'Cronyism has led to the present crisis'

There is no one particular reason that has led to the country's present crisis. Many factors have culminated in this crisis. We were going through somewhat of a crisis from before the Covid outbreak. The Covid impact had complicated the situation a bit. Next the impact of the Russia-Ukraine war exacerbated the reserve crisis and the increasing value of the dollar made matters worse. During the Covid outbreak, poor people in the country were selling all their possessions. After that, with the excessive increase in the price of food, inflation shot up. One third of the people in the country do not have the ability to tackle this situation. Even the middle class is struggling. The ultra-poor face the worst predicament, not knowing whether they will be able to manage even one meal a day. Their backbone has broken. Only the upper class is in a good shape.

The income disparity had been widening from before Covid. Covid widened the gap further. In the past too we have seen that any crisis increases this disparity in the country. This will worsen due to Covid and the Russia-Ukraine war. Around 50 million people are in a crisis of food and livelihood in the country and they will not be able to survive without government assistance. So it is the responsibility of the government to ensure their food. The middle class and the upper middle class spend around 10 to 15 per cent of their income on food. The poor spend around 40 to 60 per cent of their earnings on food. With the price of food going up, this poor section of people is faced with long term damage.

If we take the government figures into consideration, that is, accept the information given by the Bangladesh Bureau of Statistics, it will seem there is no crisis of rice in the country. But reality is something different. Either the production figures are being inflated or the per head consumption of food is being shown lower than actual. It is evident that the official figures are inaccurate because on one hand it is being said that there is more food in the country than demand. On the other hand, rice is being imported by both the government and the private sector. This has been going on for long. A country cannot run in this manner. If there is a food scarcity in the country, one sort of strategy needs to be adopted. If there is no scarcity, a different strategy is required.

There are two types of problems in procuring rice from within the country and from outside. The local rice market is controlled by a handful of rice mill owners and big paddy traders. The price of rice fluctuates at their behest. The government is unable to take any action against them. In fact, the government's rice procurement drive even depends on that group. Again, we have seen rice and wheat being procured from abroad at high prices. That rice and wheat is being subsidised and distributed at a fixed price through the government's social safety net programme. If food grain is purchased at high prices, the government will have to give more subsidy in dollars. This will deteriorate matter in these times of crisis.

A big problem is that in the case of imports, letters of credit can't be opened in state-owned banks or private banks. Big decisions of the government are in the hands of a business group and bureaucrats. All decisions are being taken in the interests of that group.

Importance first must be given to food import, but I doubt if that is being done. If one could break away from cronyism and think of the interests of the people, then food import should be given more importance. Then if there are dollars left over, the other sectors can be given importance. First the people must be fed, then everything else.

The biggest crisis that has emerged in the country's economy is the price of the dollar and the fall in reserves. The Bangladesh Bank governor recently admitted that our actually reserves are 26 billion dollars. The reserves are kept to meet emergency requirements or other needs. We have arrived at this situation because we had been caught up in vortex truth and lies all these days. We acted as if we had endless reserves and used these reserves here and there.

There was a similar mindset in the case of mega projects. We did not assess your actual capacity. We were in such a flurry of confusion, that we spent much more money on the project than required. We are so blinded in the belief of being an economic role model that we forgot all about reality. If we lived in an actual democratic society and state, where there was space to speak out the truth, then perhaps the situation would not be so. We are in this situation because of the lack of democracy. From the grassroots to the highest policy-making level, everything was seen as rosy and good. That was not the reality.

First, our own production capacity must be increased. From agriculture to industry -- production capacity must be increased in all sectors. According to government records, the production of rice, wheat and all crops is increasing by the year. But there are doubts as to how factual these figures are. It doesn't tally with reality. It does not look like any quarter is trying to resolve this problem. This creates problems in taking action. We are unable to take the right decisions about agriculture. There had been radical change in agriculture over the past few years. There have been many structural changes -- from supermarkets to contract farming and more. We do not know what impact all this is having on the farmers, on production. We are entirely overlooking these issues. We have to break away from the old development trends in agriculture. In light of the global circumstances, we have to select trends that are suitable for us. Our population is very high in comparison to our land. Food security is a big challenge for Bangladesh. Giving priority to food security, the importance being given to agriculture at present is far from adequate.

There is a lot down on paper about food security strategies, but reality is a different matter. Take paddy for instance. Paddy production has reached a stable level and is not increasing anymore. High yield technology has reached a height. We have another problem in agriculture and that is steady shrinking of land space. Buying land is a popular form of investment for urban businessmen and wealthy persons. As a result, non-agricultural use of land had increased widely. Such shrinkage of agro-land is a threat to food security. We cannot ensure anything else unless food security is ensured. There can be no actual development unless the people can be given food security.

Agriculture will not create new employment. Employment opportunities in agriculture will gradually shrink. Before employment in agriculture was 60 per cent, now it has fallen below 40 per cent. Agriculture's contribution to GDP is lessening too. That is inevitable. Another challenge to agriculture is that the young workforce in this sector is decreasing. The policies of banks and financial institutions concerning agriculture are simply about giving loans to the farmers. It is not possible to change agricultural structures and agricultural production simply by giving farmers loans. Eighty per cent of our farmers are of small farms. They must be relied upon if changes are to be brought to agriculture. First their problems and constraints must be understood. Loans are a big problem. Loans will not heal the farmers' wounds unless the other problems are resolved. An integrated policy and initiative involving seeds, fertiliser, subsidy and marketing is required for the farmers. There is no effective policy in place to change the fate of the farmers in a true sense. Farmers are among the population hardest hit by the ongoing economic crisis, and the impact hasn't even hit in full as yet. Survival is the main struggle now. The price of fertiliser, seeds, diesel and agricultural implements has increased. There is a talk about curtailing subsidies in various areas too.

IMF will give the USD 4.5 billion in several installments. In the context of macro-economy, this loan will give some relief to the tensions in foreign trade and reserves. If there is relief in the macro-economy, this will have a positive effect on the agriculture and food sector. But this will take time. There are certain conditions attached to the IMF loan. After the first installment, the second installment will depend on how far the conditions have been met. As a member country, anyone can take a loan from IMF. It is a right. But the bottom line is whether the conditions are good for us or not.

Firstly, we must bring a halt to all wasteful expenditure. In this regard, there is a serious shortcoming in the continuity of the government's policy. There has been a directive that government officials cannot go on foreign trips, but reality is a different matter. Discipline must be introduced in the budget, economy and financial management. Secondly, austerity must be practiced. We take up innumerable projects without considering priorities. In the present crisis, we have to implement projects based on priority. In the case of expenditure, we must take prudent decisions. In the case of important financial decisions of the government, we are hostage to vested interest groups. Most policies and decisions are taken in the interests of a handful of persons and groups.

It is the lack of astute decisions that we face this predicament today. The manner in which we were advancing, this consequence was not inevitable. We created these glitches ourselves, nurtured these mistakes, and fell into our own trap. If we rectify past errors and take correct decisions, it will not be impossible to overcome this situation. We have not fallen into a situation like Sri Lanka. It is not that we don't have respect or independence. But the problem is that this respect and independence is on the wane. If things continue in this manner, we will fell to the very bottom. So now is the time to turn around.

First the earlier decisions must be reviewed. It must be seen which decisions can be continued and which need to be changed. These must be delineated. The mistakes in the economic policy must be identified speedily and changed. Just making a few changes won't yield results. Overall changes must be made. The implementation may be slow, but the strategy must be adopted now.

Thank you too