3,056.03 13,695.03
RMG 776.33 785.25 809.25 710.40 623.00 3,704.23
Others * 717.35 718.55 683.85 732.10 588.35 3,440.20
Total (A) 18,937.18 18,707.55 18,234.25 17,894.65 17,591.47 91,365.10
B. BMRE
10 Textile Mills 200.00 150.00 - - - 350.00
Specialised Textiles 350.00 325.00 325.00 325.00 325.00 1,650.00
Total (B) : 550.00 475.00 325.00 325.00 325.00 2,000.00
C. Handloom & Sericulture
Handloom 120.00 120.00 120.00 120.00 120.00 600.00
Total (C) : 120.00 120.00 120.00 120.00 120.00 600.00
Total (A+B+C) 19,607.18 19,302.55 18,679.25 18,339.65 18,036.47 93,965.10

* New capacity creation in other textile industry.

14.11.2 Investment Outlay in Public Sector Textile: The present policy of the government
is to privatise public sector textile mills in phases. In pursuance of this policy, 10 textile mills
under BTMC were laid off. Among these laid off mills, 7 were sold to private entrepreneurs
and 6 of these were handed over to them. The remaining 3 laid off mills are in the process of
sale through tenders. Another 11 textile mills from the remaining 30 mills and one
engineering workshop under BTMC will be privatised immediately. Until all the mills are
privatised BTMC will operate the profitable mills. In view of this, new spindles are being
added to 10 BTMC mills under BMRE projects. Another 4 mills will be brought under
BMRE programme during the Fifth Five Year Plan period. Besides, Ministry of Textiles
(MOT), Bangladesh Handloom Board (BHB), Bangladesh Sericulture Board (BSB), and
Department of Textiles (DOT) will carry out promotional activities by implementing several
development projects. The proposed outlay for public sector agencies under the Ministry of
Textiles is shown in Table 14.18.
Table 14.18
Projected Investment in Public Sector Textile Industry During Fifth Plan Period
(in million Taka)
Public sector 1997/98 1998/99 1999/2000 2000/2001 2001/2002 1997-2002
BTMC 40.20 62.00 66.00 75.36 45.20 288.76
BHB 76.60 102.60 157.40 137.10 61.15 534.85
BSB 19.20 16.20 15.90 16.30 17.50 85.10
DOT 398.65 335.10 326.25 152.25 102.75 1,315.00
MOT 35.60 32.80 4.84 5.25 4.75 83.24
Total 570.25 548.70 570.39 386.26 231.35 2,306.95
 331

14.11.3 At present there are 31 textile mills in the public sector. Most of them are very old
and technically out-dated to produce good quality yarn and grey fabrics. All the public sector
textile mills are running at loss due to some inherent problems like low capacity utilisation,
irregular repair and maintenance, lack of managerial efficiency, excess manpower, high cost
of production, etc. Thus replacement of machinery to increase production and meet needs for
the export quality fabrics is essential for increased value addition and employment generation
for RMG.
14.11.4 Investment Outlay for Jute Industry: In order to achieve the objectives and goals
of the Fifth Five Year Plan for jute manufacturing industries under the purview of the
Ministry of Jute, an investment outlay of Tk.3,064.57 million at 1996/97 prices has been
provided for; of this Tk.435.34 million has been projected for the public sector and
Tk.2,629.23 million for the private sector. Agency wise financial outlay for public and private
sectors in jute industry including spill-over and new programmes has been shown in
Table14.19.
Table 14.19
Projected Outlay of Jute Industry During Fifth Plan Period
(in million Taka)
Agency On-going New Total Jute Industry
Projects Projects/Programmes
Amount Amount Amount
A. Public Sector
1. Ministry of Jute 56.00 6.26 62.26
2. Bangladesh Jute Mills Corporation 30.00 121.20 151.20
3. Department of Jute 150.00 31.30 181.30
4. Bangladesh Jute Research Institute - 40.58 40.58
Sub-Total (A) 236.00 199.34 435.34
B. PRIVATE SECTOR
1. Bangladesh Jute Mills Association - 1,200.00 1,200.00
2. Bangladesh Jute Spinners Association - 717.77 717.77
Sub-total (B) - 1,917.77 1,917.77
C. Small & Cottage Industries. - 711.46 711.46
Total (A+B+C) 236.00 2,828.57 3,064.57

14.12 Total Investment Outlay Under Ministry of Industries: An outlay of Tk.6729.60

million including Tk.2,200.00 million for spill-over projects and Tk.4,529.60 million for new
projects has been made in the public sector under the Ministry of Industries. Agency wise
outlay is mentioned in Table 14.20.
Table 14.20
Public Sector Investment Outlay of Agencies under Ministry of Industries
(1997-2002)
(in million Taka)
Name of Corporation/ Outlay for Spill-over Outlay for New Total Outlay
Agency Projects Projects
Public Sector Agencies
BCIC 1,040.00 3,883.37 4,923.37
BSEC 150.00 212.00 362.00
BSFIC - 297.00 297.00
BSCIC 1,000.00 89.89 1,089.89
BITAC - 31.79 31.79
BIM 10.00 4.85 14.85
NPO - 6.70 6.70
Patent Office - 4.00 4.00
Total 2,200.00 4,529.60 6,729.60
 332

14.13 Investment and Employment Target of EPZs: During the Fifth Plan
implementation of the policy packages will be closely reviewed and monitored and necessary
support services will be provided to attract investors with the ultimate objective of generating
more employment opportunities in EPZ areas and also to boost up export. The projections
that have been made for the Fifth Plan, with this end in view, are shown in Table 14.21.
Table 14.21
Expected Investment and Employment in EPZs by 2001/2002
Zones No. of Investment Employment Yearly Export
Industries (million US (nos.) (million US dollar)
dollar)
Chittagong EPZ 110 350 50,000 600
Dhaka EPZ 90 300 40,000 500
Gazipur EPZ 150 400 60,000 700
Mongla EPZ 100 300 40,000 500
North Bengal EPZ 90 300 40,000 700
Total 540 1,650 230,000 3,000
Source : Bangladesh Export Promotion Zone Authority (BEPZA)

14.13.1 At the end of Fifth Plan 540 industrial units with a total investment of $ 1,650
million are expected to be established and 230,000 jobs are expected to be created. The yearly
expected export at the terminal year of the Plan is estimated to be $ 3 billion.
14.14 Investment Outlay: An outlay of Tk. 1060.48 million including Tk. 500.00 million
for spill over projects and Tk. 560.48 million for new projects has been provided in the Fifth
Plan for the EPZ sub-sector.
14.15 Trade and Export Promotion: Within the broad framework of the export
development strategy, the main objectives of the export sub-sector are as follows :
a. to develop marketability of exportables through product diversification and
quality improvement;
b. to establish backward linkage with export oriented industries and service sectors
towards utilisation of more local materials;
c. to attract increased number of entrepreneurs for setting up of export oriented
industries and encourage them through incentive packages;
d. to expand and consolidate existing markets and also create new markets for
Bangladeshi exportables; and
e. to further narrow down the gap between export earning and import expenditure
through achievement of export targets.
14.15.1 In order to achieve the aforementioned objectives, the following strategies will be
pursued:
a. remove procedural and regulatory bottlenecks incompatible with the promotion
of exports;
b. provide progressive policy support comparable with those in other competing
countries to enable Bangladeshi exporters to be on a sound footing in
international trade;
c. strengthen and improve institutional framework for providing better services to
the exporters and the export oriented industries;
d. improve supportive infrastructure services to improve efficiency and for smooth
functioning of export related activities;
 333

e. adopt appropriate human resource development programme to improve

entrepreneurial and managerial capabilities to boost production and marketing;
and
f. formulate and implement programmes to broaden and diversify the range of
exportables.
14.16 Allocation for Trade and Export Promotion and Privatisation Programme: In
order to achieve the objectives and to implement the programmes of the sub-sector during the
Fifth Plan (1997-2002) an outlay of Tk.1,358.64 million has been made. Agency wise
investment projection is shown in Table 14.22.
Table 14.22
Other Outlay for Trade Promotion Services
(in million Taka)
Name of Agencies Total
Export Promotion Bureau 1,087.86
Tariff Commission 1.44
Board of Investment 10.00
Ministry of Commerce 3.13
Privatisation Board (Cabinet Affairs Division) 41.25
Industries Division, Planning Commission. 12.25
Ministry of Jute 62.26
Ministry of Textiles 83.24
Ministry of Industries 3.13
Sadharan Bima Corporation 1.58
Statistics Division 12.50
Bangladesh Standard Testing Institute 40.00
Grand Total 1,358.64

14.16.1 Development of industries in the Fifth Plan will be a challenge for the private sector.
If this challenge is successfully met, in the Fifth Plan period, the private enterprise will be the
trail blazer in lifting the economy from the syndrome of poverty and unemployment in the
next two plan periods.
334
 335

CHAPTER XV

ENERGY
15.1 Introduction
15.1.1 Energy is essential for promoting living standards. It is a pre-requisite for economic
growth and technological progress. In Bangladesh, per capita generation of electricity in 1995
was only 92 kwh which is lower in comparison to that in neighbouring countries. In view of
the prevailing low generation and consumption of energy, efforts should be made to develop
this sector in such a way that the needs of all sectors can be met adequately, efficiently and
economically.
15.1.2 Electricity demand grew at an average rate of 11 per cent per annum during 1972-94;
per capita generation increased from 15.6 kwh in 1973 to 92 kwh in 1995. Notwithstanding,
the progress made to date, only about 15 per cent population have access to electricity.
15.2 Review of Past Development
15.2.1 During the War of Liberation, power installations suffered extensive damage. As a
result, at the worst case, peak demand dropped to 30 MW from the pre-liberation level of 225
MW (1970). So, after independence the immediate problem was rehabilitation of power
supply. By the end of 1972-73, a rehabilitation and development programme was undertaken
in the First Five Year Plan (1973-78). However, because of the shortage of fund the
programme was carried over to the Two Year Plan (1978-80). Several projects, initiated
before the Liberation War were completed and a number of new projects were undertaken
during the periods. As a result, installed generation capacity increased to 822 MW from 545
MW, while the peak demand rose to 462 MW from 222 MW.
Table 15.1
Power Development During 1972-96
(year ending June)
Items 1972 1973 1975 1980 1985 1990 1995 1996
Installed Capacity (MW) 550 608 752 822 1,141 2,352 2,908 2,908
Effective Generation (MW) 469 455 557 625 1,018 1,834 2,133 2,105
Maximum Demand (MW) 183 222 396 462 887 1,509 1,970 2,087
230 kV Transmission Line (Km) - - - - 179 250 419 419
132 kV Transmission Line (Km) 828 828 1,395 1596 1,971 2,235 2,469 3,017
66 kV Transmission Line (Km) 167 167 167 167 167 167 167 167
Distribution Line(Km) (33 kv & below) 9,010 9,686 17,003 20,256 34,796 69,731 103,540 121,817
No. of Consumers 254,584 277,884 403,518 529,660 848,152 1,670,137 2,766,765 3,090,829
Per Capita Generation (kwh) 15.6 22.9 27 46 70 92 95

15.2.2 To reduce the gap between demand and generation capacity, the Second Plan (1980-
85) undertook a rapid expansion programme. The most important achievement during this
period was the construction of the East-West electrical inter-connector which enabled the
transfer of gas-based low cost power from the east to the west. Five power generation plants
having a total installed capacity of 330 MW were completed during this period. But
generation capacity still lagged behind the demand. The main constraint to the expansion of
power supply was shortfall of resources coupled with a huge system loss and a slow response
to tariff adjustment against rising fuel cost. By the end of the Second Plan, the system loss
stood at 37.5 per cent. An investment programme of Tk. 14,370 million at 1979/80 prices was
undertaken. The actual investment was Tk. 20,970 million at current prices. The Second Plan
also pursued a policy of substituting imported fuel by natural gas. A significant progress was
made in this direction. By the end of 1984/85, total number of electricity consumers stood at
about 964,000 compared with 522,000 in 1979/80. Table 15.1 shows the progress of power
development in the country during 1972-96.
 336

15.3 Overview of Fourth Plan

15.3.1 Ensuring supply ahead of demand is the ideal situation in case of electricity for
meeting manufacturing, irrigation, commercial and domestic needs of any economy.
However, it was not possible to do so in Bangladesh. Against a peak demand of 1640 MW in
1990/91 and 1970 MW in 1994/95, the installed capacity was only 2352 MW and 2908 MW
respectively. The operational capacity (2133 MW) was again interrupted by occasional power
outages owing to fluctuations in gas pressure, transmission and distribution faults. These
caused enormous losses to industrial production and commercial activities. Irrigation suffered
relatively less due to its use of diesel power and electricity supplied by REB in off-peak
hours.
15.3.2 Electricity generation, transmission and distribution require large financial investment.
Although Bangladesh has considerable gas reserve and promising potentials, due to high
system loss, large account receivables, poor management and inability to rationalise tariff
rate and introduce other reforms, concessional loan for the power sector from the multilateral
development partners was not available in the Fourth Plan period. Consequently, needed
investments for generation, transmission and distribution of electricity could not be made
during 1990-95. Hard term suppliers’ credit and inadequate government resources made it
possible to add only about 581 MW of generation capacity in the following power plants
during the Fourth Plan Period:

a. Raozan (Chittagong) Power Plant (1st unit) 210 MW

b. Sylhet Combined Cycle Power Plant 90 MW
c. Baghabari Power Plant 71 MW
d. Ghorashal Power Plant (5th unit) 210 MW

15.3.3 However, due to non-completion of scheduled rehabilitation of some power stations,

generation capability decreased by 271 MW and about 11 MW capability was retired during
the period. The net capacity increase was thus 299 MW. In addition, reduced gas supply
caused shut-down of some power stations resulting in lower operational supply of electricity.
15.3.4 Organisational changes were made in the area of transmission and distribution of
power in the country with BPDB entrusted with generation, transmission and distribution in
urban areas, DESA with distribution of electricity in the greater Dhaka area and REB with
distribution in the rural areas. Power generation and distribution was opened to both local and
foreign private investments. To this end, a Power Cell was created to facilitate private sector
investment in electricity production and distribution. A Rural Power Company (RPC) was set
up for generation and supply of power exclusively to the REB. Concrete results of these
measures are expected during the Fifth Plan period.
15.4 Fourth Plan Targets and Achievements
15.4.1 The Fourth Plan was formulated with a public sector allocation of Tk. 64,500 million
at 1989/90 prices for the power sector. This allocation was inadequate in relation to the
physical targets set in the Plan document. Due to shortage of both local and external
resources, the Plan allocation as well as Plan targets had to be revised. The revised allocation
was Tk. 45,360 million at 1989/90 constant prices against which Tk. 67,480 million was
spent at current prices. Major targets as well as the achievements during the Plan period are
shown in Table 15.2.
 337

Table 15.2
Targets and Achievements of Power Sector During Fourth Plan

Agency Particulars Actual Fourth Plan Achievement

Position in Target New Addition Cumulative
1989/90 during Fourth Position in
Plan (1990-95) (1994-95)
BPDB Installed Capacity (MW) 2,352 2,878 581 *2,908
Capability (MW) 1,834 2,743 581 **2,133
Transmission line (km) 2,503 3,151 552 3,055
230kv,132 kv, & 66 kv
Grid Substation capacity 4,150 2,621 2,369 6,519
(MVA) 230kv, 132kv &
66kv
Distribution line km (33 kv 30,256 36,734 4,437 34,693
& below) (Excluding
DESA)
Consumer connection (No.) 850,438 1,050,000 225,296 1,075,734
REB Distribution line km 35,333 61,188 29,853 65,186
Electrified village (Number) 8,545 14,530 7,939 16,484
Consumer connection (No.) 495,565 962,962 679,006 1,174,571
DESA Transmission line (km) 221 - 104 325
132kv
Grid Substation 433 - 874 1,307
Capacity (MVA)
Distribution line km 5,511 6,765 1,995 7,506
Consumer connection (No.) 324,134 570,000 192,326 516,460
* 2352 MW+581 MW new - 25 MW retired/standby = 2908 MW
** 1834 MW+581 MW new - 11 MW retired - 271 MW derated/decrease for maintenance
& rehabilitation = 2133 MW

15.5 Operational Performance During Fourth Plan

15.5.1 Load demand : The forecast peak demand of 2,485 MW for the terminal year of the
Fourth Plan could not be met due to shortage of available generation capacity. The peak
demand served by the end of the Plan period was 1970 MW. This gave an annual growth rate
of 4.8 per cent.
15.5.2 Energy generation : Energy generation could not reach its target. The targeted
generation in the Plan period (1990-95) was 55,735 GWh and the achievement was 46,962
GWh (84 per cent). The achievement in the final year of the Plan period was 10,806 GWh
against a target of 13,577 GWh. Because of shortage of available generation capacity as stated
earlier actual demand could not be met.
15.5.3 Energy sale : Electricity sales also remained at a low level due to high system loss
and for want of adequate generation throughout the period. The energy sale in the final year
(1994/95) of the Fourth Plan was 8,371 GWh (82 per cent of target) against a target of 10,183
GWh.
15.5.4 System loss : The system loss in BPDB (including DESA) and REB was 41.11 per
cent and 16.27 per cent respectively in the first year (1990/91) of the Fourth Plan. The system
loss of DESA in 1991/92 was 35.55 per cent. The combined system loss envisaged in the
Fourth Plan was 25 per cent. To reduce the system loss some measures such as creation of
Dhaka Electric Supply Authority, introduction of incentive/punishment scheme to improve
overall performance and introduction of new commercial operation system were taken. These
 338

measures brought some improvement, but not up to the expectation. The system loss of
BPDB, REB and DESA came down to 22.54 per cent, 15.04 per cent and 30.00 per cent
respectively in June 1995. These figures are based on generation/purchase and sale of energy
by individual entities. In June 1995, BPDB's gross generation was 10,806 million units and
sale was 8,371 million units. Purchase and sale by DESA in the same period were 4,162 and
2,913 million units respectively, and by REB 1,199 and 1,018 million units respectively. This
warrants considerable improvement in this area.
15.5.5 System imbalance : System balance could not be ensured during the Fourth Plan.
Because of non-availability of loan from development partners, the on-going projects
suffered. No new power projects (except those under suppliers’ credit) could also be started
and the scheduled rehabilitation programme of some existing power stations could not be
undertaken. The expansion and distribution system as envisaged in the original Plan
document also slowed down. Some surplus generation capacity could not be utilised fruitfully
due to bottlenecks in the grid-stations/sub-stations and shortage of gas supply.
15.5.6 System reliability : Five Power stations with a total generation capacity of 581 MW
were put into operation during the Plan period. A few units were also put into operation after
rehabilitation in the terminal year. Still there was shortage of generation capacity.
Consequently, load-shedding was resorted to. The annual load-shedding duration ranged
from 113 hours in 1991 to 763 hours in 1995. The total load-shedding over the Plan period
was 2,844 hours (6.49 per cent of total duration of the Plan period), i.e., on an average about
24 days per year. The reason for load shed of DESA was tremendous load growth in the
industrial and commercial sectors. As a result, the system reliability during the Plan period
was not satisfactory.
15.6 Power Sector Reforms
15.6.1 An inter-ministerial working group was constituted on the 3rd February, 1993 to
review the necessity and feasibility of private investment (along with public sector) in the
power sector. It transpired to the working group that mere private investment in power
generation is not the solution for the power sector to come out of the whole gamut of
problems and deficiencies in the sector. Given the magnitude of the inefficiencies and the
sector's large capital requirement, the working group felt that there was a need to undertake
basic reforms to address fundamental problems in the sector. The working group reviewed
operational, structural and other deficiencies of the sector, examined various options with
regard to reforms and emphasised the necessity for private investment and participation on an
equal footing in the power sector and finally recommended the reform programme to be
undertaken.
15.6.2 Institutional issues : Power generation and its supply have remained a state
monopoly. The government owns, operates and regulates the power sector entities. This has
sometimes resulted in overlapping and undemarcated responsibilities with lack of
accountability in terms of sector entities, operational performance and service standards. As a
result, the performance of the utilities remained far from satisfactory.
15.6.3 The responsibilities for generation, transmission and a large part of distribution of
electricity are integrated and vested in the same authority. This makes it difficult to identify
the areas of poor performance. All policy decisions/approvals involving planning and
installation of additional plants, recruitment of personnel, pay and allowances, major
procurement and rehabilitation are taken by the administrative ministry. Both BPDB and
 339

DESA carryout execution. Opening up generation for the private sector, keeping transmission
and distribution facilities in the public sector does not really attract private investment.
15.6.4 Management issues : Major impediments to BPDB's and DESA's efficient operations
include lack of management and commercial independence and an unclear definition of the
corporate structure and responsibilities.
15.6.5 Lack of accountability and discipline among the employees of BPDB and DESA are
major constraints. Rivalry of trade unions affiliated to different political parties makes the
environment even more difficult in BPDB and DESA. Incentive/punishment schemes have
been introduced in both the entities to improve the situation but the results remain yet to be
seen and marked.
15.6.6 The performance of management of PBS(REB) has been better. This can be partly
attributed to transparent operating procedures that were designed before the formation of the
organisation. There is no labour union in REB/PBSs. There is no incentive for good
performance and also no punishment for the poor performers as the PBS is based on
cooperatives.
15.6.7 Financial and economic issues : The present tariff level is low in relation to the
financial requirements of the operating entities. BPDB's present average tariff is only about
61 per cent of the long run marginal cost (LRMC). Further, both PDB and DESA provide
implicit subsidies to the PBSs through a bulk supply tariff which is about 52 per cent of
LRMC. All these adversely affect the financial viability of the utilities. Some categories of
consumers enjoy low tariff at the cost of those in the productive sector.
15.6.8 Since the power supplying entities have turned to be financially non-profitable
because of inadequate tariffs, high system loss and low collections, investment from own
resources as well as from the development partners has become insignificant. The fund
requirements in the power sector are large but there are competing demands on government
resources constraining public investment in this sector. During the Fourth Plan period, the
estimated investment need was Tk. 69 billion at 1990 constant prices, against which the
allocation was only Tk. 45 billion. The investment requirement in power sector (both public
and private) during the Fifth Plan period is estimated at Tk. 117.36 billion at 1996/97
constant prices.

15.6.9 Technical issues : Power supply is constrained by shortage in generation capacity and
inadequate transmission and distribution system. The problem has been compounded by the
shortage of gas supply. As a result, BPDB has to shed loads during peak hours through out
the country.
15.6.10 REB was created to extend distribution of electricity to the rural areas through PBSs.
However, in absence of a clear-cut demarcation of service areas, problems have arisen in the
transfer of 33/11 kv sub-station lines and consumers from BPDB and DESA to the PBSs.
Further, in areas served by PBSs, there are still 'pockets' of urban centres that are still served
by BPDB/DESA.
15.7 Operational Performance During 1995/96 and 1996/97
15.7.1 During the period of July ’95 to June ’97 no new generation capacity was added to the
system, that is the installed capacity remained at 2908 MW, the same as of 1994/95. The
Barisal- Patuakhali 132 kv line (37 km) was energised during this period. A total of 2366 km
distribution line (33 kv, 11 kv & below ) was added to the system raising the length of the
 340

distribution line to 37,059 km through implemention of various distribution projects. The

consumer number in BPDB system increased to 1,210,132 in June 1997 from 1,075,734 in
1994/95.
15.7.2 Load shedding continued during the period of 1995/96 and 1996/97 due to shortage of
available generation capacity. For this, actual peak demand could not be supplied. As per
PSMP of 1995 the projected peak demand was 2419 MW in 1996/97. But the peak demand
supplied was only 2114 MW (10.07.1996). During this period load shedding varied from a
minimum 10 MW to a maximum 674 MW. System loss in BPDB system decreased
marginally. During 1995/96 and 1996/97 the ADP allocation and (provisional) expenditures
for BPDB were as follows:
Table 15.3
ADP Allocation to and Expenditure of BPDB During 1995/96-1996/97
(in million Taka)
Fiscal Year Revised ADP Allocation Expenditure (provisional)
Total Project Aid Total Project Aid
1995/96 5,929.5 2,770.2 7,433.0 3,599.4
1996/97 6,201.7 2,000.4 4,790.4 1,597.6

15.8 Need for Major Reforms

15.8.1 BPDB has been trying for the reduction of system loss for the last 10 years which
persisted between 41 and 31 per cent. BPDB was reorganised and DESA was created for
performance improvements but desirable results have not been achieved because DESA was
created without addressing the fundamental institutional deficiencies. Although there have
been some improvements, it is not expected that desirable results can be achieved and
sustained without major reforms in the power sector.
15.8.2 The objectives of the proposed power sector reform programme will be to:
a. achieve commercial characteristics and efficiency in the power sector so as to
reduce system loss, attain financial viability in order that it no longer requires
subsidies;
b. increase production and distribution of electricity for the vast majority of the
population of Bangladesh which is yet unserved and to meet the growing
demands of industry, commerce and agriculture;
c. increase the operating efficiency of the existing public sector entities through
greater competition, managerial autonomy and accountability and full
commercialisation/corporatisation;
d. improve the reliability and quality of the existing power supply system; and
e. create an environment which will attract private capital and entrepreneurs, both
domestic and foreign, to supplement public sector investments and initiatives in
improving the performance of the sector.
15.9 Options for Reforms
15.9.1 Cost centres : The recent successful experiences in many countries offer a variety of
options for reforms starting with the establishment of separate cost and/or profit centres
within the existing utilities for commercialisation and corporatisation, and eventually, to
complete privatisation. Along with it, it is also possible to contract out specific activities of
the utility to private entrepreneurs (e.g. meter reading, billing, collection, routine and periodic
maintenance, etc.) or to offer long-term franchises to manage and operate some substantial
 341

portions of the utility's assets (e.g., a generating plant, a portion of the distribution network,
etc.). It is essential that regardless of ownership (public or private), the utility has complete,
detailed and up-to-date information on the cost of owning and operating the various parts of
its business. No reform is possible without the establishment of separate cost centres for all
identifiable and separable parts of the utility.
15.9.2 Unbundling : Once a decision is taken on the establishment of the cost centres, the
next set of options to look at will be the structure of the utility (also known as unbundling).
The utilities can be restructured (or unbundled) along functional lines with generation,
transmission and distribution being operated by separate entities. For example, BPDB can be
restructured into separate entities - one handling generation, another operating the
transmission system, and a separate and independent company responsible only for
distribution. This has recently been introduced in the UK. Only in high state of development,
this system can work. Alternatively, distribution can be handled by four zones within the
BPDB while DESA and REB/PBSs can continue to operate the distribution system in their
respective areas. In this event, rationalisation of distribution entities will be needed. PBSs
may operate as they are doing now under their area boards. A further alternative will be to
separate the generation and transmission functions from distribution and operated by a single
company (eg; Thailand). The principal advantage of restructuring along functional lines will
be in appraising cost of generation, transmission and distribution separately which can be
reflected in contracts between the functional entities. In addition, if the power sector is
structured around functional areas, it will attract private capital to one or more of these
functions where the expected returns will be high or the risks relatively low. For instance,
while the private entrepreneurs may not like to invest in the existing utilities as a whole, they
may wish to invest in new generation facilities. It is assumed, however, that an enabling
investment environment which includes a detailed and transparent legal and regulatory
framework will be in place to encourage and attract private investment. Investments by the
private sector will allow the government to divert funds to meet other socially pressing
objectives.
15.9.3 Following the decision to establish cost/profit centres and restructuring the entities
along functional lines, the logical next step will be to corporatise the new entities. For each
new functional entity, a company can be formed as a public limited company with a clear
demarcation of the roles and responsibilities of the government (ownership), the board of
directors (policy and monitoring), and the management of the company (operations). The
board members should be appointed for fixed terms (with a possibility for renewal). Some of
the Board members, including the chairman, should be from the private sector and
compensated properly in accordance with private sector practices. The board should appoint
the senior managers of the company and delegate to them full managerial autonomy for their
day-to-day operations. Through performance contracts, the board (and through them the
managers) should be held accountable for efficient operations.
15.9.4 Corporatisation is normally a preparatory step for increased private participation.
While there are many ways to achieve this, the most common one can be through the sale of
shares in the company. The advantage of this, at least from the government's standpoint, is
that while the government continues to retain control of the companies, private capital is
mobilised to support the government's development objectives for the sector. However, in
order to attract private capital in this manner, it is essential that a capital market exists and
that these companies are properly managed and earn a reasonable return on their investments.
Another frequently used method for increasing private participation is to contract out specific
 342

activities of the utility to private entrepreneurs or to offer long-term franchises to manage and
operate some portions of the utility's assets.
15.9.5 With successful corporatisation and gradual increase in private participation, the final
step to be considered in the reform process is the full privatisation. For an existing utility, this
will mean an outright sale of its assets. For expansion of the system, this can take several
forms such as build-own-operate (BOO) scheme, hire/purchase agreements, etc.
15.9.6 An important point to consider, prior to starting the reform process, is the need to
create an appropriate and transparent regulatory system. It should preferably be in place prior
to the unbundling exercise so that the system grows along with the implementation of the
reform process, while facilitating the same.
15.10 Recommended Reform Programme
15.10.1 In order to overcome the constraints encountered in the viable/desirable operation of
the power sector and to achieve the objectives enumerated above, various options to reforms
can be considered. Options for reform will be concentrated on the following areas:
15.10.2 Restructuring of DESA : The corporatised entity should be endowed with
appropriate management and financial autonomy and commercial independence so that
accountability and monitoring of performance can be ensured and improved.
15.10.3 The new company should have its own terms and conditions of employment and
have the right to select employees. The present employees of DESA who do not get employed
in this restructured company should be provided with appropriate severance package.
15.10.4 Restructuring of BPDB : BPDB should be restructured along the functional lines.
In the first phase, the functions of generation and transmission should be separated from those
of distribution of electricity and two separate corporatised entities, one for carrying out
generation and transmission functions and the other for carrying out distribution functions in
those areas that are now being served by BPDB, should be established. These two (new)
public limited companies should be formed under the existing Company Act and the
ownership should remain with the government. These new companies will have the same
features as those of the company to be created out of DESA as described above. In the longer
term, generation and transmission functions may also be needed to be separated.
15.10.5 Rural electrification : The rural electrification programme through the co-
operatives has been fairly successful and, therefore, should continue without changing the
structure. However, its area of operation should be rationalised with that of the proposed
distribution companies so that duplication of investment can be avoided, services can be
improved and the utilities may become viable. The recent government decisions on the
demarcation of service areas of BPDB, REB and DESA should be reviewed and the following
criteria may be considered for rationalisation of distribution areas:
a. The supply area should be continuous and one utility should not have pockets of
supply areas within another utility, so that optimum utilisation of distribution
facilities may be ensured and manpower for operation and maintenance may be
reduced.
b. The supply area should be of sufficient size to facilitate planning of efficient
distribution network.
c. The utilities/distribution units should have a good consumer mix.
 343

15.10.6 Regulatory framework and change of laws : With the present undifferentiated role
of the government as owner, operator and regulator, there is a little regulation with respect to
sector entities performance standards and service codes. On the other hand, the tariffs are not
adequately related to economic and financial requirements. Recommendations have been
made to separate the operation on commercial basis and to attract private investment. In order
that the consumers are ensured of an adequate supply of electricity at a reasonable cost, the
operational safety is ensured and the power utilities remain economically and financially
viable, an independent regulatory body should be established. To begin with, the regulatory
body may be attached with the Ministry of Energy and Mineral Resources (MEMR). The
regulatory tasks should include, among others, the following :
a. framing of rules and codes of practice for operation and maintenance;
b. establishment of performance standards and uniform system of accounts;
c. approval of construction standards for safe installation;
d. approval of tariffs;
e. ensuring enforcement of industry standards, public safety, as set forth under (a),
(b) and (c) as well as demand management; and
f. issuing exclusive service franchises to the distribution companies, either public
or private, and license to private generators.
This will require the existing laws creating the BPDB and DESA as well as the Electricity Act
to be amended.
15.10.7 Tariff regulation : Tariffs are inadequately related to economic and financial
criteria. BPDB/DESA are financially burdened with the cost of providing subsidised
electricity supply to PBSs, the size of lifeline block is excessive, and their tariff adjustment
process is ad hoc and non-transparent.
15.10.8 To support the development of a viable and self-sustaining power industry in
Bangladesh, tariff setting needs to be rationalised, which can be achieved by having a
regulatory body with the clear terms of reference. This regulatory body (initially attached to
MEMR) will set tariffs in accord with explicit economic and financial criteria. Specifically,
the following aspects will need to be addressed :
a. Tariffs : In view of the possible formation of separate generation, transmission and
distribution companies, a tariff study should be carried out on long run marginal cost
basis to find out the cost of supply at different voltage levels, at various geographical
locations and consumer classes. The tariff study will also design the structure
including retail tariffs considering social aspects but avoiding distortion as much as
possible. The size of the present lifeline block is too large. It should be either reduced
to restrict its application to poor consumers or totally abolished.
b. Transparency : To improve financial discipline, transparency in financial relations
and to measure the true financial relationships between the generation/ transmission/
distribution companies, subsidies between various categories of utility companies
should be made more explicit. Eventually, any such subsidy to PBSs or for meeting
public service obligations, if justified, should be funded by the government.
c. Indexation : To reduce uncertainty and ensure predictability, the regulatory body may
consider indexed rate regulation. One major advantage of indexed regulation is that,
after the initial or base prices are established, adjustments occur virtually
automatically in accordance with some defined index (e.g., fuel prices, currency
values, discounted inflation rate, etc.) that have been approved by the regulatory body.
 344

15.10.9 Private participation : In view of the large capital requirement in the power sector
and limitations of government fund, private sector investment will be necessary for rapid
development of the power sector. In order to attract private sector participation, actions on the
following fronts should be taken:
a. Generation : Specific power generation projects identified at the national level
will be offered for private investment. Competitive tenders on the basis of Build-
Own-Operate (BOO) or Build, Operate and Transfer (BOT) will be invited. The
government may also negotiate with the private parties who will express interest in
investing in generation projects.
b. Distribution : The government will invite private parties, including co-operative
societies of the utility sector employees, to participate in the distribution of power
in one or more localities on an experimental basis. In doing so, careful evaluation
of various proven modalities for participation (e.g., franchise, contract, etc.) will
have to be made.
c. Contracting of services : The government will consider contracting out some
functions currently performed by BPDB and DESA, particularly meter reading,
billing and collections.
d. Wheeling arrangement : The electricity generated by private generators may be
supplied to the grid system of the Generation and Transmission Company on
agreed terms and conditions. The private/public generators may also sell directly to
large consumers through the transmission and distribution facilities of other
distribution companies provided the facilities are adequate and the commercial
terms and conditions of such wheeling arrangements are acceptable to all
concerned.
15.10.10 Some of the steps already initiated/implemented towards privatisation and reform
programmes are briefly outlined below:
a. Implementation of power sector reform : Power sector reform programmes are
being implemented. Some of the proposed reform programmes have already been
initiated by the utilities. Power Cell has already prepared the Private Sector Power
Generation Policy of Bangladesh which was approved by the government. The Cell
has also prepared standard security package document, that is, Implementation
Agreement (IA), Power Purchase Agreement (PPA) and Fuel Supply Agreement
(FSA) for Independent Power Projects. A study on re-structuring of the power
sector has also been completed and a final report with recommendation of reforms
proposed to be undertaken has been prepared. A new tariff structure based on long
run marginal cost of supply in the restructured electricity industry has been
proposed to be implemented.
b. Power grid company of Bangladesh : PGCB, a subsidiary company under BPDB
has been set up. Initially, it will build, own and operate the Comilla-Meghnaghat-
Rampura and Meghnaghat-Haripur 230 kV transmission line and related grid
substations. In course of time, all transmission assets of BPDB will be transferred
to PGCB.
c. Dhaka electric supply company : DESC, a new distribution company has been
set up under Dhaka Electric Supply Authority. DESC will own and operate assets
for the distribution network initially at Mirpur and in course of time all of DESA's
distribution assets will be transferred to DESC.
 345

d. Meghnaghat power company : MPC has been formed. Installation of a 300-450

MW Combined Cycle Power Plant by private sector power investors on BOO basis
is under process.
e. Rural power company : RPC has been formed under Rural Electrification Board.
Initially, a 60 MW Gas Turbine Power Plant will be installed and operated by RPC
at Mymensingh.
15.11 Fifth Plan
15.11.1 In order to achieve an annual economic growth rate of 7 per cent, alleviate poverty
and realise desirable socio-economic and human development, it is essential that the
minimum electricity growth rate is maintained at a factor of 1.5 of GDP growth. Adequate
and reliable supply of electricity at a reasonable cost is a pre-requisite to attain this goal.
Hence, there is a great need and urgency to expand the electrification programmes. It is
recognised that the pace of power development has to be accelerated in order to achieve the
overall economic development projections of the country and avoid looming power shortages.
Specially, for investment in expansion of industry, power development has become
prerequisite.
15.12 Objectives
15.12.1 The development objectives of the power sector in the Fifth Plan period will be to :
a. facilitate economic development through adequate and reliable supply of electricity
at economic cost;
b. ensure reliable and uninterrupted power supply through maximum utilisation of the
existing capacities, adding generation capacities by optimising energy mix and
balanced expansion of transmission and distribution network;
c. reduce the cost of supply through implementation of least cost expansion plan and
efficient system operation with a view to making the electricity available to the
consumers at a reasonable price;
d. make the utilities self-reliant through efficient management, reasonable
restructuring of electricity tariff and favourable financial arrangement so that
reasonable portion of capital expenditure can be financed out of internally
generated funds;
e. improve management and engineering capability of the utilities;
f. raise resource management efficiency, reduce system loss and improve financial
performance of the power sector;
g. ensure environmentally sound, sustainable power development with minimum
damage to environment;
h. encourage private sector participation in power development;
i. expand power supply in the rural areas to boost rural economy and thereby alleviate
poverty and ensure women's participation in the rural areas; and
j. give special attention to meet the power shortage in the north-western region and
to line up power connection to deep tubewells installed for agricultural use.
15.13 Strategies
15.13.1 These objectives will be achieved through a package of policies, strategies and
necessary institutional reforms which, inter alia, will include:
a. generation, transmission and distribution of more electricity at least cost through
optimisation of fuel mix; to this end special attention will be given to use coal
deposits;
 346

b. augmentation of the capacities through rehabilitation of power plants, transmission

lines and grid substations;
c. balancing of transmission and distribution networks to match generation capacity
and extension of transmission and distribution networks to connect growth centres,
both urban and rural, and to meet irrigational needs;
d. addition of more 230 kv and 132 kv transmission lines for efficient transfer of
power from generating stations to the major load centres;
e. encouraging private investment in power sector, particularly as joint venture or on
BOT/BOO principles through various incentive packages; to meet immediate need
in 2 or 3 strategic locations public sector generation will be taken up if private
investment is found lacking;
f. generation of nuclear power as an appropriate option for a reliable, economic, safe
and long term generation mix in consideration of the inadequacy of indigenous
fuels for meeting electricity demand on a medium to long term perspective;
Rooppur Nuclear Power Project has been included in the public sector development
programme for many years, it has not been possible to implement it mainly due to
constraints of financing; though the initial cost of a nuclear plant is high (estimated
to be about 40 to 50 billion taka for a 600 MW plant), its low operation and
maintenance cost makes the average generation cost comparatively cheap; efforts
will be made to start implementation of the project with a 600 MW nuclear power
plant during the Fifth Five Year Plan; the private entrepreneurs will also be
encouraged to participate in the implementation of the project;
g. dissemination of various forms of renewable energy technologies like solar, wind
and mini-hydro, specially in rural areas and other remote and isolated location of
the country;
h. development of biogas: biogas technology is believed to have good potentials as a
source of energy in Bangladesh. BCSIR has developed technologies though their
dissemination has been very limited; during the Fifth Plan, efforts will be made to
popularise the use of biogas technology in the country;
i. introduction and dissemination of improved cooking stove: replacement of
traditional stoves by an improved version having better energy conversion
efficiency will help conserve biomass in the rural areas; moreover, use of the
technology in the urban area, will help reduce consumption of fuel wood, thereby
reducing deforestation; technologies are available and efforts will be made to
popularise them during the Fifth Plan;
j. application of new and renewable energy technologies; and
k. making appropriate institutional, fiscal, legal and administrative arrangement for
the successful implementation of the above strategies.
15.14 National Energy Policy
15.14.1 The objectives of the National Energy Policy (NEP) are to:
a. provide energy for sustainable economic growth so that the economic
development activities of different sectors are not constrained due to shortage of
energy;
b. meet the energy needs of different zones of the country and socio-economic
groups;
c. ensure optimum development of all the indigenous energy sources;
d. ensure sustainable operation of the energy utilities;
e. ensure rational use of total energy sources;
 347

f. ensure environmentally sound sustainable energy development programmes

causing minimum damage to environment; and
g. encourage public and private sector participation in the development and
management of the energy sector.
15.15 New and Renewable Energy Technologies
15.15.1 Biomass : Electricity coverage being only 15 per cent of the population and natural
gas reaching only 3 per cent of the households, biomass is the major source of energy in
Bangladesh. Over three-fourths of the total population of the country depend on biomass for
cooking, crop drying and winter heating. So in terms of population coverage, biomass stands
most important of all energy sources. Biomass includes trees, crop wastes, cow dung etc.
Unfortunately, Bangladesh does not have adequate supply of biomass due to low forest
coverage, a large portion of the country being affected each year by natural calamities like
flood, cyclone and river erosion. The present forest coverage is only around 17 per cent.
However, using standard tree density criteria, the forest coverage comes down to only 7 per
cent compared to 25 per cent which is usually considered to be the average a country should
have to maintain energy and environmental balance. As response to this serious problem,
social forestry, homestead forestry and linear planting (along roads, embankments and
railways) have been given high priority in the public expenditure. The policies, programmes
and projects undertaken to augment the supply of biomass have been mentioned in the
forestry sub-sector. It can briefly be said here that afforestation on all available land has been
a social movement in Bangladesh for over a decade and it can be said that, by and large, it has
been successful. If the current trend can be sustained, it will largely offset the deficit in the
supply of biomass for the majority of the population who are critically dependent on it. Along
with social forestry, popularisation of improved cooking stove, bio-gas plants, and utilisation
of solar energy, especially in the offshore islands, will contribute to both conservation of
energy through more efficient use of biomass and increasing the supply of energy through
solar power. Power sector policies, programmes and projects have, therefore, been aimed at
this direction. The dominant role of biomass in the energy supply mix of the country is likely
to continue.
Improved bio-mass fuel burning devices have been introduced in order to save bio-mass fuels
and to improve the environmental conditions surrounding the energy consuming devices.
Projects/programmes for improved stoves for urban cooking, rural cooking and improved
devices will be undertaken for bio-mass fuel consuming industries. Necessary support and
incentives will be made available to the entrepreneurs from the credit institutions. Action
research programme, training programme, extension and dissemination programme will be
provided. In addition to that, promotion of awareness about bio-mass fuel conservation and
improved devices will be encouraged.
The government has laid emphasis on the development and augmentation of rural and
renewable energy during the different Plan periods. Agencies like Rural Electrification Board
(REB) and the Local Government Engineering Department (LGED) are involved in
dissemination of various types of renewable energy technologies. The Department of Forest
and other extension agencies are also involved in planned plantation with a view to not only
improving the situation of forest coverage of the country but also in augmenting the supply of
biomass on a long term perspective. The Grameen Bank and the NGOs like BRAC, Proshikha
and others are involved in deployment of available technologies through their respective
networks. REB as well as a number of private sector enterprises are involved in marketing of
solar photo voltaic (PV) based technology.
 348

Augmentation of bio-mass supply through intensive afforestation in especially selected

locations like reserved forest as well as village and community forestry programmes has
gained momentum. These programmes are being implemented by the related extension
agencies. If sustained, this will have a significant impact not only on maintaining an
acceptable level of forest coverage of the country, but also facilitate sustainable supply of fuel
wood. Under energy conversion till date, 417 bio-mass plants including 198 of BCSIR have
been set-up by various agencies. An elaborate programme of bio-gas plants technology
diffusion was envisaged during the Fourth Plan period. REB and associated agency, under the
technical guidance of BCSIR, will undertake the responsibilities for setting up of additional
5000 bio-gas plants in selected areas of the country.
15.15.2 Mini-hydropower : According to the report of the Working Committee on Mini-
hydropower Generation of Bangladesh, there is potential for producing 10 GWh of electricity
annually. Concrete steps will be undertaken during the Fifth Plan period to realise this
potential.
15.15.3 Solar energy : The average daily solar radiation varies from 5.05 kWh/sqm in
winter to 8.76 kWh/sqm in summer. At present solar energy is mainly used as a convenient
and low cost means of drying crops, fish and salt. Some photo voltaic units have been
installed in different parts of the country mainly for demonstration. Capital cost for solar
photo voltaic technology for the generation of electricity being costly, its prospects are to be
ascertained for specific end uses and locations. One immediate positive step to encourage use
of solar energy will be to allow duty free import of photo voltaic cells.
15.15.4 Wind power : Average wind speeds in the country are low (less than 3 m/s). There
is a prospect for wind power generation using low speed wind turbines in selected areas and
for specific end-uses. In the Fifth Plan period a pilot project will be undertaken to use wind to
generate power in a selected local area.
15.15.5 Tidal and wave power : The prospects of tidal and wave power in coastal areas need
to be assessed. A feasibility study will be undertaken in the Fifth Plan period to find out ways
and means to use tidal and wave power.
15.16 Load Management
15.16.1 The annual load factor of the national electricity grid is about 57 per cent. The
characteristics of demand is such that the evening peak is very sharp. In order to improve the
performance of the system, reduce investment as well as to rationalise the energy use, there is
a need to undertake appropriate measures for the management of loads. Recently, the
government has adopted some load management measures to reduce electricity consumption
during peak hours such as early closure of commercial shops, prohibition of using irrigation
pumps during evening peak hours, etc. These measures, however, are yet to be implemented
fully.
15.17 Load Forecast
15.17.1 Power being the basic infrastructure for higher level of economic growth, the high
demand forecast of 4051 MW by the terminal year of the Fifth Plan has been envisaged. To
meet this demand, public sector investment will not be adequate. Considerable private
investment will be needed. However, since other sectors of the economy cannot grow at the
projected rate without necessary power supply, the public sector financial outlay may have to
be adjusted upwards in the course of Plan implementation should there be inadequate
response from the private sector for power generation. On the basis of the High Forecast, the
 349

projected peak demand, generation capability and reserve margin up to FY 2002 are shown in
the Table 15.4.
Table 15.4
Projected Maximum Demand for Power During Fifth Plan
Year Maximum Generation Firm Reserve Reserve Margin as
Demand Capability Capacity Margin per cent of Max.
(MW) (MW) (MW) (MW) Demand (%)
1997/1998 2806 2813 2352 7 -
1998/1999 3109 3464 2983 355 11.42
1999/2000 3447 4342 3681 895 25.96
2000/2001 3736 5156 4196 1420 38.00
2001/2002 4051 5739 4779 1688 41.67

15.17.2 This projected maximum demand of 4051 MW will call for total generating
capability of 5739 MW including reserve margin of 1688 MW by 2001/2002. A total of 3319
MW generation capacity is planned to be added to the system raising the installed capacity to
5875 MW. This will need an investment of around Tk. 100,000 million which can only be
possible if the private sector power investors participate in power generation. Following
completion of 8 projects already undertaken by the public sector ( SL. 1-5, Table 15.5),
capacity addition in the public sector during the Plan period will be 1389 MW only. This will
leave a capacity gap of 1930 MW. This gap is expected to be filled up by private sector/ joint
venture investments. In case, the private sector does not come forward in time, alternative
ways and means will be devised in the shortest possible time to meet the anticipated demand.

Table 15.5
Projected Capacity Addition to Power Generation During Fifth Plan
Sl. Name of the Power Plant Fuel Capacity Expected date
No. MW of
commissioning
A PUBLIC SECTOR
1. 210 MW Ghorasal Thermal Power Station Extension (6th Gas 210 March, 1998
unit)
2. 210 MW Siddhirganj Thermal Power Station Gas 210 March, 2000
3. 109 MW Haripur Combined Cycle Power Plant Gas 109 March, 2000
4. 60 MW Shahjibazar Gas Turbine Gas 60 FY 2000
5. 210MW Chittagong Thermal Power Station (2nd unit) Gas 210 September
1997
6. Sylhet 90 MW Combined Cycle Power Plant ( 2nd unit) Gas 90 FY 2001
7. Barapukuria 300 MW Coal Based Thermal Power Station Coal 300 FY 2001-2002
8. East Zone 2×100 MW Gas Turbine Gas 200 FY 2001-2002
Sub total : A 1389
B. PRIVATE SECTOR/ JT. VENTURE
1. 4×100 MW Barge Mounted Power Plant Oil/Gas 400 FY 1999
2. Mymensingh 60 MW Gas Turbine Gas 60 FY 1999
3. 100 MW Baghabari Gas Turbine Oil/Gas 100 FY 2000
4. Meghnaghat 450 MW Combined Cycle Power Station Gas 450 FY 2001
5. Haripur 360 MW Combined Cycle Power Station Gas 360 FY 2000
6. 210 MW Khulna Thermal Power Station F. Oil/Gas 210 FY 2002
7. 350 MW Power plants in west zone Gas 350 FY 2000-2002
Sub total : B 1930
Grand total : (A+B) 3319
 350

15.18 Physical Programme

15.18.1 The physical programme for the Fifth Plan includes 35 on-going projects and 30 new
projects (excluding TA projects). The ongoing projects and some of the new projects will be
completed and the benefit will be obtained during the Plan period. A 300 MW Barapukuria
Coal Based Thermal Power Plant, a 300-450 MW Meghnaghat Combined Cycle Power Plant
and four 100 MW Barge Mounted power plants will be taken up for implementation during
the Plan period.
15.18.2 With the implementation of these projects, necessary additional facilities for
generation, transmission and distribution will be created during the Plan period. Installed
generation capacity is expected to go up from 2908 MW (June, 97) to 5875 MW at the end of
the Plan period against the projected power demand of 4051 MW. This will have a reserve
margin of 1688 MW (41.67 per cent) over the maximum demand. The generation programme
includes 10 on-going projects and 5 new projects. Scheduled completion of the public sector
projects will add 1389 MW of electricity by the terminal year of the Plan.
15.18.3 In the Fifth Plan, 627 km of 230 kv line and 847 km of 132 kv transmission line
including 166 km second circuit stringing have been proposed. The Plan aims at expansion of
230 kv and 132 kv transmission lines and substations to remove bottlenecks in the
transmission system. Transmission projects included in the programme have been tested by
computer simulation for load flow, voltage drop and stability. The programme includes 3 on-
going projects and 9 new projects. All on-going projects and 9 new projects are scheduled to
be completed during the Plan period. A list of the Transmission Projects to be implemented
during the Fifth Plan is shown in Table 15.6.
Table 15.6
Power Transmission Projects to be Implemented During Fifth Plan

Sl. Name of the Project Line Length Expected Year of

No. (km) Completion

1. Rehabilitation, Renovation & Augmentation of Grid 166 1999

System incl. Ashuganj-Jamalpur 132 kv Second Circuit.
2. Comilla-Chittagong 230 kv Transmission Line Project. 150 1999
3. Comilla-Meghnaghat-Rampura & Meghnaghat-Haripur 110 2000
230 kv Transmission Line & National Load Despatch
Centre.
4. Khulna-Ishurdi-Bogra-Barapukuria 230 kv trans. line & 367 2001
132 kv line from Barapukuria to Saidpur & Rangpur. 95
5. Three Transmission Lines
(a) Thakurgaon-Panchagarh 132 kv single ckt line. 45 2000
(b) Naogaon-Joypurhat 132 kv single ckt line. 40 2000
(c) Chuadanga-Jhenaidha-Magura 132 kv single ckt line 73 2000
6. Tangail-Madhupur-Jamalpur 132 kv single ckt line. 100 2001
7. Dohazari-Cox’s Bazar 132 kv second ckt stringing. 88 2001
8. Chandpur-Comilla 132 kv second ckt stringing. 70 2000
9. Kabirpur-Tangail-Shirajgonj 132 kv tr. line 85 2000
10. Comilla-Bara Aulia 132 kv transmission line 140 1999
11. Barisal-Bagerhat-Khulna 132 kv transmission line 110 2000
12. Bhandaria-Mothbaria-Patharghata 132 kv transmission 55 2000
line
 351

15.18.4 Like the transmission sub-sector, thrust has been given to the distribution sub-sector
in the Fifth Plan. Importance has been given to town distribution projects as well as the rural
electrification projects. The secondary town distribution projects aim at meeting the fast
growing demand in the urban areas, improving reliability and quality of supply and reducing
system loss. In the distribution programme 7 on-going projects and 3 new projects of BPDB,
11 on-going and 7 new projects of REB, and 5 on-going and 2 new projects of DESA have
been included in the Plan period.
15.18.5 The physical programme for the Fifth Plan aims at achieving a transmission line of
1408 km under BPDB and 66 km under DESA, and distribution line of 5,377 km under
BPDB, 50,000 km under REB and 3714 km under DESA. The details of physical projections
are shown in Table 15.7.
Table 15.7
Summary of Physical Projections for Power Sector During Fifth Plan Period
Agency Particulars Bench Mark Projection (1998-2002)
Position (Additional) Cumulative
(1996/97) Position
BPDB Capability (MW) 2,148 3,319 5,739 *
Transmission line (km)
230 kv 419 627 1,046
132 kv 2,506 781 3,287
Substation capacity (MVA) 6,505 1,940 8,445
Distribution line (kv) 33 kv and 37,059 5,377 42,436
below
Consumer connection (No.) 1,250,000 3,00,000 1,550,000

REB Distribution line (km) 85,111 50,000 135,111

Electrified village (No.) 20,520 12,000 32,520
Consumer connection (No.) 1,712,439 1,000,000 2,712,439

DESA Transmission line (km) 511 66 577

Distribution line (km) 33 kv & 6781 3,714 10,495
below
* 2,148+3,319 (new) - 531 (net increase through maintenance & rehabilitation.) - 259(rtd.) = 5,739 MW.

15.19 Financial Programme

15.19.1 An investment outlay of Tk. 88,361 million including project aid of Tk. 58,275
million both at 1996/97 prices has been made in the public sector during the Fifth Plan for the
implementation of the physical programme for the power sector. Agency wise break up of this
allocation is shown in Table 15.8.
 352

Table 15.8
Agency-wise Public Sector Financial Outlay For Power Development
(at 1996/97 prices)
( in million Taka)
Name of Agency Local Currency Project Aid Total
A: Spill over projects
BPDB 7290 17648 24938
REB 2891 6505 9396
DESA 3466 5080 8546
Sub-total 13647 29233 42880
B: New projects
BPDB 7555 17683 25238
REB 6731 8410 15141
DESA 2153 2949 5102
Sub-total 16439 29042 45481
Total (A+B) 30086 58275 88361

15.19.2 In addition to ADP financing, resources will be raised through bonds to finance
implementation of projects by PDB, DESA and REB.
15.19.3 The private sector is also expected to make substantial investment (to the tune of Tk.
29,000.00 million) both in generation and distribution of power during the Fifth Plan period.
Of this amount, about 80 per cent is expected to be in generation and 20 per cent in
transmission and distribution.
 353

CHAPTER XVI

OIL GAS AND NATURAL RESOURCES

16.1 Introduction
16.1.1 Indigenous energy resources consist of known reserves of natural gas, limited hydro-
electric power and traditional fuels coming from fuelwood, crop residuals and animal dung.
About 55 per cent of the country's overall energy supply is in the form of traditional fuels
with the balance being met by natural gas (24 per cent), imported oil and coal (19 per cent)
and hydro-electricity (2 per cent).
16.1.2 The present per-capita consumption of non-renewable energy resources in Bangladesh
is about 64 Kilogram of Oil Equivalent (KGOE) which is one of the lowest in the world. Per-
capita energy use in KGOE is 123 in Sri Lanka, 236 in India and 267 in Pakistan. Of the total
non-renewable energy consumption, about 60 per cent is derived at present from indigenous
resources and the rest is met from imported petroleum and coal. Moreover, the entire reserves
of exploitable indigenous primary energy resources are located in the east zone, thereby
resulting in a gap in energy supply between the east and west zones. Mining of newly found
coal in the west zone is expected to start by the turn of the century which will help reduce the
gap partially. Of the various natural resources available, natural gas in particular :
a. supplies primary commercial energy for electricity generation to accelerate the pace of
agricultural and industrial development and reduces the kitchen drudgery at the level
of individual households;
b. helps in narrowing the deficit in the balance of payments by reducing import bill for
oil, coal, etc.;
c. mobilises resources for the national exchequer; and
d. provides raw materials for the production of urea fertiliser and fuel for electricity
generation.

16.1.3 The development of the oil and gas sector is vital for further strengthening of the
national economy. Expansion of the energy sector since the 1980's is mainly attributed to
increased natural gas production. Currently, natural gas accounts for about 70 per cent of the
commercial energy consumption compared to about 35 per cent in 1980. The development of
Bangladesh's natural gas resources has also contributed to the reduction in deforestation and
to an increase in tax revenue for the government through the levies on gas sales. During
1985-1992, gas production increased at an average annual rate of about 10 per cent. It is
estimated that minimum growth rate of about 10 per cent per annum in gas production will be
required to meet the average GDP growth target of 7 per cent per annum during the Fifth
Plan period. However, the existing gas infrastructure has limited capacity and needs to be
expanded as per requirement. Additional investment is, therefore, required to enable
Bangladesh to utilise its available gas reserves and to increase exploration activities for new
gas and oil fields. For further long-term gas supply commitments, particularly for the planned
power plants, the government is encouraging private sector participation in the oil and gas
exploration activities through the Production Sharing Contract (PSC) with the International
Oil Companies.
 354

16.2 Potentials of Natural Resources

16.2.1. Natural Gas: Natural gas is currently the only indigenous non-renewable energy
resource of the country which is being produced and consumed in significant quantities. Gas,
the main source of commercial energy, plays an active role towards the growth of the
economy. Currently, about 90 per cent of power generation is based on natural gas and the
whole of the urea fertiliser requirements of the agricultural sector is met by using gas as feed
stock. Natural gas output now accounts for about 70 per cent of the country's commercial
energy supply. Current gas reserve (proven) has been estimated at about 22.90 TCF of which
13.60 TCF is considered as recoverable. So far 2.72 TCF has already been consumed and as
of September 1996, the recoverable reserve was 10.87 TCF. New discovery in Sangu
(offshore), Shahbazpur, Shaldanadi and other blocks may augment the gas reserve to several
times the present reserve. This will enable generation of more electricity and setting up of
new urea plants against the Bangladesh's share of the PSC's already signed. A brief
description of the newly discovered gas fields is given below :
16.2.2 Saldanadi Gas Field : Saldanadi gas field is situated along the India-Bangladesh
border under Kashba Thana of Brahmanbaria district. The structure was selected for
exploratory/appraisal drilling after evaluation of seismic data collected during 1991/92 field
season by BAPEX. Accordingly, drilling was undertaken in 1996 and a prospective gas
reserve was discovered at a depth of 2,511 metres. After reviewing the data, a preliminary
estimate of gas reserve was given at 0.202 TCF.
16.2.3 Shahbazpur Gas Field : Shahbazpur field is located in the central part of
Shahbazpur island of Bhola district. The location was selected for exploratory drilling after
evaluation of seismic data collected during 1986/87 field season. Shahbazpur well was
spudded in December, 1993 and in 4 months, a depth of 3,631 metres was reached. Due to
encountering of over pressure, the well had to be abandoned after flowing gas through coil
tubing from interval 3,201-3,210 metres. Subsequently, it was decided to drill a side-track
hole. After drilling of side-tracking hole down to 3,342 metres, commercial gas flow was
ensured. Analysis of results obtained from vertical and side-track drillings indicated an in-
place reserve of 0.5138 TCF.
16.2.4 Shangu Gas Field : In 1994, Bangladesh Government signed a Production Sharing
Contract (PSC) with Cairn Energy and Holland Sea Search for oil and gas exploration in
Chittagong and its adjacent coastal areas. The international company conducted a
comprehensive seismic survey in the Bay of Bengal in 1995 and identified a prospective area
of hydrocarbon reserve located 40 km away from Shangu estuary. The first well was drilled
down to the depth of 3,500 metres and four gas zones were reached. Examination of two
zones indicated the presence of significant amount of gas and Shangu was declared a gas
field. Then the second well was drilled to estimate the gas reserve and a reserve of 0.848 TCF
was determined and to exploit the gas reserve, development of the field was planned. To
make it commercial, plan was prepared to drill additional production wells, construct
platform and install pipelines and processing plants. After successful completion of all these
activities, it is expected that the production of natural gas from this field will be possible from
April,1998.
16.2.5 Patharia Oil and Gas Exploration Well : Patharia area is located in the north-
eastern part of Bangladesh under Baralekha Thana of Moulvibazar district. After evaluation
of seismic data and gravity survey, the location was selected for exploratory drilling. Drilling
of one exploratory well with Saudi assistance was planned during the Third Plan period.
 355

Patharia well was spudded in 1989. The well was designed to be drilled down to a depth of
5,000 metres. However, due to several changes in casing points and hole deviation, it could
reach only down to 3,438 metres. Then the drilling was terminated for deterioration of casing
due to frequent reaming, slow drilling rate and risk factor in continuation of drilling.

16.2.6 Oil : Exploration activities carried out so far could not discover any significant oil
deposit. The only oil deposit so far discovered in the country is in Haripur which produced a
total of about 0.65 million barrels of crude oil till 1994. The oil production has since ceased
because of reduction of pressure and influx of water in the oil zone. Comprehensive
exploration efforts need to be mounted in this field.
16.2.7 Coal : Discovery of coal dates back to late fifties, when an exploratory oil well was
drilled through coal beds in Bogra. Subsequent explorations resulted in the discovery of the
Jamalgonj coal deposit at a depth of about 1,000 metres from the ground level and having an
estimated reserve of more than 1,000 million tons of coal. Feasibility studies have indicated
that the development of this deposit is not yet feasible under the prevailing international
market price. However, with the increase in gas price, these deposits may become
competitive. After evaluation of a detailed geological and geophysical survey, Geological
Survey of Bangladesh (GSB) identified 13 locations in the region of greater Rangpur and
Dinajpur districts as the prospective basins for coal exploration. Exploratory wells were
drilled in 5 basins out of which high quality bituminous coal deposits were found in 3 basins.
In addition, BHP, a foreign company, also discovered a coal reserve in one basin. In 1984/85,
Geological Survey of Bangladesh located another coal deposit at Khalashpir (Pirgonj) of
Rangpur district at a shallower depth (150 metres), with an estimated reserve of 450 million
tons of coal. This deposit requires to be appraised in respect of its potential.
16.2.8 Besides, minable coal deposit was also discovered in Barapukuria area of Parbatipur,
Dinajpur at a reasonably shallow depth (240 metres) with an estimated reserve of about 300
million tons. Based on this, a project for construction of an underground mine has been
undertaken at an estimated investment of Tk. 8,873.60 million to produce an annual output of
1 million tons commencing from 2000/01. Recently, another coal deposit has been discovered
by Geological Survey of Bangladesh in Dighirpara area of Dinajpur district covering an area
of about 15 sq. km. As only one well has been drilled, the actual deposit of coal could not yet
be determined.
16.2.9 The GSB has planned to conduct comprehensive exploration activities by the year
2000 in the following seven basins :
a. Badargonj-II (Rangpur)
b. Basudevpur (Rangpur)
c. Barapukuria-I (Dinajpur)
d. Barapukuria-II (Dinajpur)
e. Daudpur (Dinajpur)
f. Dongapara (Dinajpur)
g. Shamnagar (Dinajpur).
16.2.10 Peat : Deposits of peat occur at shallow depths in different low lying areas of
Bangladesh. According to the Geological Survey of Bangladesh, the reserve of dry peat is
about 170 million tons. The major deposits are in greater districts of Faridpur (150 million
tons), Khulna (8 million tons) and Sylhet (13 million tons). Peat requires drying before
making briquettes for use as fuel. A pilot project for extraction of peat and making briquettes
 356

was implemented by Petrobangla, but the results were not encouraging and extraction was
assessed as economically not viable. However, in future, this resource may be viable as and
when prices of other fuels rise.
16.2.11 Hardrock and Limestone : Hardrock was discovered by GSB in Madhyapara area
of Dinajpur District in 1964 at a depth of 285 metres from surface. An agreement was signed
with North Korea in 1993 for the opening of an underground hardrock mine with a target
production of 1.6 million tons per annum. The hardrock mine is expected to come into
operation by the year 2000/01. Madhyapara hardrock will be used for river training , heavy
construction work, railway ballast, highway, etc. The granite slabs excavated from this mine
can also be used as polished tiles and pavings. Presently these are imported. Considerable
import substitution and increased revenue earning may, therefore, be expected from this rock.
Limestone has been found at Joypurhat and some other places of Sylhet district. The
production of sub-surface limestone of Joypurhat is yet to materialise.

16.3 Review of Past Performance (1973-1997)

First Five Year Plan and Two Year Plan (1973-1980)
16.3.1 The need for development of natural gas as a source of energy was recognised in the
First Plan (1973-78). In this Plan, priority was given on the gas transmission and distribution
related works with a view to accelerating the use of natural gas as fuel and industrial raw
material. One of the objectives of the Two Year Plan (1978-80) was to accelerate the pace of
exploration activities and encourage expanded use of gas, particularly as a substitute of
imported petroleum. An allocation of Tk. 2,360.00 million was made during the First Plan
and Two Year Plan periods for development of the sector. However, actual expenditure
during the period stood at Tk. 2,870 million.
16.3.2 An intensive effort was made during this period to find new hydro-carbon sources,
particularly in the off-shore areas, but with limited success. Gas deposits were found in two
wells out of eleven exploratory wells drilled, of which 9 were off-shore wells drilled by the
international oil companies (IOCs). Nine production wells drilled in 4 fields with an
estimated production capacity of 210 MMCFD, produced only 122 MMCFD of natural gas in
1979/80. Total transmission line extended up to 224 km in 1979/80. During this period, the
main physical achievement was the connection of Habigonj gas field with the Titas field by
the 12" transmission line over a stretch of 56 km and initiation of gas transmission line from
the Bakhrabad field to Chittagong. Total distribution line of 1,608 km was constructed and
119,400 gas connections were given upto 1979/80. Crude oil storage tanks with a capacity of
80,000 tons and refined petroleum storage tanks with a capacity of 25,000 tons were installed
during 1973-80.
Second Five Year Plan (1980-1985)
16.3.3 Implementation of the Second Plan started with the objective of maximising the
utilisation of indigenous natural gas and saving foreign exchange through substitution of
imported fuel. The Plan envisaged to raise the supply of gas to 128 BCF in 1984/85 from 44.5
BCF in 1979/80 in order to enhance the share of natural gas in commercial energy
consumption from 37 per cent in 1979/80 to 68 per cent in 1984/85. At the same time,
exploration activities were geared up in search of oil and gas.
16.3.4 During the Plan period, drilling of 6 exploration wells were completed against the
planned target of 9 wells. Out of these, 4 wells were found to have gas reserves. The
 357

important developments during the period were the activation of Bakhrabad gas field to
supply gas to Chittagong area and connection of this field with the Titas system by a new
transmission line near Dhaka. Transmission system was expanded by 307 km altogether
which enabled gas supply to rise from 44.5 BCF in 1979/80 to 94.6 BCF in 1984/85. The
share of gas in commercial energy rose from 37 per cent in 1979/80 to 56 per cent in 1984/85.
At the end of the Plan period, 240,000 customers were given gas connection against the target
of 258,000 customers which raised the total gas connection to 359,400 customers in the year
1984/85.
16.3.5 The country continued to be entirely dependent on imported POL. The total quantum
of POL product consumed during the Second Plan was 6.8 million tons at an average rate of
about 1.4 million tons per year. Of this, about 70 per cent was derived from imported crude
oil refined at the Eastern Refinery Ltd. (ERL) and the rest, the middle distillates like diesel
and kerosene were imported. ERL also set up an LPG recovery plant with a designed capacity
of 17,000 tons per annum. Production of LPG was 7,000 tons in the year 1984/85. At the end
of the period, the economics of ERL were upset by the fall in world oil price. As spot
purchases of POL products became cheaper, refining of crude through ERL was reduced to
below 1 million tons against its capacity of 1.5 million tons. Moreover, naphtha was exported
at a cheap price when some middle distillates were being imported at a higher cost. So a study
was undertaken for ascertaining the feasibility of secondary conversion of some of the ERL
products into more needed middle distillates. The drop in world prices, however, helped BPC
to improve its financial position as the domestic prices of POL products remained unchanged
and BPC was able to make up its past losses.
16.3.6 During this period, about 1,025 sq. km of geological mapping, 2,560 sq. km of
geological surveys, 1,520 km of drilling and 3,000 geochemical analyses were completed. A
new shallow depth coal deposit at Dinajpur was discovered as a result of geological survey
during this period.
16.3.7 An amount of Tk.6,150 million (at 1979/80 prices) was allocated to the sector in the
Plan while the actual expenditure amounted to Tk. 9,550 million. The excess expenditure
was met from Petrobangla's own resources.
Third Five Year Plan (1985-90)
16.3.8 The Third Plan envisaged to maximise the use of natural gas to reduce pressure from
fuel import bill, explore the major gas fields to assess the proven reserves, conduct
exploration for oil and gas, construct transmission and distribution lines to provide additional
gas to various customers, improve product-mix of Eastern Refinery and conduct survey for
mineral discoveries. In order to achieve these objectives, the Plan set a target to drill 18
development/appraisal wells and 5 exploration wells for hydrocarbon and construct 3,760 km
of transmission and distribution lines. It was planned that the oil consumption would be
contained within 1.6 million tons in 1989/90. GSB envisaged to continue extensive
geological mapping and survey works including drilling of 6 more boreholes to delineate the
Barapukuria coal deposit during the Plan period .
16.3.9 During the Third Plan, 16 out of 18 planned development/appraisal wells were drilled,
2,700 km transmission and distribution lines out of planned 3,760 kms were constructed and
only 2 out of 5 exploration wells were completed. During the Plan period, additional gas
connections were given to 165,600 customers as against the target of 160,000. Gas supply
was raised from 94.6 BCF in 1984/85 to 165 BCF in 1989/90. Oil consumption and hence the
 358

import bill could not be contained on account of underestimation in demand projections and
lagging behind of the expected substitution of diesel and kerosene through rural
electrification and other programmes. The addition of a secondary conversion plant to Eastern
Refinery could not even be initiated. Physical activities of GSB were almost completed
which included drilling of 6 boreholes for coal exploration. Training courses to 500
professionals and technicians of BOGMC, GSB etc. were provided by Bangladesh Petroleum
Institute under the Plan . The discovery of oil in sylhet gas field in December, 1986 and the
discovery of a large coal field at Khalashpir, Rangpur at a depth of 250 meters in April, 1989
were two remarkable achievements during the Plan period.
16.3.10 Out of the total allocation of Tk. 13,150 million, the amount utilised was about Tk.
12,000 million during the Plan period in the public sector. Besides the public sector, Tk.
1,250 million was spent for hydrocarbon exploration by two IOCs.

Fourth Five Year Plan (1990-95)

16.3.11 The Fourth Plan was launched with the objectives of ensuring the supply of
increased quantum of commercial energy mainly from indigenous resources and optimising
its utilisation. The agency-wise physical targets and actual achievements were as follows :
Petrobangla
16.3.12 Exploration Survey and Drilling for Hydrocarbons : Intensive geophysical and
geological survey were to be undertaken over discovered as well as new areas. The target was
7,500 lkm. of survey during the Fourth Plan. In effect, actual seismic survey amounted to only
1,712 lkm. with an additional 1,000 lkm of geological survey.
16.3.13 Drilling of 5 exploration wells was planned to be executed by BAPEX. In practice,
no exploration drilling was completed during the Fourth Plan. The main reasons were
financial constraint, non-availability of project equipment and lack of expert personnel in
BAPEX. PSC partners were expected to drill at least 10 exploration wells during the Plan
period. No PSC was actually made operational and no drilling took place .
16.3.14 During FFYP, 45 new production wells were targeted (net no. of wells was to be 41
as four wells were expected to be shut-off). By the end of the Fourth Plan, 42 wells were
completed (net 39 wells, 3 wells were shut off). The Plan target was to have 35 wells in
operation. Against this target, 33 wells were put into operation upto June, 1995, while two
others came on stream shortly thereafter. Peak demand for gas was estimated to increase by
300 MMCFD to 950 MMCFD by 1994/95; in reality, peak demand was registered at 850
MMCFD by 1994/95. Annual production of gas was planned to increase from 165 BCF to
275 BCF by the end of Fourth Plan. Actual production of gas reached to 247 BCF.
16.3.15 Transmission and Distribution Line and Customer Connections : During the
Plan period, some major transmission pipe lines were completed and commissioned. These
included North-South Pipe Line, Brahmaputra Basin Pipeline and Pipeline to Raozan power
plant. In addition, a condensate pipeline of 190 km length was completed. However, the
Ashugonj-Bakhrabad pipeline suffered due to delay in financing and other complications. The
target was to add 700 km transmission line by the end of the Plan period.
16.3.16 To reach the consumers, the distribution network was planned to be expanded with
the addition of 2,500 km pipeline. This would bring the total distribution network to 7,500
km. In effect, distribution network under the three franchise areas increased by 2,950 km so
 359

that the total figured at 7,950 km. Concomitant with the growth of the network, customer
connections also grew rapidly. The Plan envisaged an addition of 195,000 new connections to
bring the total to 600,000. Actual number of connection to customers reached 631,710 by the
end of the Plan period.
16.3.17 Development Projects : During the Plan period, a total of 16 projects were
completed, of which 10 were investment projects and 6 were technical assistance projects.
These projects together created employment opportunity for about 800 persons during
implementation and about 650 persons during operation. The oil and gas sub-sector
contributed Tk. 36,000 million to the government in the form of CD/VAT, corporate tax,
dividend, etc. during the Plan period.

16.3.18 Plan Allocation : Against a Plan allocation of Tk.23,980 million the actual
utilisation was Tk. 15,320 million which was about 64 per cent of the Plan allocation and 80
per cent of RADP allocation.

16.3.19 Bangladesh Petroleum Corporation : BPC undertook five development projects

(4 spill-over and 1 new) during the Fourth Plan involving a total investment of Tk. 5,339.90
million with a foreign exchange component of Tk. 3,121.50 million to attain improved
operational flexibility and also to ensure easy availability of petroleum products at the door
step of the people. During the years under review, RADP allocation was Tk. 3,381.50 million
out of which an amount of Tk. 3,056.90 million was utilised. Among the five projects, three
were completed as scheduled at a cost of Tk 3,609 million.
16.3.20 With the completion of BMRE of ERL, the refinery attained its original processing
capacity of 1.5 million tons of crude oil per annum. Besides, a three MW steam turbine
generator, a cooling tower, dolphin type oil jetty and modern fire fighting facilities were also
installed to improve power generation and cooling system of the refinery and to facilitate
crude reception and naphtha export. After completion of the secondary conversion plant at
ERL, excess furnace oil (FO) produced in the Refinery was upgraded to High Speed Diesel
(HSD) which saved foreign currency by way of import substitution of HSD.
16.3.21 Geological Survey of Bangladesh : GSB is entrusted with the responsibility of
carrying out basic geological studies including geological, geotechnical and geophysical
drilling, etc. in the country for the exploration of mineral resources except oil and gas.
16.3.22 The organisation already completed 3,289 sq.km mapping works including
geological, geotechnical, photogeological and geochemical mapping. About 5 km of seismic,
3,312 lkm. of geophysical logging, 50 sq.km. of resistivity and 440 sq.km. of gravity
magnetic survey have also been completed within this period. Two drill holes have been
drilled in the Dighipara of Dinajpur and Badarganj of Rangpur district respectively and a coal
field has been discovered with a good quality bituminous coal at a depth of 1,076 metres
below the surface. During the Fourth Plan, GSB spent only Tk. 2.15 million against an
allocation of Tk. 2.25 million for implementation of the project - Detailed Geological
Exploration in Selected Areas of Bangladesh.
16.3.23 Bangladesh Petroleum Institute : BPI was established in January 1981 as a
development project under the Ministry of Energy and Mineral Resources. BPI was mainly
assigned to train 250 professionals annually in the petroleum sector. It imparted training over
the years to professionals and technicians engaged in the petroleum sector. During the Fourth
Plan period, a total of 550 persons were trained through 21 courses, seminars and workshops
 360

on various aspects of exploration, production and development of oil and gas fields, safety
and management. BPI also sent abroad 7 of its professionals on short courses and on the job
training (4 to 8 weeks) and 3 of its professionals on long term courses including post
graduation. It also procured books, a number of training aides and class room tools to
facilitate its training activities. BPI was allocated Tk. 154.60 million out of which Tk. 113.90
million (73.69 per cent) was utilised.

16.3.24 Sectoral Allocation and Utilisation During Fourth Plan : A total of Tk. 30,250.00
million at current prices was allocated to the oil, gas and mineral resources sector, out of
which Tk. 22,800 million was released through RADP. The actual utilisation was Tk.
18,936.30 million during the Plan period which was 62.6 per cent of the Plan allocation and
83 per cent of RADP allocation.
16.4 Performance During 1995/96 and 1996/97
16.4.1 The OGNR sector is highly important in determining the growth prospect of the
economy. Over the two year period, the major objectives in this sector were to ensure a
reliable and uninterrupted supply of commercial energy, mostly natural gas. During this
period, emphasis was given on the development of the private sector in the oil and gas
exploration activities mainly through Production Sharing Contract (PSC). Activities
undertaken during this period related to the seismic survey, exploration, expansion of gas
transmission and distribution network, development of coal and hardrock mine, etc. During
this period, 564 Lkm of seismic survey was conducted and 2 exploration wells were drilled by
BAPEX. Both exploration wells (Shahbazpur and Saldanadi) led to discovery of gas. During
1995/96, 15 km transmission pipelines and 575 km distribution and other pipelines were
constructed. During 1996/97 fiscal year, 326 km distribution and other pipelines were laid
until December,1996. The Ashugonj-Bakhrabad pipeline (30" dia 59 km) connecting Surma
basin production area and Bakhrabad franchise area was completed. Gas production during
1995/96 reached 265 BCF increasing from 247 BCF in 1994/95. Production of the same was
261 BCF in 1996/97. Remarkable achievement of these two years were the discovery of three
new gas fields among which two were on-shore and one off-shore. The off-shore field was
discovered by one international oil company under PSC and two on-shore fields were
discovered by BAPEX.
16.4.2 An allocation of Tk. 4,534.90 million was provided through ADP for 43 projects of the
sector in 1995/96. Actual expenditure during the year was Tk.4,080 million. In 1996/97
Tk.4,858.20 million was allocated to 37 development projects of the sector.
16.5 An Overview (1973-1996)
Oil and Gas Exploration
16.5.1 During the period 1973-96, drilling of 24 exploratory wells including 7 off-shore wells
was completed. Individual depth of wells varied from 1,560 metre to 4,977 metre. The
number of wells drilled by national organisations were 14, while ten wells were drilled by the
foreign companies. National organisations discovered 7 gas fields, and one oil field. Foreign
companies discovered 2 gas fields including one in the off-shore area. It may be stated that oil
and gas exploration activities had been very limited. Only one well per year, on an average,
was drilled in the last 23 years.
16.5.2 As far as gas fields are concerned, the exploration/discovery ratio in Bangladesh till
now is 3:1 i. e. 17 gas fields were discovered out of 54 exploration wells since 1910, which is
 361

one of the highest in the world. Reserves were estimated at 22.90 TCF of which 13.60 TCF
are recoverable. Out of 17 discovered gas fields, 8 were brought into production. It is
important to note that almost all the exploration activities were undertaken in the shelf area in
the north eastern part of Bangladesh .
16.5.3 To expedite petroleum exploration, a new Model Production Sharing Contract (PSC)
was formulated in 1988. In 1989, the area of the country was divided into 23 blocks of which
17 blocks including 6 off-shore blocks were offered to the international oil companies (IOCs)
for competitive bidding. In 1993, the government announced a new petroleum policy to seek
participation of IOCs in hydrocarbon exploration and production through PSC.

Production of Natural Gas Condensate and Crude Oil

16.5.4 At present gas is being produced from 8 fields, namely, Titas, Bakhrabad, Habiganj,
Rashidpur, Kailashtilla, Sylhet, Narsingdi and Feni. Production from two fields, namely,
Chatak and Kamta has been suspended owing to various technical reasons. Gas production
increased from 23.58 BCF in 1972/73 to 292 BCF in 1996/97, while sales went up from 20
BCF in 1972/73 to 285 BCF in 1996/97. Of the total volume of sales, 46.74 per cent was
consumed by the power sector, 35.57 per cent by fertiliser, 9.65 per cent by other industries
including tea estates, and the rest 8.04 per cent by commercial and domestic users. Total
revenue from sales of gas and gas associated fuel amounted to Tk. 11,618 million in 1993/94.
16.5.5 In 1993/94, production of crude oil from only one oil field at Haripur was 5,395 metric
tons. But it decreased steadily during the last few years and was suspended in July, 1994.
Current production of gas associated condensate amounts to about 1,000 barrels a day which
is expected to rise to about 3,500 barrels a day when the wet gas fields of Kailashtilla and
Beanibazar, Jalalabad are commissioned.
16.5.6 The present demand for petroleum products of the country is about 2 million tons of
which 50 per cent is for diesel, 25 per cent for kerosene, 8 per cent for motor spirit, 10 per
cent for fuel oil and the rest 7 per cent is for other minor products, whereas 1.4 million tons of
refined petroleum products are produced by the only refinery of the country of which 20 per
cent is diesel, 30 per cent kerosene, 15 per cent LPG and gasoline (motor spirit and naphtha)
and 35 per cent fuel oil. This shows that the country has excess gasoline and fuel oil while
there is a shortage of diesel and kerosene. The consumption rate of petroleum products is
growing slowly but steadily at the rate of 2.5 per cent to 3 per cent per annum. Import of
refined petroleum products, therefore, remains, quite essential. To meet the present and future
demand for petroleum products of the country, addition to the present refinery capacity will
be needed.
Transmission and Distribution of Gas
16.5.7 During the last few years, the operational networks of the transmission and
distribution companies have been considerably expanded through the construction of gas
pipeline and associated DRS and MRS installations. About 9,600 km of pipelines have been
constructed upto June 1996 of which about 1,600 km are high pressure transmission lines.
16.6 Institutional Development
16.6.1 Petrobangla : The gas sector in Bangladesh is dominated by the Petrobangla Group
consisting of eight state-owned companies responsible for the exploration, production and
delivery of natural gas as well as exploration and development of oil and solid minerals
including coal. The Petrobangla Group consists of the holding corporation (Petrobangla), one
 362

exploration and drilling company, two production companies, three distribution companies
and one liquid natural gas company. In 1993, the government approved the establishment of
the Gas Transmission Company Ltd. (GTCL) to operate the national gas grid.
16.6.2 Bangladesh Petroleum Corporation : BPC was set up in 1976 with the objective of
importing, refining and marketing of petroleum oil and lubricant products. It operates through
seven subsidiary companies.
16.6.3 Geological Survey of Bangladesh : GSB, the national geoscientific organisation,
established in 1962, is responsible for geological, geophysical, geochemical mapping and
drilling activities related to finding out solid mineral resources in the country. It evaluates the
known mineral resources, conducts studies, renders advisory services and supplies relevant
information regarding hydrogeology, engineering geology, urban and environmental geology,
etc.
16.6.4 Bangladesh Petroleum Institute : BPI was established in 1992 as a research and
training institute with the objective of imparting training to professionals and technicians in
the oil and gas sector and carrying out research works.
16.6.5 Hydrocarbon Unit : A hydrocarbon unit was established in 1994 in the Ministry of
Energy and Mineral Resources to perform the activities relating to state control over
government owned corporations and companies, monitoring exploration/production licences,
approval of PSCs, monitoring crude oil refining, petroleum products distribution policy,
fixing of price of petroleum products, preparation of budgets, all administrative matters and
control of financial matters.
16.7 Major Constraints
16.7.1 The gas sector in Bangladesh is wholly dominated by Petrobangla. The sector has a
large potential for increased contribution to the country's economic growth. However, a
number of constraints restrict the appropriate development of the sector. The country is
dependent on foreign aid. Lack of necessary capital is limiting the development of the sector.
Exploration, gas field development, transmission and distribution activities are highly
technical and capital intensive activities. The problem of the sector is accentuated by the
dependence on expatriate consultants. In spite of providing a large number of short and long-
term training, both local and foreign, to a number of technical, professional and
administrative personnel in different fields of gas sector activities in the last one decade,
substitution of foreign consultants by the local consultants has not been effective in sectoral
planning, designing and implementation of programmes/projects. Also, there has been
inadequate transfer of technology through technical assistance projects. The deficiency in the
development of manpower has also been caused by inappropriate selection of trainee
clientele. These have to be overcome through appropriate sectoral manpower planning.
Considerable delays in project implementation occur due to the following :
a. too many stages of approval at different levels for appointment of consultants/
contractors and procuring machinery/equipment/materials both within the government
and the development partners;
b. imposition of too many conditionalities by the donors at different stages of credit
negotiation, signing of agreement and effectiveness of credit; and
c. change in the scope of works and linking the implementation of priority projects with
the conditionalities of low priority projects.
 363

16.8 Fifth Five Year Plan (1997-2002)

16.8.1 Objectives : The main objectives for the development of oil, gas and natural resources
sector during the Fifth Plan will be to :
a. substitute imported oil by indigenous fuel, mainly natural gas, to the extent possible
and feasible;
b. meet most of increased demand for commercial energy through the development of
indigenous gas;
c. intensify exploration and appraisal activities for augmenting the hydrocarbon
resources base;
d. make a balanced development of different components of gas activities, namely,
exploration, production, transmission and distribution in sync with downstream uses,
etc.;
e. involve private sector in oil and gas development activities particularly in exploration
under production sharing contract (PSC), transportation and sale of gas based
liquids, LPG, condensate (diesel/motor spirit/kerosene, etc.);
f. gradually adjust gas price to its economic cost of supply in the interest of its optimal
use;
g. build a national gas grid for equitable regional distribution;
h. conserve energy resources and help maintain the ecological balance;
i. extract coal, hardrock and other solid mineral resources;
j. conduct geological and geophysical surveys in order to explore and discover new
sources of indigenous energy resources;
k. strengthen research and development in the energy sector;
l. provide cylindered liquid natural gas for the rural people; and
m. use surplus gas for downstream activities.
16.8.2 Policies and Strategies : The following policies and strategies will be adopted for
realisation of the above objectives :
a. in order to accelerate development activities, efforts will be made to gradually involve
the private sector in exploration, production, transportation and sale of oil and gas;
b. a shift towards better mix will be made so that dependence on a single energy source
like natural gas is minimised, and other energy resources are exploited;
c. natural gas fields rich in condensate and propane/butane will be developed to reduce
the import bill for oil; emphasis will be given to supply liquid natural gas to the
indigenous rural people by cylinder;
d. gas pipeline in the west zone through the Bangabandhu Bridge for effective regional
balance in energy supply will be laid in;
e. measures will be taken to use coal discovered in the west zone for electricity
generation;
f. efforts will be made to expand the gas and condensate transmission and distribution
networks to the extent possible/feasible;
g. gas supply to industrial estates will be ensured;
h. timely maintenance of the gas production wells to avoid supply dislocation caused by
sanding/water intrusion as happened in the Bakhrabad well will be ensured;
i. conservation and economic use of natural gas will be promoted through adoption of
appropriate technology and tariff measures; price of natural gas will be rationalised
into economic price considering the heating value parity;
 364

j. extraction of hardrock and other solid minerals including thorium, uranium and beach
sand minerals will be geared up;
k. special incentive package for oil and gas exploration in the west zone will be given;
l. efforts will be made to encourage establishment of privately owned and managed
distribution companies for marketing of natural gas available from transmission
pipelines to unserved urban centres;
m. measures will be taken to establish a regulatory authority which will be manned by
competent persons for licensing energy utilities, setting prices and consideration of
related issues;
n. environmental impact assessment will be made mandatory for energy development
projects;
o. dependence on external assistance will be reduced gradually by internal financing to
the extent possible;
p. a comprehensive programme of training linked with career development of
professionals will be implemented;
q. research and development activities will be increased for productivity and cost-
effective advances in the energy sector;
r. geological and geophysical activities will be geared up;
s. measures will be taken to provide tax incentives to those entrepreneurs who will come
forward to set up natural gas based industries; and
t. international oil companies with whom PSCs have been signed for exploration of oil
and gas will be encouraged to invest downstream in power generation activities,
fertiliser factories, petro-chemical complex, etc.
16.9 National Programmes
16.9.1 The demand for primary commercial energy is expected to increase from 10 million
ton oil equivalent (MTOE) in 1997 to 15 MTOE by 2002 showing an average growth rate of
8.57 per cent. At this growth rate, per capita primary commercial energy consumption will
rise from 81 KGOE in 1996/97 to 109 KGOE in 2001/02. This increased demand will mostly
be met by indigenous natural gas raising its share to 70 per cent of the total primary
commercial energy consumption. The peak demand of natural gas is expected to increase
from 1,100 MMCFD in 1996/97 to about 1,700 MMCFD in 2001/02 and average demand
from 900 MMCFD in 1996/97 to about 1,360 MMCFD in 2001/02 giving an annual average
growth rate of about 10 per cent. Endeavours will be made to put coal to use so that partial
energy demand can be met from this alternate indigenous resource. To augment gas supply,
both intensive and extensive exploration for hydrocarbon will be carried out aiming at adding
new reserves during the period 1997-2002 in both public and private sectors and under PSCs.
16.9.2 To contain the import of oil more or less at the present level, all efforts will be made to
substitute this with indigenous natural gas and coal to the extent possible and extract LPG
from natural gas to reduce the import of kerosene. The import of diesel and kerosene will be
further reduced by expanding rural electrification programme for irrigation and lighting. In
spite of all these efforts, the import of POL is estimated to grow at an average rate of 9 per
cent annually. It is expected that the consumption of POL in 2001/02 will be about 3.49
million tons compared with the consumption of 2.38 million tons in 1996/97.

16.10 Programmes in Public Sector

16.10.1 Survey/Exploration for Hydrocarbon : The geological and geophysical surveys
will be intensified to discover and delineate new hydrocarbon bearing structures and to
 365

determine the extent and potential of existing gas fields. It is expected that a total of 3,000
lkm of seismic survey and about 1,200 lkm of geological survey will be undertaken during
this period. At the same time, programme of drilling 7 exploration wells will be implemented
during the Plan period in the public sector. For exploration of hydrocarbon, in the private
sector, particularly the multinational companies will be encouraged to invest under PSCs.
16.10.2 Production/appraisal wells : Drilling of production wells in Rashidpur/Habiganj
gas fields and drilling of appraisal-cum development and workover wells in Titas fields have
been planned for 1997-2002. The major work in this respect will include the drilling of
appraisal and production wells in Saldanadi and Shahbajpur (2+2=4), Rashidpur (4 wells),
Habiganj (4 wells), Titas (3 wells), and workover of about 10 wells together with the drilling
and establishment of 480 MMCFD process plant.
16.10.3 Transmission and distribution line : A number of on-going lines will be completed
and new ones taken up during 1997-2002. The major ones will include Monohardi-
Narshingdi-Shiddhirgonj pipeline (59 km), Rashidpur-Ashugonj loop line (82 km),
Beanibazar-Kailashtilla pipeline (23 km) and pipeline over Bangabandhu Bridge and on the
west bank (80 km). In total, more than 350 km of transmission line is expected to be
completed. Besides, about 2,000 lkm distribution line will be constructed in three franchise
areas to supply gas to users.
16.10.4 Coal : At the present rate of growth in energy demand, partial energy demand
mostly for thermal power plants beyond 2000 will be met by coal. Development of the
Barapukuria coal mine is under implementation projecting a production of 1 million tons of
coal per year from 2000 for 65 years. In addition, Khalashpir (Rangpur) coal deposit is being
studied for possible extraction. Studies will also be undertaken to extract coal bed methane
from the Jamalgonj coal deposit.
16.10.5 Hardrock : The present annual demand of hardrock is 1.5 million tons. The
hardrock project is projected to yield of 1.65 million tons per annum.
16.10.6 Development of LPG / NGL : Necessary arrangements will be made for production
of LPG/NGL from the wet gas fields of Sylhet region. It is expected that about 125,000 tons
of additional LPG/NGL/ condensate will be produced annually by the end of the Plan period.
16.10.7 Major programmes of petrobangla : The following will be the major programmes
of Petrobangla in the Fifth Plan period :

Oil and Gas Exploration Drilling 7 wells

Geological and Geophysical Survey 3,000 km
Appraisal/Development Drilling 13-15 wells
Gas Transmission Lines 375 km
Gas Distribution Lines 2,000 km

In addition to these, contingent on negotiations with the relevant oil exploration companies,
additional exploration may be undertaken.
16.10.8 Bangladesh petroleum corporation : BPC's main activities will be concentrated on
the completion of BMRE of the existing refinery, construction of lighterage and dolphin
jetties, second crude oil distribution unit at ERL, Mongla Oil Installation and LPG import,
storage, receiving, bottling and distribution facilities. In addition, a second refinery will be set
up during the Plan period to meet the rising demand for POL products.
 366

16.10.9 Geological Survey of Bangladesh : Extensive and intensive geological and

geophysical surveys supported by drilling for mineral discovery, engineering, water resources
and tectonic studies will be undertaken by GSB. It will also conduct research for identifying
rocks and minerals and establishing rock sequence in the country. GSB will take up activities
relating to the delineation of Khalashpir coal and completing its early feasibility study. A few
important proposals of GSB are as follows :

Major Programmes 1997-2002

Detailed geological mapping for minerals 7,000 lkm
Research or stratigraphy 10 sections
Research and exploration for metallic deposits 200 samples
Gravity and magnetic survey 1,000 sq. km
Seismic/Resistivity survey 200 sq. km.
Drilling of exploration wells (15 Nos.) 7,000 metres

16.10.10 Gas Demand Forecast and Other Proposals : Gas demand forecast and other
proposals for 1997-2002 period are given in Tables 16.1, 16.2 and 16.3 . Gas demand forecast
for power generation and fertiliser production has been made on the basis of already
committed projects and future demand estimated from power sector master plan (PSMP).
Demand forecast for other sectors has been estimated considering historical trend of
consumption (around 10 per cent per annum) by the sectors over the last ten years.
Table 16.1
Gas Demand Forecast During 1997-2002
Items 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002
(Benchmark)
Peak demand (MMCFD) 1100 1240 1380 1470 1550 1700
Average demand (MMCFD) 900 1000 1120 1200 1250 1360
Annual production capacity (BCF) 292 350 495 506 500 500
Annual gas supply (BCF) 285 350 410 438 455 495
Source : Petrobangla.

16.10.11 As stipulated in the energy policy, gas supply will be required to be limited to a
maximum of 1,000 MMCFD or 365 BCF/Year provided significant increase in the natural
gas reserve does not take place. If remarkable addition to reserve occurs, the situation may
significantly improve in the coming years and the production capacity shown above may well
be attainable. It is expected that from 1998/99 there will be no supply constraint and gas
supply will be based on available demand.
Table 16.2
Customer-wise Average Gas Demand During 1997-2002
(in MMCFD)
Sector 1997/98 1998/99 1999/2000 2000/01 2001/02
Power * 540 638 680 712 766
Fertiliser 280 285 305 305 305
Domestic 70 79 84 92 102
Commercial 17 17 18 21 24
Industrial + B.F+ T.E* 95 101 113 120 163
Total 1002 1120 1200 1250 1360
(365 BCF) (410 BCF) (438 BCF) (455 BCF) (495 BCF)
Source : PSMP/GSMP * Brick Fields + Tea Estates
 367

Table 16.3
Field-wise Appraisal/Production Wells During 1997-2002

1996/97 ( Benchmark) 2001/2002

Locations Production wells Wells under Production Wells Wells under operation
operation
1. Titas 11 11 14 14
2. Bakhrabad 8 8 8 8
3. Habiganj 6 6 10 10
4. Feni 2 2 2 1
5. Belabo 1 1 1 1
6. Meghna - - 1 1
7. Sylhet 1 1 2 2
8. Kailashtilla 4 3 4 4
9. Rashidpur 4 4 8 8
10. Bianibazar - - 2 2
11. Fenchugonj - - 2 2
12. Jalalabad # - - 2 2
13. Semutang # - - 1 1
14. Sangu # - - 4 4
15. Saldanadi - - 2 2
16. Shahbazpur - - 2 2
Source : Petrobangla, # Under PSC Investors

16.10.12 Financial Outlay (1997-2002) : A total of Tk 26,039.60 million at 1996/97 prices

has been projected under the Plan for development of oil, gas and natural resources in the
public sector. In addition, Tk. 8,726.07 million is expected to be invested by the private
sector. Agency- wise break-up of the financial outlay is as follows:

Table 16.4
Public Sector Outlay for Development of Oil Gas and Natural Resources in Fifth Plan
(in million Taka)
Agency Allocation
Petrobangla 19,990.60
BPC 5,978.70
GSB 70.30
Total 26,039.60
 368

Table 16.5
Projected Physical Attainments in Oil Gas and Natural Resources in Fifth Plan
Sl. Description Base Year Proposed Addition Remark
No. 1996/97 2001/02
1. Peak Demand for Gas (mmcfd) 1,100 1,700 --
2. Annual Supply of Natural Gas 285 365/400 115 Subject to gas reserve
(bcf)
3. Customer (Nos) 650,000 790,000 140,000 --
4. Exploration wells for Hydrocarbon 55 77-82 22-27 Subject to new PSC
operations
5. Production wells (Operation) 36 64 28 Both Public & PSC
6. Transmission lines (km) 1,600 1,975 375 --
7. Distribution lines (km) 8,000 10,000 2,000 --
8. Geological & seismic survey (lkm) 7,000 7,000 3000 public sector,
4000 in PSC
9. Production of Cond/NGL (tons/yr) 50,000 175,000 125,000 Jalalabad, Beanibazar
& Kailashtila fields to
be commissioned
10. Production of Coal (100,000 tons) nil 10 10 --
11. Production of LPG (tons/yr) nil 15,000 15,000 NGL plant needed to
be commissioned

16.11 Participation of Private Sector

16.11.1 One of the policies of the government is to involve the private sector in the
development of hydrocarbon resources of the country through participation of international
oil companies (IOC) under production sharing contract. This policy will continue during the
Fifth Plan. With the known recoverable reserve of gas, it will not be possible to give
additional gas connections beyond 2000 without constraining the supply to the already
connected consumers. With the projected demand and known recoverable resources of gas,
the country will start facing gas shortage after 2010 if no gas fields are discovered. In order to
accelerate exploration efforts, international oil companies will be encouraged to participate in
hydrocarbon development. During the last forty years, IOCs/private companies discovered 10
gas fields in the country. On the other hand, the state owned organisation discovered 9 gas
fields through implementation of different projects. For exploration of hydrocarbon the whole
country has been divided into 23 blocks of which 17 are offered for IOCs for competitive
bidding. Three production sharing contracts have been signed for development of discovered
gas fields and further exploration and development of new fields. It is envisaged that the
supply of gas under PSCs may be available from end- 1998.
16.11.2 In order to regulate the operation of private and public sector entities in the sector,
the government is in the process of creating a Gas Regulatory Authority. In line with the
policies of privatisation and commercialisation of the sector, the entire gas industry is being
segregated into production, transmission and distribution lines. Each operation is entrusted
with separate companies to be operated on profit and loss basis. Instead of regulating the price
of natural gas, the government is considering to align the domestic price of gas to its
international price/long run marginal cost of gas. To this end a committee has already
submitted a report on gas pricing, decision on which is awaited.
16.12 Environmental Aspects
16.12.1 Following the decision taken in the Earth Summit held in Rio-de-Janeiro, Brazil in
1992 and in line with the environmental policy of Bangladesh, measures will be taken to
assess the environmental impact of the development projects, especially of the new ones. The
 369

Government of Bangladesh has developed an environmental policy which requires

assessment of environmental impact of all new industrial projects. In fulfilment of the policy
to conduct environmental impact assessment, the government has initiated appropriate action
programmes. Over the past decades, the gas sector practically caused no environmental
problem since gas produces no hazardous smoke detrimental to environment. Rather, it has
been protecting the environment by replacing traditional fuel wood and kerosene.
16.12.2 Recently the government has planned to extract coal and use it in producing
electricity in the energy-deficit west zone of the country. Though coal pollutes the
environment to some extent, it will also help save the environment by reducing the
deforestation process in the west zone. Besides, as this coal is of high quality with low
sulpher content, it will cause comparatively low environmental damage. However, to contain
possible adverse environmental effects, the government has established an Environment and
Safety Division in Petrobangla to assess and monitor the environmental effect of the
development projects and suggest mitigation measures. The newly created division will also
develop environment and safety management system.
16.12.3 As regards pollution effect of oil refinery, consideration of environment was not
taken much into account at the time of construction of oil installations and oil refinery. As a
result, the installation does not have adequate environment protection measures and the
amount of oily water/sludge going into the surrounding canals, ponds and river and the off-
gas pollute the environment around the refinery flare. In order to release minimum carbon-di-
oxide gas in the atmosphere and to meet the requirement of refinery, adequate measures will
be undertaken during the Plan period.
16.13 Linkage With Other Sectors
16.13.1 Since the demand for gas is a derived demand, gas sector development issues,
policies and strategies are closely related to and ultimately dependent on the end-user's
sectoral objectives and policies, particularly those of power generation and industries
(including fertiliser) sub-sectors. In fact demand estimate and investment programme of oil,
gas and mineral sector are made on the basis of existing demand and drawn up development
plan of the major consuming sectors. Efficient use of gas and commercial energy depend on
the operational efficiency of power and fertiliser units, which vary widely from plant to plant
due to technological obsolescence and age of the installed plants. Generally keeping this in
consideration, the challenge will be to ensure development of downstream production units so
as to completely avoid any mismatch of supply and use.
16.14 Internationalisation of Gas Trade
16.14.1 Bangladesh has an estimated gas reserve of 22.90 t.c.f of which 13.6 t.c.f is
considered recoverable. With the intensification of oil and gas exploration under the PSCs,
this reserve is going to increase significantly in the years to come. With a success ratio of 3:1,
it will not be a surprise if we experience a doubling or tripling of the existing reserve very
shortly. On the other hand with the current demand scenario and its growth, intensive oil and
gas exploration requires a sharp expansion of the gas market even beyond borders. It may be
mentioned that due to asymmetric gas reserve vis-à-vis the internal demand in our
neighbouring countries, cross border gas trade is a highly promising option for Bangladesh.
According to an estimate, by the year 2005, gas demand-supply gap will be 20.8 BCMY in
India, 16.1 BCMY in China, 10.6 BCMY in Thailand and 7.5 BCMY in Pakistan. Surrounded
by such energy deficit economies, Bangladesh has a great potential for export of gas. The
corner stone of a medium to long run strategy of the government may be an
internationalisation of gas trade to make the sector economically viable and harness the
resources needed for its development. Care will be taken to export gas if so required within
the framework of a pragmatic policy of ensuring national interest.