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BANGLADESH

ECONOMIC REVIEW
2003

Economic Adviser's Wing


Finance Division, Ministry of Finance
Government of the People's Republic of Bangladesh
June 2003
PREFACE

Bangladesh Economic Review 2003 is published as a regular annual publication of the


Government. The Review reflecting the state of Bangladesh economy and its current
trend, is placed before the Jatiya Sangsad (Parliament) during its Budget Session every
year.
2. The present Government had to undertake the responsibility of steering a fragile
and unstable economy caused by gross economic mismanagement of the past regime. The
macroeconomic situation of the country was further aggravated due to the negative
impact of 9/11 coupled with the then global economic recession. Against these stark
realities, the new Government faced the formidable challenges of managing the economy
with courage and sagacity. During the last one and a half year, the Government achieved
commenable progress in implementing wide-ranging reforms and a set of emergency
recovery programmes aimed at restoring macroeconomic stability. This resulted in
restoration of macroeconomic stability at a satisfactory level. In the Bangladesh
Development Forum meeting held in Dhaka, the representatives of development partners
put on record their highest appreciation of the impressive achievements made by the
Government.
3. Poverty is an endemic problem in a developing country like Bangladesh. Although
there has been sustained progress in achieving growth and poverty reduction, which can
be attributed to the wide ranging reforms introduced and implemented in the early
nineties, the depth and dimension of poverty is still a continuing challenge. Against these
imperatives, the Government has finalised the draft of a three-year 'National Strategy for
Economic Growth, Poverty Reduction and Social Development' through extensive
consultation with the concerned stakeholders. In the light of this strategy, a 'Three-year
Rolling Investment Programme' is being formulated.
4. The data presented in the Review facilitate analysis of the fundamentals of the
overall economy. The Review has made assessments of vital issues of macro economy
and also shed light on important sectors of the economy. In tandem with this, other
important priority sectors like human resource development, poverty reduction and
private sector development have been reviewed as well. To provide a wider
understanding of the progress made by Bangladesh, comparisons with regional and
international economic situations on selected areas have been presented.
5. We appreciate the cooperation extended by the Ministries/Divisions/Agencies in
preparation of this Review by providing latest valuable data and information. We shall
feel our endeavors amply rewarded if the information presented in the Review serve the
purpose of enthusiastic readers, researchers, academics, students and stakeholder
organisations. I thank the officers and staff of the Economic Adviser's Wing who worked
relentlessly in preparation of this document.

(M. Saifur Rahman)


Minister for Finance & Planning
INTRODUCTION

''Bangladesh Economic Review'' is published as a vital document with basic information


of the macroeconomic situation of the country covering current and previous fiscal years.
This document, presented before the Parliament as background information of the
Budget, reflects the status of socio-economic progress of the country. The prime
objective of the document, however, is to present and review data/statistics that facilitate
analysis of the macroeconomic trends of the country. In the English version of the
Review, most of the data/statistics have been updated up to June 2003 based on their
availabity. These have been duly reflected in the text where relevant.
2. Bangladesh Economic Review 2003 contains fourteen chapters. Chapter One
presents a brief review of the macroeconomic situation of the country and the
development strategies pursued by the Government. An assessment of the country's
macroeconomic fundamentals like Gross Domestic Product, Savings and Investments,
Price, Wage and Employment, Fiscal Policy and Fiscal Management, Monetary Policy
and Monetary Management and External Sector is incorporated in Chapters Two to Six.
In the Sector-specific chapters (chapters Seven to Twelve) developments in major sectors
of the economy like agriculture, industry, power and energy, transport and
communication and human resource development have been discussed. Chapters Thirteen
and Fourteen pertains to the analysis on the Thrust Sectors and present a brief account of
the initiatives of the government towards poverty reduction and private sector
development respectively. Coloured charts, graphs, statistical tables and boxes, where
relevant, have been used for further enrichment of the analysis.
3. The overall responsibility of preparing this document rests with the Economic
Adviser's Wing of the Finance Division. I would like to thank the officers and staff of the
Wing who performed their duties with deep devotion in publishing this document. I
congratulate the relevant Ministries/Divisions/Agencies, which extended cooperation in
preparation of this document by providing useful information.
4. The Review has been prepared amidst a range of constraints that may have caused
some errors and omissions. To make this document more up-to-date and qualitatively
rich, valuable suggestions from the inquisitive readers/researchers as well as the
concerned Ministries/Divisions/Agencies will be gratefully acknowledged.

(Zakir Ahmed Khan)


Secretary
Finance Division
CONTENTS

Preface
Introduction
List of Tables
List of Graphs
List of Boxes
List of Statistical Appendices
Socio-Economic Indicators of Bangladesh

Macro Chapters

Chapter 1. Macroeconomic Review and Development Strategies 1-18


Chapter 2. GDP, Saving and Investment 19-25
Chapter 3. Prices, Wages and Employment 26-32
Chapter 4. Fiscal Policy and Fiscal Management 33-39
Chapter 5. Monetary Policy and Monetary Management 40-48
Chapter 6. Foreign Trade, Exchange Rate Management and External 49-60
Sector

Sectoral Chapters

Chapter 7. Agriculture 61-73


Chapter 8. Industry 74-86
Chapter 9. State Owned Enterprises 87-89
Chapter 10. Power and Energy 90-107
Chapter 11. Transport and Communication 108-128
Chapter 12. Human Resources Development 129-144

Thrust Area Chapters

Chapter 13. Poverty Alleviation 145-175


Chapter 14. Private Sector Development 176-190

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LIST OF TABLES

Table Title Page

2.1 Per Capita GDP, GNI, NNI and National Savings and Investment (At 19
Market Prices)
2.2 Gross Domestic Product (GDP) at Current Prices 20
2.3 Sectoral Growth Rate of GDP at Constant Prices (Base: 1995-96) 21
2.4 Sectoral Share of GDP (%) at Constant Prices (1995-96) 22
2.5 Trends of Sectoral Contribution at Current Market Prices of Some Asian 23
Countries During the Last Two Decades.
2.6 Saving as Percentage of Gross Domestic Product (GDP) 24
2.7 Investment as Percentage of Gross Domestic Product (GDP) 25
3.1 Consumer Price Index and Inflation (Base year 1985-86=100) 26
3.2 Point-to-Point Rate of Inflation (National) (Base year 1985-86=100) 27
3.3 Rate of Increase in Wages (Base year 1969-70=100) 28
3.4 Share of Employed Labour Force by Sector 29
3.5 Number of Expatriate Bangladeshis and their Remittances 30
3.6 Number of Expatriates Classified by Skill 31
3.7 Number of Expatriate Bangladeshis by Country 32
4.1 Revenue Receipts 33
4.2 Public Expenditure 35
4.3 Revenue Outlays on Social Sectors 36
4.4 Implementation of Annual Development Programme (ADP) 37
4.5 ADP Expenditure and its Composition by Major Sectors (%) 37
4.6 ADP Expenditure on Social Sectors 38
4.7 Overall Budget Deficit 38
4.8 Domestic Resources for Financing Budget Deficit 39
4.9 Domestic Resources in Financing ADP (on the basis of RADP allocation) 39
5.1 Broad Money (M2) and Its Causative Factors 41
5.2 Reserve Money and Its Sources of Change 42
5.3 Summary of Trading Operations of Dhaka Stock Exchange 46
5.4 Summary of Trading Operations of Chittagong Stock Exchange 47
5.5 Important Regional and International Share Price Indices 48
6.1 Impact of Tariff Reforms on Average Rate of Customs Duty 51
6.2 Impact of Tariff Reforms on Average Rate of Customs Duty by Type of 51
Commodities
6.3 Degree of International Openness for Bangladesh, Pakistan, Sri Lanka 55
and India.
6.4 Average Exchange Rate (Taka per US$) 56
6.5 Foreign Exchange Reserves 56

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Table Title Page

6.6 Import Growth and Composition 57


6.7 Export Growth and Composition 58
6.8 Annual Amount of Remittances 59
6.9 Balance of Payments 60
7.1 Growth Rate of Agriculture and its Sub-sectors including Fishery 62
(Base year 1995-96)
7.2 Share of Agriculture and Fishery in GDP (Base year 1995-96) 62
7.3 Food Grain Production 63
7.4 Area Under Irrigation 66
7.5 Uses of Chemical Fertilizer 67
7.6 Agricultural Credit Disbursement, Recovery and Outstanding Balance 68
7.7 Fish Production (1994-95 through 2001-02) 69
7.8 Targets and Progress of Forestry Programme 71
8.1 Contribution of Manufacturing Sector in GDP and Growth Rate 74
(at constant prices of 1995-96)
8.2 Quantum Index of Production for Medium to Large-scale Industries 75
(1988-89=100)
8.3 Distribution of Private Investment Projects (Local and Foreign) 78
Registered with the BOI from FY1991-92 to FY2002-03.
8.4 Country-wise Distribution of Foreign Private Investment Registered with 79
BOI from FY1996-97 to FY2002-03.
8.5 Sector-wise Distribution of Foreign Private Investment Projects 79
Registered with BOI from FY1996-97 to FY2002-03.
8.6 Comparative Statement of Sector-wise Distribution of Local Private 80
Investment Registered with BOI from FY2001-02 to FY2002-03.
8.7 Number of Units, Investment and Employment in the Operational Units 85
under EPZ (up to June, 2003)
8.8 Annual Investment and Export: Dhaka, Chittagong, Mongla, Comilla, 86
Uttara and Iswardhi EPZs (1994-95 through 2002-03)
9.1 Government Grant/Subsidy to SOEs (1996-97 through 2002-03) 88
10.1 Power Sector Achievements of the Country (up to June 2003) 90
10.2 Installed Capacity, Dependable Production Capacity and Maximum 91
Production
10.3 Accounts Receivable and Payable of BPDB 92
10.4 Statement Showing Reduction of System Loss 95
10.5 Purchase and Sale of Electricity and Revenue Collection since the 96
Creation of the DESA
10.6 The Accounts Receivable and Payable of DESA 96
10.7 Commercial Statistics of DESCO 98
10.8 Physical Target and Achievement of REB (1991-92 to 2002-03) 99

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Table Title Page

10.9 Statistics of Purchase and Sale of Electricity by REB to Consumer 100


10.10 Accounts Receivable and Payable Amount of REB 100
10.11 Total Gas Reserve in the Country 101
10.12 Sector-wise Demands for Use of Natural Gas 102
10.13 Sector-wise Demand for Natural Gas 103
10.14 The Agreement for Gas Exploration under Production Sharing Contract 103
10.15 Import of Crude Petroleum Commodities (1991-2003) 105
10.16 Import of Refinery Petroleum Commodities 106
11.1 Road Network in Bangladesh 108
11.2 Trend in Transport Modal Shares 109
11.3 Various Categories of Roads under Roads and Highways Department 110
11.4 Programmes of LGDE for Infrastructure Development 111
11.5 Revenue Income by BRTA from Motor Vehicles Tax and Fees during 112
1991-92 to 2002-03
11.6 Toll Collected by JMBA 113
11.7 Income and Expenditure Status of BRTC during 1993-94 to 2002-03 115
11.8 Overall Activities of Bangladesh Railway 115
11.9 Income and Expenditure of CPA during 1991-92 to 2002-03 116
11.10 Revenue, Income and Expenditure of MPA during 1991-92 to 2002-03 117
11.11 Statement of Income-Expenditure and Profit-Loss of BSC since 1991-92 118
11.12 Income and Expenditure Statement of the Department of Shipping 119
during 1991-92 to 2002-03
11.13 Income and Expenditure Statement of BIWTC during 1992-93 to 2002- 120
03
11.14 Statistics on Movement of Aircrafts, Passengers and Cargoes in the 122
Airports during 1993 to 2003.
11.15 Income/Expenditure of Biman Bangladesh Airlines during 1991-92 to 123
2002-03
11.16 Statement of the Number of Telephone, NWD Circuits and Foreign 124
Circuits of BTTB since 1991-92
11.17 Revenue Target, Collection, Expenditure and Surplus of BTTB during 125
1991-92 to 2002-2993
12.1 Rate of Generation of Value Addition in the Social Sectors 129
12.2 Allocation in Social Sectors under ADP 130
12.3 Allocation under Revenue Budget for Social Sectors 130
12.4 Student Enrolment at Primary Level (1990-2002) 133
12.5 Recent Trend in Literacy (15 years and above) 134
12.6 Recent Trends in Health Indices 136

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Table Title Page

12.7 Estimated Expenditure of Health and Population Sector Programme 137


(HPSP)
12.8 Progress of HPSP 138
12.9 Government Expenditure in Education, Health and Social Sectors in 139
1980 and 2000.
12.10 Allocations and Expenditures in RADP 140
12.11 Allocations and Expenditures in RADP 144
13.1 Poverty and Hard-core Poverty on the Basis of Calorie Intake (%) 146
13.2 Daily Per Capita Calorie Intake 146
13.3 Division-wise Rate of Poverty on the Basis of CBN Method (Head Count 147
Ratio)
13.4 Distribution of Poor by Residence in Percentage 148
13.5 Poverty Gap (P1), Squared Poverty Gap (P2) 148
13.6 Incidence of Poverty by Size of Household 149
13.7 Distribution of Land Ownership by Household (%) 149
13.8 Incidence of Poverty and Main Occupation of Household 150
13.9 Status of Division-wise Per Capita Income 151
13.10 Status of Division-wise Per Capita Expenditure 151
13.11 Percentage Share of Income of Household by Deciles Group 152
13.12 Per Capita Expenditure on Consumer Goods and Services 152
13.13 Simulating Trends in Poverty under Alternative Growth Scenario, 153
Bangladesh: 2000-2020
13.14 Major Goal Posts in Poverty and Social Targets Set against the 1990 154
Benchmark
13.15 Human Poverty Index (HPI) 155
13.16 Poverty Alleviation Effects by Sectors 156
13.17 Medium-Term Outlay for Poverty Reduction Programmes 157
13.18 Allocation in Social Sector in the Revenue and Annual Development 158
Programmes
13.19 Safety Net Programmes 159
13.20 Status of Grihayan Tahabil 162
13.21 Micro-credit Programme of Karmasangthan Bank 163
13.22 Rural Infrastructure Development Programme under LGED 165
13.23 Micro Credit Disbursement Programme of Four Major NGOs (up to June' 168
02)
13.24 Sources of Micro Credit and Revolving Loan Fund of NGOs 168
13.25 Status of Micro Credit Programmes of Major NGOs 169
13.26 Micro Credit Programme of three Specialised Institutions 172
13.27 Status of Micro Credit Disbursement of Nationalized (Scheduled) Banks 173

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Table Title Page

13.28 Micro Credit Programmes of other Commercial and Specialised Banks 174
13.29 Status of Micro Credit of Administrative Ministires/Divisions 175
14.1 Number of Primary Schools in the Government and Private Sector 187

LIST OF GRAPHS

Graph Title Page

2.1 Growth Rate of GDP at Constant Price 19


2.2.1 Contribution of Broad Sectors in GDP of 1991-92 23
2.2.2 Contribution of Broad Sectors in GDP of 2002-03 23
2.3 Saving as Percentage of GDP 24
2.4 Investment as Percentage of GDP 25
3.1 National Inflation Rate 26
3.2 Point-to-Point Rate of Inflation (National) 27
3.3 Wage Rate Index 28
3.4 Share of Employed Labour Force by Broad Sector in Bangladesh 29
Labour Force Survey, 1999-00
3.5 Number of Expatriates Bangladeshi and their Remittances 30
3.6 Number of Expatriates Classified by Skill 30
3.7 Rate of Expatriates Bangladeshi by Country in 2002 31
5.1 Trend of the Money Supply 43
5.2 Composition of the Money Supply 43
6.1 Foreign Exchange Reserve 56
6.2 Trade Deficit and Current Account Balance 59
7.1 Growth Rate of Agriculture Sector in GDP 62
7.2 Contribution of Agriculture and Fishery Sector in GDP of 62
2001-02
7.3 Contribution of Sub-sectors of Agriculture Sector in GDP of 62
2001-02
10.1 Capacity of Power Generation and Maximum Power Generation 92
10.2 System Loss of DESA 95
10.3 Target and Achievement of Distribution Line for Rural 99
Electrification

xii
Graph Title Page

10.4 Sector-wise Demands for the Use of Natural Gas 102


11.1 Allocation of Transport, LGED and Communication Sectors in 109
the RADP of 2002-03
11.2 Total RADP Allocation of LBED for 2002-03 111
11.3 The Number of Telephones of BTTB Over the Years 124
12.1 Government Allocation for Social Sectors since 1991-92 to 130
2002-03
12.2 Trend of Maternal and Child Mortality 136
13.1 Situation of Poverty and Hardcore Poverty 146
13.2 Division wise Rate of Poverty 147
13.3 Poverty Incidence by Owned Land Size 149
13.4 Per Capita Expenditure on Consumer Goods and Services 153
13.5 Human Poverty Index 155
14.1 Customer Distribution of Different Private Cellular Mobile 183
Companies (in Thousands)
14.2 Year-wise Information on the Number of Government and 187
Private Primary School

LIST OF BOXES

Box Title Page

1.1 Millennium Development Goals 4


1.2 Medium-Term Macroeconomic Framework: Key Indicators 12
4.1 Measures under Direct Taxes 34
4.2 Measures under Indirect Taxes 34
7.1 Main Objectives of the National Agriculture Policy 61
11.1 Recovery Programme of Bangladesh Railway 116
11.2 Cost Reduction Measures of Biman 123
11.3 Special Services of the Postal Department 126
14.1 Investments Registered in the BOI 178
14.2 Privatisation Programme for Different Organisations 179
14.3 General Objectives of Bangladesh Telecommunication 184
Regulatory Commission

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LIST OF STATISTICAL APPENDICES
Appendix Title Page

1.1 Macroeconomic Indicators: 1991-92-2002-03 192


1.2 Macroeconomic Indicators: 1991-92-2002-03 (As Percentage of GDP) 193
2. Gross Domestic Product (GDP) at Current Price 194
3. Gross Domestic Product at Constant Price (Base Year: 1995-96) 195
4. Sectoral Growth Rate of GDP [at Constant (1995-96) Prices] 196
5. Sectoral Share of GDP (%) at Constant Prices (1995-96) 197
6. Consumer Price Indices (CPI) for Middle Class Families of Dhaka City 198
(Base year: 1973-74=100)
7. Consumer Price Indices-National (Base Year: 1985-86=100) 198
8. Consumer Price Indices-All Urban (Base Year: 1985-86=100) 198
9. Consumer Price Indices-All Rural (Base Year: 1985-86=100) 199
10. Wholesale Price Indices of Agricultural and Industrial Products 199
11. Cost of Living Index of Industrial Workers of Narayanganj, 200
Chittagong and Khulna (Base Year: 1973-74=100)
12. Wage Rate Indices by Major Sectors (Base Year: 1969-70=100) 200
13.1. Revenue Budget (Revenue Receipts 1986-87 to 1996-97) 201
13.2. Revenue Budget (Revenue Receipts 1997-98 to 2003-04) 202
13.3. Revenue Budget (Revenue Expenditure 1986-87 to 1996-97) 203
13.4. Revenue Budget (Revenue Expenditure 1997-98 to 2003-04) 204
14. Annual Development Programme (ADP) (Allocation and Expenditure) 205
15.1. Economic Classification of Revenue Expenditure (1989-90 to 1996-97) 206
15.2. Economic Classification of Revenue Expenditure (1997-98 to 2003-04) 207
16. Money Supply and Its Components 208
17. Bank Advances Classified by Economic Purposes 208
18. Bank Advances Classified by Economic Sectors 209
19. Domestic Credit through Banking System 210
20. Bank Deposits 210
21. Production of Major Agricultural Crops and Acreage 211
22. Import of Foodgrains 212
23. Agricultural Credit Disbursement, Recovery and Outstanding 213
24. Area Under Irrigation 213
25. Use of Chemical Fertilizer 213
26. Quantum Index of Industrial Production (Base: 1988-89=100) 214
27. Production of Major Industrial Goods 215
28. Production of State-Owned Enterprises (SOEs) and their Financial Performance 216
29. Net Profit/Loss of SOEs 217
30. Dividend Contribution of SOEs 218
31. Debt Service Liabilities of SOEs 219
32. Overdue Bank Loans of SOEs (Up to April'03, cumulative) 220

xiv
Table Title Page

33. Number of Primary Schools, Student Enrolment and Number of Teachers in 221
Govt. Primary Schools
34. Number of Secondary and Higher Secondary, Technical and Vocational and 222-223
Religious Educational Institutions, Teachers and Students
35. Number of Educational Institutions, Teachers and Students at Higher 224-225
Education Level
36. Number of Govt. Hospitals, Dispensaries, Doctors, Nurses and Beds 226
37. Kilometerage, Number of Engines and Coaches of Bangladesh Railway 227
38. Passenger and Freight Carried by Bangladesh Railway 228
39. Different Type of Roads under Roads and Highways Department 228
40. Terms of Trade (Base: 1979-80=100) 229
41. Average Rates of Foreign Exchange with US Dollar 229
42. Value of Exports by Major Commodities 230
43. Value of Imports by Major Commodities 231
44. Overseas Employment and Remittances 231
45. Balance of Payments 232
46. Foreign Exchange Reserves 233
47. Commitment and Disbursement of Foreign Economic Assistance 233
48. Foreign Debt Service Payment 234
49. External Debt Outstanding 235
50. Size, Actual Expenditure and Growth Rate of GDP (Respective Base Year 236
Price) of Past Plans

xv
Socio-Economic Indicators of Bangladesh

General Income Distribution and Poverty, 2000

Rate of Poverty Based on Cost of Basic


Geographical Location/Characteristics Need Method (CBN), (HIES-2000)
Location Based on Upper Poverty Line
200 34' & 260 38' North Latitude National 49.80
880 01' & 920 41' East Longitude Rural 53.10
Area (Sq. Km) 147570 Urban 36.60
Standard Time GMT+6 Hours Based on Lower Poverty Line
National 33.37
Vital Statistics Rural 37.40
General Vital Statistics Urban 19.10
Population (Crore), 2001 (Census) 12.31
2001 (Adjusted) 12.92 Total Gross Domestic Product (GDP),
2003 (Projected) 13.34 2002-03 (Provisional)
Population Growth Rate (Percentage), 2001 1.48 GDP at Current Price (In Crore Tk.) 300485
Male-Female Ratio, 2001 103.8 GDP at Constant Price (Base 237259
Year= 1995-96), (In Crore Tk.)
Population Density/Sq. Km., 2001 (Census) 834 GDP Growth at Constant Price (%) 5.33
Population Density/Sq. Km., 2003 (Projected) 904 Per Capita National Income (In Tk.),2003 23575
Basic Vital Statistics Per Capita GDP (In Tk.), 2003 22523
Savings and Investment (percentage of
Crude Birth Rate (Per 1000 Population), 2000 19.00 GDP), 2002-03 (Provisional)
Crude Death Rate (Per 1000 Population), 2000 4.90 Domestic savings 18.23
Infant Mortality Rate (Per Thousand Live 58.00 National savings 23.74
Birth), (Below 1 Year of Age), 2000 Total investment 23.21
Total Fertility Rate Per Women, 2000 2.59 Public 6.72
Contraceptive Prevalence Rate (%), 2000 53.63 Private 16.49
Life Expectancy, 2000 68.20 Balance of Payments, 2002-03
Life Expectancy, 2000, Male 68.60 (In Million US $)
Female 67.80 Export Earning (Target) 6750
Mean Age of Women at First Marriage, 1998 20.40 Import Payment (Target) 8114
Health and Social Services Export Earning 6549
Persons Per Hospital Bed (Including 4109 Import Payments 9658
Dispensary), 2003
Persons Per Registered Physician, 2003 3866 Export (As Percentage of GDP) 12.6
Safe Drinking Water User (%), 2000 95.44 Import (As Percentage of GDP) 18.6
Sanitary Latrine User (%), 2000 41.22 Current Account Balance 328
Literacy Rate (%), 2001 65.00 Foreign Exchange Reserves 2470
(As on 30.06.2003)
Workers’ Remittances 3062

xvi
Employment and Labour Force Government Revenue/Expenditure
2002-03 (Revised), (In Crore Tk.)
Labour Force Survey, 1999-00 Total Revenue 31069
Number of Civilian Labour Force (Crore) 6.03 Total Expenditure 43710
Male 3.75 Total Revenue (As Percentage of GDP) 10.34
Female 2.28 Total Expenditure (As Percentage of 14.55
Percentage of Total Labour Force GDP)
Agriculture Labour 62.30 Budget Deficit (Excluding Foreign 4.21
Industrial Labour (Manufacturing, Power, Gas) 7.60 Grants)
Other Labours 30.10 Budget Deficit (Including Foreign 3.39
Transportation (Km.), June 2003 Grants)
National Highway 3420 Money Supply (In Crore Tk.)
Regional Highway 4241 Narrow Money (M-1), June, 2003 26730
Feeder Road Type-A 13138 Reserve Money, June, 2003 24313
Railway 2768 Broad Money (M-2), June, 2003 113995
Financial Statistics Money Multiplier, June, 2003 4.69
Total Number of Commercial Banks 40 Exchange Rate
Local Bank 30 Taka/US$ (As on June, 2003) 57.9
Foreign Bank 10 Capital Market (Share Price Index, as
Financial Institution 28 on June,2003)
Dhaka (Weighted Average Index, 823.14
Base=100)
Chittagong (Weighted Average Index, 1841.24
Base=1000)

Sources: Bangladesh Bureau of Statistics, Finance Division, Bangladesh Bank, SEC.

xvii
CHAPTER-1

MACROECONOMIC REVIEW AND DEVELOPMENT


STRATEGIES

In its journey towards prosperity Bangladesh economy passed a crucially important phase during
FY 2001-02 and 2002-03. During this period the country's economy regained stability following a
process of recovery. The present Government had to confront the onerous task of managing an
economy that became increasingly fragile due to economic mismanagement of the previous
regime. In addition, the faltering global economy and the adverse impact of the September 11
shock further deepened the economy's fragility and instability. Against this backdrop, the
Government implemented a set of pragmatic recovery programmes and restored stability in the
economy. Still the prevailing imperatives dictate the need for deepening and expanding the
already initiated reforms for infusion of dynamism in the economy. In the socio-political context
of Bangladesh, though implementation of these reforms presented a formidable challenge, the
Government faced it successfully through its relentless efforts over the past one and a half year.

Economic Growth
Over the past two decades, particularly during the 1990's, the economic growth in Bangladesh
registered a remarkable progress. The average growth rate of Gross Domestic Product (GDP) was
around 5 percent in this decade. Implementation of a wide array of reforms during the early 1990s
made it possible to achieve this higher rate of growth. Four percent growth rate on an average
over a period of the last two decades brought an opportunity for transition to a higher growth
path. Attaining of per capita GDP growth at 3.3 percent during the 1990's is an impressive
achievement. This was possible due to a sharp fall in birth rate. Success in attaining such a higher
growth, elevated Bangladesh's position among the developing countries. Infusion of further
momentum in the economy in FY 2002-03, caused to make projection of GDP at 5.33 percent
which is 0.91 percent higher than the growth rate of last fiscal year. In FY 2002-03, the growth in
agriculture and industries (manufacturing) sectors has been projected at 3.59 and 6.62 percent
respectively. Moreover, the current year's growth in all other sectors barring the construction
sector has been projected to be higher than those of the previous fiscal year.
Saving and Investment
Based on provisional estimates, domestic and national savings during the current fiscal year have
been projected at 18.23 and 23.74 percent of GDP. In FY 1991-92 the rates of savings stood at
13.86 and 19.30 percent reflecting a secular rise in savings over the decade. Provisional estimates
show that the rate of investment in FY 2002-03 will be 23.22 percent of GDP consisting of shares
of public and private sector at 6.72 percent and 16.49 percent respectively. The rate of investment
too registered a rising trend over the past decade.

1
Inflation
According to consumer price index, constructed on the basis of 1985-86 as the base year, the rate
of inflation in FY 2002-03 stood at 5.14 percent. In food and non-food sectors, inflation stood at
4.94 and 5.52 percent respectively. In a growing economy such inflationary trend is considered
tolerable. It is however to be noted that, the rate of inflation remained low in Bangladesh since
the 1990s. Maintaining this low rate of inflation has largely been possible due to rise in food
production and downward trend in prices of consumer goods in the international market.

Fiscal policy and fiscal Management


Following restoration of stability in macroeconomic management of the country, the deficit in the
last two fiscal years came down to a sustainable level. Whereas in FY 1999-2000 the budget
deficit was 6.1 percent, it came down to 4.7 percent in the previous fiscal and 4.2 percent in the
FY 2002-03. This has been achieved through a combination of policies aimed at rationalization of
Government expenditure and augmentation of domestic resources mobilization. In the
Government's efforts to establish macroeconomic stability in the economy, this achievement is a
significant milestone. While announcing budget for FY2002-03, a number of steps were proposed
to augment both tax and non-tax revenue. In the backdrop of declining foreign aid, enhanced
domestic revenue mobilization was an imperative for our fiscal sustainability. NBR revenue has
increased by 17.53 percent in FY 2003, which is much higher than the actual collection of the last
year. The Government total revenue has exceeded Tk.31000 core which is the highest so far. This
has raised the revenue-GDP ratio to 10.4 percent. It is to be noted that the growth of revenue was
7.0 percent during the 1990s while it was only 3 percent during the 1980s. In Bangladesh,
expenditure-GDP rose to 15 percent FY03. In the 1980s, the growth of expenditure was 3.1
percent which rose to 6.6 percent during the 1990s. Despite saddled with resource constraints, the
trend in Government spending in the priority social sectors like human development, building
rural infrastructure and poverty reduction has been consistently on the increase. According to the
revised ADP, the expenditure in social sector stands at 24.6 percent and the revenue outlays on
social sector stands at 22.7 percent in FY03.

Monetary Policy and Monetary Management

Monetary policy for FY 2002-03 was formulated to accelerate the pace of economic activities of
the country and to maintain the trend of economic growth. As the country's monetary
management was steered in the light of a moderately expansionary monetary policy, the money
supply and credit expansion remained slightly expansionary during FY2002-03. During this
period the broad money supply registered 15.59 percent increase compared to that of the
corresponding period of the previous fiscal year. On the other hand, the domestic credit expansion

2
registered a slightly lower increase by 9.48 percent compared to 12.92 percent increase during the
corresponding period of the previous fiscal year. During this period credit flows to the public
sector decreased (5.47%) while it registered an increase by 14.93 in the case of private sector.
Because of the measures taken by the Government to improve revenue collection and to
rationalize public expenditure, the rate of borrowing by the Government from the banking system
reduced which had an important impact on the reduction of growth of domestic borrowing. This
resulted in minimizing crowding out effect of public borrowing and caused increased flow of
credit to the private sector that brought about expansion of trade and commerce and infused
dynamism in the economic activities. Besides, a number of important steps were taken in the
areas of banking and monetary and credit policy to ensure transparency in monetary and credit
management. Several measures have been taken for development and expansion of capital
market. This would result in restoration of investor's confidence in capital market.

External Sector
Despite prevailing adverse global economic situation, the current account balance of the balance
of payment in Bangladesh registered a surplus of US$240 million in 2001-02, which was 0.5
percent of GDP. This trend continued in FY 2002-03 and the surplus stood at US$ 328 million,
which was 0.63 percent of GDP. Notably, excepting India and Pakistan none of the least
developed countries in South Asia achieved this surplus in the recent past. On the other hand, the
trade-deficit situation is also improving gradually. According to available statistics, where the
trade deficit in FY 1999-2000 and 2000-2001 stood at US$ 1865 and 2011 million respectively, it
declined to US$ 1768 million in 2001-02. However the trade deficit in FY 2002-03 rose to US$
2207 million, which is 24.83 percent higher than the deficit of the previous fiscal year. Because
of the prudent and timely steps taken by the Government, the remittance flow of the expatriate
Bangladeshi workers increased by 33 percent in FY 2001-02 and it increased from US$ 1.9
billion in FY 2000-01 to US$ 2.5 billion in the previous fiscal year. The trend continued during
the current year. As a result, the remittance reached the US$3.06 billion mark in June 2003 and
also the overall balance of payment situation improved further. It is to be noted that the foreign
exchange reserve plummeted to US$ 1.09 billion when the present Government took office in
October 2001.

3
Box 1.1: Millennium Development Goals

By 2015 all 189 United Nations Member States have pledged to:
1. Eradicate extreme poverty and hunger
• Reduce by half the proportion of people living on less than a dollar a day.
• Reduce by half the proportion of people who suffer from hunger.
2. Achieve universal primary education
• Ensure that all boys and girls complete a full course of primary schooling.
3.Promote gender equality and empower women
• Eliminate gender disparity in primary and secondary education preferably by 2005, and at
all levels by 2015.
4. Reduce child mortality
• Reduce by two thirds the mortality rate among children under five
5. Improve maternal health
• Reduce by three quarters the maternal mortality ratio.
6. Combat HIV/AIDS, malaria and other diseases
• Halt and begin to reverse the spread of HIV/AIDS.
• Halt and begin to reverse the incidence of malaria and other major diseases.
7. Ensure environmental sustainability
• Integrate the principles of sustainable development into country policies and
programmes; reverse loss of environmental resources.
• Reduce by half the proportion of people without sustainable access to safe drinking
water.
• Achieve significant improvement in lives of at least 100 million slum-dwellers by 2020.
8. Develop a global partnership for development
• Develop further an open trading and financial system that is rule-based, predictable and
non-discriminatory. Includes a commitment to good governance, development and
poverty reduction-nationally and internationally.
• Address the least developed countries' special needs. This includes tariff and quota-free
access for their exports; enhanced debt relief for heavily indebted poor countries;
cancellation of official bilateral debt; and more generous official development assistance
for countries committed to poverty reduction.
• Address the special needs of landlocked and small island developing States.
• Deal comprehensively with developing countries' debt problems through national and
international measures to make debt sustainable in the long run.
• In cooperation with the developing countries, develop decent and productive work for
youth.
• In cooperation with pharmaceutical companies, provide access to affordable drugs in
developing countries.
• In cooperation with the private sectors, make available the benefits of new technologies-
especially information and communication technologies.

Source: United Nations Department of Public Information

4
Reforms Initiatives
A Public Expenditure Review Commission and a Revenue Reforms Commission were constituted
for streamlining and improving the effectiveness of public expenditures and enhancing revenue
efforts. Their interim recommendations, already submitted, were taken into consideration in
formulating budget for FY2003-04. For the first time, the Government carried out a mid-term
review of the budget for FY2002-03 and the results of this review were incorporated in the
revised budget for FY2002-03.

The Government has undertaken a series of reform measures in the energy and power sector in
order to create an appropriate enabling environment for improved public sector performance,
attract multi-lateral and private investment, rationalize tariff rates and improve collections, and
the consumers get 'value for money'. In order to promote efficient energy use, the government is
going to adopt an interim electricity, gas and petroleum pricing framework to ensure efficiency
and financial viability of this sector.

The trade regime has been further liberalized by reducing the maximum tariff rate by 5 percent.
Supplementary duty scheme has been rationalized by reducing the number of rates from 31 to 5.
Import license fee on all imports has been withdrawn. Consequently, the average nominal tariff
protection further declined. This liberalization trend was continued in the budget for 2003-04.
The Government has designed an integrated policy framework for effective participation in
globalisation process in the post -MFA period.

In view of the positive impact of telecommunication and the new information and communication
technology on poverty alleviation and growth, the Government has been undertaking reforms in
the telecommunication sector. Corporatization of BTTB is under active consideration of the
Government. Moreover, the Bangladesh Telecommunication Act, 2001 has already been enacted
and made operational to ensure fair play to multi- operators.

To bring more discipline in the financial sector and increase operational autonomy of the
Bangladesh Bank necessary amendments to the Bangladesh Bank Order, Banking Companies Act
and Banks (Nationalization) Order have been enacted by the Parliament. Several Task Forces
have been set up to enforce the Money Laundering Prevention Act.

In order to develop capital market on a sound footing and to protect the interest of local investors
a number of reforms has been introduced in current fiscal which include enactment of Central
Depository System (CDS Amendment) Bill, 2002, introducing web-site of capital market and
reduction of corporate tax rate. These reforms resulted in increase in average daily transactions in
the capital market and rise in overall share price index in FY 2002-03 compared to 2001-02. In
addition, there has been an investment to tune of Tk.1943.76 million up to June, 2003 through
Initial Public Offer (IPO). There have been comprehensive reforms in foreign exchange
management too. The Government has introduced floating exchange rate since 31 May, 2003. If

5
the newly introduced system brings in any instability, Bangladesh Bank will intervene through
buying and selling of dollars directly to restore discipline.

The Government has passed a revised Privatisation Policy signalling its commitment to SOE
reform. All SOEs have been put on hard budget constraint. In July, 2002, the Hon'ble Prime
Minister took a politically bold decision and closed down the Adamjee Jute Mills, the largest jute
mill of the World employing about 25,000 workers and accounting for about 10 percent of total
annual SOE losses. Since then about 24 SOEs have already been either closed or downsized.
They represent over 41 percent of aggregate SOE losses engaged in manufacturing. Employees
retrenched from these SOEs have been reduced by 30 percent last year and we expect to reduce
this loss further this year. The government is committed to continue reforms in the SOE sector
keeping in view the interest of the economy; but this will have to be accompanied by satisfactory
compensation and safety net programmes.

Adequate allocation has been made in the revised budget of FY 2002-03 to defray the severance
benefits payable to the retrenched employees of the SOEs selected for privatization and to clear
up arrears. More allocation is also being provided in the Revenue budget for FY 04 for operation
and Maintenance expenditure. Recognizing the need to strengthen the governance of targeted
food transfer programs, the Food for Education Program, and the Primary Education Stipends
Program have been discontinued and have been replaced by a cash stipend program for primary
school students. It may be noted here that to ensure transparency the government has already
monetized most of its Food for Work (FFW) programs. The Government is determined to
continue supporting the secondary education of girls and has decided to extend the Female
stipends Program to Class 12. Controlling environmental pollution will get the priority it deserves
for sustainable development. The Government has meanwhile banned the use and marketing of
the polythene bags and has also phased out two stroke three wheelers from Dhaka city to
eliminate one of the major sources of air pollution.

New incentive scheme has been introduced for improving performance of NCB's including
collection of non-performing loans. Loan recovery departments have been strengthened.
Necessary amendment to the Money Loan Courts have been enacted by the Parliament. Effective
internal control is being set up in banks. To control default loan, Bangladesh Bank has issued
necessary regulations. A Committee on default Loans was set up to suggest measures for
reducing the burden of debt default and for improved loan management performance of the
banking sector. A loan write off policy has been introduced by Bangladesh Bank for the first
time.

Development Strategy
Since independence, the Government of Bangladesh has endeavoured to improve the quality of
life of the people through planned development. Bangladesh has so far implemented 5 Five-Year

6
Plans including one Two-Year Plan. Allocation and expenditure of these plans together with the
rate of growth achieved have been shown at Appendix-50.

The Plans could not achieve desired success against targeted objectives because of a host of
factors including resource constraints. Bangladesh has, however, gained enviable success in terms
of achieving improvements in most of the socio-economic indicators. Consistent with the market
economy and the global context, required changes have been introduced in the development
strategy of Bangladesh.

In the socio-economic realities of Bangladesh, the pursuit of medium-term development plan


would be best suited for the desired growth of the country. Poverty reduction will be at the heart
of such plan. The medium-term Plan will emphasise on detailed action plans against individual
goals so that it can be achieved at the lowest level. If the medium-term plan is implemented
within the vision of the long-term perspective, it would facilitate refixing of targets, inputs and
objectives.

The Government has finalised a three-year 'National strategy for Economic Growth, Poverty
Reduction and Social Development' to implement its medium-term plan. In the light of this
strategy document, the Government will also prepare a three-year 'Rolling Investment
Programme' which would form the basis of executing future plans.

National Strategy for Economic Growth, Poverty Reduction and Social


Development
Immediately after taking office, the present Government, besides identifying the priority areas of
reform, took up the task of preparing a 'National strategy for Economic Growth, Poverty
Reduction and Social Development' in line with the UN Millennium Development Goals (MDG).
In preparing this strategy document a wide consultation process was undertaken at the national
level and local level including consultation with the experts and stakeholders. A preliminary draft
of the document, was put in place in April, 2002. Based on this draft a comprehensive dialogue
took place with the Government and non-government organisations, representatives from the civil
society and the development partners. In the light of the feedback received a revised draft was
prepared in January 2003. In March 2003, the draft was finalised after certain amendments.

The cardinal objective of the development strategy articulated in the document will be to make
sure that benefits of growth are shared by the poor. The strategy document lays emphasis on the
following five major strategies:
♦ Acceleration of pro-poor growth.
♦ Promotion of good governance
♦ Investment in human development
♦ Women development; and
♦ Ensuring social security.

7
Acceleration of Pro-poor Growth
In the strategy document, a target of raising economic growth from 5.0 percent to 6-7 percent has
been set so that the proportion of poor people can be reduced by half by 2015. The other
important segments of the strategy include:
♦ a stable macroeconomic framework
♦ development of private sector
♦ sound and effective financial systems
♦ strengthening institutional capacity
♦ rural development
♦ expansion of productive sectors
♦ improvement of existing capacity and quality of infrastructure development.

Promotion of Good Governance


The second important element of the strategy is establishing good governance in all spheres. With
this end in view, the Government has planned to bring in judicial reforms to infuse dynamism in
the judicial process, to bring about basic reforms in police administration and to ensure
transparency and accountability in the use of public resources.

Investment in Human Development


As the development of human resources has strong poverty reducing effects, the Government lays
special emphasis on enhancing the basic capacity of the poor by way of strengthening the health,
education and nutrition programmes. To implement the strategy, the Government has already
allocated substantial resources for expansion of education, particularly the primary education. As
a result, there has been quantitative expansion in education but the health and nutrition
programmes relatively lag behind. In the present strategy pursued by the Government, these two
areas are having greater importance. Overall, the Government will divert and allocate more
resources to all the programmes relating human resource development.

Women Development
The burden of poverty falls disproportionately on women due to a numbers of factors such as
literacy rate, low nutrition, low and discriminatory wages and high mortality. Empowering
women is critically important for socio-economic development. The degree of women
empowerment is measured in terms of their access to education, participation in workforce,
property rights, participation in politics and access to credit. Although Bangladesh has made
much progress in this area, it leaves much to be desired. Against this backdrop, the strategy paper
lays emphasis on:

♦ policies and institutional actions to close the gender gap

8
♦ reduce violence against women
♦ reduce high maternal mortality
♦ remove hindrances to women's employment and economic opportunities
♦ implement policies to ensure formal equality
♦ support affirmative actions at all levels and in all spheres
♦ create women-friendly institutional environment.

The Government in order to ensure greater participation of women in all spheres of development
within the framework of poverty reduction strategy, will actively promote appropriate policies
and programmes.

Ensuring Social Protection


Four sets of policies would be emphasised for the poor to cope better with various income shocks.
These policies would increase the crisis -coping capacity of the poor.
♦ The first set of policies will focus on the social safety net for the poor through food for works
and income transfer programmes (e.g. VGD/IG-VGD, FFW/TR, old-age pension schemes in
rural areas, support for the female destitutes and traditional relief programmes) to address the
specific problems of chronic poverty and socially disadvantaged groups (e.g. street children,
elderly poor, the disabled population etc.).
♦ The second set of policies will address the vulnerabilities of 'new poor' like the retrenched
workers. This form an increasingly important component of the social protection policies in
the backdrop of privatization, labour restructuring, market.
♦ The third set of policies will put emphasis on the development of social solidarity as an
increasingly important route for social interventions. The newly set up umbrella support
organization such as the Social Development Foundation (SDF) will play an important role in
fostering social capital formation by promoting CBOs and local associations in building and
maintenance of small-scale community infrastructures.
♦ The fourth set of policies will relate to risks insurance covering four categories: (a) providing
access to credit to the poor in times of emergency to ease the burden of shocks; (b) ensuring
good public health services to reduce health hazard related income and consumption shocks;
(c) strengthening disaster preventing and mitigating mechanisms to enhance the coping
capability of the poor in times of natural disasters; and (d) introducing effective measures to
minimize suffering from violence and personal insecurity.

In the strategy document, there is an elaborate framework for monitoring and assessing the
poverty reduction programmes. Within this framework a National Poverty Alleviation Council'
headed by the Hon'ble Prime Minister has been formed. Besides this, a Focal Point has been

9
established in the General Economics Division of the Planning Commission which has been
entrusted with the task of collecting all data and information on the progress of poverty reduction
programmes.

Medium Term Macroeconomic Framework


To facilitate the implementation of the 'National Strategy for Economic Growth, Poverty
Reduction and Social Development', a Medium Term Macroeconomic Framework (MTMF) has
been specified. The framework has been worked out on the basis of the estimated values of FY
2002-03 as the benchmark. The purpose is to comprehend the dynamics of the economy
identifying key macroeconomic fundamentals and formulate and implement realistic budgets.

The Framework envisages a stable macroeconomic environment during the period. It seeks to
achieve an accelerated growth rate of GDP in real terms rising from 5.5 percent in FY2003- 04 to
6.5 percent in FY 06. The target rate of growth has been set to ensure a real breakthrough in
poverty reduction in the medium term. The economy's average growth rate in the recent past, has
been higher than the historic trend growth rate of 4 percent. Because of the adoptation and
implementation of policies for structural reforms by the Government, it is expected that the
growth momentum will be regained in FY 03, which will provide the basis for a new era of
higher growth from FY 2003-04.

As high and variable inflation inhibits growth, worsens income distribution and the poverty
situation, the framework envisages low and stable rate of inflation in the economy. A tight rein
will be put on inflation so that the positive impact on poverty reduction achieved through higher
growth is not frustrated. The rate of inflation is expected to be 4.0 percent in FY2004-05 and
stable afterwards.

By the 1990s Bangladesh has made a transition from a situation of low saving and investment
ratios to moderate saving and investment ratios. It is expected that the trend will continue and
investment rates will increase further in the coming years. Moreover, the poverty reduction
strategy would require higher growth which can be achieved through higher investment. Better
management of public capital and more efficient provisioning of infrastructure leading to better
utilization of private capital would be ensured such that the productivity of capital is enhanced
and higher growth is achieved.

Accelerated poverty reduction would require higher amount of Government revenue which can be
spent on programs benefiting the poor. The revenue-GDP ratio as well as the tax-GDP ratio are
still low in Bangladesh compared with similar ratios in other developing countries. The
Government plans to mobilize larger amount of domestic revenue so that the revenue-GDP ratio
would rise from 10.6 percent in FY 2002-03 to 11.9 percent in FY 2005-06 and the tax GDP ratio
from 8.3 percent to 9.7 percent during the same period. The government has already implemented
some short term measures for increasing domestic resources in FY 2001-02. Several additional

10
measures have also been proposed in the FY2002-03 budget which have started to yield positive
results. The government has also been rationalizing the prices of public goods and services to
improve non-tax revenue collection. Future measures to increase revenue collections will focus
on further reforms in the revenue system.

A significant increase in public expenditure is needed to reduce the incidence of poverty at a


faster rate. Within the medium term framework, total government expenditure as a proportion of
GDP will increase from 15.2 per cent in FY 2002-03 to 16.4 per cent in FY 2005-06. The rise in
expenditure-GDP ratio would largely reflect the additional public expenditures required to
finance new poverty reduction projects. The size of ADP will grow from 5.8 per cent of GDP in
FY 2002-03 to 6.9 per cent in FY 2005-06 indicating expanded and improved absorption capacity
of the key sectors in utilizing additional development resources.

The budget deficit will be kept under control in the neighborhood of 3.8 to 4.0 per cent (4.5 to 4.7
per cent excluding grants) of GDP and will be financed by both domestic and foreign resources.
To avoid pressure on scarce budgetary resources it would be expedient to rely on foreign loans at
concessionary interest rates to finance deficit. It is expected that increased volume of foreign
resources will be forthcoming to finance the poverty reduction agenda under the strategy.
Consequently, net foreign financing (excluding grants) as proportion of GDP would increase
from 1.6 percent in FY 2002-03 to 1.8 percent in FY 2005-06. Net domestic financing has been
projected at 1.9 per cent of GDP in FY 2005-06. The monetary and credit program for the
medium term has been designed to ensure higher growth of GDP as well as price stability. Broad
money growth rate would decline from 12.5 per cent in FY 2002-03 to 11.9 per cent in FY 2005-
06. The reserves money will be used as an operating target to keep broad money growth within
reasonable limit.

The balance of payments (BOP) situation would also improve during the program period. The
assumption underlying the projected behavior is the steady growth of exports along with
enhanced inflow of multilateral and bilateral inflows to finance new poverty reduction programs.
The gross official reserves would increase to US$ 3.3 billion (3.2 months import equivalence) in
FY 2005-06.

11
Box 1.2: Medium-term Macroeconomic Framework: Key Indicators
Indicator Revised Projection
Est/Benchmark
Real GDP Growth (%) 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-
08
GDP Deflator (% change) 4.4 5.2 5.5 6.0 6.5 6.5 6.5
CPI Inflation (annual average) 2.7 4.8 4.0 4.0 4.0 4.0 4.0
CPI Inflation (annual) 2.4 5.2 4.5 4.0 4.0 4.0 4.0
% of GDP
Total Revenue and Grants 11.1 11.5 11.5 12.1 12.6 12.9 13.0
Total Revenue 10.1 10.6 10.8 11.3 11.9 12.2 12.3
Tax 7.7 8.3 8.7 9.2 9.7 10.0 10.1
Non tax 2.4 2.2 2.1 2.1 2.1 2.2 2.2
Grants 1.0 0.9 0.7 0.8 0.8 0.7 0.7
Total expenditure 14.8 15.2 15.5 16.1 16.4 16.4 16.3
Current expenditure 7.9 8.4 8.5 8.4 8.4 8.5 8.5
of which Interest payments 1.8 2.0 2.0 2.0 2.0 2.0 1.9
Annual Development Program 5.8 5.8 6.1 6.5 6.9 7.0 7.0
Extraordinary expenditures 0.0 0.4 0.3 0.6 0.5 0.3 0.2
Other expenditures 1/ 1.1 0.6 0.6 0.6 0.6 0.6 0.5
Overall balance (including -3.7 -3.7 -4.0 -3.9 -3.8 -3.5 -3.3
grants)
Overall balance (excluding -4.7 -4.6 -4.7 -4.7 -4.5 -4.2 -4.0
grants)
Primary balance -2.9 -2.6 -2.7 -2.7 -2.5 -2.2 -2.0
Financing (net)/2 3.7 3.7 4.0 3.9 3.8 3.5 3.3
Domestic 2.6 2.1 1.9 1.9 1.9 1.9 1.9
External 1.1 1.6 2.1 2.0 1.8 1.6 1.4
Financing (net)/3 4.7 4.6 4.7 4.7 4.5 4.2 4.0
Domestic 2.6 2.1 1.9 1.9 1.9 1.9 1.9
External 1.1 1.6 2.1 2.0 1.8 1.6 1.4
Grants 1.0 0.9 0.7 0.8 0.8 0.7 0.7
Total central govt. debt (% 51.5 53.8 49.0 48.4 47.6 46.5 45.3
GDP)
Money and credit (end of year: % change)
Domestic credit 11.9 11.2 11.2 12.0 11.8 11.8 11.8
Private sector 13.9 11.3 11.1 11.8 11.6 11.7 11.8
Broad money (M2) 13.1 12.5 12.1 12.8 11.9 11.8 11.8
money velocity 2.8 2.7 2.7 2.6 2.6 2.6 2.5
Balance of payments (millions of U$ dollar)
Exports, f.o.b 5929 6129 6620 7217 7869 8587 9376
(Annual percent) -7.6 3.4 8.0 9.0 9.0 9.1 9.2
Imports, c.i.f -8515 -9098 -10278 -10924 -11624 -12228 -12865
(Annual percent charge) -9.1 6.8 13.0 6.3 6.4 5.2 5.2
Gross official reserves 1582 2000 2549 2937 3314 3587 4004
(millions of U$ dollar)
In months of imports of goods 1.9 2.1 2.8 3.0 3.2 3.3 3.5
and non factor services
Memorandum items (In billion
of taka
Nominal GDP 2717 2996 3284 3636 4023 4450 4920
Note:
1/ Consists of other capital, net lending and food accounts (including check float and discrepancy)
2/ Grants are considered as above the line item
3/Considering grants as financing and a below the line item.

Economic Sectors
The following paragraphs are intended to present briefly the results of progress detailed in the the
important sectors of the economy.

Agriculture
In the agrarian economy of Bangladesh, the combined contribution of agriculture to GDP during
2002-03 is about 23.46 percent which plays a significant role in socio-economic upliftment and
sustainable development. During FY 2001-02 the actual production of food grains was 259.2 lakh
metric tons. In FY 2002-03, the target for food grains production was set at 280.8 lakh metric
tons. During the current year the demand for food grains was estimated at 223.51 lakh metric

12
tons. During this year the growth in agriculture and fisheries sectors has been projected at 3.6 and
2.3 percent respectively. As agriculture is the mainstay of the economy, besides reducing poverty
it contributes significantly to ensuring food security for a vast population, together with
improving their standard of living and augmenting employment opportunities. There have been
continued efforts from Government for development of agriculture. Included among them are
management of irrigation water, availability of fertilizer, introducing commercial orientation to
livestock sub-sector, massive afforestation throughout the country and preservation of forest,
meeting the deficiencies in forest resources, ensuring supply of raw materials for forest-based
industries, conservation of bio-diversity and wild-life and protection of environment and control
of air-pollution for sustainable development.

Industry
The role of industry (manufacturing) sector is central to the economic development of a country.
During FY 2002-03, the contribution of this sector to GDP has been estimated at 15.91 percent
while its growth has been projected at 6.62 percent. All industries excepting those relate to
national security have been made open for local and foreign investors. An inspired and dynamic
private sector's role will be critical for industrialisation of Bangladesh. And this should be made
competitive in a deregulated domestic and international market. Included in the vision of
industrialisation, there is a goal of having 25 percent contribution of manufacturing sector to
GDP. It has also been envisioned that this sector will absorb 20 percent of workforce. In order to
encourage industrial growth, the rate of interest for all industries under the thrust sector have been
reduced from 10-12.5 percent to 9 percent. The interest rate of shipment and packing credit has
also been reduced from 8-10 percent to 7 percent. In addition, the bank rate has been reduced
from 7 percent to 6 percent to reduce the interest rate of bank loan. Since establishment of
Privatisation Board (Now Privatisation Commission), up to June, 2003 a total of 42 industrial
entities have been privatised. Much wider initiatives are in place to accelerate the pace of
privatisation. In FY 2001-02 the net loss of 44 SOEs amounted to Tk.1533.56 crore. In FY 2002-
03, the net loss has been estimated at Tk.1026.81 crore. Foreign Direct Investment in the country
has now increased substantially. In FY 1991-92 the foreign investment stood at US$ 25 million.
In FY 2002-03 it stood at US$368 million. The Government has already declared a range of
facilities for foreign investment. Currently, six Export Processing Zones (EPZs) are operating in
the country. Up to June 2003, 180 industries were operational in these zones which had a total
investment to the tune of US$ 634.04 million.

Power and Energy


During the current year, the total power generation capacity increased to 4680 mw following
commercial operation of the 450 mw Combined Cycle Power Plant set up under the private sector
initiative since October, 2002. Against this installed capacity, 3622 mw power is being generated.

13
The present Government has taken up a set of comprehensive development and reform
programmes to attract private sector investment to supplement the Government investment to
increase power generation. In the current year, out of the total power generated, the public
sector's share is 78.38 percent while the private sector accounts for 21.26 percent share. Of the
total power generated, 90.66 percent is gas-based, 3.88 percent is hydraulic and 5.46 percent is
oil-based. Bangladesh Power Development Board (BPDB) is playing one of the major roles in
power generation. Besides, Bangladesh Rural Electrification Board (BREB), Dhaka Electric
Supply Company (DESCO) and Power Grid Company of Bangladesh (PGCB) are also working
for managing transmission and distribution system of power. Through the PDB system, power is
distributed through 33 kv and 11 kv lines. Power generated in different plants is distributed
through 230 kv and 123 kv lines. A total of 22 gas fields has been discovered in the country so
far. Out of the total extractable reserve of gas, 391.53 billion cft have been extracted during FY
2001-02. The whole country has been divided into 23 blocs for special exploration of gas
resources and also for expansion of the use of gas. So far Production Sharing Contract (PSC) has
been concluded for 12 blocs. In order to meet the increasing demand for gas, the private sector is
coming up side by side with the public sector. In order to contain environment pollution, the
process of converting vehicles into CNG is under way. Under the 'Dhaka Clean Fuel Project' the
petrol-driven auto rickshaws and cars are being converted into CNG at both public and private
sector levels. Bangladesh Petroleum Corporation has taken measures to make the storage
facilities at different sites in Bangladesh developed, expanded and also internationally acceptable
in terms of quality and standard. The companies under Petrobangla are being awarded
administrative and financial autonomy for exercising more powers.

Transport and Communication


The system of transport and communication is of immense importance for development of
Bangladesh. The contribution of this sector to GDP at constant price is 9.78 percent (provisional).
The transport and communication network in Bangladesh consists of road transport, railways,
water and airways, post and telecommunication and information technology. Although
immediately after independence there was a road network of 4000 kilometres only; it increased,
according to the estimates of 1998, to a huge road network of 2 lakh 23 thousand kilometres with
national highways, regional highways, feeder roads and rural roads. Bangladesh Road Transport
Authority was set up to take care of overall supervision, management and supervision of the
transport sector. As a cheap mode of transportation, the importance of Bangladesh Railway is
immense. Despite the fact that Bangladesh Railway had been a loss-making entity for many
years, it has introduced recently a set of reform programmes that aim to reduce the deficit of
Railway, abolish the system of open ended subsidy and rationalise manpower, among others. In
maritime-trade of the country, Chittagong and Mongla Port Authorities play critical role. A small
part of the remaining external trade is performed through land ports and air routes. Bangladesh

14
Shipping Corporation has built-up a mixed fleet of 13 vessels in order to provide efficient
shipping services as well as to perform properly most of the external trade activities linked to
international maritime trade. In addition, there is a Directorate of Shipping to ensure accident-free
movements of all kinds of ships that include ships operating in inland waterways, coastal fishing
trawlers, ships bound for foreign destination and ships coming into Bangladesh ports and also to
protect commercial interests of Bangladeshi ships. Bangladesh Inland Water Transport
Corporation is a service-oriented organisation. This entity, as a public utility service, is playing an
important role in transporting commodities, passengers and vehicles. In order to enhance trade
activies with the neighbouring countries, 13 land ports have been established at the Bangladesh-
India border under Bangladesh Land Port Authority. Biman Bangladesh Airlines is the only
public sector organisation engaged in the task of managing air travels. Amidst global recession in
aviation business, Biman is continuing its operational activities in the competitive market with its
limited resources. In the socio-economic development of Bangladesh, the role of
telecommunication is significant. In view of the increasing public demand, as the number of
telephones, NWD circuits and overseas circuits increased, so the revenue augmented over the last
ten years. Opening up of cellular phones to private sector has increased teledensity significantly.
Bangladesh Postal Department is a service-oriented organisation. The department makes
arrangements for speedy dispatch of mails throughout the country through Biman, Railway, Bus
and Launch. In addition, the department provides quite a few special services through which
valuable articles, documents etc. can be sent to and from the country. In the current context of
globalisation and market economy, economic development is not possible without achieving
progress in information technology. In order to bring about improvement in this sector, the
Government has taken up a comprehensive development programme.

Poverty Reduction
Poverty is a multi-faceted problem. The primary goal of the overall development efforts of
Bangladesh government is the reduction of poverty. Poverty reduction, has, therefore, been given
the top-most priority in the development plans of the country and a range of programmes are
being implemented. According to the report on Household Income and Expenditure Survey 2000,
(HIES) published by Bangladesh Bureau of Statistics (BBS), the absolute poverty at national
level on the basis of daily calorie intake of 2122 k. cal. was 47.75 percent in 1998-99 and 44.33
percent in 2000. During the same period the hardcore poverty measured against 1805 k. cal was
28.36 and 19.98 percent. The poverty trend has been calculated according to Cost of Basic Needs
(CBN) methodology introduced in 1995-96. According to this methodology, using high and low
poverty lines the impact of poverty at national level are 49.8 percent and 33.7 percent. According
to Bangladesh Human Development Report 2000, Human Development Index was 16.3 percent
in 1981-83 and 34.8 percent in 1998-2000. In a recent meeting with the Secretaries, the Hon'ble
Prime Minister emphasised the need for implementing programmes having poverty reducing

15
effects on a priority basis. Included among them are plantation of trees, fish cultivation, goat
rearing, primary and women education, information and communication technology, library
development, children's right, vocational and technical education and housing for the poor. In
addition, a project has been taken up at the initiative of the Hon'ble Prime Minister at a cost of
Tk. 447.00 crore for reduction of poverty. The implementation of the project will be completed
by June, 2006. The role of micro-credit in reducing poverty is widely recognised. Bangladesh
Rural Development Board (BRDB), Palli Karma Shahayask Foundation (PKSF) and a number of
Government Agencies are engaged in distributing micro credit. Besides Grameen Bank, the
scheduled banks are also participating in micro-credit distribution programme. Alongside the
Government organisations, the Non-government organizations (NGOs) are also carrying out
micro-credit operations. Among the NGOs, ASA, BRAC, PROSHIKA and SWANIRVHAR are
playing significant role in this area.

Human Resource Development


The fundamental objective of economic upliftment is human development. The role of literate,
healthy and efficient human resources is critical to the intended development of a country by
achieving sustainable and higher growth. Education training, health and social services as tools
for human resources development are gaining increasing importance. Realising this importance,
the government in response is channeling increased resources to social sectors for human
resource development. In FY 2002-03, the share of social sector in total public outlay has been
estimated at 24 percent. The primary education has been made compulsory since 1990. Stipends
for female students have been introduced to promote women education. A system of informal
education for adult and illiterate learners has also been introduced. The outcome of these
initiatives is that the current rate of literacy now rises to 62.66 percent. In order to build a system
of quality education, a number of programmes has been introduced including teachers' training,
revision of curriculum and infrastructure development. Greater emphasis has been laid on science
& technology and vocational education. Efforts are under way to build an effective and sound
health services to ensure sound public health alongside education. The Five-Year Health and
Population Sector Programme (HPSP) was scheduled to be terminated in June 2003 but
eventually completed in December 2003. A Health, Nutrition and Population Sector Programme
(HNPSP) will commence from January 2004. Government is taking a range of measures through
the Ministry of Women and Children's Affairs for women and children development. With a view
to removing the gender inequality and to involve women with the mainstream of development
activities, a variety of programmes has been adopted at governmental level. Elaborate
programmes are being implemented to convert the youth force of the country into a productive
force. In order to ensure utilisation of youth force in the developmental pursuit of the
Government, adequate provisions have been made for training and efficiency enhancement of the
unemployed youth, credit support, motivation and grants. To ensure welfare for the landless,

16
destitute, vagabonds, orphans, retarded and other disadvantaged classes, a variety of development
programmes has been adopted. In addition a number of programmes aimed to develop sports and
culture are being implemented. Implementation of these programmes are resulting in gradual
development of human resources.

Private Sector Development


In market economy, private sector is the main engine of growth and development. The present
Government continues its efforts for increased participation of private sector in the overall
development activities of the country. It is trying to create an investment-friendly environment in
the one hand, and taking initiatives for involving private sector for sustainable development on
the other. Among the many initiatives of the Government, significant ones are formulation of
different policies, reform of industrial policies, setting up Bangladesh Investment Board, (BOI)
constituting Privatization Commission and strengthening of capital market. Private initiatives in
the power and energy sector are being particularly encouraged. In FY2002-03, with the
commissioning of two power plants under the private sector, the total power generation increased
to 3622mw from 3218mw earlier. In telecommunication sector, two private companies are
making significant contribution. Up to June 2003, 4 private companies provided 13 lakh 79
thousand cellular mobile connections which was 7 lakh in the previous year. In addition, 2 private
companies have installed 25,348 fixed lines. Because of a range of initiatives in the transport
sector, involvement of private sector is increasing in air-transport, water-transport and railway.
GMG Air Lines are now operating in domestic and international air-routes. In construction and
operation of container terminal for water-transport, in development and operation of landing
station, private sector initiatives are being encouraged. In addition, decision has been taken to
place different land ports under the private sector. Currently 40 banks, 60 insurance companies
and 28 other financial institutions are operating under the private sector. These institutions,
besides providing sound and efficient services, are supporting to make investment easy and
competitive. Up to 2002 a total 24736 registered non-government primary schools has been
established under the private initiative. In addition, a significant number of secondary schools,
colleges and universities has also been established. In the health sector currently 642 private
hospitals and clinics are operating. It has been made possible to save valuable foreign currencies
by way of providing higher education and specialised health services. A comprehensive
programme is in existence under the private sector initiative in the agriculture sector. The private
sector is making special contributions in the areas of selling of shallow tube-wells, production
and marketing of quality seeds, improvement of irrigation systems etc. Private initiatives are
making special contributions to the jute and textile sectors too. Currently there are as many as 182
cotton mills in the country of which 156 cotton mills are under private sector. There are 3800
export-oriented garment industries that absorb a work force of 1.8 million. Consequent on a range
of measures taken by the Government, private sector investment increased gradually which now

17
accounts for 71 percent of the total investment. During July 2002 to June 2003, the total number
of industries registered with the Board of Investment stood at 2200 and the total investment
proposed amounted to Tk.137,711 million. During the corresponding period of the previous year,
the proposed investment of the registered industries amounted to Tk.105,400 million. As the rise
in private investment will contribute to rise in production and attaining efficiency, so will it
contribute to reduction of revenue expenditure for infrastructure and human resource
development.

World Economic Outlook


In 2002 the world economy started recovering from the ills of severe recession in 2001. As a
result, in the early part of 2002, the signs of achieving higher growth became evident in the global
economy. But amidst continuation of adverse impact of the bursting of equity market bubble,
rising political uncertainty, low market confidence and the escalation of oil prices, the pace of
recovery slowed towards the end of 2002. Despite that the world output grew by 3.3 percent in
2002 from its dismal 2.3 percent registered in 2001. However, consistent monetary and fiscal
policy pursued by the industrialised developed countries, improved macroeconomic management
with accelerated structural reform in developing countries were the major contributing factors for
the growth recovery. As the two major economic blocs, the Euro area and Japan remained
relatively weak, a faster global recovery during the year was stalled. Due to the economic
uncertainty throughout the world and the Iraq war, the projection of global economic growth for
2003 had to be adjusted. According to the IMF projection as presented in 'World Economic
Outlook' published in February this year, the world output was estimated at 3.3 percent. But in the
changed scenario, this projection has been revised to 3.2 percent in April 2003. In this projection,
the rate of growth in developed countries has been estimated at 1.9 percent. In the case of the
developing countries, this has been projected at 5.0 percent. Again among the developing
countries, the growth of the developing Asia might be around 6.3 percent. According to revised
projection of IMF, the growth of world trade in 2003 would be 4.3 percent which is 0.3 percent
less than the projection of February 2003. But the impact of the realities emerging during post-
Iraq war would call for a fresh projection of world economic growth in 2003.

18
CHAPTER-2
GDP, SAVING AND INVESTMENT

It has been projected in the Medium Term Macroeconomic Framework (MTMF) adopted by the
Government that the real growth of Gross Domestic Product (GDP) will rise from 5.5 percent in
FY 2003-04 to 6.5 percent in FY 2005-06. It is widely recognised that the growth of GDP is
largely dependent on capital intensity as well as on the efficiency in utilisation of capital.
Currently, the Incremental Capital Value Addition Ratio (ICVR) in Bangladesh is considered to
be in the neighbourhood of 4 percent. So, for attaining 6.5 percent projected growth of GDP as set
in the MTMF would mean raising investment level to the tune of 26 percent of GDP.

In FY 2001-02, GDP grew at 4.42 percent


Graph 1.1: Growth rate of GDP at
and the rates of national savings and constant price

investment stood at 23.44 percent and 23.15


7
percent respectively. Due to increase in 6

Percentage
5
production in agricultural sector and positive 4
growth in exports, GDP growth in FY 2002- 3
2
03 has been projected at 5.33 percent while 1
0
the rates of national investment and savings
9 0 1 2 3
have been estimated at 23.74 percent and -9 -0 -0 -0 -0
98 99 00 01 02
19 19 20 20 20
23.21 percent of GDP respectively.

In Table 2.1, total and per-capita GDP at current prices, Gross National Income (GNI) and Net
National Income (NNI) in taka currency and dollars and the rates of National Savings and
Investment as percentage of GDP have been shown:
Table 2.1:Per Capita GDP, GNI, NNI and National Savings & Investment (At Market Prices)
Item 1998-99 1999-00 2000-01 2001-02 2002-03 (Provisional)
GDP (In Crore Tk.) 219697 237086 253546 273201 300485
GNI (In Crore Tk.) 227250 245799 262388 285743 314527
NNI (In Crore Tk.) 209720 227021 242132 263931 290552
Population (In Crore) 12.63 12.81 12.99 13.16 13.34
Per Capita GDP (In Tk.) 17,397 18511 19,525 20,754 22,523
Per Capita GNI (In Tk.) 17,995 19,192 20,206 21,707 23,575
Per Capita NNI (In Tk.) 16,605 17,725 18,646 20,050 21,778
Exchange Rate (US$1=Tk.) 48.06 50.31 53.96 57.43 57.90
Per Capita GDP (In US$) 362 368 362 361 389
Per Capita GNI (In US$) 374 381 374 378 407
Per Capita NNI (In US $) 346 352 346 349 376
National Saving Rate 22.31 23.10 22.41 23.44 23.74
National Invest Rate 22.19 23.02 23.09 23.15 23.21

Source: Bangladesh Bureau of Statistics (BBS)


Note: Population data for the FY 2000/01 and 2001/02 are adjusted on the basis of Census 2001. Population data up to 1999-2000
are projected based on census 1991.

19
GDP: Growth and Composition
Table 2.2 shows the rate of GDP growth at current prices and the sectoral contribution to GDP
during FY1998-99 to 2002-03. According to provisional estimates, the projected GDP in FY
2002-03 at current prices will be around Tk.3,00,485 crore (about US$ 51.90 billion). In FY
2001-02 and 2000-01, GDP at current prices reached Tk.2,73,201 crore and Tk.2,53,546 crore
respectively. In FY 2002-03 the rate of growth of GDP is projected to be around 9.99 percent at
current prices which were 7.75 percent and 6.94 percent in FY 2001-02 and 2000-01 respectively.
In FY 2001-02 per-capita GDP was Tk.20,754 (about US$ 361) which is likely to rise at about
Tk.22,523 (about US$ 389) during FY 2002-03 (Table 2.2). At current prices the rate of growth
of per-capita GDP in taka will be 8.52 percent in 2002-03, which was 6.29 percent in the previous
fiscal year. Sectoral contribution of GDP at current prices during FY 1991-92 to 2002-03 has
been shown in Appendix-2
Table 2.2: Gross Domestic Product (GDP) at Current Prices
(In Crore Tk.)
Sector/Sub-sector 1998-99 1999-00 2000-01 2001-02 2002-03
(Prov.)
1. Agriculture & Forestry 42990 44692 45631 46003 48800
a. Crops & Vegetables 32395 33418 34068 33896 36035
b. Livestock 6443 6858 6893 7118 7474
c. Forestry 4152 4417 4674 4989 5291
2. Fishery 12485 13674 13406 13897 14259
3. Mining & Quarrying 2066 2311 2640 2997 3302
a. Natural Gas & Crude Petroleum 1080 1277 1502 1733 1894
b. Other Mining & Quarrying
986 1034 1138 1264 1409
4. Industry (Manufacturing) 32783 34837 38234 41805 46238
a. Large & Medium-scale 23527 24939 27340 2959 32558
b. Small-scale 9256 9898 10894 12209 13680
5. Electricity, Gas & Water Supply 2838 3072 3346 3640 4035
a. Electricity 2388 2579 2804 3053 3183
b. Gas 318 343 375 399 444
c. Water 132 150 167 188 207
6. Construction 15625 17622 19334 21159 23483
7. Wholesale & Retail Trade 27232 29204 32479 35312 38744
8. Hotel & Restaurant 1317 1463 1590 1740 1937
9.Transport, Storage & Communication 18041 19743 22129 25524 31215
a. Road Transport 13083 14463 16099 18869 24105
b. Water Transport 2404 2490 2616 2725 2823
c. Air Transport 320 373 393 413 446
d .Related Transport Services & 676 772 934 992 1066
Maintenance
e. Post & Tele-communication 1558 1645 2088 2525 2775
10. Financial Intermediations 3351 3648 3911 4207 4588
a. Bank 2639 2828 2988 3179 3430
b. Insurance 565 660 760 8061 986
c. Others 147 160 162 167 172
11.Real Estate, Renting & Business 19584 21139 22365 23995 25578
Activity
12.Public Administration and Defense 5552 6234 6695 7117 7785
13. Education 4718 4386 5852 6352 6971
14. Health and Social Services 4842 4376 5722 6079 6545
15. Community, Social and Personal 18497 20360 21665 23698 26684
Services
Import Duty 7776 8325 8547 9676 10321
GDP at Current Market Price 219697 237086 253546 273201 300485
Growth Rate (%) at Current Market 9.75 7.91 6.94 7.75 9.99
Price
Source: Bangladesh Bureau of Statistics (BBS).

20
Sectoral growth of GDP at constant prices (base year 1995-96) has been presented in Table 2.3.
In FY 2002-03 the rate of growth of GDP will stand at 5.33 percent which was 4.42 percent in FY
2001-02. The rate of growth of the agricultural sector has been projected at 3.95 percent in FY
2002-03 which was -0.62 percent and 5.53 percent in FY 2001-02 and 2000-01 respectively.
Because of the favourable climatic condition, the yield of Aman crop reached an expected level.
It is estimated that like Aman crop, Boro crop will also yield expected production target. In FY
2002-03, it has been projected that the growth rate in crop sector will be 3.21 percent. The rate of
growth in forestry sub-sector is presumed to increase slightly in FY 2002-03 compared to that of
FY 2001-02; but the growth in livestock sub-sector may decrease slightly.

Table 2.3: Sectoral Growth Rate of GDP at Constant Prices (Base: 1995-96)
Sector/Sub-sector 1998-99 1999-00 2000-01 2001-02 2002-03
(Prov.)
1. Agriculture & Forestry 3.24 6.92 5.53 -0.62 3.59
a. Crops & Vegetables 3.11 8.10 6.18 -2.39 3.21
b. Livestock 2.69 2.74 2.81 4.70 4.51
c. Forestry 5.16 4.94 4.85 4.91 4.97
2. Fishery 9.96 8.87 (-)4.53 2.22 2.33
3. Mining & Quarrying 1.32 9.48 9.75 4.53 6.32
a. Natural Gas & Crude Petroleum (-)2.46 14.55 13.99 4.93 7.92
b. Other Mining & Quarrying
6.18 3.47 4.19 3.96 4.00
4. Industry (Manufacturing) 3.19 4.76 6.68 5.48 6.62
a. Large & Medium-scale 4.19 4.35 6.55 4.60 6.04
b. Small-scale 0.75 5.80 7.02 7.69 8.01
5. Electricity, Gas & Water Supply 6.00 6.78 7.40 7.63 8.86
a. Electricity 6.75 6.87 7.60 7.78 8.85
b. Gas 0.63 5.61 6.05 6.53 8.41
c. Water 6.44 8.06 7.05 7.52 10.14
6. Construction 8.92 8.48 8.65 8.61 8.29
7. Wholesale & Retail Trade 6.51 7.30 6.43 6.59 6.66
8. Hotel & Restaurant 6.65 6.94 7.00 6.92 7.00
9.Transport, Storage & Communication 5.90 6.08 7.92 6.56 7.33
a. Road Transport 6.62 6.32 6.37 6.73 7.02
b. Water Transport 1.60 1.78 0.57 0.34 -0.05
c. Air Transport 14.46 16.80 4.62 -16.84 4.90
d. Related Transport Services & Maintenance
e. Post & Tele-communication 4.24 13.15 18.10 -4.62 1.53
5.96 5.57 26.92 20.95 18.19
10 Financial Intermediations 5.40 5.50 5.54 6.70 6.96
a. Bank 3.85 3.87 4.01 5.52 5.83
b. Insurance 13.05 13.59 13.46 12.35 12.28
c. Others 6.20 5.54 -0.03 2.05 1.01
11. Real Estate, Renting & Business 3.02 3.83 3.41 3.42 3.50
Activity
12.Public Administration and Defense 5.70 5.97 5.88 5.92 6.93
13. Education 7.70 7.74 7.11 7.58 7.87
14. Health and Social Services 4.60 4.80 4.92 5.30 5.82
15. Community, Social and Personal 2.95 3.06 3.15 3.24 3.43
Services
Import Duty 1.97 1.55 1.85 5.84 -1.96
GDP growth rate(%) at Constant Market 4.87 5.94 5.27 4.42 5.33
Price
Source: Bangladesh Bureau of Statistics (BBS).

21
In FY 2002-03, the growth rate of fisheries sector is estimated at 2.33 percent which was 2.22
percent and -4.53 percent in FY 2001-02 and 2000-01 respectively. The September shock and the
subsequent events had a negative impact on non-agricultural sector. As a result, production of
export goods and trade sustained colossal loss. This had an impact on the overall economy. But
various prudent and prompt interventions of the Government, helped most of the sectors
including power sector to register higher growth than what it was in FY 2001-02. In FY 2002-03,
it is projected that the growth of large scale and small scale industries sub-sector under industries
sector will stand at 6.04 percent and 8.01 percent respectively which was 4.60 percent and 7.69
percent in FY 2001-02. Overall, the manufacturing sector will fetch a growth rate of 6.62 percent
which was 5.48 percent in FY 2001-02. The sectoral growth of GDP at constant prices during FY
1991-92 to 2002-03 have been incorporated in Appendix-4.
The sectoral contribution to GDP has been shown in Table 2.4. The positive trend of structural
transformation from agricultural to non-agricultural sector consistently continued unabated. In FY
2002-03 the contribution of agricultural sector including the fisheries sector stands at 23.46
percent which was at 23.98 percent and 25.03 percent respectively in 2001-02 and 2000-01.

Table 2.4: Sectoral Share of GDP (%) at Constant Prices (1995-96)


Sector/Sub-sector 1998-99 1999-00 2000-01 2001-02 2002-03 (Prov.)
1. Agriculture & Forestry 19.35 19.49 19.51 18.58 18.23
a. Crops & Vegetables 14.33 14.59 14.72 13.75 13.44
b. Livestock 3.12 3.02 2.95 2.96 2.93
c. Forestry 1.90 1.88 1.87 1.88 1.87
2. Fishery 5.93 6.09 5.52 5.40 5.23
3. Mining & Quarrying 1.00 1.03 1.07 1.07 1.08
a. Natural Gas & Crude Petroleum 0.54 0.58 0.63 0.63 0.65
b. Other Mining & Quarrying 0.46 0.45 0.44 0.44 0.43
4. Industry (Manufacturing) 15.60 15.40 15.59 15.76 15.91
a. Large & Medium-scale 11.20 11.01 11.13 11.16 11.20
b. Small-scale 4.40 4.39 4.46 4.60 4.71
5. Electricity, Gas & Water Supply 1.42 1.43 1.46 1.51 1.55
a. Electricity 1.20 1.21 1.23 1.27 1.31
b. Gas 0.16 0.16 0.16 0.17 0.17
c. Water 0.06 0.06 0.07 0.07 0.07
6. Construction 7.67 7.84 8.08 8.41 8.63
7. Wholesale & Retail Trade 13.21 13.35 13.48 13.77 13.91
8. Hotel & Restaurant 0.63 0.63 0.64 0.66 0.67
9. Transport, Storage & Communication 9.21 9.20 9.42 9.62 9.78
a. Road Transport 6.64 6.65 6.71 6.86 6.96
b. Water Transport 1.23 1.18 1.12 1.08 1.02
c. Air Transport 0.16 0.18 0.18 0.14 0.14
d. Related Transport Services & Maintenance
e. Post & Tele-communication 0.34 0.36 0.41 0.37 0.36
0.84 0.83 1.01 1.16 1.30
10. Financial Intermediations 1.58 1.57 1.57 1.61 1.63
a. Bank 1.24 1.22 1.20 1.22 1.22
b. Insurance 0.27 0.28 0.31 0.33 0.35
c. Others 0.07 0.07 0.07 0.06 0.06
11. Real Estate, Renting & Business Activity 9.07 8.88 8.72 8.63 8.46
12. Public Administration and Defense 2.55 2.55 2.56 2.60 2.63
13. Education 2.17 2.20 2.24 2.31 2.36
14. Health and Social Services 2.23 2.20 2.19 2.21 2.21
15. Community, Social and Personal Services 8.37 8.13 7.97 7.87 7.71
GDP 100.00 100.00 100.00 100.00 100.00
Source: Bangladesh Bureau of Statistics (BBS).

22
Graph 2.2
In FY 2002-03, the contribution of
Contribution of Broad sectors in GDP
wholesale and retail trade stood at 13.91
percent, which was 13.77 percent and
Graph 2.2.1: Contribution of Broad sectors in GDP of
13.48 percent in FY 2001-02, and 2000- 1991-92
01 respectively. The contribution of
transport and communication is also Agriculture
increasing. Due to the floods in 1998 the 28.70%

contribution of industries sector though Service


49.74%
declined in 1997-98, it picked up in Industry
2001-02. In FY 2002-03, it is projected 21.56%
0 that the contribution will stand at 15.91
percent. The sectoral contribution in Graph 2.2.2: Contribution of Broad sectors in
terms of percentage of GDP at constant GDP of 2002-03
prices during FY 1991-92 to 2002-03 Agricultur
have been shown at Appendix-5. The e
23.46%
structural changes in the contribution to Service
GDP by broad sectors of the economy 49.37%

over a decade have been shown in the Industry


27.17%
charts presented in the margin.

Table 2.5 presents the trend of sectoral contribution to GDP at current prices of several countries
of Asia over the past two decades. This would give an idea as to Bangladesh's comparative
position vis-a-vis these countries.

Table 2.5: Trends of Sectoral contribution at current Market Prices of Some Asian
Countries during the Last Two Decades.
Country Agriculture Industry Services

1980 1990 2001 1980 1990 2001 1980 1990 2001

China 30.1 27.0 15.2 48.5 41.6 51.1 21.4 31.3 33.3
#
India 38.1 31.0 24.7 25.9 29.3 26.4 36.0 39.7 48.8
Indonesia 24.8 19.4 16.4 43.4 39.1 46.5 31.8 4.5 37.1
Korea 14.9 8.5 4.4 41.3 43.1 41.4 43.7 48.4 54.1
Malaysia 15.2 8.4 42.2 49.6 42.6 41.9
#
Pakistan 29.6 26 25.0 25.0 25.2 23.0 45.5 48.8 52.0
Philipine 25.1 21.9 15.1 38.8 34.5 31.6 36.1 43.6 53.3
Thailand 23.2 12.5 8.6 28.7 37.2 42.1 48.1 50.3 49.3
Bangladesh* 31.7 30.4 22.7 20.9 21.7 26.4 47.4 47.9 50.9
# Contribution has been based on current prices of GDP in case of India & Pakistan
Source: Key Indicators 2002, Asian Development Bank, *BBS.

23
Savings
In FY 1990-91 the domestic and national savings as percentage of GDP were 14.57 and 19.66
percent respectively and had since gradually increased to 18.16 and 23.44 percent of GDP
respectively in FY 2001-02. According to provisional estimates, the rates of domestic and
national savings will stand at 18.23 and 23.74 percent of GDP in FY 2002-03. Due to the adverse
impact of floods in 1998, September shocks in 2001 and the subsequent events there had been a
surge in expenditure for import of food grains, shortfall of revenue earnings and excessive flood
rehabilitation expenditure. Despite that a gradual upward trend is noticed in the rates of savings
during the subsequent fiscal years after 1997-98. In Table 2.6 and in chart 2.3, the year-wise rates
of domestic and national savings during 1990-91 to 2002-03 have been presented.
Table 2.6: Saving as Percentage of Gross Domestic Product (GDP)

Year Domestic Saving as % of GDP National Saving as % of GDP


1990-91 14.57 19.66
1991-92 13.86 19.30
1992-93 12.30 17.96
1993-94 13.10 18.79
1994-95 13.13 19.12
1995-96 14.90 20.17
1996-97 15.90 21.58
1997-98 17.41 21.77
1998-99 17.71 22.31
1999-00 17.88 23.10
2000-01 18.00 22.41
2001-02 18.16 23.44
2002-03 (Prov.) 18.23 23.74
Source: Bangladesh Bureau of Statistics (BBS).

Chart 2.3: Saving as percentage of GDP.

25

20
As % of GDP

15

10

0
1 2 3 4 5 6 7 8 9 0 2 3 3
-9 -9 -9 -9 -9 -9 -9 -9 -9 00 00 00 00
990 991 992 993 994 995 996 997 998 9-2 1-2 2-2 2-2
1 1 1 1 1 1 1 1 1 9 0 0 0
19 20 20 20

Domestic Saving as % of GDP National Saving as % of GDP

24
Investment
In FY 1990-91, the rate of total investment was 16.90 percent of GDP in which the shares of
public and private sector were 6.63 percent and 10.27 percent respectively. The rate of national
investment gradually picked up since FY 1990-91 and rose to 23.15 percent of GDP in FY 2001-
02. Of the total investment, the shares of public and private sector contribution were 6.37 percent
and 16.78 percent respectively in FY 2001-02. Under the impact of private sector-oriented
reforms in the national economy, local and foreign direct investments have been rising and this
resulted in gradual increase in private sector investment. According to provisional estimates, the
rate of national investment slightly picked up to 23.22 percent in 2002-03, which is the ever-
highest rate so far. The shares of public and private sector contribution are estimated to be 6.72
and 16.50 percent respectively. Investment in public sector though reduced slightly as percentage
of GDP, the total public expenditure has increased. Likewise investment in private sector has also
been gradually increasing. Table 2.7 shows investment as percentage of GDP during FY1990-91
to 2002-03:
Table 2.7: Investment as Percent of Gross Domestic Product (GDP)
Year Total Investment Public Investment Private Investment
1990-91 16.90 6.63 10.27
1991-92 17.31 6.97 10.33
1992-93 17.95 6.48 11.47
1993-94 18.40 6.65 11.76
1994-95 19.12 6.74 12.38
1995-96 19.99 6.42 13.58
1996-97 20.72 7.03 13.70
1997-98 21.63 6.37 14.26
1998-99 22.19 6.72 15.47
1999-00 23.02 7.41 15.61
2000-01 23.09 7.25 15.84
2001-02 23.15 6.37 16.78
2002-03 * 23.22 6.72 16.49
Source: Bangladesh Bureau of Statistics (BBS).
* Provisional.

Graph 2.4: Investment Rate as % GDP

25
As % of GDP

20
15
10
5
0
1

3
-9

-9

-9

-9

-9

-9

-9

-9

-9

-0

-0

-0

-0
90

91

92

93

94

95

96

97

98

99

00

01

02
19

19

19

19

19

19

19

19

19

19

20

20

20

Total Investment (% of GDP) Public Investment (% of GDP)


Private Investment (% of GDP)

25
CHAPTER-3
PRICES, WAGES AND EMPLOYMENT

Bangladesh Bureau of Statistics (BBS) has constructed national consumer price index (CPI) using
1985-86 as the base year. This includes a large number of food and non-food commodities and
services utilised by the consumers in their daily life. In order to construct the price index of the
base year 1985-86, the lists of consumer goods consumed by the rural and the urban population as
obtained from Household Expenditure Survey (HES), 1985-86 were used. All Rural and All
Urban price indices were compiled from these lists. Then national index has been estimated by
combining both the indices.
The rate of inflation (national) assessed by the current national index in 2002-03 stood at 5.14 %.
This rate was 2.36%, 1.58% and 3.41% in 2001-02, 2000-01 and 1999-00 respectively. Consumer
price index during 1995-96 to 2001-02 calculated by this method is furnished in Table 3.1
Table 3.1: Consumer Price Index and Inflation
(Base year 1985-86=100)
Index 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
General 190.27 195.07 208.70 227.29 235.05 238.76 244.39 256.95
(% change) (6.65) (2.52) (6.99) (8.91) (3.41) (1.58) (2.36) (5.14)
Food 189.13 191.85 205.55 229.72 239.13 241.40 244.40 256.47
(% change) (6.99) (1.84) (7.14) (11.76) (4.10) (0.95) (1.24) (4.94)
Non-food 191.86 200.99 214.46 223.10 228.93 235.37 245.92 259.50
(% change) (5.78) (4.76) (6.40) (4.03) (2.61) (2.81) (4.48) (5.52)
Source: BBS.

In 1998-99 the average annual rate of


Graph 3.1: National Inflation Rate
inflation was 8.91%, which is the
Rate of Inflation (%)

14 highest in the past decade. The


12
10 prolonged devastating flood at the
8
6 beginning of the fiscal year and unusual
4
2
0 increase of prices of food and non-food
commodities coupled with devaluation
6

3
99

99

99

99

00

00

00

00
-1

-1

-1

-1

-2

-2

-2

-2

of currency resulted in this phenomenal


95

96

97

98

99

00

01

02
19

19

19

19

19

20

20

20

rise in inflation. Thereafter, the rate of


General Food Non-food inflation continued to decline and
reached 2.36% in 2001-02.

It may be noted that BBS has recently calculated inflation on the basis of base year 1995-96 in
addition to the existing 1985-86 base. On the basis of the latest base year annual inflation rate
stands at 4.38 percent in 2002-03.

26
Based on month wise estimates, the rate of inflation is 5.92 % in the month of June, 2003.
Although there was an upward trend of non-food prices during the last three months of this year,
the price level of food item came down to 6.66 percent in June, 2003 compared to 6.74 percent in
May, 2003. The monthly rate of inflation during 2002-03 calculated on point-to-point basis is
presented in Table 3.2.

Table 3.2: Point- to- Point Rate of Inflation (National) (Base year 1985-86=100)

2002-03
July'02 Aug'02 Sept'02 Oct.'02 Nov.'02 Dec'02 Jan.'03 Feb.'03 Mar.'03 April'03 May'03 June'03
General 4.01 4.83 4.67 4.56 4.57 4.36 4.93 5.93 5.98 5.90 5.97 5.92
National

Food 2.80 4.06 3.76 3.57 3.42 3.62 4.78 6.56 6.66 6.65 6.74 6.66
Non-Food 6.24 6.27 6.39 6.41 6.76 5.73 5.23 4.81 4.76 4.59 4.62 4.66
General 3.49 4.24 4.02 4.03 3.80 4.01 4.84 5.62 5.64 5.69 5.90 5.99
Urban

Food 2.23 3.50 3.19 3.08 2.78 3.32 4.68 6.23 6.39 6.62 6.96 7.12
Non-Food 5.36 5.33 5.25 5.44 5.31 5.04 5.07 4.74 4.58 4.36 4.39 4.36
General 4.18 5.02 4.88 4.73 4.83 4.47 4.96 6.04 6.09 5.97 5.99 5.90
Rural

Food 3.00 4.26 3.95 3.74 3.63 3.73 4.81 6.67 6.76 6.66 6.67 6.50
Non-Food 6.52 6.55 6.74 6.71 7.20 5.94 5.27 4.84 4.82 4.66 4.69 4.75
Source: BBS.

G r a p h 3 .2 : P o in t-to -p o in t r a te o f in fla tio n (N a tio n a l)


8
6
Inflation

4
2
0
2

02

3
3

3
2

'0

'0

'0

'0
'0

'0

.'0

.'0

'0
'0
.'0
.'

ril

ne
g.

b.
n.

ch

ay
ly

pt

ct

ov

ec
Ju

Ap
Au

Fe
Ja

M
ar
O

Ju
Se

G e n e ra l Food N o n -fo o d

Wage
The wage rate index during 1990-91 through 2002-03 is presented in Table 3.3. Indices for the
past several years may be seen at Appendix-12. In FY 1990-91 the nominal wage rate index stood
at 1482 which grew to 2926 in FY2002-03. Compared to 2001-02, the nominal index was up by
11.0 percent in 2002-03. The real wage indices were 130 in 2001-02. The indices stood at 141 in
2002-03 growing at the rate of 8.5 percent.

27
Table 3.3: Rate of Increase in Wages
(Base year 1969-70=100)

Year Wage index Percentage CPI for industrial Wage index Percentage
(Nominal) change labour (national) (Real) change
1990-91 1482 3.9 1386 107 -2.7
1991-92 1553 4.8 1448 107 0
1992-93 1638 5.5 1449 113 5.6
1993-94 1709 4.3 1506 114 0.9
1994-95 1786 4.5 1610 111 -2.6
1995-96 1900 6.4 1674 114 2.7
1996-97 1990 4.7 1663 120 5.3
1997-98 2141 7.6 1748 122 1.7
1998-99 2259 5.5 1921 118 -3.3
1999-00 2390 5.8 1973 121 2.5
2000-01 2489 4.1 1999 125 3.3
2001-02 2637 6.0 2024 130 4.0
2002-03 2926 11.0 2068 141 8.5
Source: BBS.

Graph 3.3: Wage Rate Index

3500
3000
2500
2000
1500
1000
500
0
19 1

19 2

19 3

19 4

19 95

19 6

19 7

19 98

19 9

00 0

01 1

02 2

3
-9

-9

-9

-9

-9

-9

-9

20 9-0

20 200

20 00

00
-

-
90

92

94

96

97
91

93

95

98

-2

-2
9

-
19

Nominal Wage Real Wage

Labour force and employment


According to Bangladesh Labour Force Survey 1999-00, a labour force of 6.03 crore (male 3.75
crore and female 2.28 crore) are engaged in a variety of professions, the highest (62.3 percent)
still being in agriculture. A similar survey carried out in 1995-96 indicated that a labour force of
5.6 crore (male 3.5 crore and female 2.1 crore) were engaged in a range of professions, the
highest (63.2 percent) being in agriculture. The survey also indicated that 40.1 percent of the
labour force was engaged as family labourers while 29.6 percent was self-employed. Daily
labourers and full time employed workers were 17.9 percent and 12.4 percent respectively. On
the other hand, according to the Labour Force Survey 1999-00, 36.7 percent of labour force was
engaged as family labourers and 32.4 percent was self-employed. Out of the remaining labour

28
force 17.6 percent was engaged as daily labourers and 13.3 percent as full time employed
workers. It is worthy of note that during the two survey periods the number of self-employed
workers increased by 3 percent while in agriculture it decreased by 1 percent. A large part of
labour force still remains outside the formal labour market and regulated wage system, although
the number of workers entering the labour market has been on the increase. The share of
employed labour force by different sectors of the economy according to Labour Force Survey
1995-96 and 1999-00 is shown in Table 3.4 and Graph 3.4.

Table 3.4: Share of Employed Labour Force by Sector


Graph 3.4: Share of Employed Labour Force by
Sector 1995-96 1999-00 broad sector in Bangladesh Labour Force Survey,
Agriculture, forestry and fishery 63.2 62.3 1999-00

Mining & quarrying - 0.7


Manufacturing 7.5 7.4
Power, gas & water 0.2 0.2
Construction 1.8 2.1 Service
Trade, hotel & restaurant 11.2 12.0 27.30%
Transport, maintenance & 4.2 4.6
communication
Finance, business & services 0.4 0.7 Agriculture
Industry 62.30%
Commodities & personal services 9.3 10.0 10.40%
Other 2.2 --
Total 100.0 100.0
Source: Labour Force Survey, 1995-96 & 1999-00,BBS.
Note: Labour Force Survey has not been conducted
after 1999-00.

Foreign Employment
A sizable portion of professionals and skilled, semi-skilled and unskilled labour force is
employed abroad. Foreign employment and workers' remittances contribute significantly to the
economic development of the country through reduction of unemployment and augmenting
foreign exchange reserves. Barring a few exceptions, manpower export has been increasing every
year. A total of 1.95 lakh Bangladeshis had gone abroad for employment in 2001-02, which is
8.45 percent less than the previous year. Expatriate workers' remittances amounted to US$
2501.13 million in 2001-02 which was about 33% higher than the previous year. In order to
increase workers' remittances, the present government established exchange houses in many
countries, introduced remittance cells in different nationalised commercial banks and
implemented Money Laundering Prevention Act. Government has taken a number of measures to
ensure remittances reach the recipients in the shortest possible time. As a result, in 2002-03,
remittances stood US$ 3061.97 million reflecting 22.42% rise over the previous year. The
number of expatriate Bangladeshi workers and their remittances in Taka and Dollar currency are
shown in Table 3.5.

29
Table 3.5: Number of Expatriate Bangladeshis and their Remittances

No of employment Amount of remittance


Fiscal Year Million US$ Percentage Crore Tk. Percentage
abroad (000)
change (%) change (%)
1990-91 97 764.00 0.39 2725.6 9.20
1991-92 185 848.00 10.99 3241.5 18.93
1992-93 238 944.00 11.32 3698.4 14.10
1993-94 192 1088.80 15.34 4354.8 17.75
1994-95 200 1197.63 10.00 4814.3 10.55
1995-96 181 1217.06 1.62 4977.8 3.40
1996-97 228 1475.40 21.23 6304.3 26.65
1997-98 243 1525.42 3.39 6951.2 10.26
1998-99 270 1705.74 11.82 8213.0 18.15
1999-00 248 1949.32 14.28 9825.4 19.63
2000-01 213 1882.10 -3.45 10266.0 4.48
2001-02 195 2501.13 32.89 14377.0 40.08
2002-03 241 3061.97 22.42 17728.77 23.31
Source: Bureau of Manpower, Employment & Training and Bangladesh Bank.

Graph3.5:Number of Expatriate Bangladeshis and their Remittances


Number (in thousand)

300 3500
250 3000

Million US$
200 2500
2000
150
1500
100 1000
50 500
0 0
91

92

93

94

95

96

97

98

99

00

01

02

03
0-

1-

2-

3-

4-

5-

6-

7-

8-

9-

0-

1-

2-
9

0
19

19

19

19

19

19

19

19

19

19

20

20

20
Number of Expatriate Bangladeshis Remittances

Coupled with the increase in the number of


Graph 3.6: Num ber of Expatriates
expatriate Bangladeshis, a qualitative change is
Classified by Skill
also observed. In 1998, of the total expatriate
labour force, 50.76 percent was engaged as Professi
professionals and skilled & semi-skilled workers. onal
6.41%
This rose to 56.46 percent and 61.40 percent in
1999 and 2000 respectively. The pie chart shows Skilled
24.98%
that the share of professional, skilled, semi-skilled
and unskilled labourers were 6.41 percent, 24.98
percent, 15.99 percent and 52.61 percent Unskilled Semi-
52.61% skilled
respectively of the expatriate manpower in 2002.
15.99%
The number of expatriate Bangladeshis classified
by skill is shown in Table 3.6.

30
Table 3.6: Number of Expatriates Classified by Skill

Calendar Year Professional Skilled Semi-skilled Unskilled Total


1990 6004 35613 20792 41405 103814
1991 9024 46887 32605 58615 147131
1992 11375 50689 30977 95083 188124
1993 11112 71662 66168 95566 244508
1994 8390 61040 46519 70377 186326
1995 6352 59907 32055 89229 187543
1996 3188 64301 34689 109536 211714
1997 3797 65211 193558 118511 381077
1998 9574 74718 51590 131785 267667
1999 8045 98449 44947 116741 268182
2000 10669 99606 26461 85950 222686
2001 6940 42742 30702 109581 188965
2002 14450 56265 36025 118516 225256
2003 7136 33600 13206 60601 114543
(Upto June)
Source: Bureau of Manpower, Employment and Training.

It has been observed that, most of the expatriates are working in Saudi Arabia, U.A.E, Kuwait,
Oman, Malaysia and Singapore. Besides, new employment opportunity has also been created for
Bangladeshi workers in Libya, South Korea, Brunei, Mauritius, Italy, Lebanon and other
countries. The number of expatriate Bangladeshis by country in 2002 is shown in the pie chart
3.7.

Graph 3.7: Rate of Expatriates Bangladeshi by It is observed from the pie chart that in 2002
country in 2002
the expatriate Bangladeshis in Saudi Arabia,
UAE, Kuwait, Bahrain and Singapore were
72.47 percent, 11.29 percent, 6.99 percent,
Singapore Others 2.38 percent and 3.05 percent respectively.
Bahrain 3.05% 3.80%
2.38%
During the same period 3.80 percent
Bangladeshi workers went to Oman,
U.A.E
11.29%
Malaysia, Libya, Laos, South Korea, Brunei,
Mauritius, Jordan, Ireland, Lebanon and
Saudi
Kuwait other countries of the world. The number of
Arabia
7.00%
72.48%
expatriate Bangladeshis by country since
1990 is shown in Table 3.7.

31
Table 3.7: Number of Expatriate Bangladeshis by Country

Calendar Saudi Kuwait UAE Bahrain Oman Malaysia Singapore Others Total
Year Arabia
1990 57486 5957 8303 4563 13980 1385 776 11364 103814
1991 75656 28574 8583 3480 23087 1628 642 5481 147131
1992 93132 34377 12975 5804 25825 10537 313 5161 188124
1993 106387 26407 15810 5396 15866 67938 1739 4965 244508
1994 91385 14912 15051 4233 6470 47826 391 6058 186326
1995 84009 17492 14686 3004 20949 35174 3762 8467 187543
1996 72734 21042 23812 3759 8691 66631 5304 9741 211714
1997 106534 21126 54719 5010 5985 152844 27401 7458 381077
1998 158715 25444 38796 7014 4779 551 21728 10640 267667
1999 185739 22400 32344 4639 4045 - 9596 9419 268182
2000 144618 594 34034 4637 5258 17237 11095 5213 222686
2001 137248 5341 16252 4371 4561 4921 9615 6656 188965
2002 163254 15767 25438 5370 3927 85 6870 4545 225256
2003 78705 5660 18655 2963 1814 05 2792 3949 114543
(Upto June)
Source: Bureau of Manpower, Employment and Training.
Note: Legal status was given to 150,000 Bangladeshi workers in Malaysia in 1997 and 5000 in Kuwait in August, 2002.

32
CHAPTER-4
FISCAL POLICY AND FISCAL MANAGEMENT

The fiscal policy governs the revenue and expenditure programmes of the government. The prime
goal of fiscal management in Bangladesh is harmonization between these programmes. Providing
major public goods and services is the responsibility of governments in all countries as the private
sector is not capable of delivering these goods and services. Government needs funds to
undertake all these administrative, development and public welfare-oriented programmes. Tax
and non-tax revenues are the principal sources of funds for financing these programmes. The
government revenue and expenditure programmes do have both positive and negative impacts on
the economy of the country. Formulation of a sound fiscal policy and its proper implementation
is therefore critical to the government. Apart from this, excess of expenditure over revenue or
fiscal deficit may have adverse impact on other segments of the macro-economy. Prudent fiscal
management is therefore of immense importance in overall economic management of the
government.
Government Receipts
Tax revenue accounts for 80 percent of total government revenue. Table 4.1 shows tax and non-
tax revenue receipts and tax/GDP ratios (new series) of the past decade.
Table 4.1: Revenue Receipts
(In crore Tk.)
Particulars 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03
Total revenue 11449 12489 15008 15333 17385 19020 19767 20074 24342 27893 31069
Tax revenue 9099 9580 12054 12124 14261 15390 16167 16079 19778 21332 24969
Non-tax revenue 2350 2909 2954 3209 3124 3630 3600 3995 4564 6561 6100
Revenue as percentage of GDP
Total revenue 9.13 9.22 9.84 9.22 9.62 9.50 9.00 8.47 9.60 10.21 10.34
Tax revenue 7.26 7.07 7.90 7.29 7.89 7.69 7.36 6.78 7.80 7.81 8.31
Non-tax revenue 1.87 2.15 1.94 1.93 1.73 1.81 1.64 1.69 1.80 2.40 2.03
Source: Finance Division, National Board of Revenue and BBS. Figures for FY2002/03 are based on “Medium Term Macroeconomic Framework”.

Analysis of revenue collection of FY1997-98 shows that the actual collection was Tk.19,020
crore against the target of Tk.19,624 crore, registering a shortfall of 3.08 percent over the target.
In FY1998-99, the collection was 4.86 percent lower than the target and the amount was
Tk.19,767 crore as compared to the target of Tk.20,776 crore. On the other hand, in FY1999-00,
actual collection amounted to Tk.20,074 crore which was 16.88 percent less than the target of
Tk.24,151 crore. In FY2000-01, the collection was 0.6 percent higher than the target of Tk.24,198
crore against actual collection of Tk.24,342 crore. Revenue collection for FY2001-02 was
Tk.27,893 crore recording a shortfall of about 2.0 percent over the target of Tk.28,456 crore. In
FY1992-93, revenue/GDP ratio was 9.13 percent, which rose to 10.21 percent in FY2001-02.
This ratio is expected to increase to 10.34 percent in FY2002-03. Tax/GDP ratio is always much
higher than non-tax/GDP ratio. In FY2001-02, these ratios stood at 7.81 percent and 2.40 percent
respectively. In tandem with this for an efficient and neutral tax system introduction of computer

33
technology is critical for raising the tax/GDP ratio. In non-tax revenue, there is a clear need for
better cost recovery through appropriate user charges.
Tax Management
Determination of the taxation policies of Bangladesh and its implementation is reposed on the
National Board of Revenue (NBR). During FY2002/03, various steps have been taken in the area
of direct and indirect taxes to achieve accelerated economic growth aimed at alleviation of
poverty, infusing more dynamism in the agriculture sector, expansion of export-oriented
industries and exports, development of the domestic industries, enhancing industrial productivity
and creation of new employment opportunities.
Box 4.1: Measures under Direct Taxes
To encourage investment and employment, tax on investment in production of goods and services has been
exempted up to 30th June, 2005;
To encourage development of rural economy, income of agro-based industry has been exempted from tax upto
30th June, 2005;
To encourage development of computer software sector, their income has been exempted from tax upto 30th
June, 2005;
Income of wage earners sent through banking channel has been exempted from tax to encourage inflow of
foreign remittance;
Self-assessment regulations and procedures has been strengthened to prevent evasion of tax through it;
As an alternative to tax holiday, the benefit of 20% reduced tax rate for the new industries upto initial 5 years
has been introduced effective from 1st July' 02 to 30th June, 2005 ;
To encourage capital market development, 5% excess tax on profit has been introduced on listed companies
declaring 15% or less dividend despite having divisible profit;
To widen the tax base, all government employees having salary income exceeding the tax-free level have been
brought under tax registration. TIN has been made mandatory in the case of bank loan exceeding taka 5 lakh.
All income of NGOs except from micro credit has been made taxable. All commercial educational institutions
excepting medical, dental, technical and IT based institutions have been brought under tax net;
Arrear tax dues prior to assessment year 1985-86 has been written-off;
To identify new taxpayers, joint survey is being conducted in association with audit firms;
To bring in reforms in overall tax administration, a DFID financed project has started working;
Foreign Travel Tax Act, 2003 has been enacted and travel tax has been levied on foreigners also.

Box 4.2: Measures under Indirect Taxes


Formerly there were 31 rate- slabs of supplementary duty varying from 2.5% to 270% on 170 items including
basic and intermediate industrial raw materials. These rates has been restructured and reduced into five slabs
only.
To discourage import of cigarette, 250% supplementary duty on import has been increased to 350%.
Previously customs duty, supplementary duty, infrastructure development surcharge, value added tax, advance
income tax and licence fee was applicable at import stage. For simplification, 2.5% licence fee at import stage
has been withdrawn completely.
Import duty on the completely build up (CBU) tractors used in the agriculture sector has been withdrawn.
To provide modern medicare services to people, customs duty on syringe, needle, catheter and diagnostic
reagent has been reduced.
With a view to enabling the general public to purchase a new car, supplementary duty on import of motorcars
up to 1649 cc has been withdrawn completely. 20% supplementary duty on motorcars between 1650 cc to
2699 cc and 60% supplementary duty on motorcars between 2700 cc and above have been imposed.
In order to modernize customs administration and to make the process easier, most modern computerized
assessment system named ASYCUDA++ has been introduced in different customs houses and customs stations
under the supervision of CAM (Customs Administration Modernization) Project. The system has already been
introduced at Dhaka Customs House, Chittagong Customs House and ICD Kamlapur, Dhaka. Gradually it
will be introduced in other important customs houses. Its effective implementation will speed up assessment as
well as ensure transparency in assessment and corruption in this sector would be reduced.
With a view to increase domestic revenue from locally produced goods and services, the network of VAT has
been expanded. Side by side, the tax base and the related procedures in many cases have been simplified and
made taxpayer friendly.
Cigarette is one of the major items of the domestic indirect taxes. In order to collect revenue at an enhanced
rate from this item, stamp and band roll system has been introduced on cigarette from September 2001 &
January 2002 respectively.
In order to improve the efficiency of the tax administration and to create awareness among taxpayers to pay
tax, a number of seminars and workshops were organised at Dhaka and different places of the country with
the assistance of DFID Project. As a result, tax phobia of taxpayers disappeared and tax collection upshot.

34
Revenue Collection Activities
In the fiscal year 2000-2001, the total amount of revenue collection by National Board of
Revenue (NBR) was Tk. 20,224.40 crore. This collection was Tk. 1,449.96 crore or 7.72 percent
higher than that of the previous fiscal year. According to the latest data from NBR, the revenue
collection for the FY2002-03 is Tk.23770.42 crore which is 0.09 percent higher than the target
(23750 crore) and it is 17.53 percent higher than the previous year collection.

Public expenditure
Public expenditure comprises mainly revenue expenditure and development outlays. Government
incurs substantial expenditure on socio-economic development, construction of physical
infrastructure, human resource development and poverty alleviation. Besides, government also
incurs expenditure on administration, public welfare and other service-oriented activities. One
important aspect of the public expenditure management is that the expenditure on productive
sectors should be increased and unproductive outlays should be restrained. Table 4.2 shows
government non-development and development outlays and expenditure/GDP (new series) ratio
over the last decade.
Table 4.2: Public Expenditure
(In crore Tk)
Particulars 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03
Public
Expenditure 16246 20368 22013 23165 24082 25859 29779 34464 37399 40757 43710
(a+b+c)
(a) Non-
development 8469 9106 10145 11712 12305 14232 16562 18195 20536 22700 25288
expenditure
(b) Development
6290 8787 10121 9866 10886 10867 12325 15221 15901 15050 16900
expenditure (ADP)1
(c) Other expenditure2 1487 2475 1747 1587 891 760 892 1048 962 3008 1522
As percent of GDP
Public Expenditure 12.96 15.04 14.43 13.93 13.33 12.92 13.55 14.54 14.75 14.92 14.55
(a+b+c)
(a) Non- 6.76 6.72 6.65 7.04 6.81 7.11 7.54 7.67 8.10 8.31 8.42
development
expenditure
(b) Development 5.02 6.49 6.64 5.93 6.02 5.43 5.61 6.42 6.27 5.51 5.62
expenditure
(c) Other expenditure 1.19 1.83 1.15 0.95 0.49 0.38 0.41 0.44 0.38 1.10 0.51
Source: IMED, Ministry of Planning and Finance Division, M/O Finance. Revenue expenditures are on revised budget basis. Figures
for FY2002/03 based on “Medium Term Macroeconomic Framework”.

It is seen from the above table that the government expenditure/GDP ratio in FY1992/93 was
about 13%. It may go up to 14.55% in FY2002/03. According to revised budget, total public
expenditure for the FY2002-03 stands at Tk.43,704 crore of which non-development,

1
‘Actual expenditure’ of Annual Development Programme (ADP) except financing from ‘own source’.
2
Capital expenditure, food expenditure, net lending and other development expenditures are included in ‘other
expenditure’.

35
development and other expenditure account for Tk.25,307 crore, Tk.16,900 crore and Tk.1,497
crore respectively.
Composition of Non-development Expenditure
Analysis of total revenue expenditure of the Government (Appendix Table-15) shows that
expenditure on salary and allowances in FY1990-91 accounted for 32 percent of total revenue
expenditure. It rose to 35 percent in FY1996-97. It stood at 30 percent, 31 percent and 29 percent
in the FY1998-99, FY2000-01 and FY2001-02 respectively. This has been 29 percent in FY2002-
03. In FY1990-91, expenditure on subsidy and current transfer was 30 percent of total non-
development outlays. It was 27 percent and 28 percent in FY2000-01 and FY2001-02
respectively. It remained at 28 percent in FY2002-03. Interest on internal and external loans
accounted for 12 percent of total non-development outlays in FY1990-91. This ratio was 16
percent in FY1997-98, 17.6 percent in FY1998-99, 19.3 percent in FY1999-00, 20 percent in
FY2000-01 and 19.9 percent in FY2001-02. It rose to 22 percent in FY2002-03.
Expenditure in social sectors generates productive assets, both financial and physical, which in
turn assist the poor to bring them out of poverty trap. Social sectors are therefore getting
increased importance in non-development expenditure claiming more than 20 percent of total
non-development allocation. Expenditure on social sectors during the last decade is presented in
Table 4.3.
Table 4.3: Revenue Outlays on Social Sectors
(In crore Tk)
Sub-sector 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03
Education & religion 1688 1770 2023 2169 2321 2706 2988 3279 3614 3769 4008
Health & population 516 607 685 730 769 813 887 972 1099 1286 1334
Youth, sports &
38 43 38 42 41 64 55 73 67 71 84
culture
Labour and
19 19 21 22 22 27 28 31 35 36 42
Manpower
Social service &
54 61 73 79 89 99 141 177 203 229 283
women welfare
Total 2315 2500 2840 3042 3242 3709 4099 4532 5018 5391 5751
As % of total revenue
27.2 27.3 27.6 25.7 25.9 25.6 24.4 24.6 24.3 23.8 22.7
expenditure
Source: Finance Division, Ministry of Finance. Based on revised budget.

Composition of Annual Development Programme (ADP) Expenditure


Actual ADP expenditure in FY1991-92 was 84.3 percent of revised ADP (Table 4.4). It rose to
96.0 percent in FY 1995-96. In FY2002-03, this ratio reached 90.1 percent.

36
Table 4.4: Implementation of Annual Development Programme (ADP)
(In crore Tk)
Year Original Revised Actual Expenditure as % of
allocation allocation expenditure revised allocation
1991/92 7500 7150 6024 84.3
1992/93 8650 8121 6550 80.7
1993/94 9750 9600 8983 93.6
1994/95 11000 11150 10303 92.4
1995/96 12100 10447 10016 96.0
1996/97 12500 11700 11041 94.0
1997/98 12800 12200 11037 90.5
1998/99 13600 14000 12509 89.4
1999/00 15500 16500 15471 93.8
2000/01 17500 18200 16151 88.7
2001/02 19000 16000 14090 88.1
2002/03 19200 17100 15408 90.1
Source: IMED, Ministry of Planning.

Allocation and expenditure in ADP is on the increase in socio-economic and physical


infrastructure sectors. This is fully consistent with the policy and strategy of the government in
the context of the present market economy. Expenditure on education, health and population
sector was 15.5 percent of total ADP outlays in FY1992-93. It was 20.6 percent and 22.1
percent in FY2000-01 and FY2001-02 respectively. It has become 22.6 percent in FY2002-03.
Expenditure on power, transport and communication, and natural resources was 39.6 percent of
total ADP in FY19912-93. It was 41.1 percent in FY20001-02 and rose to 42.6 percent in
FY2002-03 (Table 4.5).

Table 4.5: ADP Expenditure and its Composition by Major Sectors (%)
Sector 1992/ 93 1993/ 94 1994/ 95 1995/ 96 1996/97 1997/98 1998/99 1999/00 2000/ 01 2001/02 2002/03
Agriculture 5.7 5.8 5.3 4.5 5.0 4.5 4.9 4.7 4.5 4.4 4.2
Rural Development 5.6 5.3 6.6 6.8 8.4 8.2 10.1 12.2 12.2 11.1 11.2
Water Resources 9.4 6.3 6.3 5.6 8.2 8.1 7.0 6.9 6.1 5.4 4.8
Industries 1.1 1.7 1.3 1.5 1.4 0.8 0.8 1.7 3.3 1.9 1.3
Power 15.4 13.5 14.8 13.7 13.5 10.9 12.0 12.9 12.2 12.1 15.3
Gas, oil & natural 7.3 3.6 2.3 4.1 4.4 4.9 4.7 4.3 2.5 3.1
resources 4.4
Transport 14.8 17.2 18.9 20.1 22.4 19.7 17.9 17.4 20.4 19.9 18.9
Communication 2.2 6.0 4.4 2.9 1.9 1.6 2.8 3.1 2.8 6.1 4.0
Physical planning & 3.6 3.5 4.7 4.6 5.4 5.1 5.4 7.0 7.5 6.6
housing 6.2
Education & religion 8.1 10.2 14.2 13.0 13.2 12.9 13.5 12.8 13.3 14.2 15.1
Health & population 7.5 7.7 8.2 6.9 7.9 9.1 8.2 8.1 7.3 7.9 7.5
Other 19.4 19.1 13.0 16.4 8.1 14.1 12.8 9.1 7.8 7.4 7.1
Total ADP 100 100 100 100 100 100 100 100 100 100 100.0
Source: IMED, Ministry of Planning.

Investment in social sectors contains immense potential for achieving faster economic growth
through poverty alleviation and human resource development. Thus, social sectors are getting

37
increased importance in ADP. Expenditure on social sectors in FY1992-93 was 12.4 percent of
total expenditure while it rose to 23.8 percent in FY2001-02 .24.6 percent in FY2002-03 (Table
4.6).
Table 4.6: ADP Expenditure on Social Sectors
(In crore Tk.)
Sub-sector 1992/ 93 1993/ 94 1994/ 95 1995/ 96 1996/ 97 1997/ 98 1998/ 99 1999/00 2000/01 2001/02 2002/03
Education & religion 528 920 1465 1303 1457 1421 1693 1980 2148 2001 2334
Health and family welfare 206 281 370 688 872 1005 1021 1246 1178 1110 1149
Social welfare, women & 31 42 100 95 152 141 166 173 182 155 202
youth development
Sports & culture 37 55 70 28 53 65 46 84 110 75 82
Labour and Manpower 9 14 15 6 8 6 9 12 16 16 24
Total expenditure on social 811 1312 2020 2119 2543 2638 2935 3495 3635 3358 3791
sectors
Social sectors as % of ADP 12.4 14.6 19.6 21.2 23.0 23.9 23.5 22.6 22.5 23.8 24.6
Source: IMED, Ministry of Planning. Actual Outlays.

Budget Deficit and Financing


Budget deficit (except foreign grants) was by and large limited to 4.4 percent of GDP during
FY1992-93 through FY1998-99. Budget deficit of the government increased subsequently as a
result of the expansionary fiscal policy pursued by the previous government. It went up to 6.1
percent of GDP in FY1999-00. Budget deficit in FY2000-01 was 5.1 percent of GDP. It came
down to 4.5 percent of GDP in FY2001-02 as a result of prudent fiscal measures implemented by
the present government. It is expected that budget deficit in the current fiscal year would come
down to 4.2 percent of GDP. Table 4.7 provides overall budget deficit and financing thereof (as
percentage of GDP-new series) of the past decade.
Table 4.7: Overall Budget Deficit3
(% of GDP)
Deficit/ financing 1992/ 93 1993/ 94 1994/ 95 1995/ 96 1996/ 97 1997/98 1998/ 99 1999/ 00 2000/ 01 2001/ 02 2002/03
Overall budget deficit - 3.8 -5.8 - 4.6 - 4.7 -3.7 -3.4 -4.6 - 6.1 -5.1 -4.7 -4.2
(excluding foreign grants)
Overall budget deficit -1.3 -3.7 -2.2 -3.0 -2.0 -2.1 -3.2 -4.5 -4.1 -3.7 -3.4
(including foreign grants)4
Net foreign financing5 4.5 3.8 3.8 2.8 2.8 2.3 2.5 2.5 2.0 2.1 2.3
6
Net domestic financing 1.2 1.8 0.7 1.8 1.5 1.6 1.9 2.8 2.8 2.6 1.9
Source: Finance division, Ministry of Finance; BBS and Bangladesh Bank.

3
Figures for FY2002/03 are based on revised budget and “Medium Term Macroeconomic Framework”. Other figures are actual.
Revenue expenditure and other expenditures are taken from revised budget.
4
According to IMF, foreign grants are net receipts to government, because it does not carry any liabilities to government.
5
Net foreign financing = (foreign borrowing + grants) - principal payment of foreign borrowing.
6
Net domestic financing = Net borrowing from public + borrowing from banking system. {Net borrowing from public =
Total sale of saving certificates - principal payments for saving certificates}. There exists difference between budget deficit
and financing for check float and other errors & omission.

38
Domestic Resources for Financing Budget Deficit
In FY1992-93, domestic resources for financing budget deficit amounted to 20.7 percent of total
financing, which successively increased to 58 percent in FY2000-01 (Table 4.8). Besides,
government borrowing from both the public and the banking sector increased substantially during
the previous regime. Because of the prudent steps and initiatives taken by the present
government, the amount of borrowing of the government has decreased significantly. The share
of domestic resources for financing budget deficit would be 47.2 percent of total financing in
FY2002-03.

Table 4.8: Domestic Resources for Financing Budget Deficit7


(In crore Tk.)
1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03
Total
7074 7582 6785 7548 7648 7769 9712 12682 12262 13030 12674
Financing
Domestic
1464 2412 1055 2948 2678 3179 4262 6752 7112 7170 5984
Financing
Bank Borrowing 296 760 -68 1696 1707 1255 1977 3524 2904 2480 1688
Public
1168 1652 1123 1252 971 1924 2285 3228 4208 4690 4296
Borrowing
Domestic
financing as % 20.7 31.8 15.5 39.1 35.0 40.9 43.9 53.2 58.0 55.0 47.2
of Total
Source: Finance division, Ministry of Finance and Bangladesh Bank.
Domestic Resources for ADP

The size of Annual Development Programme (ADP) and contribution of domestic resources in
financing the programme has been increasing gradually. However, because of post-flood
rehabilitation programme, the share of domestic financing largely decreased in FY1998-99
(Table4.9).

Table 4.9: Domestic Resources in Financing ADP (on the basis of RADP allocation)
(In crore Tk)
Particulars 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03
ADP 8121 9600 11150 10447 11700 12200 14000 16500 18200 16000 17101
Foreign resources8 5991 6160 6352 6033 5975 6679 8188 8274 8670 8215 10742
Domestic resources9 2130 3440 4798 4414 5725 5521 5812 8226 9530 7785 6359
Domestic resources
26.23 35.83 43.03 42.25 48.93 45.25 41.51 49.85 52.36 48.66 62.82
as % of ADP
Source: Finance Division, Ministry of Finance and Planning Commission. Figures are from revised budget,

7
Figures for FY2002/03 based on revised budget. Other figures are actual. Revenue surplus is not considered in deficit financing.
8
Includes project aid, commodity aid, food aid and others.
9
Domestic resource = ADP – Foreign resources

39
CHAPTER-5
MONETARY POLICY AND MONETARY MANAGEMENT

In modern macroeconomic management, monetary policy is regarded as a key instrument for


maintaining economic stability, accelerating growth and propelling economic activities towards a
desired direction. Though monetary policy functions indirectly in an economy, its impact and
effectiveness are very conspicuous and it plays a decisive role in shaping trends and nature of
economic activities for attaining prosperity. The role of monetary policy is, therefore, gaining
increasing prominence in macroeconomic management. In FY 2002-03 monetary policy has been
steered with an aim to accelerate economic growth; maintaining macroeconomic balance
including price stability; ensuring long-term productivity and building confidence and adding
momentum to economic activities of the country by overcoming the impact of global recession.

In the current fiscal year, steps have been taken to formulate and implement a moderately
expansionary monetary policy in the light of the objective review of the previous year's monetary
management, current trends of the major macro-economic indicators and the future needs.

Money Supply and Credit Situation:

An expansionary trend was evident in money supply and credit situation during FY 2002-03.
During FY 2002-03, broad money (M2) supply increased by Tk. 15378.50 crore or 15.59 percent
compared to the growth of 13.13 percent during the preceding year. In monetary terms, broad
money increased by Tk. 15378.50 crore over Tk. 98616.00 crore at end June 2002 and stood at
Tk. 113994.50 crore at end June 2003.

Component-wise analysis of broad money (M2) supply during FY 2002-03 reveals that time
deposits rose by Tk. 12796.20 crore to Tk. 87251.10 crore; currency notes and coins with the
public rose to Tk. 13901.80 crore and deposits of the other financial institutions rose to Tk. 13.70
crore registering an increase by Tk. 4.40 crore. At the same time, demand deposit rose to Tk.
12827.90 crore registering an increase by Tk. 1207.50 crore. Table 5.1 shows the comparative
position of broad money (M2) and its causative factors.

40
Table 5.1: Broad Money (M2) and Its Causative Factors
(Taka in crore)
Particualrs June 2002 June 2003 Annual Change

2001-02 2002-03
1 2 3 4 5
1. Broad Money (M2) 98616.00 113994.50 11441.90 15378.50
(a+b+c+d) (+13.13) (+15.59)

a) Currency notes and coins with the 12531.40 13901.80 1053.10 1370.40
public (+9.17) (+10.94)

b) Demand deposit 11620.40 12827.90 751.40 1207.50


(+6.91) (+10.39)
c) Time deposit 74454.90 87251.10 9628.10 12796.20
(+14.85) (+17.19)
d)Deposits of the other financial 9.30 13.70 * 4.40
institutions (+47.31)
2. Causative factors of the change of 98616.00 113994.50 11441.90 15378.50
Broad Money (+13.13) (+15.59)
a) Net foreign assets of the banking 9593.70 14094.00 2108.40 4500.30
system. (+28.17) (+46.91)
b) Net domestic assets of the banking 89022.30 99900.50 9333.50 10878.20
system (i+ii) (+11.71) (+12.22)
i) Total domestic credit of the banking 94978.30 103983.90 10870.60 9005.60
system (+12.92) (+9.48)
a) Government sector (net) 20164.40 19061.30 2487.10 -1103.10
(+14.07) (-5.47)
b) Public sector 7242.90 7260.00 -116.60 17.10
(-1.58) (+0.24)
c) Private sector 67571.00 77662.60 8500.10 10091.60
(+14.39) (+14.93)
ii) Other assets (net) -5956.00 -4083.40 -1537.10 1872.60
Source: Bangladesh Bank.
Note: Figures in parentheses indicate percentage changes. * Indicates data is not available at end June 2001.

During FY 2002-03, total domestic credit increased by Tk. 9005.60 crore or 9.48 percent to
103983.90 crore compared to the growth of Tk. 10870.60 crore or 12.92 percent during the
previous year. According to the sectoral analysis, during FY 2002-03, government credit
decreased by Tk. 1103.10 crore or 5.47 percent against the increase of 14.07 percent during the
previous year. During the period under review, public sector credit increased by Tk. 17.10 crore
or 0.24 percent while it decreased by Tk. 116.60 crore or 1.58 percent during the last year. On the
other hand, private sector credit increased by Tk. 10091.60 crore or 14.93 percent against its
increase by 14.39 percent in the last year.

Because of the prudent steps towards augmenting government revenue earnings and
rationalisation of government expenditure, government credit from the banking system decreased
substantially influencing a decrease in total domestic credit. This would result in reducing
crowding out effect on credit and increase in the credit flows to the private sector and thereby
contributing to the expansion of trade that would infuse momentum to the economic activities.

Reserve Money
Reserve money (RM) increased by Tk. 779.50 crore or 3.31 percent to Tk. 24313.10 crore at end
June 2003 over Tk. 23533.60 crore in June 2002. During the last year, reserve money increased

41
by Tk. 4606.20 crore or 24.34 percent. During the period under report, net domestic asset
decreased by Tk. 3942.70 crore contributing to a decline in reserve money, despite the growth of
net foreign asset of the Bangladesh Bank by Tk. 4722.20 crore compared to the same period of
the last year. At the end of June 2003, broad money multiplier has increased to 4.69, which was
4.19 at the end of June 2002. During the period under review, currency-deposit ratio decreased
from 0.146 to 0.139 and reserve-deposit ratio decreased from 0.128 to 0.104. Reserve money and
sources of its change are presented in Table 5.2.

Table 5.2: Reserve Money and Its Sources of Change.


(Taka in crore)
Particulars June, 2002 June, 2003 Annual Change
2001-02 2002-03
1 2 3 4 5
1. Reserve money (a+b+c) 23533.60 24313.10 4606.20 779.50
(+24.34) (+3.31)
a) Currency issued 13880.20 15342.30 1047.40 1462.10
(+8.16) (+10.53)
b)Balances of the scheduled Banks with 9644.10 8957.10 3549.50 -687.00
Bangladesh Bank. (+58.24) (-7.12)
c) Reserves of the other financial 9.30 13.70 * 4.40
institutions with the BB (47.31)
2. Sources of change in Reserve Money 23533.60 24313.10 4606.20 779.50
(a+b) (+24.34) (+3.31)
a) Net foreign asset of Bangladesh bank 7590.20 12312.40 2446.20 4722.20
(+47.55) (+62.21)
b) Net domestic assets of the Bangladesh 15943.40 12000.70 2160.00 -3942.70
Bank (i+ii) (+15.67) (-24.73)
i. Domestic credit (a+b+c+d) 18006.00 13489.80 2114.60 -4516.20
(+13.31) (-25.08)
a) Government sector (net) 11990.00 7403.30 1882.70 -4586.70
(+18.63) (-38.25)
b) public sector 1277.60 1231.90 -27.50 -45.70
(-2.11) (-3.58)
c)Bangladesh Bank's claims on deposit 4729.30 4846.80 360.70 117.50
money banks (+8.26) (+2.48)
d) Bangladesh Bank's claims on other 9.10 7.80 * -1.30
depository institutions (-14.29)
ii. Other assets net -2062.60 -1489.10 45.40 573.50
Source: Bangladesh Bank.
Note: Figures in parentheses indicate percentage changes. * Indicates data is not available at end June 2001.

Money Supply and Its Composition


Narrow money (M1) consists of currency outside bank and demand deposit while broad money
(M2) comprises time deposit and narrow money. The graph 5.1 depicts the growth of narrow
money, time deposit and broad money in Bangladesh since FY 1995-96. The graph 5.1 clearly
shows that the growth of time deposit is increasing at a higher rate compared to M1. For this
reason, with the higher contribution of reserve money to broad money, the contribution of
currency outside bank and demand deposit is declining. The graph 5.2 illustrates composition of
money supply in terms of percentage during the FY 1995-96, 1998-99 and 2001-02. For detailed
information Appendix 16 may be referred to.

42
Fig 5.1: Trend of the money supply Fig 5.2: Composition of money supply

25,0
80,0
20,0
60,0
15,0
40,0
10,0
20,0
5,0
0,0
0,0
95-96 96-97 97-98 98-99 99- 2000- 2001- 95-96 98-99 2001-2002
2000 2001 2002
Cur, outside banks, Demand deposit Time deposit
M1 Time Deposit M2

Reform Measures in respect of Monetary, Credit and Banking Policies


The reform measures adopted in FY 2002-03, in monetary, credit and banking policies are stated
below:

1. Bangladesh Bank (Amendment) Act 2003, and Bangladesh Bank (Nationalisation) Order
(Amendment) Act 2003 have been enacted in current fiscal year.
2. a. The compulsion of taking prior-approval of Bangladesh Bank before granting large loan
has been withdrawn by deleting section 27(3) of the Bank Company Act, 1991 through
enactment of the Bank Company (Amendment) Act, 2003.
b. Paid-up capital and reserve fund of all banks operating in Bangladesh has been re-fixed at
minimum Tk. 100 crore by amending the section 13 of the Bank Company Act, 1991
through enactment of the Bank Company (Amendment) Act, 2003 (Act 11, 2003) and
c. Decision has been taken to allow the banks to declare their dividends subject to the
availability of capital and fulfilment of other relevant conditions without having no-
objection certificate from Bangladesh Bank.
3. In order to ensure good governance in bank management, to strengthen the bank's financial
footing and to regain the confidence of depositors, it has been decided that while appointing the
chief executive emphasis should be given on the appointee's experience, competence and
financial integrity. Also in this kind of selection the decision of Bangladesh Bank would be final.

4. The banks have to deposit at a rate of 9 percent in place of 8 percent against their risk based
assets and this directive has to the executed by 30th June 2003.
5. In order to reduce the risk of providing large loans Bangladesh Bank has introduced a Large
Loan Restructuring Scheme (LLRS) for rescheduling and reconstructing large loan. The
objectives of the scheme are to involve all banks in loan rescheduling and restructuring and to
bring transparency.

6. In supersession of the previous directives on loan rescheduling the following directives


have been issued with a view to eliminating impediments in rescheduling and recovering default
loan:

43
a) While considering rescheduling of term loans for the first time, loanees will pay in cash at
least 15 percent of their expired overdue/default instalments or 10 percent of the total
outstanding loan, whichever is less. In the case of rescheduling of loans for the second time,
they are to pay at least 30 percent of their expired default instalments or 20 percent of the
total outstanding loan whichever is less. Application for rescheduling of loan for more than
twice will be considered if the loanees pay 50 percent of their expired overdue instalments
or 30 percent of their total outstanding loan whichever is less.
b) In the case of rescheduling of cash and revolving credit, the following rates of down
payment, depending on the amount of loan, shall apply:
Amount of expired loans Rate of down payment
Upto Tk. 1 crore 15 percent
Above Tk. 1 crore to Tk. 5 crore 10 percent (not less than 15 lakhs)
More than 5 crore 5 percent ( not less than 50 lakhs)

7. During the period under review, a decision has been taken to constitute an audit committee
for the Board of Directors. This audit committee will play an effective role in implementing the
strategies and plans formulated by the Board of Directors. The committee will also extend their
cooperation to the board in performing its review.

8. In the case of exporting leather goods the existing 8-10 percent interest rate has been revised
at 7 percent.

9. During the period under review, a decision has been taken to introduce at least 25 percent
Letter of Credit (LC) margin in the case of opening LCs for import of rice and wheat.
10. During this period 4 saving schemes (8-year defence savings certificate, 5-year family
savings certificate, 5-year savings certificate that offers dividend in 6 month interval and 3-year
savings certificate) have been withdrawn/abolished and a decision has been taken to partially
revise the condition on investment in other two saving schemes (3-year savings certificate that
yields dividend in 3 month interval and 5-year Bangladesh savings certificate).

11. Decision has been taken to relax the existing policies that require prior approval from
Bangladesh Bank in setting up a new branch and shifting any existing branch of banks.

Agricultural Credit
With a view to maintaining the flow of credit to agricultural and rural sectors, a target for
disbursing loan of Tk. 3560.53 crore has been set by the credit providing banks and financial
institutions. Against this target Tk. 3278.37 crore has been disbursed upto June, 2003. In FY
2001-02, the target for agricultural credit was Tk. 3326.64 crore and the actual disbursement
stood at 2950.57 crore which was 88.70 percent of the target. Upto June, 2003 outstanding credit
in agricultural sector stood at Tk. 11913.35 crore of which Tk. 6526.41 have been overdue
Chapter-7 of the Review provides the details.

44
Exchange Rate
Bangladesh has been pursuing a flexible exchange rate policy for more than a decade. With a
view to maintaining competitiveness of Bangladesh Taka, exchange rate is adjusted by taking into
account the trade-weighted Real Effective Exchange Rate (REER). To enhance export
competitiveness of Bangladesh goods in the world market, Taka was devalued by 10.5 percent in
FY 2000-01. On January 6, 2002, the exchange rate of Tk. was set in a band 57.40-58.40 by
devaluing Taka by 1.55 percent. As a result, at the end of June 2001 and June 2002 Taka/Dollar
exchange rate stood at Tk. 57.00 and 57.90 (mid value) respectively. The Government of
Bangladesh has introduced floating exchange rate for the first time since 31 May, 2003.
Capital Market Development
Consistent with the gradual adoption of market oriented economic policies by the Government, an
active capital market started functioning since the early 1990s. The new wave gained momentum
especially after the establishment of Securities and Exchange Commission (SEC) in 1993. In the
1990s the prominent tasks of the capital market were to develop a control structure and to adopt
international standard and practice. At the beginning of the new millennium issues like corporate
governance, internet trading etc. come into the picture. Investor protection is however, always
getting preference.
The capital market reform measures continued in FY 2001-02. An inevitable outcome of these
reforms shows remarkable rise in average turnover and share price index during FY 2002-03. In
FY 2002-03 a number of steps were taken for the expansion and development of the capital
market which includes:

• The Securities and Exchange Commission (SEC) has issued an order for regulation of
portfolio investment in the secondary market with a view to protect the interest of the local
investors. As per Securities and Exchange Commission (Merchant Banker and Portfolio
Manager) Rules, 1996, all transactions of the foreign portfolio investors in the secondary
market are henceforth made either through portfolio accounts opened with a portfolio
manager registered with a merchant bank or recognised custodial bank.

• A three-year lock-in condition shall work on the shares of foreign investors while investing in
any IPO shares issued by public limited companies. A one-year lock-in has also been
enforced on foreign investors in the case of private placements.

• The National Parliament has enacted the Central Depository System (CDS) Amendment Bill
2002. The CDS Act was earlier passed in 1999 for 'scrip-less trading' in stocks. The purpose
of this transformation is to create confidence among investors in the capital market,
abolishing kerb market and eliminating the existence of fake share certificates. The validity
of section 23 of the Depository Act expired on July 31, 2002. Through this amendment the
validity of section 23 of the Depository Act has been extended by another three years.

45
• Henceforth all information on actions taken by the Securities and Exchange Commission
every month will be available on the website of the Commission (www. secbd. org). The
earlier arrangement of dissemination of information through quarterly report will continue as
usual. Side by side with this monthly information will also be available on the website.

• The Securities and Exchange Commission has issued a notification to improve the
performance of Z category companies. As per this notification, the existing board of directors
of a listed company which remains in the 'Z' category for a minimum period of one year shall
be reconstituted. The formalities of reconstitution shall be completed within six month after
the expiry of the stipulated period of one year.

• Corporate tax has been kept unchanged at 40 percent for bank, insurance company and
financial institutions while in other sectors this rate has been reduced to 30 percent from 35
percent.

• Up to June 2003 the capital market attracted new investment to the tune of Tk. 194.38
crore of which Tk. 116.12 crore came through IPO (Initial Public Offer) and Tk.
78.26 crore through local placement.
Dhaka Stock Exchange
The total number of securities listed with the Dhaka Stock Exchange stood at 260 in June 2003
against 257 securities in June 2002. As of June 2003 the issued capital and debentures of listed
securities amounted to Tk. 3608.10 crore as compared with Tk. 3496.80 crore in June 2002
rgistering an increase of 3.18 percent. As of June, 2003 the market capitalisation of all securities
stood at Tk. 7299.80 crore which was Tk. 6551.80 crore in June 2002 showing an increase of
11.42 percent. The Weighted Average Share Price Index in June 2003 was 823.14 against 819.74
in June 2002. A brief summary of DSE's market operation has been given in Table 5.3:
Table: 5.3: Summary of Trading Operations of Dhaka Stock Exchange
Calendar No.Of listed Issued Capital Market Turnover All share price
Year/ securities (Tk. in crore) Capitalization (Taka in crore) index
Month End (including mutual fund (Tk. in crore) year/month
and deventure)
1995 201 1983.98 5651.81 638.00 835.00
1996 205 2305.24 16810.62 3013.30 2300.15
1997 222 2820.78 7130.16 1740.34 756.78
1998 228 2862.57 5025.40 3436.84 540.22
1999 232 2877.46 4478.12 3896.44 487.77
2000 241 3119.20 6292.40 4036.48 642.68
2001 249 3345.43 6522.28 3986.93 817.79
2002 260 3520.30 7126.20 3498.49 822.34
January-03 260 3520.70 6829.70 196.67 822.53
February 260 3543.90 6884.70 141.78 822.54
March 260 3553.90 6456.50 170.29 822.45
April 260 3554.20 6792.00 126.08 822.58
May 260 3570.70 6861.00 173.72 822.74
June 260 3608.10 7299.80 228.24 823.14
Source: Dhaka Stock Exchange.
*All share price index is calculated on weighted average method since 24 November 2001. The index base earlier was 100 for DSE.

46
Chattagong Stock Exchange
The total number of securities listed with the Chittagong Stock Exchange in June 2003 stood at
185 against 184 securities in June 2002. As of June 2003 the issued capital and debentures of
listed securities grew to Tk. 3190.67 crore which was Tk. 3084.74 crore in June 2002 showing an
increase of 3.57 percent. As of June 2003 market capitalisation of all securities stood at Tk.
6020.86 crore against Tk. 5619.05 crore in June 2002 registering an increase of 7.15 percent. The
Weighted Average Share Price Index in June 2003 was 1841.24 against 1838.99 in June 2002. A
brief summary of CSE's Market Trading Operation has been given in Table 5.4:

Table 5.4: Summary of Trading Operations of Chittagong Stock Exchange


Calendar No. of listed Issued Capital Market Turnover (Tk. All share price
Year/ securities (Tk. in crore) Capitalization in crore) year/ index
Month End (including mutual fund (Tk. in crore) month
and debenture)
1995 61 1036.80 2413.90 1.97 409.43
1996 117 1872.60 14704.30 608.90 1157.90
1997 141 2276.14 5283.23 854.51 332.98
1998 150 2418.03 4138.25 1403.60 232.80
1999 159 2508.09 3654.24 1153.79 197.83
2000 165 2726.60 5776.55 1293.38 1412.25
2001 177 2965.27 5636.35 1479.62 1836.87
2002 185 3107.99 6046.77 1358.61 1841.14
January-03 185 3107.99 5805.01 56.23 1840.95
February 185 3107.99 5827.81 38.24 1841.07
March 185 3125.99 5545.25 54.43 1840.99
April 185 3138.36 5779.16 31.75 1841.09
May 185 3183.16 5931.20 140.76 1841.23
June 185 3190.67 6020.86 87.70 1841.24
Source: Chittogong Stock Exchange.
*All share price index is calculated on weighted average method from 24 November, 2001, The index base was 1000 for CSE from
the year 2000. Previously it was 100.

Reforms in the capital market sector particularly the initiatives for listing of profitable companies
with good fundamentals, enhancing investors confidence by improving corporate governance, and
offering tax rebate for investors will make the capital market vibrant and development-oriented.
The bottom line is the prudent objective to industrialise the country through investment by the
general public in the capital market instead of bank loan based industrialisation.

Regional and International Capital Market


After the crush in capital market in 1996, all share price index of Dhaka capital market moved
down ever lowest to 488 in 1999. Due to macroeconomic stability and implementation of reform
programmes in capital market, share price went up and all share price index stood at 818 and 822

47
in 2001 and 2002 respectively. On the other hand, barring a few exceptions share price indices of
all important share markets in the world were on the decline, which reflects essentially the impact
of global economic recession. A conspicuous upward trend in Colombo share price index was
observed in 2002. It is assumed that the addition of 12 percent share capital of Srilakan Telecom
to the capital market and enthusiastic purchase of shares by Srilankan expatriates made positive
contribution in this regard. The share price index of the Karachi Stock Exchange doubled setting
an example in 2002 and it is thought that economic reforms, lowering interest rate, positive
response by development partners and a swelling of foreign exchange reserve played a vital role
in this regard. Table 5.5 presents share price indices of several important capital market of the
world.
Table 5.5: Important Regional and International Share Price Indices
Name of the capital markets End year 2001 End year 2002
Dhaka (weighted) 818 822
New York (DJIA) 10,022 8,342
London (FTSE-100) 5,217 3,940
Tokyo (Nikkei-225) 10,543 8,579
Bombay (BSE sensitive) 3,262 3,377
Karachi (BSE sensitive) 1,273 2,701
Seul (Kospi) 694 628
Bangkok (SET) 304 356
Singapore (Straits times) 1,624 1,341
Manilla (Composite) 1,168 1,341
Jakarta (Composite) 392 425
Kualalumpur (Composite) 696 646
Colombo 621 815
Source: The Asian Wall Street Journal and Bangladesh Securities and Exchange Commission.

48
CHAPTER-6

FOREIGN TRADE, EXCHANGE RATE MANAGEMENT


AND EXTERNAL SECTOR

Foreign Trade
Consistent with the trends of the market economy, Uruguay Round Accord and Agreement with
World Trade Organisation (WTO) Bangladesh has been pursuing a liberal trade policy since
1990s. An increase or decrease of foreign exchange reserve is closely linked to foreign trade.
Bangladesh declared a set of five-year term liberal export and import policies at the end of FY
1997-98 to attain a favourable trade balance along with consistent improvement in foreign
exchange reserve situation.

The terrorist incident of September 11, 2001 in the USA and subsequent events of the world,
caused to make the export sector of Bangladesh suffer a serious setback at the beginning of FY
2001-02. In spite of the increased flow of remittances by the expatriate Bangladeshis, the foreign
currency reserve continued to fall as the exports suffered severe loss. To tide over this adverse
situation, government adopted pragmatic export and import policies coupled with necessary fiscal
and monetary policies. Consequently, the export sector demonstrated a remarkable growth in the
current fiscal year. At the beginning of Iraq war, export showed slight stagnation, but after the
end of the war export growth recovered steadily. If there is any impact on the movement of the
buyers of Bangladeshi garments due to the onslaught of Severe Acute Respiratory Syndrome
(SARS) in East Asia, there may be some adverse affect on export trade.

Trade Policy and Reform Programme

The trade policy of Bangladesh is now more open compared to the previous decade of 1980s.
Extensive reform programmes have been implemented in trade regime during the last two
decades. Reforms have been initiated to dismantle both tariff and non-tariff barriers. With regards
to steps towards trade liberalisation government has been pursuing a moderate protective policy
only in consideration of certain sensitive issues like public health, security and religious bindings.
Simultaneously, more liberal import and export policies and programmes have been adopted
including reduction in tariff slabs. Bangladesh pursued one-year export and import policies in the
eighties and two-year policies in the first half of nineties. But now five-year export and import
policies are formulated and implemented. These policies, are consistent with the agreement under
Uruguay Round Accord, WTO and the principles of market economy on one hand and
maintaining favourable balance between exports and imports of the country on the other.

49
Import Policy and Reform Programme

The Government five-year import policy (1997-2002) had been made consistent with the
industrial policy. As a result, administrative complexities for obtaining prior approval from
different ministries, a requirement for establishing industries, has largely been reduced. In the
new import policy, quality control mechanism of imported goods has also been strengthened.
Requirement for declaring country of origin for import of raw materials has been withdrawn for
export-oriented industries enjoying bonded warehouse facility. Consequently, raw materials
import has been made easier for 100 percent export oriented industries that will accelerate
expansion of export industries. Import of gold and silver has been made consistent with the
Exchange Control Regulations of Bangladesh Bank. Under the new import policy, expatriate
Bangladeshis can import capital machinery and raw materials in any quantity while the foreign
investors, as part of their equity share, can import the same on cost insurance and freight (c.i.f.)
basis. Insurance cover from Bangladeshi insurance companies has been made mandatory like L/C
in the case of imports. Besides, provision has been made for Tax Identification Number (TIN) for
all importers except for individuals. This has made trade and revenue administration simple and
transparent. Import of vehicles with 2/3 stroke engines has gradually been banned for protection
of environment. In order to infuse dynamism and to accelerate development, procedures for
import of fertilizer, gray cloth, standardisation of detra-methene cement, ethylene gas, and raw
materials for 100 percent export oriented garment industries have been simplified and, in special
cases, requirement of L/C opening has been withdrawn. In addition, some of the directives of
1995-96 Import Policy still hold good in the current five-year import policy as well.

The import policy 1997-2002 was scheduled to terminate by June 30, 2002, but the
government has decided to continue to pursue the policy until a new import policy is
approved. The preparation of new import policy 2002-2007 is at the final stage.
Government has taken initiatives to rationalise this new import policy to confront the
challenges of the emerging changes and expansion of world trade, free access of
commodities worldwide by the gradual expansion of globalisation and free market
economy. According to the trend of world market economy and the obligation of WTO,
Bangladesh has been adopting the method of simplifying trade policy. But considering
public health, security, social, cultural and religious bindings, very nominal protection
policy has been followed. Some of the important objectives of new import policy are:
- Import policy will be further simplified in the light of the change due to globalisation and
gradual development of free market economy under WTO;
- Facilities will be provided to import technology for the widespread dissemination
of modern technology;
- By providing simplified import facilities for the export oriented industries a
strong export base will be built up. For this reasons, import policy will be
integrated with industrial policy, export policy and other development activities;
and

50
- Gradual withdrawal of import protection for making available of the industrial raw
materials and thus enhance competitiveness, competency and efficiency.
Tariff Reform
Consistent with Uruguay Round Accord and agreement with the WTO, programme for tariff
reduction/reform continued in 2002-03. Maximum import duty of 150 percent in 1992-93 had
been gradually reduced to 32.5 percent in 2002-03. Tariff slabs have also been reduced from 9 to
5 in 2002-03. Besides, steps have been taken to rationalise tariff of different commodities and
materials including withdrawal/reduction of import duty in order to stabilise prices of essential
goods at normal level. Following these measures, unweighted average and weighted average rate
of protection stood at 16.38 percent and 12.42 percent respectively up to April 2003. In order to
protect domestic industries and their development, the 5 steps tariff rates and slabs of the previous
financial year have been maintained in FY 2001-02. However, a few required changes have been
made in respect of certain commodities. Both unweighted and weighted rates of import duty have
been presented in Table 6.1 and 6.2.
Table-6.1: Impact of Tariff Reforms on Average Rate of Customs Duty
Financial Year Unweighted Average (%) Import Weighted Average (%)
1992-93 47.4 23.6
1993-94 36.0 24.1
1994-95 25.9 20.8
1995-96 22.3 17.0
1996-97 21.5 18.0
1997-98 20.7 16.0
1998-99 20.3 14.1
1999-00 19.5 13.8
2000-01 18.6 15.1
2001-02 17.13 9.73
2002-03 16.38 12.42
(July-April)
Source: ETAC Data Base: National Board of Revenue.

Table 6.2: Impact of Tariff Reforms on Average Rate of Custom Duty by Type of
Commodities.
Financial year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(July-April)
UW W. UW W. UW W. UW W. UW W. UW W.
Classification AV AV AV AV AV AV AV AV AV AV AV AV
Primary goods 21.9 13.6 21.4 9.5 15.6 13.6 15.7 14.9 20.10 9.43 20.99 11.99
Intermediate goods 19.2 21.3 19.0 21.3 17.1 15.1 17.7 15.0 15.61 16.18 14.91 15.78
Capital goods 12.1 8.2 12.3 8.1 16.1 9.9 11.3 10.4 6.97 3.26 8.03 7.70
Final consumer 30.6 20.1 29.2 17.6 31.0 16.5 29.6 20.3 26.00 13.96 22.64 11.94
goods
Source: ETAC Data Base: National Board of Revenue.

51
Export Policy and Programme
Expanding global market economy and agreement with the WTO have opened up enormous
opportunities for exports, on one hand, and has posed a great challenge for a poor country like
Bangladesh with underdeveloped technology and low capital base on the other. In the case of
import, following gradual reduction of duty rates, domestic import-substitute industries have been
facing increasing competition. On the contrary, export industries have to survive and expand by
competing with other countries. Keeping this unfavourable situation in mind, a five-year (1997-
2002) Export Policy has been formulated and implemented.
Presently, three-fourths of the export earnings of Bangladesh come from ready-made garments.
The garments sector might face a drastic unexpected change during the post MFN period i.e. at
the beginning of 2005. To achieve the objective of putting our economy on a stronger foundation,
this change should have to be made favourable for Bangladesh. The government has taken
various initiatives to create markets of Bangladeshi commodities abroad. In the meantime, duty
free access in the market of European Union, Canada and Norway has been obtained for
Bangladeshi commodities and this facility is now available for Australia from July 1, 2003.
Reduced duty facilities on few Bangladeshi commodities are ensured for Thailand, India and
Pakistan. Negotiations are going on with China, Russia, Malaysia and other neighboring countries
for duty free access of Bangladeshi commodities. This would result in a positive outcome very
soon. To boost export, facilities should be provided for the importers to make payment both on
LC and contract basis and also current Value Added Tax, custom duties should be made rational.
Against this backdrop, the Export Policy 2002-2007 is being formulated which is now at the final
stage for approval.

South Asian Regional Trade Agreement (SAPTA)


South Asian Preferential Trade Agreement (SAPTA) came into effect on December 7, 1995.
Under this agreement, prescribed Rules of Origin of the signatory countries have been relaxed.
Three rounds of negotiation meeting have been held so far under SAPTA. Under SAPTA
agreement although there is an opportunity to take some alternative approach of trade
liberalisation, but most restrictive and potentially most trade-distortion method of product-by-
product approach was adopted in all three rounds of negotiations, which baffles or frustrates the
main objective of the creation of SAPTA. In these negotiation rounds the coverage of different
commodities and reduction of duties were considered. Meanwhile, they have also mutually
exchanged concessionary duty ranging between 7.5 percent and 100 percent for about 2,100
commodities on the basis of 6 digit Harmonized System (HS) Code. Besides, non-tariff
restrictions have been removed from 180 commodities and in the case of export from less
developed countries, the local value added rate has been refixed at 30 percent in place of 40
percent. Initiative has been taken to sign an “Agreement on Promotion and Protection of
Investment” with a view to expanding trade and investment among South Asian Association for
Regional Cooperation (SAARC) countries. A committee of experts of SAARC countries is
engaged in formulating plans for graduating from SAPTA to South Asian Free Trade Area

52
(SAFTA). The principal objective of this forum is to form a ‘Free Trade Zone’ in South Asia. In
the meantime, a feasibility study report has been prepared which is awaiting finalisation. In the
next SAARC Summit the formation of SAFTA may be finalised.

Regional Trade Creation


The regional trade situation of South East Asian countries reveals that the total export was US$
28.3 billion in 1991 that reached at US$ 51 billion in 1997. The average growth rate was 10.3 per
cent annually. In 1999, the total export of South East Asian countries was US$ 57.14 billion. The
total imports of these countries were US$ 35 billion in 1991 and in 1997 total import reached
US$ 63.6 billion. In 1999 total import reached US$ 71.73 billion. The trade deficit of these
countries were US$ 6.6 billion in 1991 and in 1999 deficit reached US$ 14.51 billion which was
approximately 25 percent of total export. The average annual increase in the rate of import was
13.3 percent compared to 1991 and this growth is twice the overall trade deficit. This external
trade scenario reflects unstable import-export condition of South Asian countries.

Trade Situation of Several SAARC Countries*


Among the SAARC countries, the export growth of Pakistan fell from 19 percent in 1990-91 to 9
percent in 2000-01. During that period import growth fell from 13.1 percent to 5.9 percent. Per
capita income decreased from US$ 509 in 1990-91 to US$ 427 in 2000-01. During the period the
growth in agriculture sector decreased from 5 percent to 2.6 percent. Industrial production
decreased from 6.3 percent in 1990-91 to 1.5 percent in 1999-00. The fragility of Pakistan's
economy throughout the decade also had negative impact on external trade. But following trade
liberalisation (custom duty decreased from 200 percent to 25 percent in 2000) and the
implementation of massive reform programmes, the economy has begun to regain stability from
the beginning of 2003.
During 1990's the trend of external trade of Bangladesh reflects an unstable condition. The export
growth increased from 12.7 percent in 1991 to 37.1 percent in 1995 and in 1999 it fell at 2.9
percent and after that export growth reached at 8.03 percent in 2000. In 2001, export showed
negative growth (-7 percent) and in the FY 2002-03 export increased by 9.39 percent. It reveals
that, there is no specific trend of our export. Similarly import showed negative growth (-8.5
percent) in 2002. On the other hand, import growth stood at the height 39.2 percent in 1995 and
in 1996 growth fell to 19.1 percent. It is evident that, trade deficit of Bangladesh has been
staggering over the period of nineties and the highest trade deficit reached US$ 3.06 billion in
1996.
Among the South Asian countries, the economy of India is the largest and has, therefore a strong
influence over regional trade. But like other SAARC countries the trade pattern of India showed

*
Information are taken from Economic Survey, 2002-03, Government of India, Economic Survey of
Pakistan, 2001-02 and the country paper presented in the workshop held on 29-30 March, 2003 organized
by BIDS.

53
similar fluctuations. In 1991 it witnessed the lowest export growth of 0.3 percent and the highest
export growth of 26.2 percent in 1995 and after that export growth fell to 7 percent in 1999.
Similar trend was also observed in the case of import. Like other SAARC countries, India
experienced trade deficit over the nineties. In 1999 the export earnings of India was US$ 39
billion and the trade deficit was US$ 5.6 billion that is the deficit stood at 14.3 percent. The trade
deficit stood at US$ 8.3 billion in the year 2000.

The trade pattern of Sri Lanka is similar to other SAARC countries. Export showed negative
growth (-8 percent) in 1999. Over the nineties, the average export growth was 5 percent and the
highest export growth reached 16 percent in 1991. Sri Lanka experienced the trade deficit over
the 1990s and in 1999 trade deficit reached US$ 2.3 billion.

Degree of Openness of the Economy of Several SAARC Countries


The implication of the removal of restrictions on both exports and imports would be to enhance
external trade. One of the measurements of the international openness of the economy is the
Trade Ratio, which is the ratio of sum of exports of goods and services and imports of goods and
services to GDP. Another measurement of international openness is Import Penetration. Import
Penetration is estimated as the percentage of imports of goods and services to domestic demand
(GDP + trade surplus or deficit). The third measurement is Export Propensity. Export Propensity
is defined as the ratio of exports of goods and services to GDP. In the case of other
measurements, some experts consider the relative share of customs duty to total tax revenue.
Others consider the influence of tariff and non-tariff barriers on imports to measure international
openness.

Table-6.3 indicates the changes in the degree of international openness of Bangladesh, Pakistan,
Sri Lanka and India during 1990-2000. The table shows that all the indicators move in the same
direction over the period for Bangladesh, Sri Lanka and India. The external trade ratio of
Bangladesh, Sri Lanka and India rose from 26.7 percent, 68.2 percent and 15.7 percent in 1991 to
42.1 percent, 88.8 percent and 19.41 percent respectively in 2000. However, the external trade
ratio increased from 35.1 percent in 1990 to 38.8 percent in 1993 and gradually fell to 34.5
percent in 2000 for Pakistan. Thus it appears that the process of opening up of the economy
faltered for Pakistan since the mid-nineties while it continued uninterrupted for Bangladesh, Sri
Lanka and India for the 1990s. It may further be noted that in 1990 Sri Lanka was the most open
economy according to external trade share, Pakistan was the second, Bangladesh stood third and
India was the least open economy. Sri Lanka continued to remain the most open economy in 2000
while India was the least open Economy. The trade ratio of Bangladesh (26.7 percent) was lower
than that of Pakistan (35.1 percent) in 1990 but rose rapidly to reach a higher level of 42.1 percent
compared to that of Pakistan (34.5 percent) in 2000. Most importantly we may note that export
growth, relative to GDP, was considerably higher in Bangladesh than in the other South Asian
economies. In Bangladesh, the contribution to its increased openness came primarily from
exports, in contrast to the other South Asian economies.

54
Table-6.3: Degree of International Openness for Bangladesh, Pakistan,
Sri Lanka and India
Bangladesh Pakistan Sri Lanka India
Year Export Import Trade Export Import Trade Export Import Trade Export Import Trade
Propen- Pene- Ratio Propen- Pene- Ratio Propen- Pene- Ratio Propen- Pene- Ratio
sity tration sity tration sity tration sity tration
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
1990 8.3 16.7 26.7 14.8 19.2 35.1 30.2 35.3 68.2 7.1 8.4 15.7
1991 8.8 15.1 25.0 17.0 18.3 35.6 28.7 35.3 67.6 8.6 8.6 17.2
1992 10.0 15.3 26.3 17.4 19.9 37.9 31.8 37.6 72.8 9.0 9.7 18.8
1993 10.6 16.5 28.2 16.3 21.1 38.6 33.8 39.6 77.1 10.0 10.0 20.0
1994 11.8 17.1 30.0 16.3 18.5 35.3 33.8 40.8 79.4 10.0 10.3 20.4
1995 14.2 20.8 36.6 16.7 18.9 36.1 35.6 41.7 81.6 11.1 12.1 23.3
1996 14.2 21.8 38.1 16.9 20.5 38.3 35.0 40.3 78.9 10.6 11.7 22.5
1997 15.4 21.6 38.7 16.1 19.8 36.9 36.5 40.7 80.1 10.9 12.0 23.1
1998 17.2 22.2 40.9 16.5 17.3 34.0 36.2 39.9 78.5 11.2 12.5 23.9
1999 16.7 22.1 40.3 15.6 16.7 32.5 35.5 40.1 78.8 n.a. n.a. 18.26
2000 17.5 23.0 42.1 16.2 17.9 34.5 39.1 44.9 88.8 n.a. n.a. 19.41
Notes: (i) Export Propensity: (Exports of goods and services/GDP) as percentage of GDP.
(ii) Import Penetration: (Imports of goods and services/Domestic Demand).
(iii) Domestic Demand = GDP+ Imports of goods and services - Exports of goods and services.
(iv) Trade Ratio = (Exports of goods and services + Imports of goods and services)/GDP*100.
Source: International Financial Statistics, 2001 and BIDS, March 2003.

A study conducted by BIDS under the research project titled " Trade Cooperation and Economic
Policy Reform in South Asia-TRACE" suggests to consider the following criteria for the
expansion of regional trade and economic cooperation among the SAARC countries:
- Geographical area of the countries and disparity of technical capability;
- Possibility of unevenly distribution of the effect of regional integration;
- Trade Negotiation Sector Bias;
- Inequality in information and communication and expertise among the countries;
- Overlapping actors and modes of cooperation;
- Inadequacy in regional analysis;
- Too little disaggregation;
- Inadequacy in expertise transfer.
If the above issues are considered from economic point of view and also with political broadness
then the trade will expand rapidly among the South Asian countries which will eventually
increase cooperation and friendship among the people.

Management of Foreign Exchange Rate


Bangladesh have pursued a flexible exchange rate policy since the beginning of nineties.
Exchange rate of Taka is being adjusted from time to time to keep it at competitive level on the
basis of rate of inflation and movement of exchange rates as well as trade weights with partner
countries. At the end of June 2001, exchange rate of Taka had been fixed 1 US$ = Tk. 57.00.
Thereafter, exchange rate of Taka was readjusted at US$ 1 = Tk. 58.00 in January 2002 by further

55
devaluing 1.55 percent. Exchange rates of Taka per US Dollar from 1991-92 to 2002-03 have
been presented in Table 6.4.
Table 6.4: Average Exchange Rate (Taka per US$)
FY Rate
1991-92 38.15
1992-93 39.14
1993-94 40.00
1994-95 40.20
1995-96 40.84
1996-97 42.70
1997-98 45.46
1998-99 48.06
1999-00 50.31
2000-01 53.96
2001-02 57.43
2002-03 57.90
Source: Bangladesh Bank

It may be noted that Bangladesh adopted open market exchange rate policy made effective from
31st May, 2003. It is heartening to note that Bangladeshi Taka is showing resilience against other
currencies specially with US dollar since the free float of the currency.
Foreign Exchange Reserves
Foreign currency reserves from June 1992 to June 2003 are shown in Table 6.5. On June 30,
1995, foreign exchange reserves reached US$ 3070 million. After that the reserves decreased
gradually and by June 2001 reserves stood US$ 1307 million. To face the situation, government
adopted a set of realistic and pragmatic programmes in FY 2001-02, which resulted in a gradual
improvement of the foreign exchange reserves and reached a satisfactory level at June 30, 2002.
As these programmes are continuing in the current fiscal year the reserve stood at US$ 2469.57
million as on June 30, 2003.
Table 6.5: Foreign Exchange Reserves
(In million US$)
Graph-6.1: Foreign Exchange Reserve
Date Amount
30.06.1992 1608 3500
30.06.1993 2121 3000
30.06.1994 2765 2500
Million US$

30.06.1995 3070 2000


30.06.1996 2039 1500
30.06.1997 1719
1000
30.06.1998 1739
500
30.06.1999 1523
30.06.2000 1602 0
30.06.92

30.06.93

30.06.94

30.06.95

30.06.96

30.06.97

30.06.98

30.06.99

30.06.00

30.06.01

30.06.02

30.06.03

30.06.2001 1307
30.06.2002 1583
30.06.2003 2470
Source: Bangladesh Bank

56
Import Situation
The total import payments amounted to US$ 8374 million and US$ 9335 million in FY 1999-
2000 and FY 2000-01 respectively. Import payments stood at US$ 8540 million in 2001-02
registering a decrease of 8.5 percent. Import payments in FY 2002-03 amounted to US$ 9658
million, which was 13.1 percent higher than the amount of import payment of the previous year.
Analysis of imports by major categories reveals that import bill on account of oilseeds, cement
and yarn decreased while import bill of all other main items increased. Import Payment of capital
goods in FY 2002-03 increased to US$ 2664 millions compared to US$ 2617 million of FY 2001-
02. Import payments situation has been presented in Table-6.6.
Table-6.6: Import Growth and Composition
(In million US dollar)

Commodity 1999-00 2000-01 2001-02 2002-03


a) Principal primary 980 1046 812 1133
commodities 115 172 15 211
Rice 266 177 171 198
Wheat 90 64 72 64
Oilseeds 232 273 242 267
Crude petroleum 277 360 312 393
Cotton 1225 1318 1167 1406
b) Principal industrial goods 256 218 251 364
Edible oil 406 533 481 620
Petroleum products 140 129 107 109
Fertilizer
80 44 6 2
Cement
43 39 39 41
Staple fibre
300 322 283 270
Yarn
c) Capital goods 2133 2515 2617 2664
d) Other commodities 4036 4456 3944 4459
(including EPZ)
Grand Total 8374 9335 8540 9658
Percentage change (%) 4.6 11.5 -8.5 13.1
Source: Bangladesh Bank.

Export Situation
Analysis of composition of exports by major categories reveals that in FY 2002-03 export
earnings decreased compared with the previous fiscal year only in respect of tea (10.99 percent),
leather (7.77 percent), footwear (3.90 percent) and handicrafts (2.78 percent). On the other hand,
export earnings increased for almost all main items including readymade garments, knitwear, jute
goods, frozen foods and raw jute. Export earnings are expected to go up following pragmatic
steps taken by the government. Committee/council/task force constituted for formulation of
export-trade policies and strategies as well as for instant removal of bottlenecks that exist in this
area has been working relentlessly. The amount of export in FY 2002-03 substantially increased
by 9.39 percent to US$ 6548.44 million compared to US$ 5986.09 million of FY 2001-02.

57
Table-6.7: Export Growth and Composition
Commodity classification Total export (million % of total export Growth rate (%)
US$)
2000-01 2001-02 2002-03 2000-01 2001-02 2002-03 2000-01 2001-02 2002-03

1. Primary commodities, 484.62 390.30 462.59 7.50 6.52 7.06 3.26 (19.46) 18.52
of which
a) Frozen food 363.23 276.11 321.81 5.62 4.61 4.91 5.65 (23.98) 16.55
b) Tea 21.58 17.38 15.47 0.33 0.29 0.24 21.99 (19.46) (10.99)
c) Agricultural goods 18.00 23.00 25.45 0.28 0.38 0.39 0.00 27.78 12.96
d) Raw jute 67.18 61.13 82.46 1.03 1.02 1.26 (6.20) (9.01) 34.89
e) Others 14.63 12.68 17.40 0.23 0.21 0.26 (13.94) (13.33) 32.32

2. Industrial goods, 5982.68 5595.79 6085.85 92.50 93.48 92.94 13.25 (6.47) 8.76
of which
a) Readymade garments 3364.20 3124.56 3258.27 52.01 52.20 49.76 9.13 (7.12) 4.28
b) Knitwear 1496.36 1459.24 1653.83 23.14 24.38 25.26 17.83 (2.48) 13.34
c) Leather 253.93 207.33 191.23 3.93 3.46 2.92 30.19 (18.35) (7.77)
d) Jute goods 230.36 243.53 257.18 3.56 4.07 3.93 (13.35) 5.72 5.61
e) Fertilizer & 97.18 66.57 100.49 1.50 1.11 1.53 3.90 (31.51) 50.95
chemical products
f) Footwear 48.17 48.49 46.60 0.74 0.81 0.71 (6.10) 0.66 (3.90)
g) Ceramic products 19.07 17.50 18.82 0.29 0.29 0.29 101.59 (8.23) 7.54
h) Engineering goods 2.84 1.37 12.91 0.04 0.02 0.19 (62.87) (51.76) 842.34
i) Petroleum products 10.16 9.90 31.23 0.15 0.17 0.48 (11.03) (2.56) 215.45
j) Handicrafts 7.00 6.00 5.95 0.11 0.10 0.09 40.00 (14.29) (2.78)
k) Others 453.41 411.30 509.34 7.01 6.87 7.78 -- (9.29) 23.84

Total export 6467.30 5986.09 6548.44 100.00 100.00 100.00 12.43 (7.44) 9.39
Source: Export Promotion Bureau, Ministry of Commerce.
* Figure in the parenthesis indicates negative number.

Other Sectors
Remittances: The remittances by the expatriate Bangladeshis since FY 1991-92 to FY 2002-03
has been presented in Table 6.8. In 1991-92, total remittances amounted to US$ 848 million. In
1995-96, remittances of the expatriate Bangladeshis stood at US$ 1217 million representing an
increase by 43.5 percent compared with those of FY 1991-92. Remittances further grew to US$
1949 million recording an increase by 60.1 percent compared with the increase of 1995-96.
However, total remittances slumped to US$ 1882 million with a decrease of 3.45 percent in 2000-
01. Remittances stepped up to US$ 2501 million in the FY 2001-02, which was 32.89 percent
higher, compared with the performance of previous year (FY 2000-01). On the contrary on 30
June 2003, the remittances rose to the ever-highest level of US$ 3061.97 million indicating
growth of 22.42 percent over the previous year period. It may be noted that there is no negative
affect on remittance flow due to Iraq war.

58
Table 6.8: Annual Amount of Remittances
(In million US$)
FY Amount
1991-92 848
1992-93 944
1993-94 1089
1994-95 1198
1995-96 1217
1996-97 1475
1997-98 1525
1998-99 1706
1999-00 1949
2000-01 1882
2001-02 2501
2002-03 3062
Source: Bangladesh Bank

Balance of Payments: Table 6.9 represents balance of payments profile during FY1999-00
through FY 2002-03. The data reveals that the trade balance recorded a deficit of US$ 2207
million in FY 2002-03 compared with the deficit of US$ 1768 million of the last fiscal year. It
may be noted that, the trade deficit increased by US$ 439 million in FY 2002-2003, which is
24.83 percent higher compared with the deficit of previous year. On the other hand, current
account balance recorded a surplus of US$ 328 million in FY 2002-03 compared with the surplus
of US$ 240 million over the last year. The reasons for the increase of current account balance
surplus in the current fiscal year is due to higher inflow of current transfer and lower deficit in
income balance compared with last year.

The overall balance


Chart-6.2:Trade deficit and current account balance
showed a surplus of US$
2500 899 million in FY2002-
2000
1500
03 as compared with the
Million US$

1000
500
surplus of US$ 365
0
-500
million in the previous
-1000 fiscal year.
-1500
00

01

02

03
0

0
-2

-2

-2

-2
99

00

01

02
19

20

20

20

Trade deficit Current accoun balance

59
Table-6.9: Balance of Payments
(In million US$)
Particulars 1999-00 2000-01 2001-02 2002-03p

Trade balance -1865 -2011 -1768 -2207


Exports f.o.b. (including 5701 6419 5929 6492
EPZ)1/ -7566 -8430 -7697 -8699
Import, c.i.f. (including EPZ)
-645 -914 -4989 -688
Services 849 759 865 887
Receipts -1494 -1673 -1364 -1575
Payments
-221 -264 -319 -195
Income 97 97 50 64
Receipts -318 -361 -369 -259
Payments
2394 2171 2826 3418
Current transfers 165 72 69 60
Official 2229 2099 2757 3358
Private 1949 1882 2501 3062
of which workers' remittances
-337 -1018 240 328
Current account balance
561 432 410 392
Capital account 561 432 410 392
Capital transfers
-185 407 71 302
Financial account 194 174 65 92
(i) Direct investment 0 0 -6 2
(ii) Portfolio investment -379 233 12 208
(iii)Other investment 806 790 733 937
MLT loans 2/ -396 -416 -421 -431
MLT amortization payments 127 -13 -42 -20
Other long-term loans (net) 56 86 20 226
Other short-term loans (net) -55 -68 -52 -81
Other assets -641 -260 -253 -494
Trade credit (net) -276 114 27 71
Commercial Bank -161 147 -90 217
Assets -115 -33 117 -146
Liabilities
125 -47 -356 -123
Errors and omission
164 -226 365 899
Overall balance -164 226 -365 -899
Reserve assets -164 226 -365 -899
Bangladesh Bank -79 302 -276 -887
Assets -85 -76 -89 -12
Liabilities

P Provisional.

1/: Excludes local sales reported by EPB. Some adjustments necessitated by BOP considerations have been made.
2/: Excluding supplier's credit, reclassified as trade credit.

Source: Statistics Department, Bangladesh Bank.

60
CHAPTER-7
AGRICULTURE

Agriculture is one of the largest sectors of Bangladesh economy. The economic structure of
Bangladesh has evolved around agricultural activities. Combined contribution of all sub-sectors
(crop, livestock, forestry) of agriculture including fisheries sector was around 23.46 percent of
GDP in 2002-03 (Table 7.2) of which fisheries sector accounts for 5.23 percent. The crop sub-
sector alone contributes for 13.44 percent of GDP. Of the total labour force in Bangladesh 62.3
percent are engaged in agriculture (Bangladesh Labour Force Survey, 1999-2000,BBS).
Agricultural products (including raw jute, jute goods and tea) account for 5.76 percent 1 (2001-
02) of total exports. In order of importance, the contribution of agriculture is only after knitwear
and ready made garments (RMG) exports. Agriculture has been playing a crucial role in socio-
economic progress and sustainable development through upliftment of rural economy, ensuring
food security, by, attaining autarky in food grains production, alleviation of poverty and so on.

Box 7.1: Main Objectives of the National Agriculture Policy


• Ensure a profitable and sustainable agricultural production system and raise the
purchasing power by increasing real income of the farmers;
• Increase production and supplies of more nutritious food crops and thereby ensuring food
security and improving nutritional status;
• Produce and supply agricultural commodities required as input by the industrial sector;
• Reduce imports of agricultural commodities and open newer opportunities for increasing
exports as well;
• Create opportunities for establishing agro-processing and agro-based industries;
• Protect interests of the small and marginal farmers and share-croppers;
• Update the agricultural system in the light of the Agreement on Agriculture under WTO,
SAPTA and other international treaties by protecting the national interests.
Source: Ministry of Agriculture.
Agricultural Growth

According to FY 2002-03 projections, the growth rate of agriculture and forestry would be 3.6 percent and
2.3 percent respectively. The growth of agriculture sector was -0.6 percent in FY 2001-02, (Base year 1995-
96=100) of which growth rates in crop, livestock and forestry sub-sectors were -2.4 percent, 4.7 percent and
4.9 percent respectively. The fisheries sector recorded a growth rate of 2.2 percent. Table 7.1 presents
growth rates of agriculture and fisheries sectors during FY1992-93 to 2002-2003.

1
According to data of Export Promotion Bureau (EPB).

61
Table 7.1: Growth Rate of Agriculture and its Sub-sectors including Fishery
(Base year 1995-96)
(In percent)
Sector/Sub-sector 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
(prov.)
GDP growth rate 4.57 4.08 4.93 4.62 5.39 5.23 4.87 5.94 5.27 4.42 5.33
1. Agriculture 1.4 -0.7 -1.9 2.0 5.6 1.6 3.2 6.9 5.5 -0.6 3.6
a. Crop 1.0 -1.7 -3.4 1.7 6.4 1.1 3.1 8.1 6.2 -2.4 3.2
b. Livestock 2.4 2.4 2.5 2.5 2.6 2.6 2.7 2.7 2.8 4.7 4.5
c. Forestry 3.0 2.8 2.8 3.5 4.0 4.5 5.2 4.9 4.9 4.9 5.0
2. Fishery 8.5 7.9 6.8 7.4 7.6 9.0 10.0 8.9 -4.5 2.2 2.3
Source: Bangladesh Bureau of Statistics

Chart 7.1: Growth rate of Agriculture sector in GDP

4
Growth rate

-2
93

94

95

96

97

98

99

00

01

02

03
-

-
92

93

94

95

96

97

98

99

00

01

02
19

19

19

19

19

19

19

19

20

20

20
-4

Table 7.2: Share of Agriculture and Fishery in GDP


(Base year 1995-96)
(In percent)
Sector/Sub- 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 2000/01 2001/02 2002/03(
sector prov)
Agriculture 23.28 22.20 20.81 20.32 20.39 19.67 19.35 19.49 19.51 18.58 18.23
Crop 17.71 16.72 15.43 15.03 15.21 14.59 14.33 14.59 14.70 13.75 13.44
(76.09) (75.31) (74.17) (73.96) (74.57) (74.15) (74.06) (74.87) (75.37) (74.0) (73.8)
3.56 3.49 3.42 3.36 3.27 3.19 3.12 3.02 2.95 2.96 2.93
Livestock (15.27) (15.75) (16.45) (16.53) (16.06) (16.22) (16.13) (15.50) (15.10) (15.9) (16.0)
2.01 1.98 1.95 1.93 1.91 1.89 1.90 1.88 1.87 1.88 1.87
Forestry (8.64) (8.94) (9.38) (9.51) (9.37) (9.63) (9.81) (9.63) (9.53) (10.1) (10.2)
Fishery 4.93 5.10 5.21 5.36 5.48 5.67 5.93 6.09 5.51 5.40 5.23
Source: Bangladesh Bureau of Statistics.
Note: Figures in parentheses indicate share (%) of sub-sectors in agriculture.

Chart 7.2: Contribution of Agriculture & Fishery C hart 7.3: C ontributions of sub-sectors of
sector in GDP of 2001-02 Agriculture sector in GD P of 2001-02

Forestry
Agriculture 10%
19%
Fishery Livestock
16%
5%

C rops &
V egetables
Others 74%
76%

62
Food Grains Production
The food grain production situation over the past few years indicates an upward trend.
Bangladesh attained noteworthy success in food grains production following consecutive bumper
production for several years. According to the final estimates, the volume of food grains
production in 2001-02 was 259.2 lakh mt of which Aus accounted for 18.1 lakh mt, Aman 107.3
lakh mt, Boro 127.7 lakh mt and Wheat 20.00 lakh mt. (Table-7.3). In 2001-02 per acre yeilds of
Aus, Aman and Boro were 0.59 mt., 0.77 mt and 1.26 mt. respectively. It may be mentioned that
while the volume of production of potato in 1991-92 was 13.79 lakh mt. it reached to 29.94 lakh
mt. in 2001-02 implying a phenomenal increase over a decade.

Food grains production target for FY 2002-03 was 280.8 lakh mt of which Aus accounted for
18.4 lakh mt, Aman 114.6 lakh mt, Boro 130.3 lakh mt and wheat 17.5 lakh mt. Meanwhile Aus,
Aman and Boro seasons are over. According to BBS data, actual output of Aus was 18.51 lakh
mt, Aman 111.15 lakh mt and Boro 122.22 lakh mt. The harvesting of wheat has already been
completed. Because of delayed harvest of Aman and also because of the high moisture content in
the soil during the time of wheat plantation, the seeds could not be sown in due time during this
year. As a result, wheat cropping has decreased. (Table-7.3).
Table 7.3: Food grain Production
(In lakh Metric ton)
Food grain 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
(Prov)
Aus 20.7 18.5 17.9 16.8 18.71 18.75 16.17 17.34 19.16 18.08 18.51*
Aman 96.8 94.2 85.0 87.9 95.52 88.50 77.36 103.06 112.50 107.26 111.15*
Boro 65.9 67.7 65.4 72.2 74.60 81.37 105.52 110.27 119.21 127.66 122.22*
Total rice 183.4 180.4 168.3 176.9 188.83 188.62 199.05 230.67 250.87 243.00 251.88
Wheat 11.8 11.3 12.5 13.7 14.54 18.02 19.08 18.40 16.70 16.06 15.00
Maize - - - - - - - - 1.49 1.52 2.00
Total (with Maize) 195.2 191.7 180.8 190.6 203.37 206.64 218.13 249.07 269.06 260.58 268.88
Total (w/o Maize) 195.2 191.7 180.8 190.6 203.37 206.64 218.13 249.07 267.57 259.06 266.88
% Change (1.0) (-1.8) (-5.7) (5.4) (6.7) (1.6) (5.6) (14.2) (7.4) (-3.2) (3.02)
Source: Bangladesh Bureau of Statistics.
* Actual Production.

The crops of 0.418 lakh hectares of land of 79 upazilas in 16 districts were damaged by the flood
of 2001. In 2002 also, the crops of 3.85 lakh hectares of 208 upazilas in 45 districts were
damaged due to flood. As a result, total loss in paddy production stood at 5.08 lakh mt.

In order to compensate the loss of the small and marginal farmers arising out of the natural
calamities of 2002, the government allocated Tk.7.113 crore as grants. With this allocation, a
rehabilitation programme was implemented and the affected small and marginal farmers were
provided with agricultural inputs free of costs.

63
Food Budget

Food grains (rice and wheat) production target during 2002-03 was set at 280.8 lakh mt and the
net food grain production (after adjustment of 10% for seed, animal feed and wastage) stood at
252.72 lakh mt. According to data of Food Planning & Monitoring Unit (FPMU), Ministry of
Food, demand for food grain in the country was projected at 223.51 lakh mt. in the FY2002-03.
The government internal procurement of food grains stood at 10.53 lakh mt. (rice 7.26 lakh mt.
and wheat 3.27 lakh mt.) in 2001-02. It was decided to procure 9.03 lakh mt (rice 6.36 lakh mt.
and wheat 2.67 lakh mt.) internally during the FY2002-03. Up to June'03, 9.52 lakh mt (rice 8.16
lakh mt & wheat 1.36 lakh mt) were procured through public internal procurement drive. Food
grain import was 5.09 lakh mt. in 2001-02 as food aid. Up to June'03, 29.66 lakh mt of food grain
(rice 15.52 lakh mt & wheat 14.14 lakh mt) were imported by private sector. Food import figure
stood at 32.20 lakh mt in June'03. Food grain import during FY1980-81 to 2002-03 is shown at
Appendix Table 22.

Management of Agriculture
Bangladesh is predominantly an agricultural country. Agriculture being the engine of growth of
the economy, we have no other alternative but to develop agriculture sector for alleviation of
poverty by attaining accelerated economic growth. Since provision of food security, improvement
of the living standard and generation of employment opportunities of the huge population of the
country are directly linked to the development of agriculture, there has been continued efforts by
the government for the overall development of this sector. To fulfill the food and nutritional
demand of the growing population of the country and to ensure and sustain dependable food
security, special emphasis has been laid on building up a modern agricultural system based on
appropriate technology. In this regard, various reform measures have been taken which include
ensuring the availability of agricultural inputs including fertilizer at the door-steps of the farmers,
implementation of the agricultural extension policy, simplification of the disbursement
procedures of agricultural credit, creating opportunities for investment in agriculture,
modernisation of research system for quality improvement of agro-products, the utilisation and
extension of the integrated technologies derived from research.
Because of the regular monitoring of fertilizer distribution situation and adopting timely
measures, fertilizer supply and distribution across the country has improved. The measures for the
improvement of fertilizer distribution include inter alia setting up monitoring system in the
Ministry of Agriculture, extension of the dealership system up to upazila level, increasing the
number of buffer stock centres, strengthening the monitoring system both at the district and
upazila level, motivating the farmers to use super quality fertilizers like DAP/NPKS, using
granular urea for transplanted paddy cultivation, prohibiting import of granular and coloured SSP
fertilizer, withdrawal of advance income tax and development surcharge from TSP, DAP, MOP
and NPKS fertilizers to encourage the farmers to use nutrient rich phosphatic fertilizers, etc.
These steps resulted in steady and smooth supply of fertilizers throughout the country.

64
For the development of agriculture and for achieving the target of crop production with success,
programmes have been undertaken for intensive seasonal crop production, strengthening
activities of agricultural extension at field level and other supportive activities through 99 ADP
projects of the previous year and 108 ongoing projects of the current fiscal year with an allocation
of Tk.468.76 crore by different Departments/Directorates/Agencies of the Ministry of
Agriculture. Crop diversification programmes have been taken up to retain the soil fertility. The
development of 19 wholesale markets is now under implementation to strengthen agricultural
marketing system and ensure fair price of agro-commodities. The seed certification agency tested
1800 hectares of crop land last year and 1393 sample seeds were tested at the farm level. Besides,
the various research institutes like Bangladesh Agricultural Research Institute (BARI),
Bangladesh Rice Research Institute (BRRI), Bangladesh Institute of Nuclear Agriculture (BINA)
and other associated institutes have been developing new technologies, HYVs, in their respective
fields. Application of newly developed technologies are ultimately contributing to enrich the
country through increased agricultural production. Despite significant achievement in food grains
production, we have much potential to increase crop production through the application of
biotechnology and this potentiality is now being explored.

Irrigation
Irrigation is considered as the critical input for sustaining the increasing trend in yield and
production of food grains and other crops. Since inception of minor irrigation projects (power
pump, DTW, STW and floating pump etc.) implemented by the government in early sixties, area
under irrigation i.e. irrigated area has been expanding. Area under irrigation, however, has not
been increasing commensurate with expansion of irrigation equipment. Irrigation water is not
being utilised economically for augmenting agricultural production because of inefficiency and
mismanagement in its use at the field level. Much fuel cost could have been saved and more area
could have been brought under irrigation with better irrigation water management. Keeping this
in view, farm water management has been given top priority in the National Agricultural Policy.
There are continued efforts to intensify crop production and crop diversification and increase crop
production by ensuring well-integrated and planned use of both surface and under-ground water.
There were 16 ongoing projects in FY2002-03 in different places of the country for the
development of the irrigation. The following among them are the notable ones; (1) Survey and
Monitoring project for Minor Irrigation Development; (2) Prevention of intrusion of saline water
and the development of drainage system in Kumira-Sonai Chari region of Sitakunda upazila and
the construction of water reservoir in Guptakhali and irrigation project (3) Project for the
development of irrigation area (Barendra project); (4) Project for installation of deep tube-
wells in Barendra area; (5) Ashugonj Palash agro-irrigation project etc. The overall objectives
of these projects are to develop minor irrigation, proper use of the surface water, extension of
irrigation facilities in draught prone areas and poverty reduction through command area
development.

65
Total irrigated land in the country in 2001-02 was 48,04,469 hectares (Table 7.4), which
increased to 48,86,906 hectares in 2002-03. Overall growth rate therefore stands at 1.71 percent.

Table 7.4: Area Under Irrigation


(Hectare)
Type 1998-99 1999-00 2000-01 2001-02 2002-03
a. Surface water irrigation
Major irrigation 360779 422656* 352000 469575 511700
LLP 628162 645053 647300 761439 768440
Traditional 232223 224172 222000 182240 172360
Sub-Total (a) 12,21,164 12,91,881 12,21,300 14,13,254 14,52,500
b. Ground water irrigation
DTW 504230 517548 519750 576040 578162
STW 2384320 2461238 2488435 2547300 2583418
HTW 100494 46902 86906 62518 58422
FMTW 2955 4518 4580 5556 5560
DSSTW 102331 106608 106571 105585 108964
VDSSTW 35061 77628 78938 94210 99880
Sub-total (b) 31,29,391 32,14,442 32,85,494 33,91,215 34,34,406
c. Others (minor - - - - -
irrigation)
Total (a+b+c) 43,50,555 45,06,323 45,16,480 48,04,469 48,86,906
Source: Department of Agricultural Extension, Ministry of Agriculture
* Estimated irrigated area under Water Development Board.

Fertilizer
The use of high nutrient content fertilizer is gradually becoming widespread in the country. In
1992-93, the total quantity of fertilizer use was 23.16 lakh mt which increased to 32.98 lakh mt in
2002-03. The use of Urea fertilizer alone was 15.47 lakh mt in 1992-93 which increased to 22.39
lakh mt in FY2002-03. The percentage of increase in urea use is 45 percent compared to 1992-93.
This was due to increase of irrigated areas and diversified use of Urea. On the other hand, the use
of phosphatic fertilizer (TSP, DAP and SSP) increased by 28 percent in 2002-03 compared to that
of 1992-93. Total fertilizer use has increased by 42 percent compared to that of 1992-93 (Table -
7.5).
Market Monitoring and Information System (MMIS) of the Ministry of Agriculture has been
regularly monitoring the fertilizer situation in the country. In order to ensure smooth supply to
districts as per estimated demand of Urea, restriction has been imposed on inter-district
movement of Urea. There is no such restriction on the movement of super granules Urea. The
smooth supply of Fertilizer and its distribution have been made possible due to close monitoring
of supply, stock, availability, price and evaluation of performance of dealers by the District
Fertilizer and Seed Monitoring Committee and introduction of Upazila-based dealership network
and monitoring of fertilizer centrally by a National Co-ordination Committee. The price situation
has been under control and within the reach of the farmers. Smuggling and border trade of
fertilizer has also been under control. To avoid any crisis of Urea fertilizer during the peak
season, the system of maintaining buffer stock of Urea by Bangladesh Chemical Industries
Corporation (BCIC) has been introduced.

66
Since 1995-96 Urea super/mega granules are being manufactured and marketed through private
sector. This has resulted in reduction of the misuse of Urea, saving of 30 to 35 percent of Urea
and 20 to 25 percent increase in yield and also employment opportunities in the rural areas. The
number of machines for manufacturing Urea super granules has increased to 860 (838 super + 22
mega granules) in 54 districts till February 2003. It has been planned to use super/mega granules
in 7.50 lakh hectares of Transplanted Paddy (Aman 81,250 hectares, Boro 6,31,250 hectares and
Aus 37,500 hectares) during 2002-03. Super/mega-granules are also being used in other Rabi
crops. In order to implement this plan, 1.25 lakh mt of urea is being specially allotted among the
manufacturers for Aman and transplanted Aus. Besides, use of different types of mixed fertilizer
is being encouraged for balanced use of fertilizer. Programmes for production and marketing of
NPKS fertilizer have been undertaken locally by BCIC at Chittagong TSP Complex, Northern
Agro-Services Ltd., Dinajpur and Aftab Fertilizers & Chemicals Ltd., Narayangonj under private
sector. Import of NPKS is also being encouraged under private sector.

Import of more nutrient content DAP, TSP, NPKS and potash, instead of low nutrient content
SSP fertilizer is being encouraged and farmers are also being motivated to use such fertilizer. In
order to maintain the quality of fertilizer and also to control production, import and marketing of
adulterated/low quality fertilizer, steps are being taken to enforce Fertilizer (Control) order, 1999.
Post-landing inspection has been strengthened in the case of imported fertilizer in the private
sector. Compilation of Manuals for fertilizer inspection and fertilizer analysis is now under
process.
Table 7.5: Use of Chemical Fertilizer
('000' metric ton)
Type 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
(prov.)
Urea 1547.4 1579.0 1748.5 2045.5 2141.0 1867.0 1902.0 2151.1 2121.0 2247.42 2239.0
TSP 407.0 234.2 122.9 111.1 72.6 62.4 170.2 259.3 399.5 401.46 405.0
DAP 2.0 28.7 1.8 0 0 6.8 38.6 109.2 90.1 127.03 112.0
MP 126.1 103.9 154.2 155.9 219.3 193.5 210.8 239.5 139.8 233.25 250.0
SSP 119.8 170.6 533.5 596.9 525.3 473.3 362.4 237.2 138.6 127.13 130.0
NPKS 0 0 0 0 0 0 0 0 10.2 12.87 30.0
AS 5.0 10.0 2.5 8.7 11.7 9.7 12.4 26.0 13.0 20.19 10.0
Zinc 0.7 5.2 0 1.0 1.2 0.7 0.3 1.2 3.0 0.24 2.0
Gypsum 108.2 86.1 77.2 103.6 86.6 113.4 128.2 189.4 102.3 115.58 120.0
Others 0 0.1 0 0 0 0 0 0 0 0 0
Total 2316.2 2217.8 2640.6 3022.7 3057.7 2726.8 2824.9 3212.9 3017.5 3285.07 3298.0
Source: Ministry of Agriculture

Agricultural credit
Disbursement of agricultural credit rose from Tk.794.59 crore in 1991-92 to Tk.2954.91 crore in
2001-02. During FY 2002-03 disbursement stood at Tk. 3278.37 crore. The overall situation of
agricultural credit during FY1990-91 to 2002-03 is presented in Table 7.6.

67
Table 7.6: Agricultural Credit Disbursement, Recovery and Outstanding Balance
(In crore Tk.)
Financial year Target Disbursement Recovery Balance
1990-91 1310.00 595.60 625.32 5703.45
1991-92 1322.10 794.59 662.11 5369.56
1992-93 1474.41 841.85 869.23 5692.84
1993-94 1643.08 1100.79 979.12 6222.00
1994-95 2161.72 1605.44 1124.11 7045.22
1995-96 2434.27 1635.81 1340.02 7769.07
1996-97 2394.22 1672.43 1646.38 8256.00
1997-98 2525.83 1814.53 1779.29 8515.04
1998-99 3270.01 3245.36 2039.65 9702.51
1999-00 3331.00 2851.29 2996.29 10648.90
2000-01 3265.92 3019.67 2877.87 11137.26
2001-02 3326.64 2954.91 3250.27 11355.58
2002-03 3560.53 3278.37 3516.31 11381.90
Source: Bangladesh Bank

Annual Development Programme in Agriculture


In FY 2002-03, a total of Tk.424.52 crore has been allocated in the RADP for implementation of
the projects under the Ministry of Agriculture. Of the total amount Tk.283.38 crore (67%) has
been funded from GOB and the rest Tk.141.14 crore (33%) has been funded through project aid.
Up to June,03 a total of Tk.368.68 crore has been spent which is 87 percent of the total allocation.
Fisheries
Fisheries is one of the most important and promising sectors having vital contribution in the
economic development of Bangladesh. This sector plays a significant role in meeting the demand
for protein, earning foreign exchange and socio-economic development of the rural poor by
alleviating poverty through employment generation. Total area under inland open and closed
water bodies in the country is about 44.4 lakh ha. of which 91.1 percent or 40.47 lakh ha. is
inland open water body and the remaining 8.8 percent area is closed water body. Total production
of fish in 2001-02 was 18.90 lakh mt. In the total fish production, the shares of inland open water
body , inland closed water body and marine were 6.88 lakh mt, 7.87 lakh mt and 4.15 lakh mt
respectively. About 60 percent of animal protein in our daily diet comes from fish. Against the
minimum requirement of 35 grams of fish per head per day, actual availability is 28 grams. Fish
and fish products account for about 5.3 percent of GDP and 6 percent of total export earnings. In
2001-02, a sum of Tk.2032.75 crore was earned through export of 38,988 mt fish and fish
products. In 2000-01, this earning amounted to Tk.1637.14 crore from the export of 41,482 mt of
fish and fish products.

Fish output from closed water such as ponds and tanks continues to increase following the
involvement of private sector in artificial production of fish fry and application of improved
technology. In fact, the number of private fish farms and hatcheries is now increasing resulting in
high fish catch on the one hand and economic upliftment of the poor people and employment for

68
the youth, on the other hand. With support from World Food Programme (WFP), government-
owned water bodies are being reexcavated through implementation of projects under Food for
Work Programme. Integrated fish farming programmes have been undertaken in irrigated and
flood controlled farming areas. Programmes for infrastructure development and setting up of
hatcheries and training are being implemented for expansion and development of shrimp culture.
20 shrimp landing and service centres have been established to maintain the quality of shrimp
after collection. According to data of 2001, there was a total of 779 fish hatcheries and farms in
the country of which 112 were in public sector and 779 in private sector. Moreover, the number
of private farms is around 1,700. 505.46 crore fish fries (about 214.68 mt fish fries) have been
produced in hatcheries and farms in private sector in 2001 and 1872 kg fish fries were available
from natural sources.
Twenty investment and six technical assistance projects were included in RADP of 2002-03 with
an allocation of Tk. 114.55 crore (Tk.45.95 crore local currency and Tk.68.60 crore project aid)
for this sector. Up to June 2003, a sum of Tk.111.11 crore or 97% of total allocation was spent.
Trend of fish production during 1995-96 to 2002-03 is presented in Table 7.7.

Table 7.7: Fish Production


(1994-95 through 2001-02)
(Lakh metric ton)
Water Body Area 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03
(Lakh (Preleminary (projected)
ha.) projected.)
Inland
fisheries:
Open water
River & 10.32 1.66 1.60 1.57 1.51 1.54 1.50 1.65 1.79
estuaries
Sunderbans - 0.07 0.09 0.07 0.11 0.11 0.12 0.13 0.14
Beels 1.14 0.61 0.63 0.68 0.70 0.73 0.75 0.80 0.89
Kaptai lake 0.69 0.06 0.06 0.06 0.07 0.07 0.07 0.08 0.089
Flood plain 28.33 3.69 3.62 3.78 4.10 4.25 4.45 4.50 5.01
Total open 40.47 6.09 6.00 6.16 6.49 6.70 6.89 7.16 7.92
water
Closed water
Ponds 2.42 3.08 4.04 4.83 5.00 5.61 6.16 6.50 7.23
Baor 0.05 0.03 0.03 0.03 0.04 0.04 0.04 0.05 0.05
Shrimp farm 1.41 0.68 0.79 0.88 0.90 0.92 0.93 1.00 1.11
Total closed 3.88 3.79 4.86 5.75 5.94 6.57 7.13 7.55 8.40
water
Total inland 44.36 9.88 10.86 11.91 12.43 13.28 14.02 14.70 16.32
Marine
Fisheries:
Commercial 0.48 0.12 0.14 0.15 0.16 0.16 0.24 0.30 0.33
Artisanal sqmm 2.58 2.61 2.58 2.14 3.18 3.55 3.70 4.12
Total marine 2.70 2.75 2.73 3.10 3.34 3.79 4.00 4.45
Grand total 12.58 13.60 14.64 15.52 16.61 17.81 18.70 20.77
Source: Department of Fisheries, Ministry of Fisheries and Livestock.

69
Livestock
Livestock plays an important role in the agrarian economy of Bangladesh. It has been considered
as one of the important sectors for creating jobs and alleviation of poverty. The role of this sub-
sector in earning foreign exchange through export of livestock products like leather, feather,
wool, bone etc. is quite important. This sub-sector accounted for 3.12 percent of GDP in 2001-02
and the growth rate of this sub-sector was about 3.20 percent. In tandem with mechanized
cultivation, 95 percent of tilling is done by bullock. Nearly twenty-five percent of population is
dependent on this sub-sector on full time basis and 50 percent on part time basis. As a result of
involvement of private sector and NGOs, the opportunity of managing this sector on commercial
basis has been opened.

Data from Ministry of Fisheries and Livestock indicate that the number of cattle and poultry
population in 1991-92 were 4.19 crore and 11.05 crore respectively. In 2001-02, these number
increased to 8.17 crore and 16.35 crore respectively. Production of eggs (hen and duck) stood at
379 crore in 1999-2000. In 2001-02, this figure increased to 389 crore. Milk and meat output
grew from 13.52 lakh mt and 4.60 lakh mt respectively in 1991-92 to 17.5 lakh mt and 7.8 mt in
2001-02.

In a bid to develop livestock resources, the government has set up a large number of livestock and
poultry farms through implementation of ADP. Also in order to alleviate poverty, the
Government implemented goat rearing projects throughout the country on priority basis.

A total of twenty-two projects including four technical assistance projects have been undertaken
by the Department of Livestock in 2002-03. A total of Tk. 96.43 crore has been allocated in the
RADP of FY2002-03. Up to June, 2003, 90 percent of the allocation amounting Tk. 86.75 crore
has been utilized. It may be mentioned that self-employed youths both male and female trained by
the Department of Youth play a major role for the establishment of livestock and poultry farms on
commercial basis.

Forestry
Forestry sub-sector, besides making substantial contribution to national economy, plays a
predominant role in maintaining ecological balance. According to preliminary estimates the sub-
sector accounts for 1.86 percent of total GDP and 10.2 percent of agricultural income in 2002-03.
At present, the growth rate of this sub-sector is 5.0 percent (at constant prices of 1995-96). Total
area under forest in the country is 25 lakh ha. which is about 17 percent of total land area. Only
45 percent has tree coverage. Two percent of total labour force in the country is engaged in
forestry sub-sector. Increasing growth of population, trespassing in forests, large-scale felling of
trees for use as fuel, have had adverse impact on environment.

Government has undertaken a comprehensive forest development programme aimed at large-


scale afforestation and preservation of forests in the country, offsetting depletion of forest

70
resources, ensuring supply of raw materials for timber-based industries, preservation of bio-
diversity and wild life. With these goals, a twenty-year (1995-2015) Forestry Master Plan has
been approved. The Master Plan is production-oriented and participatory and also aims at
strengthening institutional facilities. Steps that have been undertaken by the Department of Forest
during 2002-03 for effective implementation of policies under the Master Plan include:

• expansion of forest in depleted hills and khas land;


• large-scale tree plantation in rural areas in private fallow and marginal land through
people's participation, extensive afforestation programme in state-owned marginal land.
e.g. along the road sides, railway tracks and all types of embankments through people's
participation;
• training through government and private channels with a view to developing people's
awareness in afforestation and preservation of forest resources;
• conscientizing people about contribution of forestry in preserving natural environment,
wild life and means of recreation;
• implementation of special projects for preservation of bio-diversity etc.
Targets and progress of forestry programmes during 1991-92 to 2002-03 are presented in Table
7.8.
Table 7.8: Targets and Progress of Forestry Programme
Year Creation of industrial Creation of mangrove Creation of woodlot Creation of Afforestation outside Afforestation along Institutional Raising of sapling for Afforestation in Creation of bamboo,
forest ('000' Hectare) forest ('000' Hectare) forest ('000' Hectare) agricultural forest WDB embankment road and rail side afforestation (Lakh) sale & distribution unclassified forest cane, mutra, tamarisk
('000' Hectare) open space forest ('000' km) (Lakh) zone of CHT ('000' plant forest ('000'
('000' Hectare) Hectare) Hectare)
Target Progress Target Progress Target Progress Target Progress Target Progress Target Progress Target Progress Target Progress Target Progress Target Progress
91/92 3.58 3.37 4.01 3.57 2.88 2.88 0.45 0.45 0.11 0.11 0.44 0.44 - - 78 78 - - 0.26 0.26
92/93 3.86 3.86 4.82 4.82 3.80 3.80 0.45 0.45 0.50 0.50 3.58 3.58 18 18 200 200 1.57 1.35 0.38 0.38
93/94 3.86 3.86 4.81 4.81 0.47 0.47 0.80 0.80 0.37 0.37 5.55 5.55 29 29 206 206 4.34 4.14 0.38 0.38
94/95 3.88 3.88 3.85 3.85 2.88 2.88 2.13 2.13 0.30 0.30 4.04 4.04 32 32 49 49 5.41 5.18 0.36 0.36
95/96 4.24 4.24 3.01 2.73 0.17 0.17 0.10 0.10 - - 1.80 1.67 21 21 51 51 1.13 1.13 0.20 0.20
96/97 3.89 3.76 1.85 1.85 0.62 0.62 0.92 0.87 - - 3.94 3.95 38 38 42 41 0.86 0.83 0.52 0.52
97/98 3.41 3.41 2.87 2.87 0.10* 0.10* 0.11+ 0.11+ - - 1.88 1.71 18 18 23 23 2.02 2.02 0.45 0.45
98/99 3.75 3.65 4.09 4.04 0.10* 0.10* 0.15* 0.15* - - 1.50 1.56 - - 149 150 2.38 2.38 0.76 0.76
99/00 5.72 4.49 4.20 4.10 0.34 0.27 0.08 0.08 0.17+ 0.17+ 2.27 2.26 - - 135 137 1.71 1.71 0.70 0.70
00/01 5.38 5.35 5.00 5.00 2.06 2.06 0.36 0.38 - - 3.95 4.04 13 13 91.10 91.11 0.99 0.99 1.36 1.36
01/02 3.73 - - - 2.21 - 0.42 - - - 4.69 - 8.70 - 259.89 - - - 0.78 -
02/03 1.2 - 2.8 - 2.8 - 1.2 - - - 5.0 - 12.5 - 75.7 - 3.9 - 0.97 -

Source: Department of Forest, Ministry of Environment and Forest


* Creation of participatory forest
+ Foreshore afforestation

In the RADP of 2002-03, an amount of Tk.102.82 crore has been allocated for 17 projects under
the Department of Forest. Up to June, 2003 Tk.76.99 crore has been spent which is 75 percent
of the total allocation.

Improvement of Environment
Environment plays an important role in the sustainable economic development of the country.
Bangladesh is a populous and poor country with scarce natural resources. Besides the global
environmental pollution, rapid population growth, unplanned urbanization, increase in salinity in
the southern part, industrial pollution, paucity of ground and surface water, indiscriminated and

71
imprudent extraction of ground water, arsenic contamination and air pollution etc. are posing
serious environmental threats to the country. Present government has undertaken many initiatives
for attaining sustainable development and the abatement of pollution. Of these, the notable ones
are as follows:

Air Pollution control: The main source of air pollution in Dhaka city is exhaust of poisonous
vehicles. To contain and curb air pollution the government has imposed ban on the import of the
most air polluting vehicles, two-stroke three wheelers chassis and two-stroke three-wheelers
vehicles. Besides, the Government has imposed ban on plying of two-stroke three-wheeler in
Dhaka city from 1 January, 2003. Restriction has been imposed on the plying of older buses and
trucks in Dhaka city which cause pollution. The Environment Conservation Rules 1997 has been
revised making the use of Catalytic Converter and Diesel Particulate filter compulsory in the
petrol and diesel run vehicles respectively. Catalytic Converter and Diesel particulate filter have
been formally introduced in Dhaka city on 7 August 2002. At present, instead of two stroke three
wheelers, four stroke CNG run auto-rickshaws are plying in Dhaka city.

Initiatives to Control Production and Use of Polythene Bags: Widespread use of polythene
shopping bags brought about massive socio-economic and environmental disaster. Government
has banned the use of polythene and its marketing in Dhaka city since 1st January, 2002 to prevent
such disaster. Later, since 1st March 2002, the ban has been extended throughout Bangladesh. In
order to implement legally the declaration of ban on production, use and marketing of all kinds of
polythene shopping bags, the Environmental Conservation Act (Amendment) 2002 has been
passed by amending the Environmental Conservation Act, 1997.

Environmental Court Act, 2002 and Establishment of Environmental Court:

First of its kind in the country, the Environmental Court has been set up to facilitate the quick
trial of all environmental offences. To run the Environmental Courts, the Government has
promulgated the Environment Court Act. The court has already started functioning in Dhaka and
Chittagong. Special magistrates have been appointed in each district to ensure lawful prosecution
of environmental offences.

Initiative taken to control burning of wood in the brickfields and steps taken for the
Environment Clearance Certificate:

According to Brick Burning (Control) (Amendment) Act, 2001, issuance of license from the
Deputy Commissioner (DC) is mandatory. Under this Act, using tree as fuel wood for burning of
bricks is prohibited. Initiative has been taken to manufacture environment friendly "Block Brick"
instead of traditional brick. Use of low sulphur content coal as fuel and installing Chimney with
the height of 120 ft. have been made mandatory for brick field.

72
Save Buriganga programme: Hazaribagh tannery is one of the major sources of pollution of the
Buriganga River. To protect the inhabitants of Dhaka city and to save the Buriganga River,
Government has planned to shift the existing Tanneries of Hazaribagh to Horindhara, a place in
between Savar and Keranigonj Upazila. For this purpose, 200 acres of land have been acquired
and further 200 acres of land to be demarcated for future expansion. Bangladesh Inland Water
Transport Authority (BIWTA), with the help of law enforcing agency removed substantial
numbers of illegal structures and the process is still going on.

Conservation of Environmental System:

Effective measures have been taken to protect Gulshan-Baridhara lake, wet land of Ashulia and
other ecosystems of the country. The hills have been contributing significantly to protect the
environment and eco-system of the country. But indiscriminate cutting of hills is causing
environmental degradation and imbalance. Necessary circulars have been issued to stop cutting of
hills. Significant success has been achieved in stopping hill cutting through organizing mass
consultation in different parts of the country. Bangladesh has achieved substantial success in
protecting ozone layer. Lack of environmentally sound disposal of solid waste is one of the major
causes of environmental pollution in cities and towns including Dhaka city. Initiative has been
taken to generate electricity and organic fertilizer using all these solid wastes. Bangladesh is a
member country of United Nations Environment Programme (UNEP) and South Asia
Cooperation for Environmental Problems (SACEP). It has signed 28 treaties, conventions and
protocols. Besides, three more projects have also been implemented in the light of Agenda-21,
Montreal Protocol and Bio-diversity Convention and one project was implemented earlier in the
context of Brussels Convention for Control of Trans-boundary Movement of Hazardous Waste.
Government has been observing various International Days relating to environment declared by
the United Nations, such as World Environment Day, World Desertification Day, International
Ozone Day etc.

Integrated policies, development of organisational structure, introduction of environmentally


sustainable system and implementation of programmes are required to ensure sustainable
development of the country and set right the environmental imbalance. Achievement of this goal
requires a strong national commitment and an active participation of the Government and the
people.

For the overall environmental development an amount of Tk.16.37 crore has been spent by the
Ministry of Environment and Forestry for implementation of development projects which
represents 89 percent of the allocation.

73
CHAPTER-8
INDUSTRY
The role of industry sector (manufacturing) is indispensable for accelerating economic growth.
This sector accounts for 15.91 percent of GDP in 2002-03 (projected). The rate of growth in this
sector was projected at 6.6 percent in FY 03 against 5.5 percent in the fiscal year 2001-02. Table-
8.1 shows growth rate of manufacturing sector during 1996-97 through 2002-03.
Table-8.1: Contribution of Manufacturing Sector in GDP and Growth Rate
(at constant prices of 1995-96)
(in crore Tk)
Type 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(Revised)
Small and 7609.1 8124.0 8184.9 8659.3 9267.4 9980.1 10780.0
cottage (7.8) (6.8) (0.75) (5.8) (6.6) (7.7) (8.0)

Medium- 18270.4 19966.8 20803.3 21708.6 23130.2 24194.1 25655.8


large (3.9) (9.3) (4.2) (4.4) (7.0) (4.6) (6.0)
25879.5 28090.8 28988.2 30367.9 32397.6 34174.2 36435.8
Total (5.0) (8.5) (3.2) (4.8) (6.7) (5.5) (6.6)
Source: Bangladesh Bureau of Statistics
Note: Figures in parentheses indicate rate of growth.

Modernisation and rationalisation of the industrial sector commensurate with the changing needs
of time is of utmost importance for comprehensive development of the nation as well as for
putting the economy on a solid foundation. In the context of the imperatives of globalisation and
free market economy, necessary amendments and additions to the existing industry policy have
been made for accelerated increase in investment and rapid industrialisation of the country.
Henceforth vibrant and dynamic private sector will be the prime mover of industrial growth of
Bangladesh. The Government is committed to make the industry sector competitive in both the
deregulated domestic and international market. The vision of industrialisation is to make the
manufacturing sector capable of capturing a share of 25 percent of GDP, which would account for
20 percent of the labour force within the next decade. Export-orientation would be the principal
feature of industrialisation. Other features are to: encourage different institutions engaged in
enhancing technological and technical skills; encourage the participation of women entrepreneurs
in the process of industrialisation; treat technology based programmes for modernisation of
agriculture as an industry; set investment priorities and bring necessary changes in the financial
and non-financial incentive structures to implement those priorities; prohibit engagement of child
labourer in industries and make all out efforts to encourage production and use of jute goods in a
diversified manner. Currently, permission of the Government is not required to establish
industries except those in the reserved sectors (arms, ammunition and defence equipment,
production of nuclear power, security printing and minting, afforestation in the reserved forest
area and its mechanical extraction). Government permission is not necessary for establishing any
industry on joint venture or 100% foreign investment or BMRE of existing industry irrespective
of the amount of investment or its share.

74
Since assumption of power, the present Government have reinforced measures for augmenting
industrial growth and diversification of industry sector. Besides the local textile sector, provision
for cash support has been introduced for the leather and jute sectors. In the budget of current
fiscal year, this assistance has been extended to several new export sectors such as frozen food,
agro-based products, vegetables and fruits, bi-cycle and light engineering etc. Besides, cash
assistance to various sectors has also been rationalised. Nationalised Commercial Banks (NCBs)
have reduced the rate of interest from 10-12.50 percent to 9 percent in the thrust industrial sectors
such as textile industry (including RMG), agro-based industry, computer software and
information technology, data export, production of artificial flowers, frozen food (including
frozen poultry and meat), gift items, 100% export oriented finished leather goods and jute goods,
jewellery, diamond cutting and polishing, oil and gas, cocoon cultivation and sericulture and
stuffed toys. The rate of interest has been reduced from 8-10 percent to 7 percent for pre-
shipment and packing credit for export of RMG, frozen food and agro-based commodities. Bank
rate has been reduced from 7 percent to 6 percent to induce reduction of interest rate of bank loan.

Index of Manufacturing Industries


Quantum Index of Production (QIP) is an important tool for measuring production of goods of
manufacturing industries. Data available from Bangladesh Bureau of Statistics (BBS) show that
QIP (1988-89=100), representing medium to large-scale industries, rose to 236.1 in 2001-02 from
173.5 in 1995-96. Annual growth rate of this sector thus stood at 5.48 percent. During fiscal year
2002-03, the average index stood at 249.7. Table-8.2 shows the index during 1995-96 through
2002-03. Appendix Table- 26 presents production index for the previous years, while Appendix
Table-27 shows actual production of principal industrial products for the last eight years.
Table 8.2: Quantum Index of Production for Medium to Large-scale Industries
(1988-89=100)
Type 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Medium to
Large- 173.50 179.30 195.94 204.17 214.3 228.4 236.1 249.7
scale
Industries
Source: Bangladesh Bureau of Statistics (BBS).

Bangladesh Small and Cottage Industries Corporation (BSCIC):


The role of Bangladesh Small and Cottage Industries Corporation (BSCIC) has been significant
in market development for small, cottage and rural industries and in identification of new
entrepreneurs for achieving economic prosperity. BSCIC data reveal that the number of industrial
entrepreneurs increased from 23,991 in 1996-97 to 46,177 in 2000-01. Against the target of
38,788 for 2001-02, the actual number of entrepreneurs stood at 41,811. The number of registered
small and cottage industries during the period from 1996-97 through 2000-01 dropped from
15,167 to 4,687. Against the target of 7,460, the number of registered industries was 5,239. The
number of registered industries during July-December 2002 was 1,479. During 2001-02, 1,130

75
small and 4,109 cottage industries were registered with BSCIC. Besides, in FY 2001-02, credit
support was provided to 423 new small industrial units along with 1,791 old units. During the
same year 16,215 new cottage industries along with 12,016 old cottage industries were provided
with credit facilities. In the industrial units registered with BSCIC, the number of persons
employed increased from 68,983 in 1996-97 to 83,416 in 2001-02. During 2002-03, the number
of persons employed was 97,957.

Production Performance of SOEs


Bangladesh Chemical Industries Corporation (BCIC)
Production of urea in the factories under BCIC was 19.40 lakh mt. in 2002-2003. During the
same period the production of TSP was 1.94 lakh mt and the production of paper reached 32,000
mt. Output of cement has fallen from1.68 lakh mt in 1996-97 to 1.60 lakh mt in 2002-03. Total
sales revenue of BCIC increased by 15 percent in 2002-03 compared to 1996-97 and cost of sale
increased by 5 percent during the same period. In consequence, operational loss of Tk. 200.68
crore in 1996-97 decreased to Tk. 96.68 crore in 2002-03. Net loss came down from Tk. 237.92
crore in 1996-97 to Tk. 86.05 crore in 2002-03. (Appendix Table 28 presents output statistics and
financial statements of state owned industrial units).

Bangladesh Textile Mills Corporation (BTMC):


The mills under BTMC meet working capital crisis as they suffered continuous loss. As the
entities failed to procure raw materials from their own resources, an alternative system of 'service'
charge was introduced to continue production of yarn in the mills since 1996-97. BTMC has also
stopped producing fabrics since 1997-98 as it has closed down all of its weaving units of
composite mills since then. Currently 13 units belonging to 10 mills are operating production
activities under the ''service charge'' system. Production of yarn in mills under BTMC increased
to 106.85 lakh kg. in 2002-03 from 67.77 lakh kg in 1996-97. During the period, total sales
revenue declined from Tk. 81.57 crore to Tk. 56.18 crore, while the cost of sales dropped from
Tk. 211.80 crore to Tk. 77.47 crore. As a result, operational loss declined to Tk. 21.29 core in
2002-03 from Tk. 130.23 crore in 1996-97. Net loss incurred in 1996-97 amounted to Tk. 163.26
crore. As the number of mills had reduced subsequently, losses gradually declined to Tk. 37.21
crore in 2002-03 (Appendix Table 28).

Bangladesh Sugar and Food Industries Corporation (BSFIC):


Production of sugar in the mills under BSFIC increased to 204,000 mt. in 2001-02 from 1,35,000
mt in 1996-97. Production target of sugar has been fixed at 181,000 mt. in 2002-03. Operational
loss rose to Tk. 98.19 crore in 2001-02 from Tk. 54.46 crore in 1996-97. Operational loss has
been estimated at Tk. 48.86 crore in 2002-03. During this period, net loss decreased from Tk.
65.29 crore to Tk. 63.54 crore (Appendix-28).

76
Bangladesh Jute Mills Corporation (BJMC):
With a view to increasing export of jute products in global market, the government has decided to
provide subsidy at the rate of 5 percent of FOB price to both public and private mills effective
from 2002-03. Accordingly, a sum of Tk 85 crore has been provided as subsidy in the budget of
FY 2002-03. As a result, export of jute is expected to increase in the world market. Total sales
revenue of the corporation increased by 15 percent during 2002-03 as compared with that of
1996-97 while the cost of sales fell by 5 percent in the same period. As a result, operating loss
decreased from Tk. 199.45 crore in 1996-97 to Tk 59.16 crore in 2002-03. The net loss during the
same period decreased from Tk. 251.71 crore to Tk. 147.38 crore (Appendix Table 28).

Bangladesh Steel and Engineering Corporation (BSEC):


Under the influence of free market economy the industrial units under BSEC faced stiff
competition with the private sector industries and the imported goods this resulted in declined
output in a number of cases. Total sales revenue increased by 14 percent in 2002-03 as compared
with that of 1996-97. The cost of sales increased by 1 percent during the same period.
Consequently, the net loss of Tk 103.28 crore in 1996-97 turned into a net profit of Tk 13.43
crore in 2002-03 (Appendix Table-28).

Overall Status of SOEs:


Total investment of 44 non-financial State-owned Enterprises amounted to Tk 89,920 crore as of
June 2001. This investment was financed through government equity of Tk. 22,493 crore,
government loan of Tk. 9,247 crore, loan from NCBs of Tk. 6,017 crore and government
guaranteed foreign loan of Tk. 21,182 crore. Total investment under these corporations accounted
for 36 percent of GDP. Unfortunately, the nation is deprived of due returns from these huge
investments. The rate of dividend on equity in FY 2001-02 was 1 percent, which, by any
standard, is extremely poor. Against the backdrop of gross inefficiency of the SOEs, there is an
urgent need for comprehensive reforms/ rehabilitation in this area.
On going Reform Programms for SOEs
The following programmes are under implementation for accelerated and extensive reforms of the
SOEs:
a) Continuous privatisation/closure of financially insolvent SOEs;
b) Payment of short term and long term liabilities of closed or privatisaed SOEs;
c) Reduction of losses through curtailing non-essential expenditures;
d) Ensuring annual audit and record keeping of assets and liabilities of SOEs;
e) Enhancement of reward/punishment scheme for ensuring accountability at every
stage on SOE sector;
f) Rationalisation of prices of goods/services consistent with market demand and
cost of production.

77
Since the inception of the Privatisation Board (now Privatisation Commission) in 1993, a total of
42 public enterprises have been privatised till June 2003. Among the enterprises, 27 have been
privatised through outright sale and 15 through sale of shares. After finalisation of the tender
procedure, Letters of Intent (LOI) have been issued to the buyers to hand over 6 enterprises and
the Commission has approved the sale of 5 industrial enterprises to the concerned buyers after
completing all bidding processes. Apart from this, international tender has been floated to sell 19
enterprises. Besides, during this financial year, 30 enterprises have been evaluated for sale and
evaluation process is underway to identify another 19 enterprises for sale.

Industrial Investment Status:


The economy of Bangladesh has been gradually drawing the attention of private sector investors
since its opening up in early '90s. Manufacturing is becoming increasingly vibrant claiming a
significant share in the total investment. During 1991-92 to 2002-03, cumulative private
investment registered with Board of Investment (BOI), the apex private investment promoting
and facilitating body, totaled US$ 25,933 million. The registered investments consist of 47.65
percent as local and 52.35 percent as foreign (100 percent and Joint Venture). Table 8.3 presents
the time-series data during FY 1991-92 to FY 2002-03. In FY 1991-92, total private investment
registered amounted US$ 116 million, whereas in 2002-03, it reached US$ 2,395 million.

Table 8.3: Distribution of Private Investment Projects (Local and Foreign) Registered with
BOI from FY 1991-92 to FY 2002-2003.
(In million US$)
Fiscal Year Local Investment Foreign Total Growth (%)
Investment
1991-92 91 25 116 -
1992-93 90 53 143 23%
1993-94 457 804 1,261 782%
1994-95 846 730 1,576 25%
1995-96 1,171 1,516 2,687 70%
1996-97 1,108 1,054 2,162 -20%
1997-98 1,137 3,440 4,577 112%
1998-99 1,183 1,926 3,109 -32%
1999-00 1,324 2,119 3,443 11%
2000-01 1,420 1,271 2,691 -22%
2001-02 1,531 302 1,833 -32%
2002-03 2,027 368 2,395 31%
Total 12,385 13,608 25,993 -
Share (%) 47.65% 52.35% 100% -
Source: Board of Investment.

2002-03 experienced a 31 percent growth in the overall investment comprising of 32 percent


growth in local and 22 percent in foreign investment. On the other hand, a country-wise analysis
of foreign investment projects registered in FY 2002-03 shows that top five investment
registering countries are Japan (28.8 percent), UK (24 percent), Netherlands (11.6 percent), South
Korea (7.4 percent) and Taiwan (6.4 percent) (Table-8.4).

78
Table 8.4: Country-wise Distribution of Foreign Private Investment Registered with
BOI from FY 1996-97 to 2002-03.
( In million US$)
Country 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Share in
2002-03
Japan 12.42 58.56 68.32 24.46 0.94 0.82 106.00 28.77%
U.K. 73.39 32.12 827.15 15.96 28.08 3.88 88.40 23.99%
Netherlands - 2.63 - 3.04 4.82 27.21 42.64 11.57%
South korea 84.75 89.78 14.10 5.14 43.19 24.61 27.28 7.40%
Taiwan - - - - - - 23.49 6.38%
Australia - - - - - - 17.41 4.73%
Singapore 132.15 33.06 273.14 20.39 86.11 2.28 16.05 4.36%
USA 8.17 1,378.54 382.01 1,178.35 308.99 2.51 13.00 3.53%
UAE - - - - - - 7.24 1.97%
Malaysia 43.67 288.02 16.36 6.13 11.39 1.19 5.70 1.55%
India 48.83 5.48 154.87 7.60 31.62 15.32 5.11 1.39%
Hong Kong 484.92 156.54 13.18 35.48 1.17 59.75 4.78 1.30%
China 9.97 25.38 18.33 10.29 27.23 9.49 2.86 0.78%
Finland - - - - - - 1.81 0.49%
Thailand - - - - - - 1.55 0.42%
Germany 12.63 23.59 57.74 1.93 115.54 1.79 1.07 0.29%
Norway - - - - 518.16 - 1.02 0.28%
Others 142.60 1,346.35 100.34 811.11 94.64 152.67 3.00 0.82%
Total 1,053.50 3,440.05 1,925.54 2,119.88 1,271.88 301.52 368.42 100%
Source: Board of Investment.
As per registration data, agro-based and chemical are the two most growing sectors in FY 2002-
03. Manufacturing sector recorded 39 percent growth in FY 2002-03 compared to FY 2001-02.
Simultaneously, total share of manufacturing grew from 55 percent to 62 percent in 2002-03.
Table 8.5 depicts the time-series data during FY 1996-97 to 2002-03.

Table 8.5: Sector-wise Distribution of Foreign Private Investment Projects register with
BOI from FY 1996-97 to 2002-03.
(In million US$ )
Sector 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Share in
2002-03
1.Agro-based 15.90 7.95 63.65 5.95 0.72 0.28 64.46 17.50%
2. Food and Allied 48.89 346.47 19.97 2.41 0.62 4.34 21.46 5.82%
3. Textiles 106.91 92.76 50.28 41.03 201.57 50.64 37.83 10.27%
4. Printing & 9.00 - 2.00 0.18 122.01 2.35 0.58 0.16%
Packaging
5. Tannery and 4.05 21.09 8.62 0.63 - - 1.78 0.48%
Rubber
6. Chemical 113.64 53.85 336.51 962.43 201.35 44.84 74.90 20.33%
7. Glass and Ceramic - 99.39 53.26 142.13 17.11 5.30 3.19 0.87%
8. Engineering 21.31 10.62 96.84 20.98 29.77 57.86 25.65 6.96%
9.Service 596.59 2,279.30 1,290.85 770.99 650.70 134.93 137.25 37.25%
10. Miscellaneous 137.21 528.62 3.56 172.27 48.03 0.98 1.33 0.36%
Total 1,053.50 3,440.05 1,925.54 2,119.88 1,271.88 301.52 368.42 100%
Source: Board of Investment.

79
Registration of local industries also grew substantially by 32 percent. Engineering, printing and
packaging, agro-based and food and allied sectors have led the growth (Table 8.6). The share of
manufacturing in local investment registration is 95 percent of the total investment proposals in
2002-03 that grew by 37 percent over 2001-02. The present investment trend indicates that the
industrial growth would rise to 7 percent in the FY 2003-04. It may be noted here that the
manufacturing sector maintained an average of 8.2 percent growth during 1991-92 to 1995-96,
which however, sharply decelerated to 5.6 percent during 1996-97 to 2000-01. As a result of
market-oriented fiscal measures and restructuring of various facilitating agencies, the industrial
growth in the FY 2003-03 has again increased to 6.62 percent.

Table 8.6: Comparative Statement of Sector-wise Distribution of Local Private


Investment registered with the BOI from FY 2001-02 to 2002-03.

Sector Local Investment (In million Taka)


FY 2001-02 FY 2002-03 Growth
1.Agro-based 4,900.17 9,132.26 86%
2. Food and Allied 5,285.93 8,697.28 65%
3. Textiles 50,772.27 43,374.80 -15%
4. Printing & Packaging 1,054.07 3,045.47 189%
5. Tannery and Rubber 794.23 874.00 10%
6. Chemical 11,449.49 5,914.00 -48%
7. Glass and Ceramic 2,451.83 506.04 -79%
8. Engineering 4,187.17 39,031.65 832%
9.Service 6,065.48 4,778.00 -21%
10. Miscellaneous 1,099.10 1,172.72 7%
Total 88,059.74 116,526.21 32%
Source: Board of Investment.

FDI Inflow Survey 2002:

FDI Inflow Survey 2002 was successfully conducted by BOI, for the first time in Bangladesh in
February 2003.It was the first-ever attempt to gather credible data on actual FDI inflow on the
basis of definition given by UNCTAD.

The World Investment Report 2003 (UNCTAD-2003) mentioned that ''FDI flows to Bangladesh
and other countries in the subregion declined. However, in the case of Bangladesh, FDI flows in
2002 would have been higher if investment in kind were included (box II.3)''

80
Box II.3: The FDI census in Bangladesh.

The Bangladesh Board of Investment (BOI) conducted a census of foreign direct investors
in February 2003 to gather comprehensive primary data and actual FDI inflows based on projects
registered with BOI and the Bangladesh Export Processing Zones Authority.
Results:
• FDI inflows in 2002 were $328 million (compared with $ 58 million on a balance of
payments basis reported by the Central Bank of Bangladesh). Half of it was financed by
equity, 31% by reinvested earnings and 19% by intra-company loans.
• While FDI flows have traditionally been concentrated in the power and energy
industries, 44% of the total FDI flows in 2002 went to the manufacturing sector.
• The major sources of investment in 2002 were Asia (45%), followed by Europe (32%)
and North America (17%). Norway was the single largest investor (19%), followed by
the United States (17%), Singapore (14%) and Hong Kong (China) and Malaysia (9%
each). Most of the FDI from Norway was in telecoms and from the United States in the
services sector (g.e. power generation, oil and gas, liquefied petroleum gas bottling,
medicare service). Investments from Asia, particularly South, East and South-East Asia,
were concentrated in manufacturing.
• The major investors include ASE and Unocal (United States), BASF (Germany),
Cemexs (Mexico), Holcim and Nestle (Switzerland), Lafarge and Total FinaElf
(France), Taiheyo (Japan), Telenor (Norway) and TMI (Malaysia).
This is an example of how careful FDI statistics need to be interpreted, given the different ways in
which they are compiled.

According to the commitments made in the Mid-term Strategic Promotional Plan 2003-04 of
BOI, the first half yearly FDI Inflow survey of 2003 was undertaken by BOI in cooperation with
BEPZA. ThisReport, the second of its kind, presents the findings of the survey in detail.
FDI Inflow Survey Findings:
During January-June 2003, a total of US$ 287 million of FDI received in Bangladesh which is
71% higher than the corresponding period of last year.
a. FDI inflow by Components:
Total FDI inflow during January-June 2003 is US$ 287.667 million.
Equity is the major portion of the inflow constituting 59%.
Reinvestment stands for about 34% of the total investment.
Intra-company borrowing comprises of 7% of the FDI.

81
Figure 1: Distribution of FDI Inflow by Components

Reinvestment
34.03%
Intra-Company
Borrow ing
7.34%

Equity
58.63%

Table 2: Summary of FDI Inflow in Bangladesh during January-June 2003


BOI BEPZA Total
FDI Component Registered Registered
in million US$ in million US$ in million US$
1. Equity 126.316 42.339 168.655
a. Capital Machinery 52.219 29.528 81.747
b. Cash 74.097 12.811 86.908
2. Reinvestment 72.833 25.060 97.893
3. Intra-Company Borrowing 6.819 14.300 21.199
Total 205.968 81.699 287.667

FDI in the form of equity is significantly higher in BOI registered projects (61%) in
comparison to BEPZA projects (51%).
Table 3: Comparative Statement of FDI Inflow during Jan-June 2002 and
Jan- June 2003.
FDI Inflow FDI Inflow Periodic
FDI Component Jan-June' 02 Jan-June' 03 Growth
in million US$ in million US$ %
1. Equity 113.176 168.655 49.0
a. Capital Machinery 64.528 81.747 26.7
b. Cash 48.648 86.908 78.6
2. Reinvestment 26.072 97.893 275.5
3. Intra-Company Borrowing 28.910 21.199 -26.9
Total 168.158 287.667 71.1

The highest growth has been experienced in reinvestment marking 276%. It


definitely shows the confidence of the existing investors on the investment climate
and performance of the economy as a whole.
Growth in the equity (49%) was immensely contributed by increase cash inflow
(78.6%), which should be reflected in the country's Balance of Payment Statement.

82
b. Sectoral Distribution FDI:

The growth of manufacturing sector is evident from the findings of the survey.

Manufacturing continues to receive the highest FDI (74.6%).

A tremendous growth in the manufacturing sector indicates prospective growth of the


industry in the upcoming years. It will also facilitate creating job opportunities and
SME development.

Textile is the highest recipient of FDI (33.69%) followed by chemicals (30.43%).


Textile sector is largely contributed by the garments in EPZs. However, chemical
sector is largely contributed by cement (60%) followed by garment accessories. A
detail study on cement sector of Bangladesh is available in BOI quarterly newsletter
"Bangladesh Investment Review", Vol. 1, Issue 1, published for the period April-
June 2003.

Figure 2: Sectoral Distribution of FDI Inflow During Jan-June 2003

Telecom Energy & Gas


13.4% 10.6%
Others
1.4%

Manufacturing
74.6%

Energy and gas sector has sharply declined (only 10.6%) to attract FDI during this
period. Given the present utility infrastructure situation of the country and projecting
faster growth of industry in coming years, energy and gas could be attractive sector
for investment in future.

83
Table 4: Sectoral Distribution of FDI during Jan-June 2003.
BOI BEPZA Total Sectoral Sectoral
Sector Registered Registered Share RANKING
In million US$ In million US$ In million US$ % Position
a. Manufacturing 133.309 81.170 214.479 74.56 -
Textile 31.096 65.820 96.916 33.69 1
Chemicals 78.056 9.490 87.546 30.43 2
Agro-based 16.663 - 16.663 5.79 4
Engineering 2.585 4.750 7.608 2.64 5
Food & allied 3.392 - 3.392 1.18 6
Tannery & Rubber 1.244 1.110 2.354 0.82 7
b. Service 72.013 0.130 72.143 25.08 3
Telecommunications 38.500 - 38.500 13.38 a
Energy & Gas 30.527 - 30.527 10.61 a
Power Generation 6.747 - 6.747 2.35 a
Oil & Gas 22.182 - 22.182 7.71 a
LPG Bottling 1.598 - 1.598 0.56 a
Other Services 2.986 0.130 3.116 1.08 a
Computer Software 0.771 - 0.771 0.27 a
Others 2.215 0.130 2.345 0.82 a
c. Miscellaneous 0.646 0.399 1.045 0.36 8
Total (a+b+c) 205.968 81.699 287.667 100% 100%
a. Not ranked separately Included in Service Sector.

Telecommunication has emerged as the 3rd largest sector having huge growth potential in the
reformed environment of telecom sector.
c. FDI Inflow by Sources:
European Union and Western Europe; South, East and South East Asia; and North America are
the main sources of FDI in Bangladesh.
Europe as a whole is the largest source (44%) of FDI in Bangladesh during January-
June 2003. This was mainly geared up by French investment in cement sector.
South, East and South East Asia is the second largest source (39%) of FDI led by
Hong Kong (13.94%), South Korea (10.62%) and Malaysia (9.28%).

Figure 3: Distribution of FDI Inflow by Sources

Japan & Ot her Develpoed


3%

Sout h, East & Sout h East European Union


Asia 41%
39%

West Asia & Ot hers Ot her Europe


Nort h America
3% 6%
8%

84
European investments spread over manufacturing and service sectors like textile,
cement, agro chemical, leather goods, drugs and pharmaceuticals, tele-
communication, LPG bottling, lubricants, power generation, industrial gas etc.
Investments from South, East and South East Asian nations like China, Hong Kong,
India, Malaysia, Pakistan, Singapore, Sri Lanka, Taiwan and Thailand are
concentrated on manufacturing sectors.
Investment in EPZs:

Tables 8.7 and 8.8 provide data relating to the number of operational industries,
investment, manpower and export of the six EPZs at Dhaka, Chittagong, Comilla,
Mongla, Uttara and Iswardhi. Up to June 2003, 180 industrial units were operational in
the sixteen zones with a total investment of US$ 634.04 million. Of the operational units,
23 percent were RMGs and 10% textiles. A total of 1,28,917 local manpower have been
employed in these industries. Goods valuing of US$ 1077.02 million were exported from
the Zones during 2001-02, which account for 18 percent of national exports. During
2002-03 the amount of export was US$ 1200.22 million which is 18.33 percent of total
export.
Table 8.7: Number of Units, Investment and Employment in Operational Units
under EPZ (up to June, 2003).
Products No. of Total Manpower Manpower Total
Units Investment (Local) (Foreign) Manpower
(Million US$)
Garments 42 178.681 64,260 312 64,572
Textile 18 133.407 12,168 162 12,330
Terry Towel 15 22.953 5,216 10 5,229
Knit & Other Textile 15 53.455 19,004 281 19,285
Garments Accessories 17 30.852 1,408 20 1,428
Caps 7 31.687 9,442 97 9,539
Tent 3 10.351 4,218 16 4,234
Electrical & 11 39.324 2,152 18 2,170
Electronics
Footware & Leather 11 45.624 5,459 11 5,470
Metal Product 9 15.276 469 10 479
Plastic Goods 11 16.886 1,294 5 1,299
Paper Product 2 0.787 120 0 120
Fishing Real & Golf 1 31.582 901 1 902
Rope 2 5.748 301 2 303
Service Oriented 4 3.780 338 2 340
Industries
Agro Product 2 0.570 294 1 295
Miscellaneous 10 13.080 1,870 10 1,880
Total 180 634.039 1,28,917 958 1,29,875
Source: BEPZA

85
Table 8.8 : Annual Investment and Export:Dhaka,Chittagong, Mongla,Comilla,
Uttara and Iswardhi EPZs (1994-95 through 2002-2003)
(In million US$)
EPZ 1994-95 1995-96 1996/97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

Investment 8.26 14.45 31.01 26.24 35.45 19.80 24.05 32.01 59.14
Dhaka Amount
Export 41.28 73.22 119.45 185.64 259.58 364.72 447.51 466.76 554.79
Amount
Chittagong Investment 27.67 16.13 22.89 42.59 36.11 14.18 24.30 22.37 42.14
Amount
Export 186.98 263.8 343.31 450.41 452.12 526.01 620.35 680.70 641.28
Amount
Mongla Investment 0.00 0.00 0.00 0.00 0.00 0.00 0.045 0.43 0.11
Amount
Export 0.00 0.00 0.00 0.00 0.00 0.00 0.048 1.55 2.99
Amount
Comilla Investment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.64 1.05
Amount
Export 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.012 1.15
Amount
Uttara Investment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.16 0.20
Amount
Export 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - -
Amount
Iswardhi Investment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.50
Amount
Export 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - -
Amount
Total Investment Amount 35.93 30.58 53.90 68.83 71.56 33.98 48.41 55.71 103.13
Total Export Amount 228.26 337.02 462.77 636.05 711.69 890.82 1067.87 1077.03 1200.22
Source: BEPZA

86
CHAPTER-9
STATE OWNED ENTERPRISES

State Owned Enterprises (SOEs) still continue to have the major stake in industry, power, gas,
transport, communication and service sectors of Bangladesh economy. Although in keeping with
the changed circumstances a range of reforms including privatisation in public enterprises are
well in progress, the contribution of these enterprises is still substantial in GDP, value addition,
employment generation and revenue earning.
Coverage and scope of SOEs:
This chapter analyses economic and financial statistics of 44 non-financial autonomous
entities in the country. According to the Bangladesh Standard Industrial Classification
(BSIC), 44 non-financial public corporations have been grouped into seven sectors as
follows:
Sector No. of Title of enterprises
enterprises
Industry 6 Bangladesh Textile Mills Corporation (BTMC), Bangladesh Steel and Engineering
Corporation (BSEC), Bangladesh Sugar and Food Industries Corporation (BSFIC),
Bangladesh Chemical Industries Corporation (BCIC), Bangladesh Forest Industries
Development Corporation (BFIDC), Bangladesh Jute Mills Corporation (BJMC).
Power, gas and 5 Bangladesh Oil, Gas and Mineral Resources Corporation, Bangladesh Power
water Development Board (BPDB), Dhaka Electric Supply Authority (DESA), Dhaka
Water and Sewerage Authority (WASA), Chittagong Water and Sewerage
Authority.
Transport and 11 Bangladesh Shipping Corporation (BSC), Bangladesh Inland Water Transport
communication Corporation (BIWTC), Bangladesh Biman Corporation, Bangladesh Road Transport
Corporation (BRTC), Chittagong Port Authority, Mongla Port Authority, Chittagong
Dock Workers Management Board, Mongla Dock Workers Management Board,
Bangladesh Telecommunication Regulatory Commission (BTRC), Bangladesh Land
Port Authority and Jamuna Multipurpose Bridge Authority.
Trade 3 Bangladesh Petroleum Corporation (BPC), Bangladesh Jute Corporation (BJC),
Trading Corporation of Bangladesh (TCB).
Agriculture 2 Bangladesh Fisheries Development Corporation (BFDC), Bangladesh Agricultural
Development Corporation. (BADC)
Construction 4 Rajdhani Unnayan Kartipakha (RAJUK), Chittagong Development Authority
(CDA), Rajshahi Development Authority (RDA), Khulna Development Authority
(KDA).
Service 13 Bangladesh Muktijoddha Kallyan Trust, Bangladesh Film Development Corporation
(BFDC), Bangladesh Parjatan Corporation (BPC), Bangladesh Civil Aviation
Authority, Bangladesh Small and Cottage Industries Corporation, Bangladesh Inland
Water Transport Authority (BIWTC), Rural Electrification Board (REB),
Bangladesh Export Processing Zone Authority (BEPZA), Bangladesh Power Loom
Board, Bangladesh Sericulture Board, Bangladesh Water Development Board
(BWDB), Bangladesh Tea Board and Export Promotion Bureau (EPB).
Note: This chapter has not included three Departmental entities viz., Bangladesh Railway, Telephone and Telegraph
Board (BTTB) and Postal Department and nationalised banks, insurance companies and other financial
institutions.

87
Net Profit/Loss:
Provisional accounts of 44 public bodies disclosed net loss of Tk.1533.56 crore in 2001-02. Net
loss projected for 2002-03 is 1026.81 crore. Profit/loss of these important entities projected for
2002-03 compared to 2001-02 are: Dhaka WASA (net profit will increase to Tk. 37.54 crore in
the FY 2002-2003 from Tk. 16.96 crore), Bangladesh Inland Water Transport Corporation (net
profit will increase to Tk. 16.14 crore in 2002-03 from Tk. 10.53 crore), Chittagong Development
Authority (It is projected that net profit will decrease to Tk. 0.54 crore in 2002-03 from Tk. 2.54
crore), BJMC (Net loss will decrease from Tk. 292.24 crore to Tk. 147.38 crore in 2002-03),
BCIC (net loss will decrease from Tk. 113.97 crore to Tk. 86.05 crore in 2002-03 ), Bangladesh
Gas,Oil and mineral resources corporation (Net profit will increase from Tk.198.44 crore to Tk.
252.58 crore in 2002-03) (Appendix Table 29).
Profit/Dividend Contribution to Public Exchequer:
All the SOEs together contributed Tk. 170.08 crore as profit/dividend to national exchequer
during 2001-02. It is projected at Tk. 240.10 crore in 2002-03. Among the major contributing
public enterprises during 2002-03, important ones are: Bangladesh Oil, Gas and Mineral
Resources Corporation (Tk. 150 crore), Chittagong Port Authority (CPA) (Tk. 50 crore),
Bangladesh Civil Aviation Authority (Tk. 20.00 crore), Mongla Port Authority (Tk. 4.00 crore),
Rajdhani Unnayan Authority (Tk. 3.00 crore) and Bangladesh Sugar and Food Industries
Corporation (Tk. 5.00 crore) (Appendix Table 30).
Government Grant/Subsidy:

A sum of Tk. 128.07 crore was provided as grant/subsidy to 11 public entities in 2001-02. It is
estimated to go upto Tk. 101.86 crore in 2002-03. Highest subsidy had gone to BJMC. These
entities received Tk. 53.60 crore in 2001-02 and Tk. 30.30 crore in 2002-03 as subsidy which is
10 percent & 5 percent of export value respectively (Table-9.1).

Table 9.1: Government Grant/Subsidy to SOEs


(1996-97 through 2002-03)
(In crore Tk.)
Corporation 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
BCIC 3.00 3.00 3.00 3.00 3.00 -
BSEC 0.10 0.10 0.10 0.10 0.10 0.10 0.10
BJMC - - 56.25 54.10 59.84 53.60 30.30
BIWTC 0.50 0.50 0.50 0.50 0.50 0.50 0.50
RDA 0.07 0.07 0.08 0.10 0.10 0.10 0.09
BFFWT 6.60 6.60 11.46 16.25 16.25 16.25 16.25
BIWTA 13.80 16.15 16.95 17.75 21.95 22.55 23.40
BSCIC 13.80 13.80 15.50 16.60 18.65 18.45 19.04
REB 18.00 16.00 14.00 12.00 8.00 8.00 8.00
BHB 3.00 3.00 3.32 4.04 4.17 4.05 -
BSB 2.18 2.18 2.91 2.93 4.17 4.47 4.18
Total 61.05 61.40 124.07 127.41 135.68 128.07 101.86

88
Debt Service Liabilities (DSL):
Recovery of DSL from 44 SOEs in 2001-02 amounted to Tk 1021.43 crore which is 45 percent of
total DSL of Tk 2271.02 crore. Total DSL of 44 SOEs for 2002-03 is Tk 2725.01 crore. Out of
which Tk.976.40 crore has been recovered up to June, 2003. DSL liabilities in respect of
Bangladesh Inland Water Transport Corporation, Chittagong Port Authority, Bangladesh Oil, Gas
& Mineral resources etc. are estimated to be higher in 2002-03 compared to 2001-02 (Appendix
Table-31).
Bank Credit:
The total outstanding credit of the 44 SOEs owed to public sector commercial banks as of
April 2003 stood at Tk. 7539.36 crore of which Tk. 995.00 crore (13 percent) is over due
loan. SOEs with largest outstanding credit are: BPC (Tk. 3216.87 crore), BJMC (Tk
2343.33 crore), BTMC (Tk.456.53 crore), BSFIC (Tk. 422.49 crore), PDB (Tk. 331.47
crore), BCIC (Tk. 212.60 crore), BSEC (Tk. 198.61 crore) and RUJUK ( Tk. 162.47
crore). The entities with largest amount of overdue loans are: BTMC (Tk. 446.85 crore),
BSEC (Tk.118.28 crore), BCIC ( Tk. 111.15 crore) and BJMC (Tk. 108.62 crore).

89
CHAPTER-10
POWER AND ENERGY
Power
Electric power is the key to development. Planned use of electricity is the prerequisite for
economic prosperity of any country. Its utilization is no longer confined to industrial sector only.
Now there is huge demand for electricity in the agricultural production as well. It is widely
recognized that the acceleration of growth in agriculture sector in Bangladesh in the recent time is
largely attributable to the contribution of electricity. The major organizations involved in power
generation, transmission and distribution activities in our country are Bangladesh Power
Development Board (BPDB), Rural Electrification Board (REB) Dhaka Electric Supply
Authority (DESA), Dhaka Electric Supply Company (DESCO) and Power Grid Company of
Bangladesh (PGCB). However the nationwide power production and utilization programmes are
being strengthened by involving the private sector. The avowed goal of the government is to
ensure access to electricity for each household by 2020. Upto June 2003, the total number of
consumer connection given by different agencies is 70,67,420 which covers 32 percent of the
population. The total length of transmission line (230 KV and 132 KV) is 3,859 km and length of
distribution line ( 33 KV, 11 KV and 0.4 KV) is 2,09,932 km,. The power sector achievements
upto June 2003 are given in Table 10.1:
Table 10.1: Power Sector Achievements of the Country (Upto June 2003).
Power Generation
Installed Capacity
(A) PDB 3,420 MW
(B) IPP and Others 1,290 MW
Total 4,710 MW
Maximum Power Generation
(A) PDB 2,375 MW
(B) IPP and Others 1,247 MW
Total 3,622 MW
Power Transmission
Transmission Line
230 KV 683 Km
132 KV 3,176 Km
Total 3,859 Km
Capacity of Grid Sub-station
230/132 KV 3,700 MVA
132/33 KV 6,995 MVA
Power Distribution
Distribution Line (33KV, 11KV and 0.4 KV) 2,09,932 Km
Total Number of Consumer 71 lakh
(A) Urban 24 lakh
(B) Rural 47 lakh
Number of Agriculture Consumer 1,35,000
Number of Village under Electrification 41,814
Percentage of Population under Electricity Facility 32%
Per-capita Power Generation 144 kilowatt hour
System Load Factor 64%
System Loss 25.69%
Source: Power Division

90
Power Generation Capacity and Demand
In FY 2001-02 total installed power generation capacity was 4260 mw of which the public sector
accounts for 3420 mw while the private sector generated the rest 840 mw. The construction of
450 mw Combined Cycle Power Plant in the private sector, that started commercial operation
from October 2002, raised installed capacity to 4710 mw in the current FY 2002-2003. This
includes 3420 mw in public sector and 1290 mw in private sector. In the public sector, a good
number generation units has become too old and has been operating at much reduced capacity.
Besides their reliability and productivity are also poor. For the last couple of years actual demand
could not be met due to the deficit in generation. Till June 2003 demand of electricity to the tune
of 3622 mw had been met.
Power Generation and Consumption
Total 17445 million kilowatt hour (mkwh) net energy, including 13674 mkwh in public sector
and 3771 mkwh in private sector, has been generated during FY 2001-2002. This power
generation was 7.32 percent higher than that of the previous fiscal year. Of the total net
generation public sector and private sector accounts for 78.38 percent and 21.26 percent
respectively. Of the total Power generation 90.66 percent was gas-based, 3.88 percent hydraulic
and 5.46 percent oil-based. The per-capita electricity generation was 129 kilowatt hour in 2000-
2001, which has been enhanced to 136 kilowatt hour in 2001-2002.
Total sale of electricity by PDB was 15243 mkwh in FY 2001-2002. Of this sale DESA and REB
sold 51.4 percent and 17.46 percent respectively and PDB sold 31.07 percent to its own retail
consumers. Upto June 2003 the total sale of electricity stood at 16331.587 mkwh .
Maximum Power Generation
Though the installed capacity has increased considerably but due to shortage of available
generation capacity, the actual demand could not be met in the past few years. Because of this,
even with maximum generation of 1672 mw in 1991-92, 2114 mw in 1996-1997, 2449 mw in
1994-1999,2665 mw in 1999-2000 and 3033 mw in 2000-2001, 3218 mw in 2000-2002, the
endemic power crisis in the country could not be solved. Up to June 03 maximum power
generation was 3622 mw and this is expected to increase further. Installed capacity, dependable
generation capability and maximum generation figures for the past few years are shown in Table
10.2.
Table: 10.2 Installed Capacity, Dependable Production Capacity
and Maximum Production
(m.w.)
Financial Year Installed Dependable Maximum
production production production
capacity capacity
1995-1996 2908 2105 2087
1996-1997 2908 2148 2114
1997-1998 3091 2320 2136
1998-1999 3611 2850 2449
1999-2000 3711 2645 2665
2000-2001 4005 3033 3033
2001-2002 4260 3300 3218
2002-2003 4710 3500 3622
Source: Bangladesh Power Development Board (BPDB), Power Division.

91
Graph 10.1: Cappacity of Power Generation and Maximum power Generation

5000

4000

3000

2000

1000

0
1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003

Installed production capacity Dependable production capacity Maximum production

Power Supply Situation


Due to the shortage of available generation capacity as compared to effective demand, the actual
demand could not be met for the last few years. Following implementation of various urgent
measures to improve the situation as well as commissioning of several new power plants, the
situation has improved considerably and the extent of load-shedding has also gone down
compared to the recent past. Currently, the extent of load shedding in the country is only 50-100
mw.
System Loss and Outstanding Accounts Receivable
BPDB is committed to reduce the system loss to an acceptable limit. Various measures are
underway to reduce the system loss. In FY 2001-02, BPDB's system loss (on net generation)
reduced to 12.62 percent from 13.85 percent in the previous year. As of June 03 it stands at 11.52
percent. Besides this, outstanding accounts receivable is a huge problem for BPDB. As of June
03, it stood at TK. 6410.67 crore which is equivalent to 11.52 bill month. Accounts receivable
and payable of BPDB during FY 1991-92 to 2002-03 is shown in Table 10.3.

Table 10.3: Accounts Receivable and Payable of BPDB.


Financial System loss (%of Net Receivable of Arrear Liability
Year/Month production) (Crore Tk.) (Crore Tk.)
1991-1992 28.3 446.37 ----
1992-1993 20.6 567.89 ----
1993-1994 19.2 795.25 ----
1994-1995 17.7 958.56 ----
1995-1996 17.0 988.97 ----
1996-1997 16.0 1227.01 ----
1997-1998 16.5 1684.33 ---
1998-1999 16.8 2321.01 ----
01-07-91 to June
1999-2000 15.4 2789.22 31-6-2000
Cumulative 4275.43
2000-2001 13.85 3354.99 630.35
2001-2002 12.62 3670.65 661.02
2002-2003 11.52 6410.67 716.20
Total outstanding
6579.67
Source: Bangladesh Power Development Board

92
The above table depicts that up to June, 2003 BPDB's total receivable for electric bill was Tk.
6410.67 crore and liability for DSL stood at Tk. 6579.67 crore.
Present Status of Power Transmission and Distribution
Transmission: Electricity generated from different power plants are transmitted through 230 kv
and 123 kv lines. Upto June, 1996 the lengths of 230 kv and 132 kv transmission lines were 419
kv and 2691 km respectively. In FY 2001-02, the lengths of 230 kv and 132 transmission lines
increased to 598 km and 3201 km respectively. In FY 2001-02, the number of 230/132 kv and
132/33 kv sub-stations stood at 9 and 75 respectively.
Distribution
Electricity is distributed in the country through 33 kv and 11 kv lines. In 1991-92 the length of
BPDB distribution lines was 32780 km which has been increased to 41656 km in 2001-02. The
length of distribution lines reached 43,059 km in June-03 (3.37 percent rise). The number BPDB,
of consumers increased from 1223964 to 1644755 (a rise of 34.37%) during the same period and
it rose to 16,95,416 (3.08 percent growth) in June -03.

Programmes Initiated for the Improvement of Power Supply Situation and Overall
Efficiency
A. Reform Programmes: Government is committed to implement reform programmes for the
overall improvement in the power sector. For the improvement of efficiency in generation,
transmission and distribution management, reform programmes have been taken up. Some of
them have already been implemented. At present the implementation status of reforms are as
follows:
1. Under the reform programmes of the government, Power Grid Company of Bangladesh
(PGCB) and Dhaka Electric Supply Company (DESCO) were created in 1996 under the
Company Act 1994. PGCB has taken over the total transmission system from BPDB in
December 2002.
2. Strategic Business Unit (SBU) programme have been brought under 47 distribution divisions
of BPDB and DESA. Following introduction of SBU programme, the system loss has reduced
and revenue collection has increased considerably.
3. Various actions are underway for the formation of 'West Zone Power Distribution Company'
under BPDB.
4. In order to improve the efficiency in the distribution sector, BPDB's 4 distribution zones have
been reorganized in to 8 zones. Besides, in order to increase the efficiency of the distribution
management, distribution circles are reorganised into Strategic Business Units (SBUs) along with
introduction of modern management. SBU system has already been introduced at Sherpur,
Jamalpur & Bogra. The performance of these units has been found satisfactory.
5. As part of the reform and restructuring of the power sector, the Cabinet has approved the
formation of the ''West Zone Power Distribution Company'' under BPDB in September 2002.

93
6. Programmes have been taken to introduce pre-paid metering system in BPDB at Chittagong
and Sylhet and in DESA at Lalbag to ensure an increase in revenue collection.
Future Programmes for Power Sector Reform
The long term goals to be achieved in the approved policy for power sector reforms are as
follows:
• To ensure electricity for all by the year 2020;
• To commercialise the power sector utilities in order to make them financially viable;
• To follow single buyer model for sale of electricity;
• To establish an independent Energy Regulatory Commission.
B. Development Programmes
As per the reference forecast of the Power System Master Plan prepared in 1995, the maximum
demand of electricity in 2005 & 2007 would be about 4595 mw and 5368 mw respectively. The
government has taken initiatives to install necessary new power plants gradually to meet the
projected demand along with achieving a reasonable reserve margin by FY 2007. In the mean
time, construction of Siddirgonj thermal power station and Barapukuria coal-based power plant is
under way.
Besides, "Bangladesh Energy Regulatory Commission Law 2002'' has been enacted to regulate
Power, Gas and Petrolium sector. The Government is implementing a range of programmes for
power generation and distribution which include, among others, conversion of BPDB into
separate companies under the Company Act, taking joint venture commercial loans alongside
Independent Power Producer (IPP), establishing power plants through self financing and through
collection of funds from public via stock exchange, continuing the expansion of electricity
distribution system through ''Palli Bidyut Samity'' under REB.
Regulatory Functions of Electrical Adviser And Chief Electric Inspector
The office of the Electrical Adviser and Chief Electric Inspector has been established under
section 36 of the Indian Electricity Act, 1910 for ensuring proper control in each level of power
generation, transmission, distribution, supply and use and safety of life and property. This office
plays active roles as specified in the Electricity Act and Electricity Rules, Films Act and Rules as
well as in revenue earnings.
Dhaka Electric Supply Authority (DESA)
To bring dynamism and establish transparency in the power sector DESA has been established
covering greater Dhaka in pursuance of the section-36 of article 4 of DESA Act, 1990.

DESA commenced its operation on 1st October 1991. The performance of electric distribution of
Dhaka has improved after the establishment of DESA. Before the creation of DESA, the system
loss of electric supply was 38.26 percent which decreased to 21.24 percent on an average during
the last fiscal year. Set out below is a table that shows system loss during pre-DESA and post-
DESA days.

94
Table 10.4: Statement Showing Reduction of System Loss.
Financial Year System loss (%)
Pre-DESA 38.26
1991-1992 (9 months) 35.55
1992-1993 31.20
1993-1994 31.33
1994-1995 30.00
1995-1996 29.47
1996-1997 27.29
1997-1998 27.89
1998-1999 24.84
1999-2000 25.72
2000-2001 25.68
2001-2002 25.05
2002-2003 21.24
Source: Dhaka Electric Supply Authority
Distribution: Length of Distribution Lines and No of Consumers

Graph 10.2: System Loss of DESA

45
40
35
30
25
20
15
10
5
0
91 SA
92 92
93 93
94 94
95 95
96 96
97 97
98 98
99 99
00 00
01 01
02 02

3
00
19 -19
19 -19
19 -19
19 -19
19 -19
19 -19
19 -19
19 -19
20 -20
20 -20
20 -20
19 DE

-2
e-
Pr

Purchase of Electricity and Revenue Collection


In the first year of establishment of DESA (1991-92), the electricity purchase was 2260 mkwh.
But in FY 2001-2002 it increased to 8306.07 mkwh. Revenue collection from electricity supply
has also increased substantially. At the initial stage of DESA, the monthly average revenue
collection was Tk. 35 core 56 lakh. But it increased to Tk. 1141.04 crore and Tk. 1553.82 in FY
2001-02 and FY 2002-03 respectively.

95
Table 10.5: Purchase and Sale of Electricity and Revenue Collection Since the Creation of
the DESA
Financial year Total power Revenue collection
Purchased (mkwh.) (Crore Tk.)
1991-92 (9 months) 2259.885 320.04
1992-93 3356.390 467.03
1993-94 3696.357 474.16
1994-95 4162.396 584.09
1995-96 4550.851 599.79
1996-97 4935.532 708.36
1997-98 5418.941 790.48
1998-99 5946.635 809.63
1999-2000 6504.047 1000.73
2000-2001 7240.456 1141.04
2001-2002 7833.191 1427.32
2002-2003 8306.079 1553.82
Source: Dhaka Electric Supply Authority.

Statement of Account Receivables and Payables


Every month DESA's collects 90 percent of the bills claimed. Since the establishment of DESA,
the cumulative amount of receivables stood at Tk. 1699 core upto June 2003. Of the total
receivables the shares of government institutions is Tk. 192 crore, autonomous bodies owe Tk.
276 crore and Tk. 1072 crore arrear is to private institutions. On the other hand, DESA has
substantial amount of debt to BPDB. DESA's receivables and payables (liabilities) are shown in
Table 10.5.
Table 10.6: The Account Receivable and Payable of DESA
Financial year Receivables Payables (crore Tk.)
(crore Tk.)
October/91 213.10 107.49
June/92 237.90 200.18
June/93 300.10 288.59
June/94 429.20 466.00
June/95 508.60 658.07
June/96 626.20 812.78
June/97 792.80 1022.33
June/98 998.10 1463.26
June/99 1244.19 2120.51
June/2000 1396.51 2616.21
June/2001 1480.73 3058.30
June/2002 1540.140 3430.33
June/03 1699.64 3707.37
Source: Dhaka Electric Supply Authority.

The above table indicates that up to June 03, DESA's receivable from customers was Tk. 1699.64
crore and payable to BPDB was Tk. 3707.37 crore.

Improvement of the Power Supply


To meet the increasing demand of electricity in Dhaka metropolitan city and greater Dhaka city,
following projects are under implementation for the improvement of the supply situation:

96
1. Greater Dhaka Power Distribution Project, Phase-IV. Under this Project, 45 km 132 kv,
transmission line would be installed.
2. 132 kv Siddirgonj-Maniknagar Transmission line 9.5 km;
3. 132 kv Haripur Ullon Transmission line 60 km.
4. Turn-in-off 132 kv Tongi-Ullon second circuit into Bashundhara, 132/33 kv substation.

Besides the above projects, several other projects are planned for implementation to meet the
increasing demand for electricity in the, Dhaka city, which include:

a) 132 kv Joydebpur-Kabirpur double circuit transmission line 15 km.


b) 132 kv Mirpur-Dhanmondi new double circuit underground line 15 km;
c) 132 kv Shampur -Maniknagar double circuit transmission line 24 km.

Apart from these, one consumer service desk in each division has been in place for the
improvement of consumer service. Besides, 4 vigilance teams have been working under the
supervision of the Chairman, DESA. To mitigate low voltage problem, 1337 set capacitor banks
have been installed in the system and installation of 250 set switch type capacitor banks is under
way.

In order to augment revenue collection, disconnection campaign is being conducted effectively


and for this purpose 4 Magistracy courts are running Mobile courts under DESA. Following these
measures, revenue collection has increased and if this trend continues, in near future DESA
would appear as a profitable organisation.

Dhaka Electric Supply Company (DESCO)

In order to lay greater emphasis on distribution management of electricity in the metropolitan city
of Dhaka, to enhance reliability of electricity supply, to improve customer service, to reduce
system loss to a reasonable level, to augment revenue collection and above all to bring dynamism
in the distribution and to run it commercially DESCO was formed on 3rd November, 1996
covering the areas like Mirpur, Pallabi, Gulshan, and North region of Dhaka. The company has
launched its operation since 24th of September, 1998 in the above mentioned areas. Relevant
statistics on the commercial activities of DESCO are presented below:

97
Table 10.7: Commercial Statistics of DESCO

SL.No. Description Oct’98 1998-99 1999-00 2000-01 2001-02 2002-03


1. Electricity Purchased (mkh) 42.48 344.80 546.71 627.56 673.09 855.78
2. Electricity Purchased (million 52.01 654.67 1041.60 1218.93 1354.51 1850.44
Taka)
3. % of Purchased (Tk./kw) 1.76 1.76 1.89 1.94 2.01 2.16
4. Sales of Electricity (mkh) 23.97 204.78 369.20 440.17 493.62 675.56
5. % System Loss 46.67 40.62 32.80 29.87 23.04 21.06
6. Electricity Sales (Million Tk.) 64.67 415.45 1066.76 1297.24 1470.03 2216.74
7. % of sell (Tk./kh.) 2.70 2.78 2.89 2.95 2.98 3.28
8. Bill Collection (Million Tk.) - 336.78 836.42 1041.80 1308.98 1642.66
9. Bill Collection Ratio (Million 65.55 86.85 76.11 88.33 90.70 74.10
Tk.)
10. CI Ratio 47.00 10.43 53.93 62.31 69.80 58.50
11. Number of Consumer 71.19 77.77 88.62 97.13 180.18 205.80
12. Liability to DESA(Million Tk.) 52.00 415.45 545.12 739.11 834.70 1185.66
13. Receivable from the consumers 64.67 231.66 462.000 717.44 878.50 1452.58
(Million Tk.)
Source: Dhaka Electric Supply Authority.

It could be observed from the above table that up to June-03 DESCO's accounts payable and
receivable stood at Tk. 875.50 and Tk. 1452.58 million respectively.

Rural Electrification Board (REB)

Since development of rural area is of vital importance for economic prosperity of the country,
rural electrification is one of priority programmes of the government. As enhanced consumption
of electricity is vital for acceleration of rural development that contribute to agricultural
development, establishment of rural enterprise, income generation, poverty alleviation and above
all upliftment of standard of living of the rural people, government has established REB in 1977
to ensure smooth supply & effective consumption of electricity. As one of the programmes for
development of the infrastructure, REB has attained phenomenal success in realising its
objectives through relentless innovative efforts.

Targets and Achievements of REB since 1991-92 to 2002-2003.

Rural electrification programmes have been showing a remarkable progress since its inception
and this has been widely appreciated at national and international levels. The following table
shows the physical target and achievement of REB. (up to June 03).

98
Table 10.8: Physical Target and Achievement of REB (1991-92-2002-03)
Financial Year Distribution line (Km) The number of consumer
connection.
Target Achievement Target Achievement
1991-92 2910 3528 94000 98632
1992-93 5115 5198 90900 89479
1993-94 5800 7280 109000 132158
1994-95 7260 8803 115000 243972
1995-96 9000 9749 140000 224355
1996-97 8440 10176 150000 262584
1997-98 10370 10467 300000 343870
1998-99 8325 9505 200000 373822
1999-00 10325 11408 300000 512445
2000-01 13750 12989 325000 504074
2001-02 14528 14641 350000 662641
2002-03 14922 16002 450000 650126
Total: 110745 119746 2623900 4098158
Source:-Rural Electrification Board (REB)

Graph 10.3: Target and Achievement of Distribution Line of REB

18000
16000
14000
12000
10000 Target
8000 Achievement
6000
4000
2000
0
19 -92
19 -93
19 -94
19 -95
19 -96

19 97
19 -98
19 -99
20 -00
20 -01
20 -02

3
-0
-
91
92
93
94
95
96

97
98
99
00
01
02
19

The REB is an infrastructure development agency of the government of Bangladesh and as such,
the entire financing of the REB programme comes from the ADP allocations. REB purchases
electricity from BPDB and sells it to the consumers. During 1991-92 to 2002-03 physical
achievement of distribution line exceeded by 8.13 percent and the number of consumer
connection exceeded by 55.42 percent compared to the physical target. The statistics of electricity
purchased and sold to consumers by REB up to June '03 have been shown in the following tables:

99
Table: 10.9 Statistics of Purchase and Sale of Electricity by REB to Consumer.
Month/ Year Import of power Export power (sale/consume) mwh Average
(Purchased) mwh system loss of
2002-03 Domestics Industry Commercial Agriculture Total 67 PBSs ( %)
July-02 438264 167379 163189 21300 3984 356758 18.60
August-02 513571 178992 188036 23104 2929 393971 23.29
September 02 477659 186257 178667 23661 3474 393011 17.72
October 02 477673 184905 184938 23589 4172 398532 16.57
November-02 434628 160526 169610 21105 4200 356394 18.00
December-02 431422 163148 159167 21308 6480 351027 18.63
June-03 518200 206184 195703 26845 6811 436580 17.33
Source: Rural Electrification Board.

REB purchases electricity from BPDB and sells it to the consumers. REB has therefore liabilities
to the BPDB and has receivables from the consumers. REB's receivables and payables are as
follows:

Table-10.10: Accounts Receivable and Payable Amount of REB.


Financial year Receivable (TK. in 000.) Payable (Tk. in 000)
1991-92 380,137 80,587
1992-93 366,248 91,225
1993-94 379,285 106,546
1994-95 503,615 142,900
1995-96 556,828 162,764
1996-97 742,639 191,454
1997-98 912,511 236,839
1998-99 1271,428 343,741
1999-00 1493,264 442,747
2000-01 1864,124 580,795
2001-02 2349,959 767,100
2002-03 2687,117 1049,579
Source: Rural Electrification Board.

The above table shows that up to June'03 REB's receivables amounted to Tk.268.71 crore and
payable amounted Tk. 1049.57 to BPDB.
New Projects under Implementation within REB

Several projects have been undertaken as part the of goal of the government to supply electricity
to every region of the country by 2020. Included among them are: intensification and expansion
of Distribution System of PBS, System Loss Reduction of Acquired Lines, Rural Electrification
through Solar Energy, Construction of REB Training Academy Complex, Area Coverage Rural
Electrification Phase V-C and Environmental Assessments and Management Training for Rural
Electrification Programmes in Bangladesh etc. These will be a remarkable achievement in
electrification of remote areas once these projects are implemented.

100
Activities for Development and Expansion of Information Technology

So far payroll softwares have been installed in 20 PBSs Computerized systems already exist in all
the 67 PBS to generate financial and statistical reports. In addition, computerized billing systems
have already been installed in 15 PBSs. The quality of consumer service would be improved
through introduction of computerized billing system in the existing 67 PBSs in phases.
Private Sector
Of late private sector has been participating increasingly in power generation, transmission and
distribution activities in Bangladesh. Although the major part of electrification activities is still
performed by the public sector, the participation of private sector is undoubtedly encouraging
even though it is yet in limited scale. The role of the private sector has been discussed in Chapter-
14 of the Review.
Fuel
Natural gas is a very vital fuel resource in Bangladesh, which meets the demand of about 70
percent of commercial fuel use of the country. Up to June 2003, total number of explored gas
fields in the country is 22. In these fields, there is an estimated gas reserve of 28.76 trillion cubic
feet of which the estimated recoverable reserve is 20.42 trillion cubic feet. Up to June 2003,
cumulative actual gas production is about 5.09 trillion cubic feet. As of June 2003, the net total
recoverable gas reserve was 15.32 trillion cubic feet .The following table shows the total gas
reserve in the country:
Table-10.11: Total Gas Reserve in the Country.
(Billion cft)
Gas field Total Reserves/Recoverable Cumulative Balance reserve
reserves/proven production (June '03)
and probable) (up to June'03
Production
Bakhrabad 1432 1002 617.986 384.014
Habigonj 5139 3854 1036.851 2817.149
Jalalabad 1256 879 133.331 745.669
Kailastilla 2720 1931 303.653 1627.347
Meghna 159 111 31.370 79.630
Narsingdi 111 77 43.927 33.073
Rasidpur 2002 1401 287.966 1113.034
Sylhet 486 479 171.609 307.391
Sangu* 1049 734 221.336 512.664
Salda Nadi 200 140 29.186 110.814
Titas 7300 5110 2110.135 2999.865
Beani Bazar 243 170 18.348 151.652
Not yet in
production
Begumgonj 46 32 - 32.000
Fenchugonj 404 283 - 283.000
Kutubdia* 861 603 - 603.000
*Semutang 665 465 - 465.000
Shahbajpur 174 122 - 122.000
Bibiana 3145 2202 - 2202.000
Moulvi bazar 500 350 - 350.000
Suspended
Chatak 474 332 26.500 350.500
Kamta 38 27 21.100 5.900
Feni 165 116 39.510 76.490
Total: 28767 20420 5092.808 15327.192
Source: Energy & Natural Resource Division,
Ministry of power, Energy and Natural Resources

101
At present, gas is being produced from the 54 wells of 12 gas fields. These are Titas (14 wells),
Bakhrabad (14 wells), Hobiganj (10 wells), Rashidpur (7 wells), Kailastilla (4 wells), Sylhet
(1well), Narsingdi(1 well), Meghna (1 well), Shalda river (2 wells), Sangu (4 wells), Jalalabad (4
wells) and Biani Bazar (2 wells). Kamta, Chatok, and Feni gas fields are now abandoned after
longtime utilization. In FY 2001-2002 and 2002-03 actual gas production was 391.53 and 421.15
billion cubic feet respectively.

Natural gas is the key energy source of Bangladesh are used for power generation, fertilizer
production and commercial, industrial and domestic purposes. The following two tables depict
sectorwise use and demand of natural gas.
Table: 10.12: Sectorwise Demands for use of Natural Gas.
(Billion cft.)
Sector/ Gas Sale Total
year production Power Fertilizer Industry Tea Seasonal Commer Domestic sales
Garden cial
1990/91 172.708 82.556 54.173 12.651 0.750 0.003 2.931 10.529 163.593
1991/92 188.362 88.105 61.642 12.670 0.678 0.604 2.939 11.646 178.284
1992/93 210.885 93.212 69.202 14.228 0.660 0.740 2.395 13.496 193.933
1993/94 223.765 97.491 74.435 17.975 0.689 1.043 2.710 15.628 209.971
1994/95 247.191 107.453 80.456 22.532 0.621 1.139 2.877 18.918 233.996
1995/96 265.664 110.967 90.978 25.583 0.727 0.994 2.996 20.709 252.954
1996/97 260.916 110.864 77.848 28.827 0.712 0.091 3.287 22.770 244.399
1997/98 281.946 123.451 80.002 32.475 0.743 0.030 3.462 25.201 265.364
1998/99 307.881 140.837 82.730 35.779 0.710 0.347 3.652 27.183 291.238
1999/00 331.247 148.865 84.900 41.978 0.671 0.347 3.827 28.945 309.533
2000/01 372.688 175.267 88.431 47.990 0.668 0.438 4.065 31.855 348.714
2001/02 391.530 190.029 78.785 53.564 0.726 0.531 4.250 36.739 364.642
2002/03 421.15 190.54 95.89 63.75 0.74 0.524 4.55 44.79 400.81
Source: Source: Energy & Natural Resource Division,
Ministry of power, Energy and Natural Resources

Graph 10.4 Sectorwise Demands for Use of Natural Gas in 2002/03


Commercial
1.14%
Domestic 11.18%
Tea Garden
0.18%
Power 47.54%
Seasonal 0.13%

Industry 15.91%

Fertilizer 23.93%

102
Table 10.13: Sectorwise Demand for Natural Gas.
(Billion cft)
Sector 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007
(Actual)
Power 179.9 210.00 227.90 234.05 447.10 259.30
Fertilizer 90.7 94.20 106.70 107.14 110.70 112.10
Domestic 33.6 43.48 49.30 55.09 63.05 77.50
Commercial 5.1 5.80 5.95 6.20 6.80 7.50
Industry 52.2 39.55 59.50 72.5 86.4 95.0
Tea garden 0.69 0.74 0.77 0.80 0.82 0.85
Brick field 0.47 0.50 0.54 0.58 0.73 0.76
System loss 22.4 13.78 11.75 10.52 9.66 7.79
Total 391.53 408.06 462.41 486.78 525.26 560.80
Source: Energy and Mineral Resource Division;
Ministry of power Energy and Mineral Resource.

Exploration of new gas fields and the development of discovered gas fields are very important to
meet the huge demand for gas use. The country has been divided into 23 blocks for quick
exploration and expansion of gas resource. Foreign investment has been allowed in this sector
under production sharing contract (PSC) on favorable terms. As a result, encouraging response
has been received from several international oil companies. So far 12 production sharing
contracts have been signed under the first and second production contract bidding. Relevant
information on this has been presented in the following table.

Table- 10.14: The Agreement for Gas Exploration under Production Sharing Contact (PSC).

International Oil Company Exploration Area


Block
Unical Bangladesh Limited 13,14 Greater Sylhet Zone
Prior Occidental Exploration of
Bangladesh Ltd.
Unical Bangladesh Ltd. 12 Greater Sylhet Zone
Prior Occidental Exploration of
Bangladesh Ltd.
Shell Bangladesh Exploration and 15,16 Feni, Greater Chittagong district,
Development Building Kayran Energy. and Bay of Bengal.
Tullow Bangladesh Ltd. /Chevron 9 Gazipur, Norshingdi, Comilla,
Texaco/Bapex Chandpur.
Unical Bangladesh Ltd./Bapex. 7 Barisal, Potuakhali and Bay of
Bengal.
Shell Hydrocarbon Holdings Ltd./Kayarn 5,10 Luxmipur, Noakhali, Bhola,
Energy/Bapex. Satkhira, Bagharhat and Bay of
Bengal.
Source: Energy and Mineral Resource Division
Ministry of Power Energy and Mineral Resource.

103
Meanwhile, one of the companies has been able to discover one gas field (Sangu) in the Bay of
Bengal and production from Sangu gas field started under PSC arrangement since 1998. Another
company has been able to discover gas fields at two new places (Bibiana and Moulbi Bazar)

Several projects are under implementation to meet the increasing demand of gas. Among them,
important ones are Third Natural Gas Development Project in collaboration with ADB, Sreekail
Oil and Gas Exploration Well Drilling Project, Development of Sahabajpur and Fenchuganj Gas
Field. Construction of 30 feet dia 54-km long Habigoj-Ashugonj Gas Transmission Pipeline
project has been completed recently to transmit the gas produced from north eastern part of the
country to Dhaka region and the other parts of the country. Besides, initiatives are being taken for
supplying gas to AES Haripur (360 mw) and AES Meghnaghat (450 mw) power plants under
private sector. Laying of the gas pipeline over Jamuna Bridge, facilitated extending pipeline upto
Ishwardi EPZ via Baghabari across the river Jumana. Supply of gas in Serajgonj town and
Baghabari power plant has commenced since December, '99. Expansion of gas distribution
network to Pabana and Ishwardi town is now under implementation. A plan to supply gas to the
western region of the country in phases through the expansion of pipeline network is under way.

Liquefied Petrolium Gas (LPG) and Compressed Natural Gas (CNG)

Annually 7000 thousand mt LPG is being produced from NGL of Kailastila Gas Field through
LPG plant. Besides, establishment of an NGL fractionation plant with 110 mt production capacity
is underway on government financing for producing LPG, motor spirit, high speed diesel,
kerosene etc by procuring NGL from the wet gas fields like Kailastila, Beanibazar & Jalalabad to
Ashugonj through pipelines. Moreover, 2 or 3 NGL fractionation plants are also being established
under private initiatives.

Conversion of the vehicles to the CNG driven ones is encouraged to prevent environmental
pollution. To support the use of CNG, 5 filling stations have already been set up. Establishment
of 26 filling stations under the Dhaka Clean Fuel Project and 6 CNG filling stations under the
CNG project to prevent environmental pollution are under implementation. It may be noted that
there is a plan to establish CNG stations in Dhaka city and adjacent to Dhaka and along the
Dhaka-Chittagong and Dhaka-Sylhet Highways. In addition, under the Dhaka 'Clean Fuel Project'
a provision has been made to import 300 CNG driven buses, 2000 CNG driven autorikshows and
10,000 conversion kits to convert petrol-driven cars under both public and private sector.

Programmes have been undertaken to establish 2 CNG workshops and to construct 97 km gas
pipelines to ensure supply of gas to the CNG stations in Dhaka city under the same project.
Alongside this arrangement, private sectors are being encouraged to establish CNG filling
stations simultaneously for which various incentives are being provided by the government. The

104
LPG and CNG projects are expected to diversify our fuel usages pattern and will contribute
towards conservation of nature and pollution control.

Coal and Hard Rock

Under mining sectors Barapukuria Coal Mining Project will be completed by 2004-2005 and one
million tons of coal will be extracted per annum from this project. Out of the extracted coal, 7
lakh tons of coal will be used in coal-based power station. Very recently (April 2003) Hon’ble
Prime Minister has inaugaurated the Coal Extraction Programme at Barapukuria. On the other
hand, Madhyapara Hard Rock Project will be completed by 2004-2005 and this would facilitate
extraction of 1.65 million tons of hard rock.

Fuel Demand and Supply System

Development and expansion of fuel reserve system, modernising and upgrading the fuel supply
system conforming international standard for international and domestic flights at Zia
International Airport and replacement of the main distillation column of Eastern Refinery Ltd.,
the only petroleum refinery in the country, have been completed. Apart from these, emphases
have been laid on development and expansion of fuel reserve system throughout the country so
that minimum 60 days' requirement can be meet. Total fuel demand for 2001-2002 was 33.15
lakh mt and total import was 32.93 lakh mt. Currently, total fuel stock capacity is 8.06 lakh mt.
The following two tables present the information on import of refined and crude petroleum
commodities by Bangladesh Petroleum Corporation (BPC) during 1990-91 to 2002-2003.

Table-10.15: Import of Crude Petroleum Commodities (1991-2003)


( crore Tk.)
Year Quantity C & F Price US$ crore TK.
1990-91 11,81,652 215.36 783.04
1991-92 10,17,764 147.63 570.40
1992-93 11,28,657 162.52 638.17
1993-94 12,39,038 149.94 599.20
1994-95 13,63,888 181.83 733.88
1995-96 11,40,334 153.42 639.23
1996-97 12,39,699 203.69 875.31
1997-98 11,44,048 151.56 714.10
1998-99 9,55,874 98.10 473.72
1999-00 12,36,049 218.68 1110.96
2000-01 13,37,121 290.73 1598.60
2001-02 12,24,707 220.19 1277.78
2002-03 13,30,585 281.68 1650.64
Source: Energy and Mineral Resource Division
Ministry of Power Energy and Mineral Resource.

105
Table-10.16: Import of Refinery Petroleum Commodities
(Quantity: Metric ton, Price: crore TK.)

JP-1 Kerosin , Petrol, Bitumen Lubricating oil


Year Quantity Price Quantity Price
1990-91 684441 688.99 26522 44.16
1991-92 805658 623.04 25771 34.99
1992-93 792131 607.81 28660 36.89
1993-94 916658 619.62 34274 45.15
1994-95 1114572 758.14 50262 81.09
1995-96 1466118 1125.07 39184 68.52
1996-97 1596567 1510.10 47638 64.98
1997-98 1734874 1275.04 39742 57.53
1998-99 2221872 1350.10 39961 45.62
1999-00 1823400 2021.43 50229.15 86.41
2000-01 2068913 2999.20 29918 69.34
2001-02 2072300 2535.62 15316 30.59
2002-03 2198450 3181.95 19.31 5.10
Source: Energy and Mineral Resource Division, Ministry of Power, Energy and Mineral Resource.

Financial Loss Against Fuel Import


Although there has been an increase in the fuel price in the international market, it was not
refixed along with the duty rate in the local market. As a result, BPC had to incur net financial
loss of Tk.1161.19 crore in 1999-2000, Tk.1311.23 crore in 2000-01 and Tk. 645.75 crore in
2001-2002. BPC will again incur net loss of Tk.1413.00 in 2002-2003 due to current rising trend
in fuel price in the international market. However this year, BPC is expected to provide revenue
to the tune of Tk.3165.18 crore to the government exchequer on account of customs duties and
taxes. BPC may face a deficit of Tk.146 crore according to the estimated budget for the 2003-
2004. It has also been estimated that BPC would provide revenue to the tune of Tk. 3447.81 core
to the government treasury against customs duties and taxes.
Reform Programmes:
Formation of Energy Regulatory Commission
In order to accelerate long term development in energy and gas sector in a competitive
environment, encourage private sector investment, protection of consumers interest, curb abuse of
monopoly and protect environment the Energy Regulatory Commission Act has been enacted.
The Commission will be formed under this Act. Included among the responsibilities to be vested
with this commission are: issuance of licenses to the gas operators, fixation of tariff and price for
gas transmission and distribution, protection of consumer interest and punishing those who
violate the Gas Act. With the establishment of the Energy Regulatory Commission it is expected
that public complaints against different Agencies having monopoly will be reduced and
consumers right will be protected properly.

106
Simplification of the Gas Connection Method
Previously the consumer had to submit 20 types of documents to get gas connection and had to
wait months after months. To eliminate the consumers sufferings, the existing gas connection
system has been simplified by the government.
Strengthening the Commercial Activities in Oil and Gas Sector
The present government has been opened import of lubricating oil, LPG, and transformer oil to
encourage participation of private and foreign investment in fuel sector. So lubricating oil from
world famous companies are being imported in the country now. Apart from this, many
entrepreneurs have come up to produce lubricating oil, through establishment of Lube Blending
Plant, establishment of LPG bottling plant and transformer oil production plants. Meanwhile
under the private sector initiative, 5 LP gas bottling and several transformer oil producing
factories have been set up. This has resulted in the savings of foreign currencies, capital
investment and creation of employment opportunities.
Autonomy, Transparency and Accountability
Administrative and financial autonomy has been granted to the three companies of Petrobangla
Titas Gas Transmission and Distribution Company Ltd., Compressed Natural Gas Company Ltd.
and Gas Transmission Company Ltd so that they can exercise all powers under the Companies
Act, 1994. Granting autonomy to other six companies is in progress. The Boards of Director of
these companies are being restructured by accommodating representatives from the private sector,
so that the representation from the consumers are ensured. The manpower of Petrobangla and its
subsidiary companies are being rationalised. Constant supervision and monitoring by the task
force formed to reduce system loss, disconnection of illegal lines, declaration of gas company
services as essential service, settlement of liabilities through courts and introduction of proper
billing system have brought remarkable successes. The top management of above 3 autonomous
companies will be appointed through competition.
Private sector
Private sector has also come up in the field of fuel supply. The role of this sector has been
discussed in Chapter-14 of the Review.
Conclusion
By 2050 the world energy usage will be doubled. Most of the growth would be in the developing
countries whose billions of people would escape from poverty. Despite the attainment of greater
efficiencies, demand from developed nations will continue unabated. Against this backdrop, we
have to prepare ourselves in advance and formulate long-term perspective plan and programme to
meet the future energy demand of the country.

107
CHAPTER-11
TRANSPORT AND COMMUNICATION

The contribution of transport and communication system is central to the prosperity of both the
developed and developing countries. A well-organized transport and communication network is
an indispensable for enhancement of production, efficient marketing of inputs and commodities
and maintenance of stability of prices all over the country. The present day realities characterized
by globalization and market economy, emphasise the critical need for evolving a developed and
well-knit transport and communication system which should be able to integrate Bangladesh with
the regional and international transport and communication network. Realizing this importance,
the concerned ministries and their agencies continue to exert their efforts to develop the system.

After independence there existed only a road network of 4000 km in Bangladesh. Over the last
three decades a huge road network of 2 lakh 23 thousand km has been built. This includes
national highway, regional highway, feeder roads and rural roads. Set out below is a table
showing the total road network as exists in Bangladesh:

Table: 11.1 Road Network in Bangladesh


Category Length Definition
(km.)
National highway (NH) 3144 Connecting national capital with divisional
headquarters, old district headquarters, port cities,
and international highways.
Regional Highway (RH) 1746 Connecting different regions with each other which
are not connected by national highways.
Feeder Road Type A (FRA) 15964 Connecting upazila headquarters and growth
centres with the arterial road system.
Feeder Road Type B (FEB) 19490 Connecting important growth centres/markets,
places of socioeconomic importance and the
upazila headquarters.
Rural Road Class 1 (RI) 65222 Connecting union headquarters/local markets with
upazila headquarters or road system.
Rural Road Class 2 (R2) 50880 Connecting villages and farms to local
markets/union headquarters.
Rural Road Class 3 (R3) 66147 Roads within villages.
Total 222593
Source: ‘A National Strategy for Economic Growth, Poverty Reduction and Social Development. (PP-97)
Note: The Information on the above table are based on data collected in 1998. 25000km roads constructed under the Food for Works
Programme is not included in this table.

Due to the phenomenal expansion of the road transport sector, its share in transporting passengers
and freight is increasing compared to the other modes of transportation. The modal shares of
different transport sectors in transporting passengers and freights are given below on the basis of
available data and information.

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Table-11.2: Trend in Transport Modal Shares
Year Passenger Freight
Billion Modal distribution (%) Billion ton Modal distribution %
Passenger km
km.
Road Rail Water Road Rail Water
1984-85 35 56 20 16 4.8 48 17 35
1988-89 57 68 17 15 6.3 59 11 30
1992-93 66 75 12 13 9.0 61 7 32
1996-97 72 73 13 14 10.0 63 7 30
Source: Planning Commission Bangladesh Integrated Transport System Study, June 1998 and ‘A National Strategy for
Economic Growth, Poverty Reduction and Social Development. (PP-95)

From the above table it is evident that the importance of railway and waterway in transportation is
on the decline. But railway & waterway are cheaper in transporting goods though there is a partial
risk in water transportation. It is therefore necessary to build a well- knit transport network by
combining the three modes of transportation by minimizing risk in waterway.

In the current FY 2002-03 an amount of Tk. 3902.36 crore has been allocated for transport and
communication sector in the revised ADP. In FY 2002-03,the contribution of this sector to the
GDP at constant prices is about 9.78 percent (provisional). The Local Government Engineering
Department (LGED) is also playing a vital role in the development of transport infrastructure.
Bangladesh has developed a transport and communication network that includes roads, railway,
water and air-transport as well, post, telecommunication and information technology. The
allocation of the transport and communication sector in the revised ADP of 2002-03 is shown in
the following graph:

Graph 11.1: Allocation of Transport, LGED & Communication sectors in


the revised ADP of 2002-03

Transport
19%
Communication
4%

Others LGED
62% 15%

109
Transport
Road transport

Roads and Highways Department (R & HD):

Among various modes of domestic transportation, road transport is most commonly used in
carrying passengers and freights. It has been observed from a survey, among the various surface
transports, road transport carries above 63 percent of freights in ton kilometers and 73 percent
passengers in passenger kilometers. According to a report of Roads and Highways Department, a
total of 20,799 km. roads of different types were under this department until middle of 2003 of
which 16274 km were paved road and 4525 km brick-soled and kucha road. In the above road
network, the shares of national highway, regional highway, and link roads were 3620 km
(17.24%), 4241 km. (20.20%) and 13138 km. (62.56%). Besides this, there were 4608 bridges of
different types having the length of 124 Km. and 5313 culverts with 35km. length under this
department. There were 100 ferry ghats at different points of road network under this department
for commuting 187 ferries of different types. In the last fiscal year, the quality of the roads had
been upgraded through development works and about three kilometer bridges had been
constructed. Hon'ble Prime Minister set a milestone in road development by inaugurating Nolka-
Hatikumrul Highway of 55 kilometer long on 10 May, 2003. Built with the assistance from
World Bank at a cost of Tk. 337 crore, this road has reduced one hour's distance between Dhaka
and the four districts of North Bengal viz; Rajshahi, Chapai Nowabgonj, Kustia and Natore. The
road network under the Roads and Highways Department combining different types of roads built
over a period from 1993-94 to 2002-2003 is given below:

Table- 11.3: Various Categories of Roads under Roads & Highways Department
Year (Up to the National Regional Feeder Road Total (km)
June, 30) Highway highway 'A' type
(km) (km) (km)
1994 2920 1687 11063 15670
1995 2920 1700 11450 16070
1996 2920 1700 12934 17554
1997 2920 1700 15656 20276
1998 3144 1746 15964 20854
1999 3090 1752 16116 20958
2000 3086 1751 15962 20799
2001 3086 1751 15962 20799
2002 3086 1751 15962 20799
2003 3420 4241 13138 20799
Source: Deptt. of Roads & Highways, The Ministry of Communication.

110
Local Government Engineering Department (LGED):
The organizational background of LGED can be traced back to early sixties when implementation
of Works Programme (WP) comprising Rural Works Programme (RWP), Thana Integration
Programme (TIP) and Thana Training and Development Programme (TTDC) was started. A
"Cell" was established under the Ministry of Local Government, Rural Development and Co-
operatives in the 1970s. To administer WP nation-wide, the Works Programme Wing (WPW)
was created in 1980. It was converted into Local Govt. Bureau (LGEB) in 1984. LGEB was
upgraded as the Local Government Engineering Department in August 1992. Implementation of
various infrastructure development projects particularly the project meant for construction of
rural roads, bridges/culverts, growth center/culverts, Union Parishad (UP) complex and tree
plantation are significant activities of LGED. During 1991-92 to 2002-2003, a total of 72237km
(45664 km Earthen road and 26573 km Paved road) Upazila road and Union road and 360415
meter bridge/culvert have been constructed. The programmes of LGED for infrastructure
development up to June of FY 2002-03 are shown below:

Table-11.4: Programmes of LGED for Infrastructure Development.

Activities Cumulative 1998-99 1999-00 2000-01 2001-02 2002-03 Cumulative


figure Since figure up to
1991-92 to June' 03
June, 98
Earthen Road (km) 14844 5888 5525 10102 4555 4750 45664
Paved Road (km) 11621 1946 2142 3870 3255 3739 26573
Bridge/culvert (m) 118876 34757 46448 67449 50882 42003 360415
Source: LGED.

A total of Tk. 2491.35 crore has been allocated for LGED in the revised ADP of 2002-03.
Allocation for LGED programmes during 2002-03 is shown below:

Graph 11,2: Total RADP Allocation of LGED for 2002-03

Maintenance
IFSP 6,70%
Water 7,75%
0,60%
Agriculture
2,73%

Education
13,33%

Transport
0,37% RD & I
61,63%
PPWS&H
6,90%

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Bangladesh Road Transport Authority (BRTA):
BRTA was set up for overall supervision, management and control of the transport sector. To
bring discipline and momentum in this difficult and sensitive sector, the organization has already
adopted following programmes:

Formulation of Polices and Laws: The draft land transport policy has been prepared which will
be issued after approval by the Government. A draft for a new and up-to-date motor vehicle law
has been framed to replace the existing Motor Vehicle Ordinance 1983.

Safety on Roads: In order to ensure safety on roads a 'National Road Council' has been formed.
Besides, a range of measures like discarding of old and defective vehicles, introducing
computerized vehicle inspection centre to assess the fitness of vehicles, installing weighing
bridge on roads, taking legal actions against unskilled drivers without license and similar other
measures have been adopted.

Mitigating Traffic Jam: In an attempt to mitigate the traffic jam in the city of Dhaka movement
of all 2-stroke three wheelers and old bus/track of 20/25 years have been prohibited. These and
other effective measures have improved the traffic jam situation in the city.

Measures to Control Pollution of Environment


To control pollution, two stroke three-wheeler vehicles have been withdrawn, use of CNG motor
vehicles has been enforced and the age of imported reconditioned motor vehicles has been
reduced from five years to four years. The table below shows the revenue income by BRTA
during 1991-92 to 2002-03:
Table 11.5: Revenue Income by BRTA from Motor Vehicles Tax and Fees during 1991-92
to 2002-03.
FY Target Revenue Income Rate of
collection (%)
1991-92 40,00,00,000 40,14,54,000 100.36
1992-93 47,00,00,000 50,60,61,000 107.67
1993-94 60,00,00,000 63,25,51,000 105.42
1994-95 85,00,00,000 75,23,13,000 88.51
1995-96 110,00,00,000 92,76,98,000 84.36
1996-97 130,00,00,000 106,22,15,000 81.71
1997-98 110,00,00,000 95,67,20,000 86.97
1998-99 125,00,00,000 87,26,52,000 69.81
1999-00 150,00,00,000 99,95,60,000 66.64
2000-01 120,00,00,000 121,31,70,000 101.10
2001-02 145,11,62,000 173,45,67,000 119.53
2002-03 2250000000 2222630000 98.78%
Source: BRTA, The Ministry of Communication.

Jamuna Multipurpose Bridge Authority (JMBA):


Development of physical infrastructure is extremely essential for economic advancement of a
country. Jamuna Multipurpose Bridge is an important addition to the existing physical

112
infrastructure of the country. With the opening of the bridge for traffic on 23 June, 1998 link
between the northwestern part of the country and the capital has become much closer. This bridge
is playing an important role in the economic development of the country. Currently, the rate of
vehicular movement through this bridge is higher than predicted. As the rate of traffic movement
is increasing, so is income augmenting from the bridge. Toll collected by Jamuna Multipurpose
Bridge Authority (JMBA) during 1997-98 to 2002-03 is given below:
Table-11.6 Toll Collected by JMBA

FY Target Collection Rate of Collection (%)


1997-98 1,06,88,720 99,68,555 93.26
1998-99 54,17,35,660 58,81,37,280 108.56
1999-00 66,03,35,860 64,77,30,388 98.09
2000-01 78,09,55,120 81,14,89,160 103.91
2001-02 84,94,54,160 91,99,89,952 108.30
2002-03 95,03,39,120 107,02,26,067 122.62
Source: Jamuna Multipurpose Bridge Authority .

Ongoing work of setting up rail line on both sides of Jamuna Bridge is scheduled to be
completed. Once completed, the capital city of Dhaka will be connected with northwestern region
of the country through direct rail link. Alongside setting up rail and electricity line, gas line has
also been setup over the bridge. Gas is currently being supplied at Sirajgonj town and work on
laying of gas pipeline to Baghabari Power Plant has been completed. As gas and electricity are
supplied to northern region of the country, fuel crisis has been partially solved which in turn is
helping to maintain environmental balance. Furthermore, if gas is supplied to these areas it will
facilitate conversion of oil based power plants into gas based system and thus reducing cost of
production of electricity. It may be mentioned here that the Planning Commission has conducted
a study entitled "Study on Northwest Region" to bring about overall economic development of
the northwestern region of the country. The study has made several important recommendations.
Once these are implemented, this will hold out the opportunities for massive development of
agricultural and industrial sector in the backward northwest region. Besides reducing
unemployment, this would play a greater supportive role in bringing overall economic
development.

Other Initiatives for Buildings Bridges:


It is necessary to construct a bridge over the river Padma as the latest step of establishing direct
and systematic communication link between southern region of the country and the capital city of
Dhaka. The government has therefore taken a decision to build a bridge over the river Padma
through a project. Before implementing the project, a primary techno-financial study was initiated
in November 2001. Following this a detailed study has begun in full swing since 18 April this
year. With the inauguration of Shikerpur-Dohareka Bridge on 8 April this year, communication
between Barisal- Jahalokathi and Khulna has improved.

113
With the gradual increase of developmental work in Dhaka and expansion of the city, the present
government, in order to establish better communication link with the adjoining areas has decided
to build Mukterpur Bridge over the river Dhaleshwari on Dhaka- Munshigonj road with the
financial assistance from the Chinese Government. The Mukterpur Bridge will be a remarkable
addition to physical infrastructure of Bangladesh. The project, if implemented by 2006-07, will
improve the quality of life and the socio-economic condition of the people which will eventually
help reduce poverty.

Dhaka Transport Co-ordination Board (DTCB):


In the absence of a separate organisation for transport development work in the Dhaka
Metropolitan area, no notable improvement took place in the transport sub-sector. Development
partners also did not come forward to assist in development of transport infrastructure of the city.
Today, traffic jam in Dhaka is alarmingly dangerous by any standard. The Government has set up
"Dhaka Transport Co-ordination Board (DTCB) " by an Act of Parliament in 2001 to overcome
the situation. Its fundamental objective is to develop a planned and environment- friendly
transport system in close cooperation between the public and private sector. To achieve its
objectives, the institutional capability of the organisation will be strengthened and a long-term
transport plan will be prepared.
The ongoing "Dhaka Urban Transport Project" is being implemented by DTCB. It is the only
major aided project for Dhaka Metropolitan area. The World Bank funded US$ 177 million for
this project. The total cost of the project is estimated at Tk. 942 crore. The project commenced in
1998-99 and is expected to be completed by June 2004.

The principal objectives of the project include among others increasing speed of the vehicles by
improving arterial roads and 40 other intersections, construction of Tongi bypass as well as 80 km
main roads, construction of Gabtoli, Mohakhali and Sayedabad bus terminals, development of 40
km footpaths for the pedestrians, construction of under pass and development of signalling
system and improvement of flood damaged roads.

Bangladesh Road Transport Corporation (BRTC):


To establish a sound transport system, BRTC was established in 1961 by an Ordinance. Its main
objectives are:
(a) To ensure a cheap, speedy, secured, comfortable and modern transportation system;
(b) To help develop non-government transport system;
(c) To play an important role in controlling the transport quality and transport fare;
(d) To develop skilled manpower in transport sector through training;
(e) To play a strategic interventional role for a sound and organised transport system.
Although this organisation remained a losing concern for many years, it has now been able to
infuse dynamism, skill and discipline in management and other areas following several reforms.
Income and expenditure statement of BRTC during 1997-98 to 2002-03 are shown below:-

114
Table 11.7: Income and Expenditure Status of BRTC during 1993-94 to 2002-03.
(in lakh Tk.)
FY Income Expenditure Operational Interest & Net Profit
Profit (+)/loss (-) Depreciation (+)/ loss (-)
1993-94 2159.56 2040.83 118.73 1327.44 (1208.71)
1994-95 2385.97 2064.77 321.20 1225.48 (904.28)
1995-96 2292.53 2122.67 169.86 741.10 (571.24)
1996-97 2715.21 2336.91 378.30 993.45 (615.15)
1997-98 2627.79 2372.36 255.43 972.41 (716.98)
1998-99 3068.76 2544.65 524.11 1434.60 (910.49)
1999-00 3281.98 2706.19 575.79 1803.87 (1228.08)
2000-01 3703.41 3038.53 664.88 2841.56 (2176.68)
2001-02 4656.24 3238.08 1418.16 4169.18 (2751.02)
2002-03 6269.45 4336.99 1932.46 5613.64 3681.18
Source: BRTC, Ministry of Communication.

Rail Transport
Bangladesh Railway:

The contribution of railway is critical to the economic development of the country. Its importance
is immense in transporting of production inputs as well as the produces for proper marketing at
cheaper cost. At present, the total railway route is 2768.37km (BG 936.25 km and MG 1832.12
km). This will increase to 2791 km on completion of setting up dual guage track (from Jamtail to
Joydevpur) on Jamuna Bridge. The following statement depicts the overall activities of
Bangladesh Railway:

Table 11.8: Overall Activities of Bangladesh Railway


No Particulars 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

1. Passenger traffic km 3333.25 3753.61 3855.50 3678.00 3940.69 4209.00 3972.00 4024.21
(million)
2. Goods traffic ton km 689.02 782.43 803.85 896.40 777.10 907.88 951.82 951.99
(million)
3. No. of Rail Engine 272 284 275 279 268 277 277 275
4. No. of passenger 1277 1249 1264 1287 1282 1275 1272 1273
coaches
5. No. of freight wagons 13817 12773 11943 11152 10929 10778 10631 10605
6. No. of other coaches 153 152 146 139 137 136 135 137
7. Revenue earnings (crore 284.09 330.64 350.91 475.60 341.50 366.39 388.40 420.10
Tk)
8. Revenue expenditure 401.59 414.17 433.36 461.15 469.86 523.88 535.48 624.74
(crore Tk.)
Source: Bangladesh Railway, Ministry of Communication.
*PSO and welfare grants are included.

From the above table, it is evident that passenger and goods traffic of railway have been
increasing but the number of freight wagons is declining. On the other hand, railway could not

115
make itself a profitable organization due to excessive revenue expenditure even though the
revenue earning is increasing.

Box 11.1: Recovery Programme of Bangladesh Railway

A recovery programme aided by ADB has been introduced to make the organisation
profitable. The following are the five elements in the reform programme:

(1) Significant deficit reduction;


(2) Termination of open-ended subsidies;
(3) Labour rationalisation;
(4) Institutional reforms;
(5) Adoption of rational investment programme.

Water Transport

Chittagong Port Authority (CPA):


Chittagong port is the principal sea port of Bangladesh occupying the key position in handling
maritime trade of the country. About 80 percent of import trade and 75 percent of export trade are
handled through this port. Upto June 2003 in FY 2002_03,18.32 million metric tons of goods
have been imported and 2.26 million metric tons of goods have been exported through this port.
With the accelerated economic growth of the country and government policy of trade
liberalisation, cargo handling at Chittagong Port has been increasing steadily. Due to the gradual
rise in the number of containers arriving at the port, the Port authority has been implementing
various programmes in phases for development of infrastructural facilities and for procurement of
handling equipment for containers and containerised commodities. A sum of Tk. 4264.00 lakh
has been allocated for 4 investment projects in 2002-03. Statistics of income and expenditure of
the CPA during 1991-92 to 2001-03 are shown below:

Table-11.9: Income and Expenditure of CPA during FY 1991-02 to 2002-03.


(In Crore Taka)
Expenditure (except
FY Income the contribution in Surplice
Govt. treasury)
1991-92 168.74 120.19 48.55
1992-93 187.58 143.44 44.14
1993-94 205.56 157.13 48.43
1994-95 260.40 196.32 64.08
1995-96 315.86 223.46 92.40
1996-97 324.31 213.33 110.98
1997-98 345.22 242.72 102.50
1998-99 374.51 262.17 112.34
1999-00 421.81 295.17 126.64
2000-01 477.00 302.28 174.72
2001-02 531.37 396.10 135.27
2002-03 530.66 373.36 157.30
(Provisional)
Source: Chittagong Port Authority, Ministry of Shipping.

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Against the backdrop of rapid expansion of sea trade and consistent with the expanding economic
growth of the country, steps have been taken to put in place required facilities including modern
equipment to ensure port services of international standard and operational efficiency of the port.
As a result, the average waiting time for ships at the port is reducing .On the other hand, the
container capacity within the port has increased manifold as a result of construction of new
Yards. Meanwhile, the business of stevedoring and clearing and forwarding agents has been
given to the private sector. The private sector has also been involved in handling various
equipment. In addition, the CPA has launched a separate web-site of their own to transmit
information about the Chittagong Port to the outside world.

Mongla Port Authority (MPA):

Mongla is the second largest seaport of Bangladesh. About 13.30 percent export through sea route
and 11.08 percent import and export are handled through this port. In the FY 2002-03, 14.50 lakh
metric tons of goods have been imported and 3.51 lakh metric tons of goods have been exported
through this port. During the same period,171741 metric tons containerised cargoes have also
been handled. Revenue income and expenditure of this port during 1991-92 to 2002-03 are shown
below:
Table 11.10: Revenue Income and Expenditure of MPA during 1991-92 to 2002-03.
(in Lakh Tk.)
Year Revenue Income Revenue Expenditure Net profit Increase/decrease rate over
the previous years (%)
1991-92 5629.70 3329.69 2301.01
1992-93 5630.21 3431.45 2198.76 (-) 4.44%
1993-94 5103.24 3566.35 1536.89 (-) 30.10%
1994-95 6196.94 4164.55 2032.39 (+) 32.24%
1995-96 6461.86 4415.62 2046.24 (+) .68%
1996-97 6269.72 4566.65 1703.07 (-) 17.76%
1997-98 6827.54 4783.39 2044.15 (+) 20.03%
1998-99 7421.05 5048.23 2372.82 (+) 16.07%
1999-00 7876.11 5413.46 2462.65 (+) 3.79%
2000-01 7586.16 5504.44 2081.72 (-) 15.47%
2001-02 6461.80 5464.43 997.37 (-) 52.09%
2002-03 5490.75 5453.61 37.14 (-) 96.27%
Source: Mongla Port Authority, Ministry of Shipping.

To develop this port, Tk. 1265.00 lakh has been allocated in the ADP of 2002-03 for
implementing 2 projects. The lion share of our external trade is handled through Chittagong and
Mongla ports and the remaining smaller share of external trade is handled by the land ports and
the airways.

Bangladesh Shipping Corporation (BSC):


Bangladesh Shipping Corporation (BSC) was established on February 5,1972 by the Presidential
Order No. 10. Its major objective was to provide efficient shipping services in international sea
routes and also carry out international sea trade. Though BSC had no vessel at the time of

117
inception, it has now been able to build up a fleet at its own efforts as well as with government
support.. As on June, 2003, BSC has a mixed fleet of 13 vessels having carrying capacity of 1.96
lakh tons The fleet comprises of one container vessels, 10 multipurpose cargo vessels and 2
lighter oil tankers. Currently, BSC vessels are engaged in the following routes/services:
(a) Bangladesh-Pakistan/West Asian Gulf Services;
(b) Bangladesh /Singapore Feeder Service;
(c) Crude Oil Lighterage Service;
(d) Food Grain Lighterage Service;
(e) Chartering and Tramping Service;
Set out below is a table that shows gross income-expenditure and net profit-loss during 1991-02
to 2002-03:

Table-11.11: Statement of Income-Expenditure and Profit-Loss of BSC since 1991-92.

(In Crore Tk.)


FY Total Total Expenditure Net Profit Depreciation Profit/Loss
Income (including & Interest without
depreciation & depreciation &
interest) interest
2002-03 (Provisional) 207.62 207.44 0.18 20.65 20.83
2001-02 200.33 200.21 0.12 20.05 20.17
2000-01 212.59 225.49 (12.90) 24.72 11.82
1999-00 142.92 174.49 (31.57) 21.40 (10.17)
1998-99 153.96 183.93 (29.97) 20.87 (9.10)
1997-98 207.23 216.44 (9.21) 18.94 9.73
1996-97 206.84 232.03 (25.19) 37.79 12.60
1995-96 218.90 233.78 (14.88) 27.00 12.12
1994-95 212.57 225.45 (12.88) 28.58 15.70
1993-94 191.01 206.79 (15.78) 31.00 15.22
1992-93 185.65 202.89 (17.24) 39.75 22.51
1991-92 191.16 216.42 (25.26) 41.47 16.21
Source: Bangladesh Shipping Corporation, Ministry of Shipping.

Department of Shipping:
The prime objectives of this department are to ensure secured movement of domestic ships,
coastal fishing ships and ships bound for foreign destinations and to protect the trade interest of
Bangladeshi ships. The department therefore implements the provisions of ordinance made by
international organisations and also prepares its rules and regulations to ensure more safety in this
sector.
This department plays an important role in employment generation by providing training facilities
to seamen. Bangladesh is now included in the IMO white list as the Department of Shipping has
been able to revise its examination and certificate system as per international criteria. This has
resulted in expansion of employment generation opportunities for the Bangladeshi officers and
sailors.

118
Fees for registration and survey of inland and seagoing vessels, competency examination fees for
officers and sailors, light house dues, penalty for violations of shipping rules are the sources of
income of this department. Income and expenditure of the department during 1991-92 to 2002-03
are shown below:

Table- 11.12: Income and Expenditure Statement of the Department of Shipping during
1991-92 to 2002-03.
(In Crore Tk.)
Year Target of Revenue Revenue income Revenue
Revenue Income increase/decrease Expenditure
Income than target
1991-92 2.00 2.09 + 0.9 3.60
1992-93 1.85 1.97 + 0.12 1.69
1993-94 1.75 2.07 +0.32 1.59
1994-95 4.39 3.88 - 0.51 1.75
1995-96 2.36 2.06 - 0.30 1.78
1996-97 3.15 2.36 - 0.79 1.88
1997-98 3.15 2.78 - 0.37 2.36
1998-99 3.15 2.83 - 0.32 2.25
1999-00 3.32 5.07 + 1.75 2.36
2000-01 3.86 5.14 + 1.28 2.51
2001-02 3.36 6.46 + 3.10 2.52
2002-03 7.30 6.85 - 0.45 2.81
Source: Department of Shipping, Ministry of Shipping.

Bangladesh Inland Water Transport Corporation (BIWTC):


BIWTC is a service -oriented government- owned organisation which was established in the year
1972 under the Presidential Order 28. It is also the biggest inland water transport organisation. At
present, there are 215 vessels of this organization. Of which, 159 are commercial and 56 are
auxiliary vessels. Most of the vessels of the organisation are very old. Though the corporation has
to incur heavy expenditure for their repair and maintenance, it continues to provide its service in
transporting passengers, vehicles and goods for the sake of public interest. Currently, the
corporation offers the following services:

(1) Inland passenger service;


(2) Coastal passenger service;

(3) Ferry service;

(4) Cargo service.


In the FY2002-03, a total of 0.93 lakh tons of goods, 125.86 lakh passengers and 11.70 lakh
vehicles have been transported through these services.

BIWTC as a service- oriented organisation is continuing its coastal and inland service under
subsidy for the public interest. Although, it set out its journey as a loss making organisation, now

119
it has been able to augment its revenue by streamlining its management. A statement showing
income and expenditure of the corporation for the last ten years is presented below:

Table 11.13: Income and Expenditure Statement of BIWTC during 1992-93 to 2002-03.
(in crore Tk.)
Year Income Actual Operational Interest & Net Profit & Remark
Expenditure Profit (+)/Loss depreciation Net Loss
(-)
1992-93 60.84 53.49 +7.35 10.36 (-) (-)3.01
1993-94 65.47 57.91 +7.56 10.50 (-) (-)2.94
1994-95 72.18 58.15 +14.03 14.75 (-) (-)0.72
1995-96 73.89 59.48 +14.41 12.90 (-) (-)1.51
1996-97 86.75 64.64 +22.11 13.08 (+) (+)9.03
1997-98 85.58 65.06 +20.52 13.34 (+) (+)7.18
1998-99 68.64 61.21 +7.43 13.75 (-) (-)6.32
1999-2000 77.80 64.66 +13.14 14.38 (-) (-)1.24
2000-01 88.72 69.60 +19.12 16.18 (+) (+)2.94
2001-02 99.73 72.03 +27.70 17.18 (+) (+)10.52
2002-03 108.18 69.58 +38.60 21.52 (+) (+)17.52
(Unaudited)
Source: Bangladesh Inland Water Transport Corporation, Ministry of Shipping.

In 2002-03 two development projects at a cost of Tk. 1134.59 lakh has been included in the
ADP.

Bangladesh Land Port Authority (BLPA):

Trade volumes with the neighboring countries of Bangladesh through land routes have meanwhile
increased substantially. In view of the emerging needs to provide land port facilities to several
important land customs station in the border area, the "Land Port Authority Act 2001" was
passed. Under this Act, Bangladesh Land Port Authority has been established under the Ministry
of Shipping which started functioning since 14 June, 2001. It may be noted that since 1994, there
exists an arrangement for providing land port facilities to Benapole Land Customs Station
treating it as a unit under Mongla Port Authority. As export-import increased significantly,
facilities have been created for proper maintenance and management of Benapole Land Port,
considering its economic significance. Facilities have also been created in the India-Bangladesh
border customs check posts especially for those through which large volume of export-import
takes place. These are namely, Benapole, Darsona, Sona Masjid, Hilly, Burimari, Birol, Bhomra,
Bibir Bazar, Bangla Bandh, Akhaura, Tamabil, Haluaghat, Teknaf,. Among the land ports, the
Benapole Land Port is playing a significant role. In FY2002-03, 1724023 Metric tons of goods
have been transported through this port what is 29 percent higher than the previous year.

120
Once Bangladesh Land Port Authority becomes fully functional, regional and international trade
among Bangladesh, India, Myanmar, Nepal and Bhutan would be expanded. Improvement of land
ports will result in increase of trade volume, prevention of smuggling and reduction of evasion of
customs duty. It would also promote co-operation between government and private sector in
different areas of development. Private investment in the peripheral area of the country will
increase which will also augment Government revenue income. It has been decided that the above
12 ports will be built and directed on BOT basis through private initiatives. A study has been
conducted upon the proposed activities of land ports by utilising TK 16.00 lakh allocated by the
government. A feasibility study about establishing Teknaf land port has also been initiated by TK
16.00 lakh. Besides, construction of physical infrastructure along with land acquisition for
Bangla Bandh land port are going on by involving own resources of land port authority. Two
proposals for the expansion of infrastructure of Benapole land port has been placed under
Government finance.

Air Transport

Civil Aviation Authority (CAA):

To ensure quick and secured movement of foreign and domestic aircrafts in the Bangladeshi sky
territory, the CAA builds and maintains airports, air traffic, air navigation and installs
telecommunication services and provides other facilities for the passengers. As a member state of
the International Civil Aviation Organization (ICAO), the CAA as part of its responsibility is
putting in place necessary infrastructural facilities for movement of domestic and international
aircrafts. As the operation of the CAA is essentially technical in nature, it requires trained
manpower having special skills.

This authority is engaged in construction, direction and maintenance of airports to meet the
operational demand of domestic and international airlines. It is now maintaining 3 international
airports and 5 domestic airports. Apart from this, 1 domestic airport and 5 STOL ports have been
built for the convenience of airlines. Currently, Biman Bangladesh Airlines and GMG airlines are
operating their domestic flights on schedule. GMG airlines are operating in all domestic and
international airports. Biman Bangladesh Airlines are operating their flights in all domestic
airports except Barisal. Air Parabat is operating its seasonal flights in the southwestern airports.
Bismillah and Best Aviation are operating their cargo flights. Other than these, several private
airlines are planning to operate their flights in the STOL ports. Statistics on movement of
aircrafts, passengers and cargoes in the airports during 1993 to 2003 are presented below:

121
Table 11.14: Statistics on Movement of Aircrafts, Passengers and Cargoes in the Airports
during 1993 to 2003.
Sector/Traffic 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

a) Aircraft Movement
Domestic 43431 51422 51261 53784 56039 71405 77831 77950 77960 75846 38890

International 10048 11261 11882 12695 12763 12969 13007 15000 15050 15356 8410

Total 53479 62683 63144 66479 68801 84374 90838 92950 93010 91202 47300
(+) (+) (+) (+) (+) (+) (+) (+) (-) (+)
Increase/decrease (%) 17.21% 0.74% 5.28% 3.49% 22.63% 8.66% 2.33% 0.07% 1.94% 7.44%

b) Passenger
Movement
Domestic 751169 931020 893608 929207 913107 743312 1148120 1150000 1200000 1045147 514865

International 1376859 1450014 1625512 1734625 1868554 1916052 1912280 2203665 2408030 2604123 1316301

Total 2128028 2381034 2519160 2663872( 2781661 2659364 3000400 3353665 3608030 3649270 1831166
(+) (+) +) (+) (-) (+) (+) (+) (+) (-)
Increase/decrease (%) 11.89% 5.80% 5.74% 4.42% 4.40% 15.00% 9.58% 7.58% 1.14% 1..35%

c) Cargo Movement
Domestic 3526 1933 1337 1460 1209 1190 1243 1250 1300 2524 2850

International 47366 65740 70361 74606 79602 82338 84644 111097 112000 100666 53816

Total 50892 67673 71698 76066 80811 83528 85887 112347 113300 103190 56666
(+) (+) (+) (+) (+) (+) (+) (+) (-) (+)
Increase/decrease (%) 32.97% 5.95% 6.09% 6.23% 3.36% 12.82% 30.80% 0.09% 8.92% 9.55%
Source: Ministry of Civil Aviation & Tourism.

Biman Bangladesh Airlines (BBA):


Biman Bangladesh Airlines, the national flag carrier of the country, plays an important role in air
transportation by maintaining air links within the country as well as with other countries. In spite
of the downturn in the aviation market caused by the incident of September 11, 2001, Biman
continues its operational activities in the competitive market with limited resources.
Currently, there are 17 aircrafts of 5 categories in the existing Biman fleet. Biman is operating
flight services to 7 domestic and 26 international destinations through six DC 10-30, four A310-
300 air buses, two B737-300 boeings , three F-28-4000 and two ATP aircrafts.It is pertinent to
mention that Biman is on the process of selling its 2 ATP aircrafts.. Among international
destinations, Biman is operating its flights to 5 destinations in SAARC countries, 4 in South East
Asia, 2 in east and Far-East, 9 in the Gulf and the Middle-East, 5 in Europe and 1in North
America. Apart from this, for the last few years, Biman has been using the leased aircrafts for
carrying the pilgrims. But in 2002 and 2003, Biman operated these Hajj flights by its own
aircrafts and transported 20,602 and 24754 Hajj passengers. As a result, Biman could make
substantial savings in cost reduction.
Currently, Biman is operating joint freighter service with Uzbekistan Airways and Malaysian
Airlines. This has resulted in enhancement of its capacity of transporting cargo and in 2002,

122
Biman carried 754 tones cargo through joint freighter service. In addition, there exists Biman
service in Chittagong and Sylhet.
According to provisional accounts of FY 2002-03, Biman Bangladesh Airlines has incurred loss
to the tune of Tk. 61.20 crore (provisional). In spite of overall `increase in the growth of
passenger and cargo transportation, Biman could reduce its financial loss to the tune of TK.
61.20 crore in 2002-03, compared to the loss of TK. 79.13 crore in 2001-2002 through adoption
of cost reduction measures. Statistics on profit and loss of Biman during 1991-92 to 2002-03 are
presented below:
Table- 11.15: Income/Expenditure A/C of Biman Bangladesh Airlines during
1991-92 to 2002-03.
(in crore Tk.)
FY Revenue Income Revenue Expenditure Net Profit/ Loss
1991-92 788.99 754.22 34.77
1992-93 880.53 812.61 67.91
1993-94 968.00 904.06 63.94
1994-95 1068.18 1007.03 61.15
1995-96 1076.48 1054.11 22.37
1996-97 1144.41 1242.34 (97.93)*
1997-98 1280.30 1345.28 (64.97)*
1998-99 1330.13 1330.16 (0.03)
1999-00 1561.50 1551.99 9.50
2000-01 1721.12 1819.32 (98.20)**
2001-02(Unaudited) 1845.43 1924.56 (79.13)
2002-03(Provisional) 1981.54 2042.74 (61.20)
Source: Biman Bangladesh Airlines, The Ministry of Civil Aviation & Tourism.
* The main causes of loss during the FY of 1996/97 and 1997/98 were-purchase of two new A310-300 airbus and
payment of interest on loan taken for buying those aircrafts and depreciation of those aircrafts.
** excessive increase of expenditure for leasing aircrafts.

Box 11.2: Cost Reduction Measures of Biman


Biman has adopted the following cost reduction measures to improve its financial position:
(a) Reduction of lease rent through negotiation with the leasing company.
(b) Curtailment of frequency of the New York flights of Biman to reduce route expenditure.
(c) Reorganizing different routes to rationalise the flight operating cost.
(d) Decision on reduction of 25% manpower in the foreign stations of the Biman.
(e) Steps to reduce hotel fare by negotiating with the Hotel authorities where the crew are to
stay while staying abroad.
(f) Measures to reduce expenditure by negotiating with the Hotel authorities about their hotel
fare and food for the transit passengers.
(g) Steps to reduce operating cost of different canteens of Biman by contracting out to
private caterers.

Biman carried 418430 passengers in domestic routes and 1121484 passengers in international
routes in 2002-2003 which is 0.64 percent and 5.49 percent higher than the performance of 2001-
02. Overall growth rate of passenger transportation is 3.75 percent in 2002-03. During the same
period, cargo carriage of Biman has decreased by 10.98 percent in domestic routes but in

123
international routes, it has been increased by 12.19 percent than the previous year. Overall cargo
transportation has increased by 11.79 percent in 2002-03 compared to 2001-02.
Communication

Bangladesh T & T Board (BTTB):


The contribution of telecommunication system to socio-economic development of Bangladesh
cannot be overemphasised. Besides augmenting revenue earning of the Government, this service
plays a critical role at every stage of economic development through quick transmission of
information.
Despite resource constrains, development and modernisation of telecommunication system is
therefore necessary. In view of the increasing public demand, BTTB is relentless to develop &
enhance the quality of their service. The growth in the number of telephones, NWD circuits, and
foreign circuits during 1991-92 to 2002-03 is shown below:

Table 11.16 Statement of the Number of Telephone, NWD Circuit, and Foreign Circuits of
BTTB since 1991-92.
FY Telephone Increase/ NWD Increase / Foreign Increase/
decrease circuits decrease circuits decrease
1991-92 253,863 5,046 975 - 399 -
1992-93 269,492 15,629 8,999 8,024 416 17
1993-94 295,982 26,490 9,810 811 566 150
1994-95 314,980 18,998 10,649 839 954 388
1995-96 368,769 53,789 11,151 502 1,267 313
1996-97 440,491 71,722 20,695 9,544 1,609 342
1997-98 462,573 22,082 20,695 - 1,841 232
1998-99 474,322 11,749 23,185 2,490 2,081 240
1999-2000 579,794 105,472 22,832 (-) 353 2,302 221
2000-01 688,920 109,126 22,770 (-) 62 2,767 465
2001-02 746,078 57,158 29,016 6,346 3,327 560
2002-03 920993 174915 33781 4765 3700 373

Source: BTTB, Ministry of Post & Telecommunication.

G r a p h 1 1 .3 : T h e n u m b e r o f t e le p h o n e s o f B T T B o v e r t h e
y e a rs
Number of Telephone (in lakh)

10
9
8
7
6
5
4
3
2
1
0
-92

-93

-94

-95

-96

-97

-98

-99

-00

-01

-02

-03
1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

To provide services to the people, who do not have any telephone facility, card phone system has
been introduced throughout the country since 1992. The number of card phones in 1992 was 153

124
which increased to 1497 on January 3, 2003. Besides card phones, people from home and abroad
can establish communication with the remote areas through operator trunk dialing.
To introduce data communication system, BTTB has established package switching exchanges in
Dhaka, Chittagong, Khulna, Barisal, Sylhet, Rajshahi , Bogra and Mymensingh. Data Network is
being established for data communication on domestic and international routes. Besides this, Vsat
system has already been introduced which is able to connect directly with internet by satellite and
send data to the outside world. This results in holding out job opportunities for educated
unemployed through exportation of data and software. Recently, Vsat & Internet Services have
been made open to private sector.

'One Point Service Centre' has been established at Ramna and Gulshan of Dhaka to provide better
services to the subscribers. Besides this, BTTB has undertaken a programme for installation of
Small Digital Exchange at 92 Upazilas under RR programme to provide better service to the
subscribers at the Upazila level. Apart form this, digital exchanges are being installed in
additional 105 Upazilas and, 10 growth centers under "Installation & Expansion of Digital
Telephone Exchange in various District Headquarters of Bangladesh" project and under 3 other
projects, digital telephone exchange is being installed in 9 Upazilas. Under the "Installation of
Digital Telephone Exchange in Upazilas and growth centers" project recently approved by
ECNEC, digital telephone exchange will be installed in the rest of the Upazilas. The exchanges
are expected to be operational very soon. Besides NWD, ISD facilities can also be provided from
those places when they are operational. BTTB earns revenue by providing telecommunication
services. A statement showing revenue target, collection, expenditure & surplus during 1991-92
to 2002-2003 is given below:

Table 11.17: Revenue Target, Collection, Expenditure & Surplus of BTTB during 1991-92
to 2002-03.
(in lakh Tk.)
FY Target Revenue Revenue Surplus Achievement
collection Expenditure against target %_)
1991-92 52000.00 54233.27 24050.59 30182.28 104%
1992-93 61129.53 64818.10 28521.40 36296.70 106%
1993-94 75852.42 77230.36 26477.61 50752.75 102%
1994-95 94939.95 89110.69 28100.81 61009.88 94%
1995-96 90000.00 83731.85 29041.32 54690.53 93%
1996-97 120525.39 107248.46 57380.98 49867.48 89.36%
1997-98 147518.42 124518.38 72017.09 52501.29 84.41%
1998-99 138000.00 125424.81 61678.40 63746.41 91%
1999-2000 150000.00 140067.64 48648.31 91419.33 93.38%
2000-01 160000.00 126511.37 39045.39 87465.98 79.07%
2001-02 160300.00 158305.15 46354.09 111951.06 99%
2002-03 160000.00 154479.98 58843.12 95636.86 96.55%
Source: BTTB, The Ministry of Post & Telecommunication.

There has been a demand for corporatisation of BTTB from the private sector including
development partners since long. This should be examined for development of ICT sector.

125
Postal service
Bangladesh Postal Department (BPD):
Bangladesh Postal Department is one of the service-oriented departments of the Government.
There are 9859 post offices throughout the country. Of them 794 post offices are located in urban
areas while 9061 post offices in rural areas. Of the total number, 7 new post offices have been
established in 2002-03 throughout the country.

Internal mail
For quicker transmission of mail, post office has direct mail service between capital city and
district headquarters, between district headquarters and Upazilla headquarters. There exists
arrangements for carrying mails by air, railway, launches, boats, departmental runners and extra
departmental runners. Mails are also carried by departmental Mail Motor Service and by mail
contractors. Arrangements are there to deliver postal articles from capital city to district
headquarters and from district headquarter to Upazilla headquarters and to important post offices
on the second and third day. Mails are also carried by departmental mail vans. With the
infrastructure development and opening of Jamuna Bridge, exchange of mail with northern areas
has become quicker. New transports have been added to the departmental mail motor fleet.
Measures are being taken to carry mail quickly through departmental mail motors. Introduction of
Add mails, Bulk -mail service is under active consideration. Apart from this, several special
services have been introduced to meet the increasing demand of the clienteles.

Box: 11.3 Special Services of the Postal Department


Express Parcel Post (E.P.P.) Goods are transmitted within the country.
Granted Express Post (G.E.P.) Goods are carried and mailed by special arrangement.
Internal money order. Money is sent within the country.
Commemorative Stamp. On special days of the year stamps on different themes are
released.
International Mail. An arrangement for exchange of general and registered letters with
all countries of the world except Israel.
E-Post Service. A kind of E-mail service both within and outside the country.
Express Mail service. This service provides for very quick transportation of international
mail.
Intel Post Service. Messages, documents, letters, business documents are sent within the
country as well as 19 countries of the world with the help of facsimile machine.
International Money Order. The expatriate Bangladeshis can send money to Bangladesh
through this service.

126
Development of Postal Service
Despite resource constrains, the government is determined to develop and modernise the postal
department. Savings account and life insurance account of postal service have already been
computerised. Apart from this, the area of operation of every service is being expanded gradually.
Ten development projects of the postal department will be implemented in FY 2002-03.

Information and Communication Technology (ICT):


Information technology has revolutionised communication. In the current context of
globalisation and market economy, economic development is not possible without any substantial
progress in this sector. Against this background, "National Information and Communication
Technology Policies" have been declared in October 2002. Also to ensure smooth marketing of
IT products and services and to encourage foreign investment in IT sector formulation of an ICT
Act is in progress. By this time, the first ICT incubator in Bangladesh has been set up. E-
governance/E- government is inextricably linked to modern government activities. The
Government of Bangladesh has also taken initiative to introduce e-governance in order to
establish transparency and accountability. There is no alternative to computer literate skilled
people in developing information and communication technology in the country. Keeping this
objective in view, Bangladesh Computer Council provided 690 computers to the high schools and
implemented training programmes for the schoolteachers. In addition, the concerned Ministry has
also arranged a separate computer training programme for the teachers of secondary schools.

A project proposal is being prepared to build a high tech park on 231.68 acres government land
near Dhaka. All relevant infrastructure of information technology including transmission of high-
speed data will be developed here. This Ministry has set up an ICT Incubator in the BSRS
Bhaban at Kawran Bazar ,Dhaka. This area is being exclusively allocated to the ICT related
organizations in the Private Sector and entrepreneurs involved in software and IT enabled
services working for the markets both in home and abroad. High speed data communication and
dedicated power supply have been ensured in the incubator.

There are about 1500 private institutions all over the country providing computer education. But
the standard of computer education of these institutions has raised many questions. The Ministry
of Information and Communication Technology is going to assess the quality of education
delivered by these institutions in the light of the close dialogues with the representatives of
different organisations engaged in this sector. The objective of this assessment is to know the
level of competence of these institutions (in terns of skilled manpower, teaching staff, up to date
syllabus, appropriate education materials, appropriate environment etc.). Apart from this, an
expert committee has been formed to determine the ranking of these institutions comprising
Bangladesh Computer Council, BUET and Dhaka University. Once this is done, a list of the

127
institutions capable of imparting computer education will be published in different newspapers &
news media. As a result, the interested students and young people would be in a position to select
appropriate institution that suits their needs. Like other countries, information technology is being
considered as a potential economic sector in Bangladesh. Realising its importance, the
Government has declared it as a thrust sector. Government is, there fore, attaching top priority to
the computer education service. A work plan has been formulated to establish full-fledged
computer laboratories in 128 educational centers of 64 districts on the basis of 'one school one
computer' and 'one college one computer' in each district together with curriculum development
and implementation of training programmes. This plan is now under consideration of IT Task
Force. A total of Tk. 12.00 crore has been sanctioned in the current fiscal year as grants to the
scientists of the universities and Government research and development organisations for the
development of science and technology. In addition, Tk. 27.50 lakh has been sanctioned as grants
in the ADP of current fiscal year for innovation of small technologies , research and development
projects. Besides, in the current fiscal year, a programme of awarding fellowship to the
researchers of different universities including meritorious students under National Science and
Technology Fellowship Programme is under implementation and Tk. 45.00 lakh has been
allocated for this purpose.

The process of establishing an IT center in Bangladesh Computer Council has been initiated
under the financial assistance from the Government of Korea where the students will be awarded
Vendors Certificate. The Government of Japan has also agreed to provide necessary support to
this project. Besides this, a proposal for a survey programme on "IT Enabled services" with the
assistance from the German government is under consideration at Economic Relations Division
(ERD) and there is an initiative to hold discussion with the European Commission in order to
have European assistance in ICT sector of the country. After completing a survey on "IT Enabled
services in Bangladesh" through the JOBS project, USAID recently sent a report to the Ministry
of Science & Information and Communication Technology. There is an initiative to take
necessary actions after reviewing the report. Moreover, to meet the challenges of the 21st century
a project titled" Strengthening of Bangladesh Computer Council" has been taken up for necessary
infrastructure building. The second phase of "Establishment of Information Expansion Cell" in
the Ministry of Science & Information and Communication (MOSICT) is under implementation.

The Ministry has also allocated TK.150.00 million for 5 (five) public Universities (Dhaka
University, Rajshahi University, Khulna University,Bangladesh University of Engineering
&Technology and Shahjalal Science &Tecnology University of Sylhet).These Universities will
produce 900 Post Graduates (PDG) on ICT within three years (300 each year).A standard
syllabus for this PDG programme has been prepared by the ICT experts of these Universities
under the guidance and support of Bangladesh Computer Council (BCC) and MOSICT.

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CHAPTER-12
HUMAN RESOURCES DEVELOPMENT

Economic growth and human resources development is closely correlated. The cardinal goal of
human activities is essentially human resources development. Human development, in wider
sense, amounts to providing opportunities to the people for realisation of the potentials of a long,
healthy and prosperous life. A healthy, skilled and educated workforce plays an important role in
improving standard of living, reducing poverty and ensuring sustainable economic growth.
Human resources development is therefore an important segment of the overall development
agenda of the Government of Bangladesh.
Education, training, health and social welfare activities are the prime instruments for human
resources development. It is indeed critical to strengthen social sectors to carry out these
activities. In spite of our resource constraints, we need to channel more resources to this sector.
Expenditure in social sectors generates productive assets, both financial and physical, for the poor
that aid them to come out of the vicious cycle of poverty. Moreover, the social sectors have the
potentiality to generate higher value addition to the economy through creation of increased
opportunities for production, income and employment. In Bangladesh, so far, five Input-Output
Tables have been constructed for the years 1976-77, 1981-82, 1986-87, 1993-94 and 1999-2000.
All the tables indicate that investment in social sectors (eg. education, health) provide higher
value addition to the gross output compared to the national average and other sectors (Table
12.1). All UN member countries, in the declaration of the “World Summit on Social
Development” held at Copenhagen in 1995, reached a consensus that each country should
allocate 20% of the total public outlay for the social sectors. Following this declaration,
Bangladesh has been allocating more than 20% of the total government expenditure for the social
sectors. Set out below is a table (12.1) that shows the rates of value addition as percentage of
gross output by the social sectors.

Table 12.1: Rate of Generation of Value Addition in the Social Sectors.


Sectors Value Added as % of Gross Output
1976/77 1981/82 1986/87 1993/94 1999/2000
Education 94.86 96.69 97.71 70.26 71.29
Health 60.85 63.33 70.12 51.95 79.56
Others 64.09 62.48 62.08 50.67 50.05
National Average 64.47 63.03 62.76 50.94 50.78
Source: General Economics Division (GED), Planning Commission.

Table 12.2 and Table 12.3 show allocations under revenue budget and ADP allocations
respectively in social sectors during FY1991-92 through FY2002-03. Notably, in both cases,
allocations have substantially increased.

129
Table 12.2: Allocation in Social Sectors under ADP
(In crore Tk.)
Sector 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001-02 2002-03
1. Education and Religions Affairs 535 651 985 1553 1402 1584 1494 1776 2014 2285 2171 2591
2. Health and Family Welfare 558 630 772 946 893 1079 1166 1256 1469 1636 1443 1542
3. Social Welfare, Women Affairs
39 55 75 134 113 187 156 169 180 188 173 220
& Youth Development
4. Sports and Culture 20 37 55 70 31 60 66 52 85 112 79 91
5. Labour and Manpower 11 9 14 15 8 9 10 9 14 18 18 27
6. Sub-total (= 1+2+3+4+5) 1163 1382 1901 2718 2447 2919 2893 3263 3761 4239 3884 4470
7. As percent of ADP expenditure
16.3 17.0 19.9 24.4 23.4 24.9 23.7 23.3 22.8 23.3 24.32 26.14
(= 6/8X100)
8. Total ADP allocation 7150 8122 9564 11150 10448 11700 12200 14000 16500 18200 16000 17100
Source: Finance Division, Ministry of Finance and Planning Commission, Ministry of Planning. Figures are from revised budget.

Table 12.3: Allocation under Revenue Budget for Social Sectors


(In crore Tk.)
Sector 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001-02 2002-03
9. Education and Religions Affairs 1393 1688 1770 2023 2169 2321 2706 2988 3279 3614 3769 4008
10. Health and Family Welfare 431 516 607 685 730 769 813 887 972 1099 1286 1334
11. Youth, Sports & Culture 23 38 43 38 42 41 64 55 73 67 71 84
12. Labour and Manpower 15 19 19 21 22 22 27 28 31 35 25 42
13. Social Welfare & Women Aff. 51 54 61 73 79 89 99 141 177 203 229 283
14. Sub-total (= 9+10+11+12+13) 1913 2315 2500 2840 3042 3242 3709 4099 4532 5018 5380 5751
15. As percent of total revenue
24.2 27.2 27.3 27.6 25.7 25.9 25.6 24.4 24.6 24.3 23.7 22.7
expenditure (=14/19X100)
16. Total (Dev+Rev) (= 6+14) 3076 3697 4401 5558 5489 6161 6602 7362 8293 9257 9264 10221
17. As percent of total public
20.4 22.2 23.5 25.9 24.7 25.4 24.7 23.9 23.7 23.8 23.9 24.1
expenditure (= 16/(8+19)X100)
18. As % of GDP (= 16/20X100) 2.6 2.9 3.3 3.6 3.3 3.4 3.3 3.4 3.5 3.7 3.4 3.4
19. Total revenue allocation 7900 8510 9150 10300 11814 12535 14500 16765 18444 20662 22692 25307
20. GDP at market price1 119542 125370 135412 152518 166324 180701 200177 219695 237085 253546 273201 300485
Source: Finance Division, Ministry of Finance. Figures are from revised budget.

Following chart shows the share of allocation for social sectors against government allocation and
GDP respectively:

Chart 12.1: Government Allocation for Social Sectors since 1991/92 to 2002/03

30 4.0
As percent of

As percent of

25 3.5
expenditure

3.0
20
public

2.5
GDP

15 2.0
10 1.5
1.0
5 0.5
0 0.0
As% of public
19 2

19 3

19 4

19 5

19 6

19 7

19 8

19 9

20 0

20 1

20 2

expenditure
/9

/9

/9

/9

/9

/9

/9

/9

/0

/0

/0

/0
91

92

93

94

95

96

97

98

99

00

01

02

As % of GDP
19

Fiscal Year

1
According to new GDP series.

130
In the remainder part of this chapter Government’s programmes and achievements in the sectors
associated with human resources development have been reviewed.

Education
Education is one of the fundamental rights of every citizen of Bangladesh. It is also the principal
element of human resources development. Therefore, it is of immense importance to develop
human resources trained in science and technology through building up a universal and people-
oriented education system. Education sector, therefore, receives priority in the budgetary
allocation. But currently the lion's share of education expenditure incurred is on salary and
development of infrastructure. In order to ensure quality education, there should be proportionate
allocation for educational research and logistics in future. Considering investment in education as
one of the main strategies of national poverty reduction and socio-economic development, steps
have been undertaken to create equal access for all at all stages of education and improve the
quality of education. To this end, priority has been attached to primary and mass-education on
the one hand and appropriate programmes have been undertaken for the development of
secondary and higher education on the other.

With a view to maintaining and ensuring overall quality in education, various steps and
programmes have been formulated and executed. A Commission has been formed to formulate
national education policy. Grade system, has been introduced replacing Division system so that
students concentrate more on acquiring knowledge rather than competing for scores. Training on
educational research and educational management is being imparted through National Academy
for Educational Management (NAEM). In order to establish discipline in private sector of
education, initiatives are underway to form a Teachers Recruitment Authority similar to Public
Service Commission (PSC) for appointment, transfer, promotion, etc. of teachers of all schools
and colleges under Monthly Payment Order (MPO) scheme. Besides, among the schools under
MPO scheme, the government is duly reviewing the standard/quality of education of those
schools where majority of the students fail in the public examination. Initiatives have been taken
to amend the Private Universities Act 1992. Various measures have been undertaken to
implement different reform programmes supporting improvement of education. Programmes that
deserve to be mentioned include establishment of education training authority, establishment of
separate curriculum development board, decentralization of educational administration, expansion
and qualitative improvement of job-oriented education through providing more autonomy to
vocational and technical educational institutions, etc. In addition, meritorious students are being
provided with general scholarships while the students of vocational-technical education are
getting stipend. Department of Education Engineering is constructing new buildings along with
reconstruction and renovations of existing buildings of schools, colleges, madrashas, universities
and technical educational institutions for creating an improved educational environment.

131
The present education system of Bangladesh may broadly be classified into two stages, viz.
primary and post-primary. The post primary education is further categorised into secondary,
higher secondary and tertiary education. These streams consist of general, technical and religious
education. Secondary level is of five years and higher secondary level is of two years duration.
After completing higher secondary level, students enter into colleges and universities for higher
education. Post-primary education is managed by a number of agencies, such as, Directorate of
Secondary and Higher Education, Directorate of Technical Education, University Grants
Commission (UGC), etc. under the administrative control and supervision of the Ministry of
Education.
Primary education: Primary education is the first step in the education ladder. Realizing the
extreme importance of primary education, the government has attached highest priority to
primary and mass education. Primary education was made compulsory with the enactment of
Primary Education (Compulsory) Act in 1990. A programme for compulsory primary education
was launched all over the country since 1993. In order to universalise primary education,
“Primary and Mass Education Division” was established in 1992, which has been elevated as the
Ministry of Primary and Mass Education in January 2003. A variety of development programmes
in the primary and non-formal education sector have been undertaken to improve the quality of
education as well as to extend education at the doorstep of every citizen.
The government is committed to implement the programme to emancipate the country from the
curse of illiteracy by 2006. With a view to increase enrolment rate of children at the primary level
and to reduce dropout rate, Food for Education programme was launched in FY1993/94 in 460
unions of 460 upazillas (completed in June 2002). A programme for providing stipends to poor
students of the remaining 3,208 unions was introduced in April 2000. Stipend project for primary
education has been undertaken throughout the country for five years. About 55 lakh students from
all the unions of the country are now offered a stipend in lieu of food for education. Under this
programme, poor families are getting a stipend of Tk.100 and Tk.125 per month for sending to
school one and more than one child respectively. Besides, up to December 2002, construction of
4,040 community primary schools, reconstruction of 37,441 schools and repair works of 16,749
schools were completed. 3,299 community schools are now running and the rest 741 are awaiting
commencement.
The number of primary schools (government, registered non-government, non-registered non-
government and community schools) was 49,539 in 1991. It has increased to 62,116 in 2002.
Though the number of government primary schools remains nearly the same in number (about
37,700) during this time, the number of non-government primary level increased to 24,416 from
11,845. Besides, there are other types of schools such as Experimental, Ebtedaee Madrasa,
Kindergarten, NGO, Satellite and primary schools attached to High School and Madrasa.
Including all these types of primary schools the number increased to 78,363 in June 2002. The
number of female students in primary level has been increasing gradually. Enrolment ratio of
female/male student was 45:55 in 1991, which rose to 50:50 in 2002. The ratio of female/male
teachers is also increasing due to implementation of teachers recruitment rule provision of

132
appointing 60% female teachers in Government primary schools. The percentage of female
teachers was 21.09 percent in 1991, which has been raised to 37.86 percent in 2002. The
female/male teacher ratio was 28:72 in 1992, which rose to 39:61 in 2002. During the same
period, completion rate of the cycle of five years education increased to 67% from 40.7%.
Provision of equal opportunity, increase in enrolment, improvement of quality of education and
management at primary level have been ensured through implementation of various development
programmes during FY1991-92 through FY2000/01.
Primary Curricula have been revised to make it realistic and revised textbooks introduced for
grade I to V. A unified school hour and academic calendar has been fixed for all the primary
schools. Up to December 2002, 4,820 satellite schools for students of grades II and I have been
established under Satellite Schools Project. Under “Cub Scouting Extension Programme”, 24,500
cub groups have been formed, 73,000 learning materials have been distributed and 1,900 training
courses have been arranged up to January 2003 in order to accomplish the physical, mental and
moral qualities of the children. At present, there are about 6.25 lakh Cub Scouts in the country.
Subvention is being provided to the teachers of registered non-government primary schools and
community schools. The teachers of the community schools are awarded enhanced grants at the
rate of Tk.500 per month and teachers of registered non-government primary schools are given to
the tune of maximum 90% of the initial scale of the teachers of government primary schools.
The government has been implementing several development programmes for creation of
congenial environment in primary schools, expansion of physical facilities, upgrading
professional skills of teachers, improved lessons in classes, curricula improvement, development
of educational materials, strengthening of inspection system and development of innovative
programmes. As a result, there has been remarkable progress in primary education and the rate of
enrolment in primary schools has been increasing (Table 12.4).

Table 12.4 Student Enrolment at Primary Level2 (1990-2002)


(In lakh)
Year Total Boys Girls
1990 120.5 66.6 (55.3) 53.9 (44.7)
1991 126.4 69.1 (54.7) 57.3 (45.3)
1992 130.2 70.5 (54.1) 59.7 (45.9)
1993 140.7 75.3 (53.5) 65.4 (46.5)
1994 151.8 80.5 (53.0) 71.3 (47.0)
1995 172.8 90.9 (52.6) 81.9 (47.4)
1996 175.8 92.2 (52.4) 83.6 (47.6)
1997 180.3 93.6 (51.9) 86.7 (48.1)
1998 183.6 95.7 (52.1) 87.8 (47.8)
1999 176.2 90.6 (51.4) 85.6 (48.6)
2000 176.7 90.6 (51.3) 86.1 (48.7)
2001 176.6 89.9 (50.9) 86.7 (49.1)
2002 176.8 89.3 (50.5) 87.5 (49.5)
Source: Ministry of Primary and Mass Education

2
Figures in parentheses indicate percent.

133
In the ADP of FY2002-03, a sum of Tk.1,778.66 crore has been allocated against 26 projects of
the Ministry of Primary and Mass Education. Under 19 development projects during July 2002
through January 2003,164 schools have been constructed, 1,800 schools have been reconstructed
or repaired and 5,393 schools are under construction, reconstruction, repairing or extension
works.

Non-formal education: In order to attain remarkable achievement in literacy, basic education


and women education alongside the formal education system, non-formal education programme
under the joint initiatives of government and non-government agencies is being implemented.
Under non-formal education system, various programmes have been undertaken for the children,
adolescents and young adults who are deprived of formal education and also for those who are
illiterates. During FY2002-03, there are seven ongoing projects in this area. A total of 8.74 lakh
illiterates have been made literate under these projects during this year. Post literacy and
continuing education programme for the neo-literates is in operation in 935 "Gram Shikkha Milon
Kendro" (Village Education Center) so that they do not relapse into illiteracy due to lack of practice.
The rate of literacy has been increasing following these initiatives. The literacy rate of students of
15 or 15+ years of age was 47.3% in 1995, which has been raised to 65% in 2002 (Table 12.5).

Table 12.5: Recent Trend in Literacy (15 years and above)


Year Percent3
1995 47.3
1997 51.01
1998 56.00
1999 58.00
2000 64.00
2001 65.00
2002 65.00
Source: Ministry of Primary and Mass Education

Secondary and higher education: Emphasis has been given on qualitative improvement of
secondary education through improvement in science and technological education. Education in
information and communication technology has been given priority. Currently, there are 16,166
secondary schools, 2,427 general colleges, 7,651 madrasahs, 20 polytechnic institutes, 51
vocational training institutes, 4 BITs, 16 public universities, 22 private universities and a variety
of post-primary schools in Bangladesh. School enrolment is 77.47 lakh (female: 52.6%), college
enrolment is 17.26 lakh (female: 39.4%), and madrasah enrolment is 31.12 lakh (female: 39.4%).

In the ADP of FY2002-03, 66 development projects are under implementation in secondary and
higher education sub-sector at a cost of Tk.1,141.04 crores. 86.4% of this allocation are made
against 20 projects in secondary and higher secondary sector and 11 projects in technical and
vocational sector. In order to accelerate development in higher education, University Grants

3
Estimated.

134
Commission is implementing 20 development projects. These projects have been allocated
Tk.89.54 crores in FY2001/02. Among various development projects in higher education sector,
(1) Establishment of One Science and Technology University in each of the 12 greater districts
(where there is no university), (2) Introduction of SSC vocational course in Non-government high
schools in every upazila and (3) Modernization of existing 20 polytechnic institutes and
establishment of 18 new polytechnic institutes are worth mentioning.

Expansion of female education: Stipends for female students of classes VI-X in 460 upazilas are
being awarded since 1993 to promote female education, empower women and ensure
participation of women in development pursuits. This programme has been proved effective in
raising enrolment of female students at secondary level and preventing dropout as well as early
marriage. Tuition fees of female students up to class XII has been exempted for enhancing socio-
economic status and empowerment of women through massive expansion of female education.
Moreover, they are provided additional financial assistance for purchasing books as well as
payment of examination fees. At secondary and higher secondary level, 55.70 lakh female
students are getting assistance through five major stipend projects in the current fiscal year.
Different development projects such as, Female Secondary Stipend Project, Female Secondary
School Assistance Project (2nd phase) and Establishment of 3 Mohila Polytechnic Institutes at
three Divisional Headquarters are under implementation for ensuring women empowerment. A
project (1995-2005) entitled ''Promote'' is being implemented for recruitment of female teachers
in rural non-government secondary schools. Opportunities are being created for involving the
poor female students in education sector through these projects.

Health and Family Welfare


Health care is one of the basic rights of the people. Human resource development largely depends
on a well-developed health service system. This ensures sound health for building a healthy
nation that plays a critical role in economic development of the country. The past decade
witnessed a remarkable progress in health sector in Bangladesh. Both birth and death rates have
come down, average life expectancy has gone up and infant and maternal mortality rates dropped
substantially. Standard of health services, however, is still much below the level of many other
developing countries.

Expanded Programme of Immunization (EPI), control of diarrhoeal disease (CDD) programme,


arsenic and dengue prevention programme, prevention of acute respiratory infection (ARI)
programme have made useful contribution in reducing child mortality.

Population growth rate, child and maternal mortality rates etc. since 1991 through 2000 are
shown in Table 12.6.

135
Table 12.6: Recent Trends in Health Indices4
Indices Status 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Crude birth rate National
31.6 30.8 28.8 27.0 26.5 25.6 21.0 19.9 19.2 19.0
(per 000) Urban23.9 23.7 21.0 20.2 19.4 19.0 16.2 14.0 13.8 13.7
Rural32.9 32.2 30.0 29.1 28.5 27.8 24.5 21.0 20.9 20.8
Crude death rate National
11.2 11.0 10.0 9.0 8.4 8.1 5.5 4.8 5.1 4.9
(per 000) Urban 7.8 7.5 7.2 7.1 6.7 6.5 4.2 3.7 3.5 3.5
Rural11.4 11.3 10.4 9.3 9.0 8.8 6.5 5.4 5.4 5.3
Mean age at marriage Male 25.2 25.2 26.6 27.7 27.5 27.6 27.6 27.6 27.7 27.7
Female
18.1 18.2 19.6 19.8 19.9 20.0 20.0 20.2 20.3 20.4
Persons per physician 5380 5304 5156 4725 4866 4955 4915 4671 4439 4218
Average life National 56.1 56.3 57.9 58.0 58.7 58.9 60.1 60.6 67.6 68.2
expectancy Urban 60.2 60.5 60.6 60.0 60.9 61.2 62.3 62.5 70.5 72.6
Rural 55.8 56.0 57.5 57.7 57.5 58.2 59.4 59.9 66.7 66.6
Child5 Mortality rate National 92 88 84 77 71 67 60 57 59 58
Urban 69 65 61 57 53 50 49 47 46 44
Rural 94 91 88 79 78 76 69 66 63 62
Child6 Mortality rate National 13.6 13.2 12.6 12.1 12.0 11.8 8.2 6.3 5.7 4.2
Maternal7 Mortality National 4.7 4.7 4.5 4.5 4.5 4.4 3.5 3.0 3.2 3.2
rate Urban 4.0 4.0 3.9 3.9 3.8 3.8 3.1 2.9 2.6 2.6
Rural 4.8 4.8 4.7 4.6 4.5 4.5 3.8 3.4 3.3 3.3
Contraceptive prevalence rate 39.9 -- -- 46.3 48.7 -- 50.9 51.5 53.6 53.6
Fertility rate (per women) 4.2 4.2 3.8 3.6 3.5 3.4 3.1 3.0 2.6 2.6
Source: Bangladesh Bureau of Statistics

Chart 12.2: Trend of Maternal and Child Mortality

100 5

Maternal Mortality
80 4
Child Mortality

60 3

Rate
Rate

40 2
20 1
0 0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Year Child Mortality Rate
Maternal Mortality Rate

Health services aims at improving the health of the poor, women and children. The government
has taken various measures and development activities at union, district and national level to
develop an effective and proper health care services. It has been decided and steps have been
taken to construct new Union Health and Family Welfare Centres in 775 unions for providing
health and family planning services available at the doorstep of the people. Apart from this, it has
been planned to develop Union Health and Family Welfare Centres in 2,175 unions by 2003 for
improvement of health facilities and to provide quarters for the doctors in 100 centres.

4
Figures partly revised as per latest information from BBS.
5
Per thousand live birth
6
1-4 years (per thousand birth)
7
Per thousand delivery

136
64 Upazila Health Complexes out of 402 have been upgraded from 31 beds to 50 bed and the
construction works of 35 Essential Obstetric Care (EOC) centre has been completed. The number
of beds has been increased at different stages from 100 to 250 in 16 hospitals at district level. The
construction works of Shahid Ziaur Rahman Medical College having 500-bed hospital at Bogra is
in progress. The construction work of the 2nd Nursing College at Bogra and 6 Nursing Training
Centres at other places have been completed by 40% during the current fiscal year. Establishment
of four Trauma Centers in Mymensingh, Feni, Serajgonj and Faridpur is under implementation.
Upgradation of the National Cancer Hospital at Mohakhali by increasing the number of beds from
50 to 300, construction of the 2nd unit of Dhaka Medical College and the establishment of the
National Institute of Ophthalmology is also under implementation. Besides, 300-beds Shahid
Suhrawardy Hospital at Sher-E-Bangla Nagar, National Institute of Cardiology and Hospital,
National Institute of Kidney Diseases & Urology and Hospital, National Institute of Mental
Health and Hospital, Maternal & Child Health and Training Institute (MCHTI) at Azimpur, Child
and Mother Health Institute of international standard at Matuail, etc. have already been
established. Planned programmes have been undertaken massively for reducing the malnutrition
of the population of Bangladesh, especially for the women and children. 13,395 community
nutrition centres are now working in 59 upazilas under integrated nutrition programme. National
Nutrition Project (NNP) (July 2000 to June 2004) has been undertaken at a cost of Tk.640.97
cores to combat /eradicate the problem of malnutrition in Bangladesh.

As a follow-up of the health and population sector strategies approved by the Ministry of Health
and Family Welfare, a Five-year Health and Population Sector Programme (HPSP: 1998 to 2003)
has been formulated with a view to undertaking structural reform in health and family welfare
sectors for providing quality services to the people. This programme with a cost of Tk.15,314
cores would be completed by June 2003. Total estimated cost of the programme and its progress
up to February 2003 are presenteded in the following tables.

Table 12.7: Estimated Expenditure of HPSP.


(In crore Tk)
Implementation Total estimated Estimated non- Estimated expenditure under Total Allocation
period of PIP8 expenditure development development budget under HPSP up
9
under HPSP (Revenue + (Revenue) Total GOB Project to February’03
(1998 to 2003) Development) expenditure aid (Expenditure)
Original PIP 15314.34 5491.00 9823.34 5028.34 4795.00 7278.18
1st revised 12857.46 5694.24 7163.22 2311.31 4851.91 (4722.97)
nd
2 revised 11419.11 5403.21 6015.40 1590.50 4425.40
Source: Ministry of Health and Family Welfare.

8
PIP - Project Implementation Plan.
9
GOB - Government of Bangladesh.

137
Table 12.8: Progress of HPSP.
(In crore Tk)
Source of Allocation Expenditure Allocation Expenditure Allocation Expenditure Allocation Expenditure Allocation Expenditure
financing in Revised July 98-June in Revised July 99-June in Revised July 2000- in Revised July 2001- in ADP July 2001-
ADP 99 (% of ADP 2000 (% of ADP June 2001 (% ADP June 2002 (% 2002/03 Feb’03 (%
1998/99 allocation) 1999/00 allocation) 2000/01 of allocation) 2001/02 of allocation) of allocation)
GOB 415.00 336.94 398.00 361.27 380.00 315.92 300.00 260.47 454.00 144.12
(81.19%) (90.77%) (83.14%) (86.82%) (35.49%)
Project aid 777.81 646.68 975.00 843.95 1079.48 742.48 1000.00 780.88 1498.89 290.25
(83.14%) (86.55%) (68.74%) (78.09%) (20.61%)
Total 1192.81 983.62 1373.00 1205.22 1459.48 1058.41 1300.00 1041.35 1952.89 434.37
(82.46%) (87.78%) (72.52%) (80.10%) (23.94%)
Source: Ministry of Health and Family Welfare.

In the Health and Family Welfare sector, during the FY1998-99 through FY2002-03 (up to
January 2003), various contraceptives, medicines, MSR and medical instruments have been
procured for an amount of Tk.1,513.46 cores under HPSP. To establish equality, more than 60%
of total allocation of HPSP is being utilized in upazilas and tiers below under Essential Service
Package (ESP) providing health services. This allocation is being spent mainly for improvement
of health status of the rural poor, children and mothers.

Prevention of diseases is more effective and economic rather than cure through treatment. For
this, the government has taken up various programmes viz. EPI programmes, eradication of polio,
malaria, yellow fever, phylaria, T.B., contamination of arsenic, diarrhoea, hepatitis, tetanus and
measles in remote areas, programme for controlling diarrhoea of school going children and
dengue programmes. During last year, under the alternative medicare services, homeopathic
treatment facilities have been extended to 15 hospitals at district level with required manpower,
medicines and equipments. A programme has been undertaken to establish one MCHTI hospital
in each of the divisions with the assistance of Japan. The government has formulated a National
AIDS policy to protect the country from the threats of HIV and steps have been taken to
implement HIV/AIDS prevention programme under HPSP for US$58.0 million.

Local Level Planning (LLP) procedure has commenced in 460 upazilas of 64 districts as part of
decentralization programme to promote the quality and management of health and family welfare
service. National Hospital Development Committee headed by the DG, Directorate of Health as
chairman, has been formed for proper implementation of hospital development activities.
Standard Operating Procedure (SOP) has been laid down in a bid to implement the programmes
smoothly in 17 departments of the hospitals aimed at the improvement of services under a Quality
Assurance Programme. A training programme has been launched through Quality Assurance
Officers at upazila level. Client Charter Right has been formulated under Regulation Programme,
which is displayed in hospitals. A committee consisting of government, non-government and
insurance officials is working for introducing Community Health Insurance in the health sector
on a pilot basis. Parallel to the government efforts, private sector is also being encouraged to

138
participate in medical and health services sector. For this, the government provides financial
grants from revenue budget to different private hospitals and institutions. The government has
also been encouraging establishment of private medical colleges.

In providing development assistance to the developing countries, formulating the Poverty


Reduction Strategy Paper (PRSP) is now being considered as an important activity. In order to
provide more enriched and complete health services in the light of the PRSP an ‘Advisory
Committee on Health Poverty Reduction Strategy’ and a ‘Technical Working Committee on
Health Poverty Reduction Strategy’ have been formed at the initiative of the Ministry comprising
government, non-government, autonomous and semi-autonomous institutions, various social and
service organizations and representatives of the civil society.

To cope with the challenges of 21st century in the Health and Family Welfare sector, the
government has undertaken necessary measures to modify the Health Policy to make it more pro
people and up-to-date. For this, the government has adequately increased budgetary allocation for
this sector. During the year 1998, HPSP was launched for five but no piloting was done. As a
result, it has not been possible to achieve desired progress in certain areas of this reform
programme. Steps have been taken to complete the programme taking corrective measures to
obviate implementation constraints of the HPSP. As a follow up, Health, Nutrition and
Population Sector Programme (HNPSP) for three years has been undertaken for implementation.
In the meantime, Conceptual Frame Work has been formulated and the programme will
commence from December 2003.

The achievements of Bangladesh in education and health sector are remarkable. Table 12.9
presents a comparative position of spending in health, education and social sectors of some other
countries in Asia (As a percentage of GDP and total government expenditure).

Table 12.9: Govt. Expenditure in Education, Health and Social Sectors in 1980 and 2000

Country As percentage of GDP As percentage of total government


expenditure
Education Health Social Sector Education Health Social Sector
1980 2000 1980 2000 1980 2000 1980 2000 1980 2000 1980 2000
Bangladesh* 1.2 1.4 0.6 0.4 1.8 3.6 11.5 9.3 6.4 2.8 18.2 23.8
India 2.9 3.1 0.9 1.3 5.6 6.3 11.6 11.2 3.5 4.8 22.0 22.4
Pakistan 1.4 1.7 0.7 0.7 2.6 2.6 7.7 7.2 3.2 3.0 11.4 10.8
Srilanka 2.8 2.5 2.0 1.6 10.3 7.4 6.7 9.6 4.9 6.4 25.0 29.1
Indonesia 2.9 1.3 0.7 0.5 4.5 6.2 11.0 6.4 2.6 2.3 16.8 30.7
Malayasia 5.2 4.5 1.5 1.2 8.9 8.6 18.3 21.6 5.1 5.9 31.1 41.4
Philippines 1.7 3.7 0.6 0.4 3.3 5.2 13.0 18.6 4.5 2.3 24.9 26.2
Thailand 3.7 4.0 0.8 1.5 5.5 7.6 16.7 22.4 3.4 8.4 24.8 42.1
Source: Economic and Social Survey of Asia and the Pacific 2003; Asia-Pacific Economies: Resilience in Challenging
Times; United Nations.
*Figures for 2000 are the average of the revised allocation in FY1999-2000 and FY2000-01.

139
Women and Children Development

Although women constitute half of the population of Bangladesh, the contributions of female
labour force in the economic activities has not been duly assessed. A variety of programmes have
therefore been undertaken by the government to remove gender inequality. Women development
has been accorded top priority in the completed Fifth Five Year Plan (FFYP). The government’s
set goals for women and children development are I) Mainstreaming women in the development
process and elevating their status in the society, and II) Protection of child rights and
development of their latent potentials. Women Development Policy was announced in 1997 with
a view to ensuring active participation of women in the national development activities as well as
ensuring their empowerment through building them up as skilled human resources. On the other
hand, the government adopted the National Children Policy in 1994 to preserve the rights,
interests and welfare of the children. The years 2001 to 2010 has been declared as the 'Decade for
children' according utmost priority to child rights. The Ministry of Women and Children Affairs
plays the “lead” role in executing women and children development initiatives. Various
development projects and other activities are being implemented through three agencies of the
ministry- the Women Affairs Directorate, Jatiyo Mohila Sangstha and Bangladesh Shishu
Academy. The projects are meant for providing training on various vocations, extending
revolving credit support, on-the-job training on skill development for girls with less education,
hostel facilities for working women, temporary shelters, medical facilities and legal support to the
distressed and oppressed women. Prevention of child trafficking, development of latent talents of
children, national work plan for policy, leadership and advocacy aimed at gender equality,
implementation of national women policy and coordination work for participation of both the
government and civil society are part of the agenda of these projects.

A total amount of Tk.6197.83 lakh has been allocated in the RADP of FY2002/03 against 36
projects under the Ministry of Women and Children Affairs and its agencies. ADP allocations and
expenditures from FY1992-93 through 2002-03 are presented in the following table:

Table 12.10: Allocations and Expenditures in RADP


(In lakh Tk.)
Fiscal year Allocation Expenditure % of ADP implementation
1992-93 1078.45 701.38 65
1993-94 1436.56 1122.00 78
1994-95 2614. 00 2625.12 100
1995-96 3031.00 2924.00 96
1996-97 3941.00 4054.70 103
1997-98 4554.50 3339.67 73
1998-99 4773.25 4723.80 99
1999-00 4676.00 4398.62 94
2000-01 4954.00 4687.00 95
2001-02 4276.62 3175.97 74
2002-03 6197.83 5377.16 87
Source: Ministry of Women and Children Affairs, IMED, Ministry of Planning.

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Social welfare
The Ministry of Social Welfare plays a vital role for the socio-economic development of the poor,
distressed and other backward segments of the population. As poverty is the main impediment to
overall development of the society, the Ministry has been implementing is launching various
poverty alleviation programmes as a major endeavor. This Ministry has also taken the
responsibility of providing education, training and rehabilitation of a large number of disabled
persons. In addition, the Ministry runs the programmes on Correctional Services for Juvenile
Delinquents, Care and Protection for Abandoned Children, Rehabilitation of Vagrants, Safe
Home, etc. and the other programmes all over the country. Besides, the Ministry has been
implementing 29 development projects successfully.

The Department of Social Services (DSS) implements poverty alleviation programmes in all
towns and cities, upazilas and rural areas through Rural Social Services (RSS), Urban
Community Development (UCD) and Rural Mother’s Centre (RMC) programmes. Under these
programmes, revolving funds are disbursed as initial investment and reinvestment for elimination
of poverty. With an initial total investment of Tk.15,240.66 lakh under these programmes, the
cumulative investment has stood at Tk.52,078.11 lakh up to June 2003. Similarly, the cumulative
collection is Tk.47,458.80 lakh while the average rate of recovery is 91 percent. The total number
of beneficiary families is 23,58,033 up to June 2003. The number of person benefited through
vocational training is 12,65,623, through literacy programme is 14,67,905 and through social
activities is 2,46,573. Awareness on primary health care has been disseminated to 5,76,300
persons. 11,39,606 persons have been motivated for maintaining small size family. 11,22,578
seedlings have been distributed for social forestry.

The government has allocated a total amount of Tk.40 cores under revenue budget in FY2002/03
for programmes including Mitigating Risk for Natural Disaster and Rehabilitation of Acid-burnt
Women and the Physically Handicapped having allocation of Tk.25 cores and Tk.15 cores
respectively. Under these programmes, 22,000 persons affected by natural calamities and 15,000
acid-burnt and physically handicapped persons will be benefited. The present government has
decided to establish six Safe Homes in each of the six divisions for women, children and girls
who are presently under the custody of Thana Hazat and Jail.
Youth and Sports Development
Youth: Youth are the most promising as well as productive segment of the population of
Bangladesh. Our national development entirely depends on the working spirit and initiatives of
the youth force. Realizing the significance of involving the youth force in national development
process, the government has taken massive programmes through the Department of Youth
Development (DYD) under the Ministry of Youth and Sports for transforming them as most
productive work force. At present, youth programmes have been extended to 64 districts and all
the upazillas of the country. To infuse dynamism and to reinforce the youth development work,
the government has been allocating additional funds every year for the youth sector. During the

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FY1991-92 through FY2001-02, under different training programmes being implemented by the
DYD, 19,18,300 young men and women (99.30% of the target) have been trained up. During the
same period 10,50,049 young men and women (86.76% of the target) could be self-employed. Up
to February 2003, a total number of 1,44,584 young men and women (64.26% of the target) have
been trained and 75,700 young men and women (53.79% of the target) have been self-employed.
"Family Based Employment Programme" is under implementation in 82 selected upazilas for the
purpose of reducing poverty of the poor and landless youth. Under this programme, up to
February 2003, a total number of 4,77,151 persons have been trained towards self-employment.
During the FY1995-96 through FY2000-01, motivational training on reproductive health and
gender issues has been imparted to 1,76,863 young men and women (116.97% of the target)
under the project "Advocacy on Reproductive Health and Gender Issues through Youth Clubs".
And in the current fiscal year, up to February 2003, a total number of 14,806 young men and
women have been trained. An UNDP assisted technical assistance project namely, "Proactive
Involvement of Rural Youth in Participatory Development" at Laksham of Comilla district and
Boalkhali of Chittagong district through 40 youth clubs has been completed in December 2002.
Under this project, 14,906 young men and women have been trained during the FY1997-98
through FY2000-01 and 560 have been trained up to December 2002 in the FY2002-03. Besides,
Tk.192.77 lakh have been provided as grants to 4,576 members of these 40 youth clubs. In order
to involve youth organisations in socio-economic development of the country through various
development programmes, 6092 youth organisations have been enlisted with the DYD. From
youth welfare fund and non-development budget, Tk.50 lakh and Tk.4.83 lakh have been
sanctioned as project grants to 497 youth clubs and 69 youth organisations respectively in
FY2001-02. Micro-credit programme is one of the major programmes being implemented by the
DYD. The contribution of micro-credit programme towards eradication of rural poverty and self-
employment projects is gaining importance. Up to December 2002, a total amount of
Tk.50,119.28 lakh, including revolving fund, has been sanctioned to 5,81,885 beneficiaries as
micro-credit. Average rate of recovery is 88.82%.

Sports: In achieving physical and mental excellence of the people and youth force as well as for
human resource development, games and sports have no other alternative. They play a very
prominent role in creating mutual amity and harmony in the youth force of the society. Given this
importance, the government is relentless in raising the standard of sports and games of the
country. An appropriate sports policy consistent with the present status, potentials and future
prospects of sports in the country has been formulated. Sports infrastructures and sports facilities
are the pre-requisites for the development of games and sports. During the previous ‘Five-year’
plans governments have taken up and implemented various development projects for creation,
extension and development of sports facilities in the country. Since FY1996-97 through FY2001-
02, a total amount of Tk.10,825.32 lakh has been spent through 19 development projects. Against
a total allocation of Tk.3955 lakh in FY2002-03, up to December 2003, Tk.1,927.5 lakh has been
allocated for 17 projects.

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Adequate infrastructure facilities and appropriate coaching are indispensable for the development
and promotion of sports in any country. In order to meet the above demand, the necessity of
establishing a sports institute which would take the responsibility of identifying and nurturing
talented sports persons and producing efficient coaches and technical experts was felt. To achieve
this goal, a plan was undertaken in 1974 to establish “Bangladesh Institute of Sports (BIS)” as a
project under the National Sports Council. Subsequently, the institute was renamed as Bangladesh
Krira Shiksha Protishtan (BKSP) in 1983 as an autonomous, statutory organisation. At present,
sports coaching and academic programmes are run as regular activities of the institute. Total
revised ADP allocation against the projects under the Directorate of Sports, during the FY1991-
92 through FY2002-03 (up to March 2003), amounts to Tk.7,067.45 lakh of which actual
spending stands at Tk.4,773.05 lakh (67.04%).
Cultural Development
There is a very close relationship between cultural development and human resource
development. A nation, well acquainted with its own cultural heritage, feels motivated to
participate on the nation building efforts. History, civilisation, national heritage and identity of a
nation are reflected through its culture. Cultural institutions & activities very truly project the
direction of its culture. To keep pace with the ongoing trend of world culture, the agencies under
the Ministry of Cultural Affairs, like Shilpakala Academy, Bangla Acadamy, National Museum,
Department of Archaeology, Department of Public Library, National Archives, National Book
Centre, Nazrul Institute, Folk and Crafts Foundation, Copy Right Office, Cultural Centre at Cox's
Bazar and Tribal Cultural Institutes at Rangamati, Bandarban and Birishiri are making relentless
efforts to put in place cultural development infrastructure throughout the country. In the
meantime, the cultural identity of Bangladesh is widely known around the world. So far, cultural
agreements have been concluded with about 39 countries of the world in a bid to promote mutual
understanding and amity. Exchange visits of our cultural representatives, students, teachers,
scholars and cultural personalities take place under these cultural exchange programmes. After
the assumption of power, the present democratic government has been laying much emphasis on
cultural programmes covering music, dances, fine arts, exhibition of handicrafts and books.

With a view to bring in professional excellence in drama, music and dance the government has
already taken up infrastructure development initiatives including 'Construction of National
Theatre' and 'National Music and Art Centre'. To revamp traditional rural arts and culture, Folk
Art Fairs for a month are organised every year. In order to nurture and improve the tribal culture,
development works for Tribal Cultural Academy at the Divisional town of Rajshahi, Tribal
Cultural Institute at Khagrachari and Monipur Lalit Kola Academy at Moulvibazar have already
been completed. Tribal Museum-cum-Library has been established at Rangamati. The works for
development of Tribal Institute (2nd phase) at Bandarban has been undertaken. The construction
of Training Centre on Fine and Performing Arts (1st phase) at Rajbari has been completed.
Shilpokala Academy Development projects have been undertaken in 28 districts to develop

143
cultural infrastructures at district level. Besides, programmes have been taken up to promote
cultural activities throughout the country.
In order to enrich higher education, literature and folk songs, the Bangla Academy publishes new
books and arranges book fairs at national and regional level every year. Efforts are under way to
develop library services through expanded network of the non-government/private libraries. This
will have significant impact on the spread of education throughout the country, increasing reading
habit of the people and elimination of illiteracy. Therefore, National Library, Central Public
Library, libraries at divisional and district level and National Book Centre have been set up.
Programmes have been undertaken to establish public libraries at two newly formed Divisional
headquarters of Sylhet and Barisal.

Department of Archaeology and the Bangladesh National Museum have been making constant
efforts to preserve the relics of ancient history and archaeological sites. Restoration works of
Paharpur Buddhist Temple and historical Shait Gombudge Mosque of Bagerhat (3rd phase) have
been completed in June 2000. There is a project for setting up of "Shilpacharya Joynul Abedin
Museum" to preserve Joynul Abedin's works. In memory of Begum Rokeya Sakhawat Hossain,
the forerunner of women's awakening, a project named "Begum Rokeya Smriti Sanskritik
Kendra" at Payraband in Rangpur, her birthplace, is at the final stage of completion. In addition to
this, arrangements have been made for mobile exhibition of folk arts to popularise it nationwide.

To continue the development endeavour in cultural affairs, efforts have been made for significant
increase in the allocation during the three-year rolling programmes for 2003-2005. An amount of
Tk.39.46* core has been allocated in the ADP of FY2002-03 against 29 development projects.

ADP allocation and expenditure from FY1991-92 to FY2002-03 against the projects of culture
sub-sector are given in the following table 12.11:
Table 12.11: Allocations and Expenditures in RADP
(Taka in lakh)
Fiscal year Number of Revised ADP Number of Number of
Projects in Allocation Actual Projects targeted completed
Revised ADP Expenditure for completion Projects
1991-92 14 921.49 797.65 -- --
1992-93 19 1179.74 946.76 -- --
1993-94 22 1539.95 1227.95 1 1
1994-95 23 2500.00 2413.49 8 7
1995-96 22 1244.00 1292.47 4 1
1996-97 29 2226.00 1995.10 8 6
1997-98 41 1656.00 1556.24 1 3
1998-99 38 2246.00 1685.00 2 --
1999-2000 40 3715.00 3552.24 12 2
2000-2001 38 4659.57 4505.72 12 2
2001-2002 42 3506.01 3196.50 13 4
2002-2003* 28 3946.36 3482.55 7 --
Source: Ministry of Cultural Affairs. *IMED.

144
CHAPTER-13
POVERTY ALLEVIATION

It is widely recognised that poverty is the single most issue of concern in a country having a
population of thirteen crore. Poverty alleviation is therefore one of the cardinal goals of all
economic development activities pursued by the Government of Bangladesh. Poverty is a
multidimensional issue that simultaneously implies status and process-(redirection of resources
for pro-poor growth). Although severity of the poverty situation has improved over the past three
decades, its pervasiveness and depth is still of grave concern. The challenge becomes far more
formidable for a country saddled with extreme resource constraints. For these obvious
imperatives, highest priority has been accorded to poverty alleviation in development planning of
the country and to this end various programmes are being implemented. Initiatives have been
taken by the government in collaboration with non-government organisations (NGOs), specially
supporting the activities of NGOs is the basic strategy of the government. In pursuance of UN
Millennium Development Goals, the government has prepared "A National Strategy for
Economic Growth, Poverty Reduction and Social Development" popularly known as I-PRSP.
National Poverty Focal Point has been established in General Economic Division, Planning
Commission, prime task of which is to finalise I-PRSP by December, 2004 as well as monitoring
and evaluation of the poverty reduction programmes. On the basis of this strategic plan ''The
Medium Term Plan for Economic and Social Development'' and a three year ''Rolling Investment
Programme'' will be formulated, which will be instrumental to development planning of the
government.
Poverty Situation
Poverty connotes a situation when minimum requirement of basic needs like food, shelter, fuel,
clothing etc remains unfulfilled. Poverty alleviation or reduction becomes easier if the true sense
or proper definition of poverty is identified rightly. Officially head-count ratio based on Direct
Calorie Intake (DCI) and Cost of Basic Need (CBN) methods have been utilized to measure the
incidence of poverty. Bangladesh Bureau of Statistics (BBS) measures poverty by using
Household Income and Expenditure Survey (HIES). Latest HIES was conducted by BBS in 2000.
Both DCI and CBN methods were followed to measure poverty in this survey. It may be
mentioned that BBS used both Food Energy Intake (FEI) and Direct Calorie Intake (DCI) method
for measuring the incidence of poverty in the country up to Household Expenditure Survey (HES)
1991-92. CBN method was first applied in the Survey of 1995-96 as well as in the latest Survey
of 2000. Currently CBN is recognised as the best method for measuring poverty. In this chapter
results obtained by using both the methods for measuring poverty situation are presented in
different tables and graphs.
Poverty Measurement By DCI Method: The latest report of HIES-2000 reveals that at national
level incidence of absolute poverty registered a decreasing trend in 2000 as compared with 1988-
89 based on per capita calorie intake of 2122 Kcal per day. Similarly, incidence of hard-core
poverty also decreased to 19.98 percent in 2000 compared to 28.36 percent in 1988-89 based on

145
1805 Kcal per day. On the other hand, in rural area hard-core poverty decreased to 18.72 percent
in 2000 compared to 28.64 percent in 1988-89. Although in respect of absolute poverty in 1988-
89 reverse situation was noticed in urban area but hard-core poverty situation has been declined
in the same period. In urban area absolute poverty was 47.63 percent in 1988-89 but it rose to
52.50 percent in 2000. On the other hand, hard-core poverty was 26.38 percent in 1988-89, which
decreased to 25.02 percent in 2000.

Table 13.1 Poverty and Hard-core Poverty on the Basis of Calorie Intake (%)*
Nature of Poverty 1983-84 1985-86 1988-89 1991-92 1995-96 2000
Poverty National 62.60 55.65 47.75 47.52 47.53 44.33

Rural 61.94 54.65 47.77 47.64 47.11 42.28


Urban 67.70 62.55 47.63 46.70 49.67 52.50
Hardcore poverty
National 36.75 26.86 28.36 28.00 25.06 19.98

Rural 36.66 26.31 28.64 28.27 24.62 18.72

Urban
37.42 30.67 26.38 26.25 27.27 25.02

Source: HIES-2000, BBS


* Used DCI Method
Note: In 1983-84 and 1985-86 absolute and hardcore poverty lines were estimated based on per capita per day calorie intake of 2,200
kcal and 1800 Kcal respectively while in 1988-89 onward these were estimated based on per capita per day calorie in take of 2122
Kcal and 1805 Kcal.

Chart 13.1: Situation of Poverty and Hardcore Poverty

80
Percentage

60
40
20
0
1983/84 1985/86 1988/89 1991/92 1995/96 2000

Poverty(National) Hardcore Poverty(National)

Table 13.2 Daily Per Capita Calorie Intake


Survey Year National Rural Urban
2000 2240.3 2263.2 2150.0
1995-96 2254.0 2263.1 2208.1
1991-92 2266 2267 2258
1988-89 2215 2217 2183
1985-86 2191 2203 2107
Source: BBS, Report of Household Income and Expenditure Survey, 2000.

146
Measurement of Incidence of Poverty by Cost of Basic Needs Method:
In this chapter remaining tables depict the diagnostic results on poverty derived from CBN
method. It is worth mentioning that since these measures are based on a methodology different
from those used by BBS in earlier years, results are not comparable with poverty estimates. CBN
method was used in 1995-96 and 2000 survey.

Population Below Poverty Line:


The head-count ratio for 2000 is presented in Table 13.3, which has been worked out by CBN
method. Here two head-count ratios have been shown: one for the lower poverty line and the
other for the upper poverty line. At the national level, the incidence of poverty was found 33.7
percent by using lower poverty line, while this stands 49.8 percent if upper poverty line is used.
Under this method, poverty incidence in urban areas is much lower than that of rural area. In
sharp contrast, the head-count ratio based on DCI method shows higher incidence in urban areas
than that of rural areas. Incidence of poverty among administrative Divisions is shown in Table
13.3. It is observed from the table that the incidence of poverty measured by lower poverty line is
much severe in Rajshahi and Khulna Division (46.7 percent and 35.4 percent respectively) as
compared with other Divisions. These figures are also higher than the average incidence of
poverty throughout Bangladesh (about 34 percent). On the other hand, rest of the Divisions have
lower and more or less equal incidence of poverty having the same lower poverty line. Incidence
of poverty measured by upper poverty lines is also found to be much higher in Rajshahi and
Khulna (61.0 percent and 51.4 percent respectively). The lowest incidence of poverty is noticed
in Barisal Division (39.8 percent) by using the same poverty line.

Table 13.3 Division-wise Rate of Poverty on the Basis of CBN Method (Head Count Ratio)
Using the lower poverty line Using the upper poverty line
National/Division
Total Rural Urban Total Rural Urban
National 33.7 37.4 19.1 49.8 53.1 36.6
Barishal 28.8 29.6 19.5 39.8 40.0 37.9
Chittagong 25.0 25.3 23.3 47.7 48.4 44.0
Dhaka 32.0 41.7 12.0 44.8 52.9 28.2
Khulna 35.4 36.8 27.5 51.4 52.2 47.1
Rajshahi 46.7 48.8 32.3 61.0 62.8 48.1
Source: (HIES-2000), BBS

Chart 13.2: Divisionwise rate of poverty

70
60
Percentage

50
40
30
20
10
0
National Barisal Chittagong Dhaka Khulna Rajshahi

Using the lower poverty line Using the upper poverty line

147
Division-wise Rate of Poverty and Incidence of Poverty:
Administrative Division-wise distribution of the poor segment of population identified by
utilising both the poverty lines has been shown in table 13.4. Here poor is defined as the
individual, whose total expenditure is less than what is indicated by poverty line. This is another
way of getting the idea about the spatial incidence of poverty. It reveals that 11.3 percent of the
poor section of population in the country indicated by the lower poverty line live in urban areas.
Rajshahi Division has the largest number of poor population (of total population 32.4 percent
below the lower poverty line and 28.6 percent below the upper poverty line) in the country
followed by Dhaka Division. This is also true for rural areas. In urban areas, Dhaka Division has
the largest number of poor population according to upper poverty line (5.8 percent) and also for
lower poverty line (3.6 percent). On the other hand, Barishal Division has the least number of
poor population according to both lower and upper poverty line.

Table 13.4 Distribution of Poor by Residence in Percentage


Using the lower poverty line Using the upper poverty line
National/Division Total Rural Urban Total Rural Urban

National 100.0 88.7 11.3 100.0 85.2 14.8


Barishal 6.0 5.7 0.4 5.6 5.2 0.4
Chittagong 19.6 16.5 3.1 25.4 21.4 3.9
Dhaka 29.7 26.1 3.6 28.2 22.4 5.8
Khulna 12.3 10.8 1.5 12.1 10.4 1.7
Rajshahi 32.4 29.6 2.8 28.6 25.8 2.8
Source: HIES-2000, BBS

Poverty Gap (P1) and Absolute Poverty Gap (Root P1=P2)


Measures of poverty gap and the squared poverty gap for 2000 are presented in table 13.5. The
average dispersion below poverty line as indicated by poverty gap and the severity of poverty as
reflected by squared poverty gap are observed to be maximum both in rural and urban areas of
Rajshahi Division measured against both lower and upper poverty lines.

Table 13.5 Poverty Gap (p1) Squared Poverty Gap (p2)


Using the lower poverty line Using the upper poverty line
National/ Squared Poverty Gap (p2) Squared Poverty Gap (p2)
Division Poverty Gap (p1) Poverty Gap (p1)
Total Rural Urban Total Rural Urban Total Rural Urban Total Rural Urban
National 7.3 8.2 3.8 2.3 2.6 1.2 12.9 13.8 9.5 4.5 4.8 3.4
Barishal 5.3 5.4 4.2 1.4 1.4 1.4 8.9 8.8 9.8 2.8 2.7 3.8
Chittagong 4.8 4.8 4.9 1.4 1.3 1.6 11.5 11.6 11.1 3.9 3.9 4.0
Dhaka 7.0 9.3 2.1 2.2 3.0 0.5 11.5 13.8 6.6 3.8 4.5 2.2
Khulna 6.5 6.6 5.8 1.7 1.7 1.8 12.7 12.6 13.3 4.2 4.0 5.1
Rajshahi 11.5 12.2 7.0 4.0 4.2 2.4 17.7 18.1 14.6 6.9 7.0 5.9
Source: HIES-2000, BBS

148
Poverty and Household Characteristics:
According to Table 13.6 households having 5-6 members had the higher rate of poverty incidence
on head-count ratio and it is found that the rate of poverty of this group is 37.2 percent by using
lower poverty line and 52.8 percent by using upper poverty line. Usually households having 1-2
members had the lower poverty incidence. The findings of the survey reveal that the rate of
poverty of this group is 29.5 percent by using upper poverty line and 16.1percent by using lower
poverty line.

Table 13.6 Incidence of Poverty by Size of Household


Household Using the lower poverty line Using the upper poverty line
Size (Number Total Rural Urban Total Rural Urban
of person)
All 33.7 37.4 19.1 49.8 53.1 36.6
1-2 16.1 18.7 4.7 29.5 33.1 13.4
3-4 27.8 31.8 12.9 43.0 46.9 28.8
5-6 37.2 42.1 18.7 52.8 57.0 36.9
7-8 37.1 39.7 25.9 55.0 57.2 45.7
9-10 37.1 38.6 30.8 54.7 56.1 48.9
11+ 25.5 28.2 12.7 39.2 41.6 27.6
Source: HIES-2000, BBS

Poverty on the basis of Land Ownership:


It is observed from Table 13.7 that the poverty incidence and size of land owned is inversely
related. The number of households owning land size group 0.01-0.04 acre are adversely affected
by the curse of poverty (42.7 percent) according to lower line of poverty. This figure is much
higher than the national average (33.7 percent). Upper poverty line too shows similar pattern.

Table 13.7 Distribution of Land Ownership by Household (%)


Ownership of Using the lower poverty line Using the upper poverty line
land (acre) Total Rural Urban Total Rural Urban
All size 33.7 37.4 19.1 49.8 53.1 36.6
Landless 31.0 57.1 19.7 47.8 70.6 37.9
0.01-0.04 42.7 48.1 22.0 59.1 64.2 39.3
0.05-0.49 38.1 39.8 15.4 57.1 59.1 30.4
0.50-1.49 29.2 30.6 7.5 46.4 47.6 27.6
1.50-2.49 21.3 22.2 1.4 34.7 35.7 12.3
2.50-7.49 11.7 12.5 - 23.8 24.4 15.9
7.5or more 4.0 4.1 - 8.0 8.1 -
Source: HIES-2000, BBS

Chart 13.3: Poverty incidence by ow ned land size

60
Percent

40
age

20
0
e ss 4 9 9 9 9
iz .0 .4 .4 .4 .4 re
ll S dle 01-0 05-0 50-1 50-2 50-7 mo
A an 0. 0. 0. 1. .
2 .5o r
L
7

Using the low er poverty line Using the upper poverty line

149
Incidence of Poverty According to Occupation:
Incidence of poverty by main occupation of head of households has been presented in Table 13.8.
It is observed from the table that at the national level, by using the lower poverty line, the highest
incidence of poverty (39.9 percent) exists in the households where the occupation of the head
relates to agriculture, forest and fisheries. To the contrary, the lowest incidence of poverty (4.9
percent) was observed in households with head in administrative and managerial work. On the
other hand, for urban areas using the upper poverty line the highest incidence (55.2 percent) of
poverty was observed in the case of service sector workers, and lowest (7.7 percent) for
households with head in administrative and managerial works. There exists rural and urban
variation in incidence of poverty by occupation. In the rural area (using the upper poverty line),
the highest incidence (56.3 percent) was observed in households belonging to agriculture, forest
and fisheries and the lowest in the households with head in administrative and managerial works
(23.0 percent). On the other hand, using the same poverty line, the highest incidence was
observed in the case of service workers (53.5 percent) and lowest for households with head in
administrative and managerial works (1.9 percent) in the urban areas.

Table 13.8 Incidence of Poverty and Main Occupation of Household


Using the lower poverty line Using the upper poverty line
Occupation National Rural Urban National Rural Urban
Total 33.7 37.4 19.1 49.8 53.1 36.6
Professional, Technical and Related 18.8 21.9 12.0 32.7 35.5 26.6
Administration and Managerial Work 4.9 12.7 1.9 7.7 23.0 1.9
Clinical Related Works & Govt. 33.1 40.5 22.0 48.6 54.8 39.2
Sales Worker 22.6 27.3 14.6 39.4 45.2 29.4
Service Workers 35.9 39.4 29.6 55.2 56.2 53.5
Agri., Forestry and Fisheries 39.9 40.6 25.0 56.0 56.3 49.3
Production,Trans. & Related Works 31.2 37.2 20.0 48.5 53.4 39.1
Head not Working 22.2 26.5 10.7 31.3 36.1 18.2

Source: HIES-2000, BBS

Per Capita Income:


As shown in Table 13.9, the per capita income of the poor below poverty line is the highest in
Barisal division (Tk. 545.32), which is slightly above the national average. Considering upper
poverty line, it is the highest in Khulna division (Tk. 641.07). Per capita income of the poor is
found lowest in Rajshahi division (Tk. 468.89 and Tk. 526.44 respectively) measured against
both lower and upper poverty line.

150
Table 13:9 Status of Division wise per Capita Income
Using the lower poverty line Using the upper poverty line
National/Division
Total Rural Urban Total Rural Urban
National 495.19 484.64 577.74 573.72 550.82 705.95
Barishal 545.32 539.42 638.72 583.07 563.65 795.95
Chittagong 522.56 497.49 657.57 619.39 593.15 762.37
Dhaka 475.73 467.63 533.79 549.95 515.03 648.42
Khulna 543.46 532.33 625.94 641.07 625.85 734.50
Rajshahi 468.89 464.55 514.60 526.44 513.95 639.94
Source: HIES-2000 BBS

Per Capita Expenditure:


Table 13.10 gives the per capita expenditure pattern of the poor. Per capita expenditure of the
poor below lower and upper poverty lines is the highest in Chittagong Division (Tk.499.86 and
599.45 respectively). Below both the poverty lines, Rajshahi Divisions show the lowest per capita
expenditure (Tk. 438.25 and Tk. 490.41 respectably). It may be observed from Tables 13.9 and
13.10 that the distribution of highest and lowest per capita income and expenditure shows similar
pattern in the country.

Table 13.10:Status of Division wise per Capita Expenditure


Using the lower poverty line Using the upper poverty line
National/Division
Total Rural Urban Total Rural Urban
National 460.91 455.43 503.77 532.04 515.37 628.29
Barishal 458.78 457.54 478.38 503.71 495.35 595.36
Chittagong 499.86 489.23 557.07 599.45 583.42 686.79
Dhaka 454.25 445.73 515.25 518.95 484.37 652.14
Khulna 475.65 473.76 489.70 533.02 522.47 597.76
Rajshahi 438.25 437.97 441.18 490.41 486.94 522.02
Source: HIES-2000, BBS

Income Distribution:
It is evident from Table 13.11 that the gap between the poorest of the poor (bottom 5 percent) and
richest of the rich (top 5 percent) is widening so as far as the Distribution aspect of income is
concerned. In 1995-96 the income accruing to top 5 percent of the households was 23.62 percent
while income share of the lowest 5 percent was 0.88 percent implying the gap of income
differential by 27 times. Comparatively, in 2000, income accruing to top 5 percent of the
households (30.66 percent) is 46 times higher than the income accruing to lowest 5 percent of the
household (0.67). The share of income of the bottom 5 percent has decreased from 0.88 percent in
1995-96 to 0.67 percent in 2000. On the contrary, the share of income of the top 5 percent has
increased from 23.62 percent to 30.66 percent over the same period indicating highly skewed
income distribution. Rising income inequality is also reflected in the Gini Coefficient which
reached to 0.472 in 2000 from 0.432 in 1995-96. In rural area the richest-poorest ratio in 2000 is
found to be 35.7 while in 1995-96 this ratio was 19.73. In urban area this ratio increased to 53.4
in 2000 from 32.8 in 1996-96.

151
Table 13.11 Percentage Share of Income of Household by Deciles Group
Deciles of National Rural Urban
Household(Household
Income Scale) 2000 1995-96 2000 1995-96 2000 1995-96
Total 100.00 100.00 100.00 100.00 100.00 100.00
Lowest 5% 0.67 0.88 0.75 1.00 0.63 0.74
Decile-1 1.84 2.24 2.08 2.56 1.70 1.92
Decile-2 3.13 3.47 3.55 3.93 2.81 3.20
Decile-3 3.96 4.46 4.45 4.97 3.60 4.06
Decile-4 4.77 5.37 5.34 5.97 4.46 4.98
Decile-5 5.68 6.35 6.23 6.98 5.37 5.97
Decile-6 6.84 7.53 7.42 8.16 6.43 7.20
Decile-7 8.32 9.15 8.87 9.75 7.86 8.98
Decile-8 10.40 11.35 10.88 11.87 10.06 11.35
Decile-9 14.30 15.40 14.50 15.58 14.10 16.29
Decile-10 40.72 34.68 36.62 30.23 43.56 36.05
Top 5% 30.66 23.62 26.74 19.73 33.64 24.30
Gini Co-efficient. 0.472 0.432 0.430 0.384 0.497 0.444
Source: HIES-2000, BBS

Per Capita Expenditure on Consumer Goods and Services: In Table 13.12 per capita
expenditure on consumer goods and services have been presented covering the period from FY
1989-90 to 2002-03. The statistics indicates that per capita expenditure on consumer goods and
services at market prices has increased to Tk. 17,301 from Tk. 7,740 during 1989-90 through
2002-03. In this case compound growth is 5.72 percent during 1990-2003. On the other hand per
capita expenditure on consumer goods and services in real terms has increased to Tk. 12,804 from
Tk. 10,800 during 1989-90 through 2002-03 (at 1995-96 prices). Here compound growth rate is
1.08 percent.

Table 13.12 Per Capita Expenditure on Consumer Goods and Services


(Tk.)
Fiscal Year Per Capita Expenditure on Consumer Per Capita real Expenditure on
Goods and Services at market prices* Consumer Goods and Services
1989-90 7740 10800
1990-91 8197 10560
1991-92 8672 10684
1992-93 9060 10865
1993-94 9516 11049
1994-95 10550 11252
1995-96 11108 11108
1996-97 11781 11491
1997-98 12529 11422
1998-99 13516 11315
1999-00 14352 11614
2000-01 15126 12042
2001-02 15950 12418
2002-03 17301 12804
Compound growth 5.72 1.08
(1990-03)
Source: Statistical Year Books ,BBS.
• Calculated from private consumption data under GDP new series.

152
Chart 13.4: Per capita expenditure on consumer goods and services
Per capita real expenditure on consumer 20000
17500
15000
goods and services

12500
10000
7500
5000
2500
0
0

3
-9

-9

-9

-9

-9

-9

-9

-9

-9

-9

-0

-0

-0

-0
89

90

91

92

93

94

95

96

97

98

99

00

01

02
19

19

19

19

19

19

19

19

19

19

19

20

20

20
Per capita expenditure on consumer goods and services at market prices
Per capita real expenditure on consumer goods and services

Table 13.13 Simulating Trends in Poverty Under Alternative Growth Scenario, Bangladesh: 2000-2020

Per Capita Consumption Expenditure Growth


Year Rural Urban National
2% 3% 4% 2% 3% 4% 2% 3% 4%
2000 53.0 53.0 53.0 36.6 36.6 36.6 49.8 49.8 49.8
2001 52.2 51.8 51.4 36.1 35.9 35.7 49.2 48.9 48.6
2002 51.4 50.6 49.8 35.6 35.2 34.8 48.6 48.0 47.4
2003 50.6 49.4 48.2 35.1 34.5 33.9 48.0 47.1 46.2
2004 49.8 48.2 46.6 34.6 33.8 33.0 47.4 46.2 45.0
2005 49.0 47.0 45.0 34.1 33.1 32.1 46.8 45.3 43.8
2006 48.2 45.8 43.4 33.6 32.4 31.2 46.2 44.4 42.6
2007 47.4 44.6 41.8 33.1 31.7 30.3 45.6 43.5 41.4
2008 46.6 43.4 40.2 32.6 31.0 29.4 45.0 42.6 40.2
2009 45.8 42.2 38.6 32.1 30.3 28.5 44.4 41.7 39.0
2010 45.0 41.0 37.0 31.6 29.6 27.6 43.8 40.8 37.8
2011 44.2 39.8 35.4 31.1 28.9 26.7 43.2 39.9 36.6
2012 43.4 38.6 33.8 30.6 28.2 25.8 42.6 39.0 35.4
2013 42.6 37.4 32.2 30.1 27.5 24.9 42.0 38.1 34.2
2014 41.8 36.2 30.6 29.6 26.8 24.0 41.4 37.2 33.0
2015 41.0 35.0 29.0 29.1 26.1 23.1 40.8 36.3 31.8
2016 40.2 33.8 27.4 28.6 25.4 22.2 40.2 35.4 30.6
2017 39.4 32.6 25.8 28.1 24.7 21.3 39.6 34.5 29.4
2018 38.6 31.4 24.2 27.6 24.0 20.4 39.0 33.6 28.2
2019 37.8 30.2 22.6 27.1 23.3 19.5 38.4 32.7 27.0
2020 37.0 29.0 21.0 26.6 22.6 18.6 37.8 31.8 25.8
Source: A National Strategy for Economic Growth, Poverty Reduction And Social Development. March, 2003

153
Table 13.14: Major Goal Posts in Poverty and Social Targets set against the 1990 Benchmark
1990 Annual 2015 (Projection 2015 (Projection
(bench 2000 Progress based on the based on criteria
Target mark over progress rate of laid down in
data) 1990-00 1990-2000) MDGs over 25-
(%) year period)
Indicators in the light of
MDGs:
Income Poverty 59 50 -1.5 37 30
Adult Literacy 35 56 6.0 88 --
Primary Enrollment 56 75 3.4 100 100
Secondary Enrollment 28 65 13.2 100 --
Infant Mortality Rate(IMR) 94 66 -3.0 24 31
Maternal Mortality Rate 480 320 -3.3 80 147
(MMR)
Life Expectancy 56 61 0.9 69 73
Children Underweight (%) 67 51 -2.4 27 26
Source A National Strategy for Economic Growth, Poverty Reduction And Social Development. March, 2003
Note: 1. Taking 1990 as the benchmark year and extrapolating the progress historically achieved during the nineties,
the projection is made for the year 2015.The results show that using 1990 as the benchmark year will render the
attainment of MDG goals relatively an affordable task. The Government, however, has made a deliberate choice in
adopting an accelerated social development strategy by setting targets with the year 2000 as the benchmark .An
accelerated vision is premised for progressive realization of development goals in the shortest possible time.
2. Adult literacy and secondary enrollment rate have not been included under MDGs as separate level target variable
and hence excluded here.
3. A reliable figure of the under-five mortality rate for 1990 is presently not available and hence excluded from the
table.

Dimensions of Human Poverty.


Three broad dimensions of human poverty are considered: (a) deprivation in health (b)
deprivation in education and (c) deprivation in nutrition (including food security)

(a) Deprivation in health:

There exists considerable socio-economic difference in the case of health facilities. In the 1-4 age
group, Female child (1-4 years) mortality is about one third higher than male child mortalities and
the difference has remained nearly unchanged between (Demographic and Health Survey- DHS)
surveys of 1993-94 and 1999-2000. However the rural-urban gap in infant child (0-5 years)
mortalities has declined, gap for under five mortality dropped from 34 percent to 16 percent in the
said period. Infant mortality is about 70 percent higher for the poorest segment than for the
richest group. Birth and death rates are highly correlated with poverty alleviation. Total Fertility
Rate (TFR) remained static in mid 1990s, which now stands at 2.9 (2000). Maternal mortality rate
is also correlated with poverty. The Bangladesh Maternal Mortality Survey 2001 indicates a
mortality rate of 3.20 per thousand live births during the period of 1998 to 2001.
(b) Deprivation in Education
Remarkable progress has been achieved in expanding elementary education in the nineties. The
gross enrollment rate in primary schools increased from 59 percent in 1982 to 96 percent in 1999.
The gender gap in education is closing at an impressive pace at primary and secondary levels. But
a remarkable gender gap is observed in higher secondary and tertiary level. Government has been

154
taken various initiatives to reduce the gender gap. Poverty is the stumbling block for ensuring
universal primary and secondary education. As a result, a sizable number of students dropped out
from education system that entails a huge loss of human potential to the future to the nation.

(c) Deprivation in Nutrition:

The nutritional situation started improving since the mid-eighties. According to BBS survey data,
the rate of stunted children in the age group of 6-71 months was 68.7 percent in 1990 which
dropped to 49 percent in 2000 .The proportion of under weight children in the similar age group
has gone down from 72 percent to 51 percent during the same period. Notwithstanding these
improvements, in respect of the overall level of child nutrition, Bangladesh still lags behind the
developed world. The DHS for 1996-97 and 1999-2000 show that girls are more likely to be
stunted and underweight than boys. The female-male gap for the severely stunted increased from
10 percent in 1996-97 to 16 percent in 1999-2000. Similarly, the gap for the severely underweight
increased from 19 percent to 26 percent over the same period. Child malnutrition is considerably
higher in rural areas than in urban areas. The 1999-2000 DHS shows 47 percent of rural children
as stunted and 49 percent as underweight compared to the urban figures of 35 percent as stunted
and 40 percent as underweight. Maternal malnutrition, measured by Body-Mass Index (BMI) and
the critical value of 18.5, turns out to be very high in Bangladesh. Applying this criterion, DHS
estimates the proportion of malnourished mother at 45 percent in 1999-2000, showing some
improvement over 52 percent in1996-97. The rural-urban gap in maternal malnutrition, as
measured by BMI, has increased from 50 to 63 percent during the period .

Human Poverty Index: According to Bangladesh Human Development Report-2000 Human-


Poverty Index (HPI) was 61.3 in 1981-83. It came down to 34.8 in 1998-2000. The following
table shows HPI over a couple of decades between 1981-2000.

Table 13.15 Human Poverty Index (HPI)


Year 1981-83 1993-94 1995-97 1998-2000
HPI 61.3 47.2 41.6 34.8
Source: BIDS: Bangladesh Human Development Report-2000

Chart 13.5: Human-Poverty Index

70
60
Poiverty
Human-

50
Index

40
30
20
10
0

-83 -94 -97 0


81 93 95 00
19 19 19 9 8-2
19
Year

155
Review of the Programs for Poverty Alleviation:
Comprehensive economic development with concomitant growth rate is extremely essential for
poverty alleviation. In order to assure poverty reduction and sustainable development, it is
necessary to enhance per capita income along with employment generation and to adopt
programmes that augment savings. This would result in establishing an economic base of their
own and continued investment in different social sectors (education, nutrition, health, housing
etc.) which would eventually uplift their standard of living. Employment generation in non-farm
sectors in rural areas as well as in urban areas calls for developing economic infrastructure
including industry, business and other service sectors . Side by side, curbing inflation, (especially
food prices), will be congenial for increasing real income of the poor. A number of programmes
both at government and non-government level are at work for the employment and income
generation as well as the upliftment of the poor. These programmes continue to contribute to
enhance the entitlement of the poor, and at the same time, their empowerment and awareness
building.

Poverty Alleviation Effects by Sectors: Investment in social sectors has the largest poverty
alleviation effects. This leads to higher income and employment of the poor. Highest priority has
therefore been accorded to these sectors in allocating resources. The social sector affords higher
scope for growth of output, income and employment generation. Based on a Social Accounting
Matrix (SAM) presented in Table 13.16 it is seen that poverty alleviation effects are largest for
the education sector, followed closely by the health sector. That is why highest allocation has
been earmarked for education and health sector in our development programmes.

Table 13.16 Poverty Alleviation Effects by Sectors


Sector Poverty Measures
Head-Count Ratio
Education 1.554
Health 1.177
Service 1.124
Other Agriculture 1.090
Food Grain 1.036
Construction 0.846
Export Industries 0.789
Processed Food 0.689
Other Industries 0.602
Clothing 0.393
Machinery 0.211
Source: CIRDAP (1997)

156
Table 13.17 Medium-Term Outlay for Poverty Reduction Programmes
As % of GDP 2002-03 2003-04 2004-05 2005-06
Human Poverty Plus 1.5 2.26 2.36 2.47
Safety Net
Income Poverty 1.00 1.31 1.37 1.49
Infrastructure 0.75 1.06 1.11 1.18
Total 3.25 4.64 4.84 5.13
Additional 1.39 1.59 1.88
Source: A National Strategy for Economic Growth, Poverty Reduction And Social Development. March, 2003
Note: The figures in the table are based on the following assumptions:
1. It is estimated that about 22 to 33 percent of total public expenditure have been spent directly on poverty
alleviation programmes in FY03. It is assumed that of the total public expenditure at least 22 percent (3.25
percent of GDP) are directed to poverty reducing programmes.
2. Expenditure to Safety Net Programmes from the Revenue Budget varies between 0.5 to 1.2 percent of GDP.
Again, it is assumed that at least 0.5 percent of GDP will go to safety net programmes, which is also true for
FY03.
3. Of total development expenditures, the share of poverty alleviation programmes, in physical infrastructure is
24 percent (0.75 percent of GDP), in employment generation and income-enhancing programmes is 40
percent (1 percent of GDP), and human poverty reduction including safety net is 36 percent (1.5 percent of
GDP).
4. Any additional resource to the social sector, physical infrastructure sector and rural infrastructure sector is
assumed to be directed towards poverty reduction programmes.

At the government level, different ministries and agencies viz., Ministry of Agriculture, Ministry
of Women and Children Affairs, Ministry of Fisheries and Livestock, Ministry of Youth and
Sports, Ministry of Social Welfare, Ministry of Disaster Management and Relief, Bangladesh
Rural Development Board (BRDB), Local Government Engineering Department, Bangladesh
Small and Cottage Industries Corporation etc., have their own programmes. Besides, Food for
Work, VGD, rural road/infrastructure construction/ maintenance programmes etc. also create
employment. On the other hand, education expansion programmes, e.g., Food for Education,
special subvention and financial support, free primary education, directly reduce educational
costs. A social awareness is evident in social welfare, women empowerment, children rights,
which inspire them for improved life style.

Sectoral Allocation in Revenue and Annual Development Programme:

Government has been attaching top most priority to poverty alleviation in all the Developments
Plans and has been implementing a number of projects aimed at poverty alleviation under both
Revenue Budget and Annual Development Programmes (ADP). The major strategy for poverty
alleviation is human resource development and the base of human resource development is
education, health, nutrition, rural development and women development. Table 13.18 shows that
in 1991-92 16.3 percent of ADP allocation was spent in social sector aimed at poverty alleviation
and it rose to 26.0 percent in 2002-03. In 1991-92 allocation in social sector accounted for 24.22
percent of revenue budget which is stood at 22.6 percent in 2002-03. In 1991-92 the social sector
outlay against total government outlay (Development + Revenue) stood at 20.4 percent and in

157
2002-03 it rose to 24.0 percent. But analysis of the budget for 2002-2003 shows that expenditure
on poverty alleviation is not only confined to social sector, public outlays in other sectors such as
physical infrastructure, industry and utility services etc. do contain expenditure that also
positively contribute to reduction of poverty. According to this analysis it is found that
approximately 31 percent of revenue and 48 percent of ADP outlays have been earmarked for
poverty alleviation. So real expenditure on poverty alleviation is larger than the social sector
estimates.

Table 13.18 Allocation in Social Sector* in the Revenue and Annual Development
Programmes

Sector 1991-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02 2002-03
1.Allocation in 1913 2315 2500 2840 3042 3242 3709 4099 4532 5018 5380 5709
Social Sector of
Revenue
24.2 27.2 27.3 27.6 25.7 25.9 25.6 24.4 24.6 24.3 23.7 22.6
2. As percent of total
Revenue Expenditure
(1/5*100)

3. Allocation in 1163 1382 1901 2718 2447 2919 2893 3263 3761 4239 3884 4442
Social Sector of
Annual Development
Programme

4. As percent of total 16.3 17.0 19.9 24.4 23.4 24.9 23.7 23.3 22.8 23.3 24.3 26.0
ADP Expenditure
(3/8*100)

5. Total Revenue 7900 8510 9150 10300 11814 12535 14500 16765 18444 20662 22692 25284
Allocation
6. Total in Social 3076 3697 4401 5558 5489 6161 6602 7362 8293 9257 9264 10151
Sector (1+3) (dev. +
rev.)
7. As percent of 20.4 22.2 23.5 25.9 24.7 25.4 24.7 23.9 23.7 23.8 23.9 24.0
Govt. Expenditure
(6/(5+8)*100
8.Total ADP 7150 8122 9564 11150 10448 11700 12200 14000 16500 18200 16000 17100
allocation
9.As % of GDP 2.6 2.9 3.3 3.6 3.3 3.4 3.3 3.4 3.5 3.7 3.4 3.4
Source: Finance Division, Ministry Of Finance, On the basis Of revised Budget
*1.Education and Religion 2.Health and Family Planning 3.Social welfare & Women Affairs and Youth Development
4. Sports and Cultural Affairs 5. Labour and Manpower

Safety Net Programmes: To supply the ultra poor with food and create income-generating
activities for them, the government provides resources from the revenue budget every year. The
amount of resources, utilised allocated in Food for Work (FFW), Gratuitous Relief (GR), Test
Relief (TR), Vulnerable Group Development (VGD), Vulnerable Group Feeding (VGF)
programme etc. during 1996-97 through 2003-04, is shown in Table 13.19.

158
Table 13.19: Safety Net Programmes
(In crore Tk.)
Programme 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
1. FFW 810.81 836.00 715.58 806.00 885.00 705.00 451.00 237.00
2. GR & TR 256.10 258.71 210.23 272.00 199.00 248.00 204.04 202.72
3. VGD 215.27 225.09 208.90 228.00 236.00 243.00 240.69 219.53
4. VGF 0 76.24 584.81 229.00 297.00 131.00 108.52 172.52
5. School feeding 0 1.02 0 - 0 0 0 0
6. Other 15.24 0.51 65.88 1.00 86.09 94.67 93.04 72.00
Total 1297.42 1397.57 1785.40 1536.00 1703.09 1421.67 1097.2929 903.77
Growth (%) 35.00% 7.72% 27.75% -13.97% 10.88% -16.52% -22.82% -17.64%
GDP10 180701.3 200176.6 219697.2 237085.6 253546.0 273201.0 300485.0 --
Total/GDP
0.72% 0.70% 0.81% 0.65% 0.67% 0.52% 0.37% --
(%)
Source: Budget documents

Special Programmes: Poverty alleviation is one of the prime economic programmes of the
government. Strengthened poverty alleviation programmes have been accommodated on a
priority basis in the government's "100 Day Programme" declared by the Hon'ble Prime Minister.
Hon'ble Prime Minister in her speech addressed to the Secretaries on 9th April, 2003 reminded
that the Government has the responsibility to fulfill basic needs of a large number of poor people
of the country. She laid special emphasis on implementation of several programmes on a priority
basis. Included among them are tree plantation, aquaculture, goat rearing, primary and womens'
education, information and communication technology, library development, childrens' rights,
vocational and technical education, housing for distressed people. Achieving self-reliance and
poverty alleviation is largely dependent on the success of these programmes. Moreover the
government is also going to implement a set of new programmes that would help efforts meant
for poverty alleviation. Among these programmes, two projects, a) Abasan Project and b) Poverty
Alleviation and Goat Development Project are worth mentioning. Besides, the government has
also decided to continue several specific programmes, which are already under implementation.
These are: 1) Allowance for elderly poor people, 2) Grihayan Tahabil to provide credit and grant
to the shelterless poor, 3) Karmasangthan Bank for employment generation for the unemployed
youth, 4) Destitute women allowance, 5) Widow and destitute women allowance program 6)
Special micro-credit programmes for the acid-burnt women and the physically retarded.

Based on the recommendations of Secretary's Committee on poverty alleviation a report focusing


on the coordination between various micro-credit programmes targeting poverty reduction and
employment generation and similar programmes of Karmasangsthan Bank has been prepared. On
the basis of this report, a decision has been taken to form a Cabinet Committee for co-ordinating

10
New GDP series.

159
the micro-credit programmes at government and non-government levels. Besides, a decision has
also been taken to examine the feasibility of initiating micro-credit programmes in other
scheduled commercial banks for Small Enterprises Development similar to those undertaken by
Agrani Bank.

Poverty alleviation and Goat Development Project:

Local Black Bengal goat is one of the most important animal resources. Eighty percent of the
total goat population in the country are reared by the rural poor. Government has taken a national
programme on ''poverty alleviation by goat rearing'' in consideration of its economic and social
importance for poverty alleviation, self-employment, enhancing supply of nutritions and
expanding export industries on leather and meat processing. Five-Year (2002-03 to 2006-07)
Action Plan has been formulated by a task force comprising representative from both government
and non-government organisations for implementation of this program all over the country. It is
noteworthy that the contribution of this animal resource to our national economy is about Tk.500
crore per year. Consequently, the existing number of 14.8 million goat population is expected to
increase to 53.33 million during next five years according to Action Plan target. In order to
increase the goat population 20,000 small farmrs (2-5 goat) and 4,000 intensive farmers (>25
goat) will be provided support during 2003. The number of farmers will increase to 1,00,000 and
12,000 respectively during the five years. 10,000 goats will be distributed as donation among
rural distressed women and poor farmer. On the basis of number of goats each farmer will get
Tk.5000 to Tk.15, 000 as micro-credit from government organisation and farmers having a
number of goats above 25 will get Tk.50,000 from bank as credit with lower interest rate. The
total project expenditure has been estimated at Tk.208.41 crore and the number of beneficiaries of
the projects will be 2.6 lakh.

Widow and Distressed Women Allowance Programme:

There is an ongoing programme for providing allowance to the helpless and the distressed
women. Under this program, 4 lakh distressed women have been provided with such allowance in
4,479 unions of 461 upazilas during the period from 1998 to 1999. In July 2002 the number of
unions had been increased to 4,488. Similarly the number of 'C' category Pourashavas had been
increased to 152. Besides, 62 'A' and 40 'B' category Pourashavas have been included in the
allowance programme. In 2002-03 the number of beneficiaries per ward has been increased to 6
from 5 persons. In the case of 'C' category Pourashava the number of beneficiaries is 11 per
ward while in 'A' & 'B' category Pourashava the number is 10 per ward and the total number of
beneficiaries is 2,66,580. To accommodate, these beneficiaries the allocation has been raised to
Tk. 40 crore from 25 crore in the budget of FY 2002-03.

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Old age allowance:

An old age allowance is being provided to 10 oldest poor persons of whom at least 5 must be
women from each ward of every union in the country. In this way more than 4 lakh poor elderly
people are being benefited in 4,479 unions of 461 upzilas and 135 municipalties of 'C' category.
Ministry of Social Welfare/ Department of Social Services is responsible for implementation of
the programme. There were provisions of Tk. 26 crore and Tk. 49 crore for this purpose in the
budget of FY1997-98 and 1998-99 respectively. From July 2002 the number beneficiary unions
has been increased to 4488. Similarly the number of beneficiaries under "C' category Pourashava
has been increased to 152. Besides 62 'A' category 40 'B' category Pourashavas have been are
brought under this programme. The number of beneficiaries increased has been to 12 from 10 per
ward in FY 2002-03. This year the number of total beneficiaries is 4,99,662. Out of the total
number of beneficiaries, 10 beneficiaries have been drawn from each ward under 'C' category
pourasavas, 2 beneficiaries have been drawn from each ward under 'B' category pourasavas, 1
beneficiary has been drawn from each ward under 'A' category pourasava. In the current year,
budget allocation has been raised to Tk.75 crore from Tk.50 crore.

Special Micro credit Programmes for Acid-burn and the Physically disabled:

Government has allocated a total of Tk. 40 crores for implementation of the programme for
Mitigation of Risk of Natural Disaster and the programme on Rehabilitation of Acid-burnt
Women and the physically handicapped during FY 2002-03 under Revenue Budget. Of the total
allocation the programme on Mitigation of Risk of Natural Disaster accounts Tk. 25.00 crore
while Tk. 15.00 crore goes to the programme on Rehabilitation of Acid-burnt Women and the
physically handicapped. Under this programme 22,000 persons affected by natural calamities and
15,000 Acid-burnt and physically handicapped persons will be benefited. Present government has
decided to establish safe home in each of the 6 Divisions as custodian of women, children and girl
who are presently under custody of Thana Hazat and Jail. Under the Hon'ble Prime Minister's
directive special Micro credit programme for the development of disabled has been introduced.
Disabled persons will be selected by the DSS/Disabled Foundation, each will be provided with
maximum credit up to Tk. 50,000 under this programme without collateral security for their self
employment creation and raising the standard of living.

Grihayan Tahabil (Housing Fund): Grihayan Tahabil, a specific programme for poverty
alleviation, has been introduced to solve the housing problem of the homeless, poor and low-
income people in the country. The government allocated an initial amount of Tk.50.00 crore in
the budget of FY 1997-98. By now, the amount of the Tahabil has been raised to Tk. 98.00 crore.
As of June, 2003 an allocation to the tune of Tk. 83.70 crore was made to finance the rural

161
housing scheme. Out of this allocation Tk. 71.70 crore was earmarked for credit and Tk. 12.00
crore for grant. Against this allocation an amount of Tk. 48.88 crore has been released . The
credit programme has covered 251 upzilas of 62 districts of the country. Under this programme
(Table 13.20) 23,010 houses have already been constructed by June, 2003 and about 1 lakh 15
thousand 50 people have been benefited. An amount of Tk.10.00 crore has been sanctioned to
BRAC for construction of a hostel in Dhaka for women workers. A steering committee formed
with nine members to govern and manage the Tahbil has been functioning.

Table 13.20: Status of Grihayan Tahabil


(In crore Tk)
Particulars 1998-99 1999-00 2000-01 2001-02 2002-03 Cumulative up
to June'03
a. Allocation
(i) Loan 17.80 25.10 14.20 - 14.60 71.70

(ii) Grant 5.00 - 7.00 - - 12.00


Total 22.80 25.10 21.20 - 14.60 83.70
b. Disbursement
(i) Loan 4.55 21.28 16.15 1.90 5.00 48.88
(ii) Grant 5.00 - 5.54 - - 10.54
Total 9.55 21.28 21.69 1.90 5.00 59.42
c. Recovery
(i) Target - 1.16 3.21 7.23 6.34 17.94
(ii) Achievement - 1.14 3.18 5.80 4.81 14.93
(iii) % of achievement - 98.28 99.07 80.22 75.87 83.22
d. Beneficiary
(i) No. of housing units - 11,123 8,334 2,963 586 23,010
(ii) Persons - 55,635 41,670 14,815 2,930 115,050
Source: Grihayan Tahabil, Bangladesh Bank

Karmasangsthan Bank: Being managed by a Board, Karmasangsthan Bank formally


commenced its operation on 22 September 1998 for employment generation of the unemployed
youth of the country in different profitable and production oriented sectors by providing loans.
Up to June 2003, the cumulative loan disbursement and recovery stood Tk. 96.09 crore and Tk.
55.15 crore respectively, implying that the rate of recovery was 74.71 percent. The number of
beneficiaries in 64 districts of the country stood at 32,203 (Table 13.21). Notable among the
major fields of the bank's financing are handloom, poultry farm and dairy farm.

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Table 13.21: Micro-credit Programme of Karmasangthan Bank

Particulars 1999-00 2000-01 2001-02 2002-03 Cumulative up


to June'03
Disbursement (crore Tk.) 5.77 33.74 28.17 27.54 96.09
Recovery (crore Tk.) 1.00 7.93 19.92 26.18 55.15
Recoverable (crore Tk) 1.23 10.55 30.22 32.46 74.71
Rate for recovery (%) 81% 75% 66% 81% 74%
Average loan per borrower (Tk) 40013 29864 29508 29032 29835

Major sector of loan


disbursement (000 Tk)
Handloom 900 4355 2047 1989 12591
Poultry - duck farm 29141 78121 22421 26305 157127
Dairy farm 11697 26521 12243 15897 67723
Others 15962 228403 244989 231281 723531

Total 57700 337400 281700 275472 960972


Samity/Association/organ/Branch 24 71 84 85 85
No. of districts 23 56 63 64 64
No of Beneficiaries 1442 11298 9546 9486 32207

Source: Karmasangsthan Bank

Special Credit Program:

Jatiya Mohila Sansgtha has been implementing a credit program titled "Self-Employment Credit
Program" for the self-reliance of the poor unemployed women through their district and upazila
offices utilising 1 crore 20 lakh received from the Prime Minister's Special Fund. Under this
programme, the poor unemployed women are provided with credit between Tk. 5,000 to
Tk.20,000 and in special cases Tk. 50,000.

Palli Progati Project

This program has been launched under an agreement between the Bangladesh Krishi Bank and
Bangladesh Rural Development Board (BRDB) to provide micro-credit to the farmers of 338
unions under 338 upazilas. The project will be implemented by 2004-05. No collateral security
will be required to avail micro-credit up to Tk. 12,000. Availing of any " Micro Enterprises Credit
" ceiling from Tk. 15,000 to 50,000 by middle and large farmers requires collateral security.

Micro Enterprise Development for the Adivasis Monipuri (MEDAM) Credit Programme.

The Monipuri community's women of the greater Sylhet have been receiving micro-credit since
1994-95 for handicraft industries specially handloom and cottage industries. The maximum credit
ceiling under this pragrammes is Tk. 25,000. However under a separate credit pragramme the
Monipuri women, would be provided with credit to the tune of Tk. 35,000 without any collateral
security for their handlooms operations.

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Special Credit Programme for the Rakhain Community of Cox's Bazar.
A good number of people from the Rakhain Community produce and sell different handicrafts
and products of cottage industry. They have been availing maximum credit facilities up to Tk.
25,000 per person under landless and marginal farmers credit programme operated by bank.
Under a separate credit programme, however, they will be provided with credit up to a maximum
limit of Tk. 30,000 without collateral security.

ABASHAN (Poverty Alleviation & Rehabilitation) PROJECT:


This project has been launched by the Prime Minister's Office for poverty alleviation as part of
the electoral commitment of the Government. This is being implemented under the direct
supervision & guidance of the Hon'ble Prime Minister. This project will be implemented over a
period of four years (July 2002- June 2006) at a cost of Tk. 447 crore. Abasan project aims to
alleviate poverty by providing land accommodation, training, credit, education, health service,
family planning, income-generating activities, pure drinking water, electricity, improved
transportation system, facilities for tree plantation to 65,000 landless, homeless and destitute
families. Under this project , the adult members of 65,000 families will be provided training for
skill development, human development and awareness building at a cost of Tk. 15 crore. Again
these families will be provided with a credit of Tk. 15,000 per family. An allocation of Tk. 35
crore has been made for the propose. In the current fiscal year this project will rehabilitate 25,000
families. Already a proposals for establishing 127 Abasan villages has been approved by the
Hon'ble Prime Minister. Once these villages are established 7,663 families will be rehabilitated.
Armed Forces Division 'in aid of civil power' will implement the construction work of this
project. Once implemented at the joint initiative of both the civil administration and armed forces,
above three lakh people of 65 thousand families will be directly benefited. They will get their
own accommodation and employment, which in the process, will augment their income and
improve their living standard. Above all, if the project is implemented successfully by June 2006,
this will greatly contribute to the reduction of rural poverty.

Rural Infrastructure Development Programme:


Local Government Engineering Department (LGED): This Department under the Ministry of
Local Government, Rural Development and Cooperatives has been implementing various
infrastructure projects, especially rural roads, bridges/culverts, growth centres, construction of
embankment project etc., for employment generation in the rural areas. Thus employment for
about 89.52 crore man days has been created during 1991-92 through 2002-03. During this
period, a total of 72,237 km (earth road 45,664 km and paved road 26,573 km) B-type feeder road
and rural road and 3,60,415 m bridges/culverts have been constructed. Besides, 1,549 growth
centres have been developed. 640 UP complexes have been constructed and plantation has been
carried out along 11,304 km roadside. These programmes have generated employment for 7.50
crore man days up to June, 2003 of FY 2002-03 (Table 13.22).

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Table 13.22: Rural Infrastructure Development Programme under LGED
Activities Cumulative up 1998-99 1999-00 2000-01 2001-02 2002-03 Cumulative (up
to June '98 to J une '03)
Earth Road (km) 14844 5888 5525 10102 4555 4,750 45,664
Paved road (km) 11621 1946 2142 3870 3255 3,739 26,573
Bridge/Culvert (metre) 118876 34757 46448 67449 50882 42,003 3,60,415
Growth Centre (no) 693 213 176 225 124 118 1549
Employment Generation 3464.31 1141.34 1565.95 1173.00 856.68 750 8951.87
(lakh man days)
Source: LGED

Urban Poverty Reduction Programme: The government has been implementing Urban
Infrastructure Development Programme for urban poverty alleviation, and simultaneously
continuing the micro-credit programme too. To increase the family income of the selected slum
dwellers in 4 city corporations and 21 municipalities, LGED has disbursed about Tk. 2.50 crore
as revolving loan under Slum Development Project assisted by United Nations Children's
Emergency Fund (UNICEF). The revolving loan fund provided from this project later increased
to Tk. 3.22 crore, which is again utilised as revolving loan fund in 'Urban Basic Service Delivery'
Project supervised by the relevant city corporations and municipalities. In the light of the
experiences gained from the above-mentioned projects, the relevant city corporations and
municipalities have been managing revolving loan fund activities for poverty alleviation .
Besides, LGED has been disbursing micro-credit for self-employment generation through
Secondary Town Infrastructure Development Project-2, Urban Poverty Alleviation Project
through Local Partnership and Integrated Food Security Programme aided by United States
Agency for International Development (USAID). An amount of Tk. 4.88 crore has been
disbursed as micro-credit to 14,061 families of 119 slums in 22 municipalities since 1995-96
under Secondary Town Infrastructure Development Project-2 and Tk. 19.61 crore has been
disbursed as revolving loan to 33,243 families in the slum areas under Jessore, Tongi, Dinajpur
and Mymensingh municipalities since 1999-00 under the said Integrated Food Security
Programme.

Palli Daridrya Bimochan Foundation (PDBF): The objectives of the Palli Daridro Bimochon
Foundation are to alleviate poverty and promote social and economic development of the poor
and the disadvantaged. This foundation was established in April 30, 2000 with all assets and man-
power of 139 Thana Assetless Central Cooperative Societies under Rural Development-12
Project of BRDB. Its goal was to strengthen economic and social development of the rural poor
and disadvantaged people and promote gender equality. Currently the foundation is carrying out
its operating in 149 upazilas of 21 districts where 3,31,397 assetless women and men have been
organised into 66,279 groups. These upazilas constitute about one third of the geographical area
of the country with the highest incidence of rural poverty. About 90 percent of the beneficiaries
are women. PDBF disbursed successfully a total amount of Tk.149 crore among the members of

165
the societies during FY 2002-2003 under micro-credit program. Besides, the total amount of the
savings of the beneficiaries is Tk. 46.45 crore and the recovery rate is 98 percent. To achieve
PDBF's objectives, training has been imparted for human resource development for about 50 lakh
mandays.

Bangladesh Rural Development Academy (BARD): BARD, Comilla has been implementing a
project entitled “Small Farmers and Landless Labourers Development” in 30 upazilas of 8
districts in the country. Under the project, small farmers, landless labourers and poor women are
being organised into non-formal groups. In addition the project provided training for skill
development and credit support for income generation and capital formation. In total 82,396
members were enrolled in the project upto June, 2002 in 12,771 groups. Another project titled
Comprehensive Village Development Program (CVDP) has been under implementation. Under
this project 15,586 members have been enlisted upto January, 2003. BARD disbursed loan to the
tune of Tk.82.26 crore up to June 2003 and the rate of recovery stood at 76.72 percent.

Rural Development Academy (Bogra): RDA, Bogra has been implementing Comprehensive
Rural Development Project, and Primary Afforestation and Empowerment Project for poverty
alleviation. The cumulative disbursement and recovery of credit under these projects stood at Tk.
8.68 crore and Tk. 8.54 crore respectively up to June, 2003.

Social Services Activities:

The Department of Social Services (DSS), has been implementing poverty reduction
programmes through Rural Social Services (RSS), Urban Community Development (UCD)
programme and Rural Maternity Center (RMC) in all upazilas and towns & thus making
important contribution to the overall development of the country. Under these programmes
revolving funds are used for initial investment and reinvestment. The initial total investment for
these three programmes amounted to Tk.152.40 crore. The cumulative disbursement of these
three programmes stood at Tk. 520.78 crore up to June, 2003, and the cumulative recovery was
Tk. 474.59 crore implying that the rate of recovery stood at 91 percent. The total number of
beneficiary families through these three programmes was 23,58,003. The number of beneficiaries
through vocational training was 12,65,623 persons, through social activities was 2,46,573 persons
and through literacy programmes was 14,67,905 persons. 5,76,300 persons have been imparted
awareness on primary health care. 11,39,606 persons have been motivated to have small family
11,22,578 seedlings have been distributed for successful social forestry programmes.

Self-Employment of the Youth:

The Department of Youth Development (DYD) trained 21,14,939 young men and women during
1991-92 to FY 2002-03 under different programmes. Of the total trained youth 11,80,798 have
got self-employed. A programme is being implemented for reducing poverty of rural landless and

166
poor people under the title "Family Based Employment Programme" in 82 upazilas under revenue
budget. Since the commencement of the programme and up to June, 2003 a total number of
5,00,293 youth has been trained for the purpose of self-employment. Since the inception of the
credit programme of the DYD till June, 2003 Tk.515.86 crore has been disbursed to 5,91,638
beneficiaries as credit. Average recovery rate of credit disbursed is 89.72 percent.

Activities of the Co-operative Department:

In order to improve the poverty situation of the country Co-operative Department with the
spontaneous participation of the rural and urban lower and lower middle class people organised a
total number of 1,40,927 societies up to June, 2003 and got them registrated. Among these 52,234
societies, the Cooperative Department through its direct supervision organised 43,87,636
individual cooperators. These societies have accumulated a fund amounting 351.13 crore through
collection of shares, savings deposits from the members. The department has launched a project
titled ''Strengthening of Co-operative Department and Development of Entrepreneurs through
cooperative to create income generating employment for poverty alleviation". An amount of
Tk.4.00 crore has been allocated during FY 2002-03 for this project and Tk.1.00 crore has been
spent against various professional co-operative organisations from the allocation. The department
has implemented ''Emergency Rehabilitation Project of Bangladesh National Fishermen Co-
operative Society Ltd" to rehabilitate the cyclone and tidal bore affected poor fisherman of 14
coastal areas at a cost of Tk. 107.11 crore. The project provided 600 fishing boats and other
fishing equipments to the fisherman. The recovery of loan disbursed by the project stood at Tk.
48.40 lakh.

Micro Credit Programmes

NGO Activities: In FY2001-02 the total number of NGOs registered with NGO Affairs Bureau
for receiving foreign assistance were 1671 and the number of projects were 746. According to
CDF statistics up to June, 2002 a total of 681 NGOs have been operating micro-finance
programmes. The total number of beneficiaries are 1.27 crore with male and female 0.18 crore
and 1.09 crore respectively. During the period cumulative disbursement among members was Tk.
18,733.92 crore. Rate of recovery was 97.17 percent. Total net savings was Tk. 1197.80 crore. Of
the total disbursement 41.79 percent was invested in small business, 17.64 percent in livestock
12.31 percent in agriculture and 7.39 percent in fisheries. Six NGOs namely BRAC, ASA,
Proshika, TMSS, Swanivar Bangladesh, CARITAS disbursed 80.67 percent of the total micro-
credit. Out of this credit, 23.64 percent and 8.99 percent were received from Palli Karma Sahayak
Foundation and local banks respectively (Table 13.23 and 13.24).

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Table 13.23: Micro Credit Disbursement Programme of Four Major NGOs (up to June' 02)
(in crore Tk.)

Member (Thousand) % Of Cumulative % Of Savings % Of


NGO
Up to June ,2002 Total Disbursement Total Total
BRAC 3505 27.03 7759.38 41.42 461.46 38.53
Proshika 2636 20.33 2061.19 11.00 164 13.69
ASA 1981 15.28 4370.42 23.33 201.01 16.78
Swanirvar
Bangladesh 733 5.65 263.14 1.40 18.6 1.55

TMSS 353 2.72 375.65 2.01 26.27 2.19


Caritas 297 2.29 288.82 1.54 27.12 2.26
Others 3462 26.70 3615.32 19.30 299.34 24.99

Total
12967 100.00 18733.92 100.00 1197.8 100.00
Source: CDF Statistics, Volume 14.*Thangamara Mohila Sabuj Sangha (TMSS)

Table 13.24: Sources of Micro Credit and Revolving Loan Fund of NGOs
(In crore Tk.)
Source June' 98 June' 99 June'00 June' 01 June' 02
Fund % Fund % Fund % Fund % Fund %
PKSF 288.08 18.97 478.40 23.48 659.77 24.03 759.87 23.50 882.98 23.64

Local banks 183.36 12.07 234.30 11.50 310.00 11.29 295.96 9.51 335.92 8.99

Foreign donation 394.29 25.96 415.70 20.41 464.82 16.93 563.30 17.43 616.00 17.50

Members savings 302.02 19.89 481.30 23.63 694.35 25.29 832.19 25.74 951.81 25.49

Service charge 227.53 14.98 233.80 11.48 386.21 14.06 556.33 17.21 619.49 16.59

Others 123.55 8.13 193.60 9.50 230.90 8.40 225.18 6.97 328.54 7.79

Total: 1518.80 100.00 2037.10 100.00 2746.00 100.00 3232.83 100 3734.74 100.00

Source: CDF Statistics, Volume 5, 6, 7, 8, 9, 10,11, 12, and 13

168
Table: 13.25 Status of Micro Credit Programmes of Major NGOs
(In crore Tk.)
NGO Cumulative 1998 1999 2000 2001 2002 Cumulative
(up to Dec. '97)
(up to Dec.
'02)
ASA Cumulative up to December'99
Disbursement 827.41 2957.96 5936.16
Recovery 569.44 848.97 5010.98
Rate of recovery 99.93 99.96
(%)
Cumulative up to December'99
No. of branches 686 800 1172
No. of villages 12691 22078 32344
No. of beneficiaries 1144541 1467145 2136158
Female 1059553 1355657 2055621
Male 84988 111488 80537
BRAC
Disbursement 2160.45 845.10 1084.30 1354.60 1509.98 1706.59 8661.02
Recovery 1789.68 711.39 916.43 1253.92 1457.47 1614.78 7743.67
Rate of recovery 98.30 98.20 98.40 98.60 98.85 99.27 99.27
Cumulative up to December'99
No. of villages 37740 50910 64212
No. of village 63846 90950 113756
organization
No. of beneficiaries 2234668 3348646 3531513
Female 2122935 3256611 3516838
Male 111733 92035 14675

PROSHIKA
Disbursement 541.19 277.36 312.09 327.95 394.10 406.76 2259.45
Recovery 392.96 234.82 291.40 330.20 360.07 428.40 2037.85
Rate of recovery 97.00 96.00 97.00 95.00 93.00 93.00 93.00
Cumulative up to December'99
No. of villages 11438 14559 25275
Group 74623 99096 153241
No. of beneficiaries 1417837 1899660 2902423
Female 856702 1153950 1760819
Male 571135 745710 1141613
Swanirbar
Bangladesh
Disbursement 150.14 15.46 19.04 29.36 39.86 39.46 293.32
Recovery 121.26 6.59 13.10 21.31 31.72 33.32 227.3
Rate of recovery 90.50 82.62 91.54 83.24 95.65 98.64 86.99
Cumulative up to December'99
No. of villages - 138705 161326
Group - 693525 806628
No. of beneficiaries - 509292 609950
Female - 184233 196678
Source: Concerned NGOs.

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Bangladesh Rural Advancement Committee (BRAC): Established mainly for relief and
rehabilitation activities in 1972, BRAC is, at present, operating in a range of areas such as credit
disbursement, non-formal education for both children and adults, primary health care, legal
counselling on women rights and so on. Up to December 2002, a total amount of Tk. 8861.02
crore has been disbursed as microcredit to about 35.31 lac beneficiaries (female 99 percent) in
460 upazilas of 64 districts, and the recovery rate is 99.27 percent (Table 13.25). The amount of
savings of the beneficiary groups is Tk. 529.40 crore up to December 2002.

ASA: ASA has been operating micro credit programme since 1992. The cumulative credit
disbursement and recovery are Tk. 5936.16 crore and Tk. 5010.98 crore respectively up to
December, 2002. The recovery rate is 99.96 percent. The number of beneficiaries is 21.36 lakh
of which 95.71 percent are women (Table 13.25). In 2002 the average loan disbursed per member
was Tk.7507.00.

PROSHIKA: Established in 1976, PROSHIKA has been carrying out a range of activities like,
credit support, fisheries and livestock development, sericulture development, irrigation, health
and nutrition, installation and distribution of tube wells, eco-friendly agriculture, social forestry,
housing programme etc. A total of Tk. 2259.45 crore has been disbursed as credit till December
2002 to 29.02 lakh members in 23,219 villages and 2,056 slums under 57 districts. The recovery
rate is 93 percent (Table 13.25).

Swanirvar Bangladesh: Established in 1975, this organisation has been carrying out its
operation in the field of family planning and mother-child care activities alongside micro credit
programme. At present, its activities have been expanded to 13,051 villages of 170 upazilas. Up
to December 2002, a total of Tk. 293.32 crore has been disbursed to 8.06 lac borrowers of which
about 6.09 lakh (75 percent) are women. The rate of recovery is 86.99 percent (Table 13.25).

Micro Credit Programme of Three Specialised Institutions

Grameen Bank: Though this bank was established in 1983 by an ordinance, it started its
activities in 1976 as an experimental project. Later it expanded the operation by organising the
asset less people and providing them credit support for income generation and capital and asset
building. An amount of Tk. 18,020.93 crore has been disbursed as credit by June, 2003 to about
27.87 lakh members in 390 upazillas of 60 districts through 1,182 branches. The amount of
recovery is Tk. 16,595.58 crore during this period. The bank's operation reached 42,611 villages
in the country. Grameen Bank members had saved more than Tk. 843.84 crore in their savings
accounts. A total of Tk. 778.97 crore for housing loan has been disbursed up to June 2003. With
these housing loans Grameen borrowers have built 5,69,690 houses.

170
Palli Karma Sahayak Foundation (PKSF): Established in 1990, this institution has been
providing micro-credit to the targeted poor people (people having ownership up to 0.50 acre of
land and assetless people) through partner organisations (NGOs). Among the credit activities,
paddy husking, nursery, cane work, cow fattening, poultry rearing, rickshaw and van procurement
and other small business etc are notable. Up to June 2003, PKSF has disbursed a credit of Tk.
1,50,695.11 lakh to about 41,72,595 borrowers through its 213 partner organisations which
include small organisations as well as big organisations like BRAC, ASA, Proshika and Ansar
VDP Bank. Ninety percent of PKSF beneficiaries are female and the rate of credit recovery is 98
percent.

Bangladesh Rural Development Board (BRDB): BRDB has been working in the field of rural
development, especially, towards poverty alleviation through cooperatives and non-formal group
network throughout the country with the financial and technical support of the Government of
Bangladesh and development partners. The target groups of the programme include small farmers
(holding up to 0.50 acre of land), and assetless women and men. Family planning, health and
education programmes are also included in the credit and training activities. During the period
from 1990-91 to 2002-03 ( up to June,2003), 15.95 lakh members under 58,389 societies of 449
upazilas have borrowed Tk. 2430.29 crore, of which, Tk. 2171.08 crore has been recovered.
Among the projects implemented for poverty alleviation the notable ones are: Rural
Development-5 in 27 upazilas, Rural Livelihood Project in 152 upazilas, Rural Poverty
Alleviation Project in 123 upazilas, Self-employment Project for Women in 21 upazilas of Jessore
District, Integrated Women Development Project in 200 upazilas, Social Development Project
through the Participation of Local People for Poverty Alleviation in 7 upazilas of Sylhet, Rajshahi
and Patuakhali Districts aided by UNDP.

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Table 13.26: Micro Credit Programme of three Specialised Institutions
(In Crore Taka)
Institution Cumulati 1997-98 1998-99 1999-00 2000-01 2001-02 2002/03 Cumulative
ve up to up to June-03
June ‘97
Grameen Bank
Disbursement 7909.20 1907.91 1855.35 1431.62 1600.79 1436.25 1879.81 18020.93
Recovery 6634.80 1690.50 1836.86 1626.32 1601.22 1529.55 1676.33 16595.58
Rate of recovery (%) 97.12 94.04 92.28 88.77 89.18 98.29 99.00 99.00
Cumulative up to December 1999
No. of branches 1086 1141 1182
No. of villages 37109 39395 42611
No. of beneficiaries 215790 2369458 2786748
5
Female 203728 2245762 2657105
6
Male 120619 123696 129643
PKSF Cumulative up to December 1999
Disbursement 467.47 247.24 118.06 253.88 303.04 1389.69
Recovery 110.20 59.84 11.04 26.68 159.38 367.14
Rate of recovery (%) 99.11 99.54 100 99.57 98.35 98.35
Cumulative up to December 1999
No. of branches 140 170 213
No. of 672119 1533117 4172595
beneficiaries
Female 615543 1398250 3755335
Male 56576 134867 417260
BRDB Cumulative up to
December 1999
Disbursement 1308.43 305.77 219.80 278.52 317.77 2430.29
Recovery 1167.30 275.46 205.44 243.19 279.70 2171.08
Rate of recovery (%) 94% 92 93 92 93 93
Cumulative up to December 1999
Samiti - 58389
No. of - 1594734
beneficiaries
Female - 1130942
Male - 463792
Source: Concerned institutions

Status of Micro Credit Disbursement of Scheduled Banks

Commercial banks have also been participating in poverty alleviation programmes and providing
credit support to landless and small farmers. Besides their own programmes, they also provide
credit to different organisations including NGOs. The status of credit disbursement is shown in

172
Table 13.27. Up to December 2002, the cumulative credit disbursement and recovery stand at
Tk. 8400.75 crore and Tk. 7829.54 crore respectively. The number of beneficiaries are 1 crore 22
lakh 87 thousand 162 and the recovery rate is 93.20 percent.

Table 13.27: Status of Micro Credit Disbursement of Nationalised (Scheduled) Banks*


(In crore Tk)
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Dec, 2002
Bank Cumulative (Dec'02) Cumulative
Sonali Bank
Disbursement 2813.92 294.93 255.48 167.45 330.43 307.57 206.22 4376
Recovery 2488.78 276.1 123.61 243.92 345.5 434.36 258.43 4170.7
Rate of recovery (%) 88.45 93.62 48.38 145.67 104.56 141.87 125.32 95.35
No. of beneficiaries 4410000 730000 500000 186457 490815 446966 254491 7018729
Agrani Bank
Disbursement 636.78 100.18 195.75 129.04 91.34 102.39 65.35 1320.83
Recovery 645.29 87.05 141.75 125.11 113.74 112.77 71.4 1297.11
Rate of recovery (%) 101.34 86.89 72.41 96.95 124.52 110.14 109.26 96.20
No. of beneficiaries 2288082 114723 240600 144019 75485 76616 48478 2988003
Janata Bank
Disbursement 1021.21 95.06 142.21 111.92 131.93 113.29 57.32 1672.94
Recovery 893.18 106.42 78.31 116.89 127.31 119.53 56.45 1498.09
Rate of recovery (%) 87.46 111.95 55.07 104.44 96.50 105.51 98.48 89.55
No. of beneficiaries 287368 28775 25670 88778 89500 88400 39500 647991
Rupali Bank Ltd.
Disbursement 17.18 0.48 0.86 0.91 1.05 1.6 1.39 22.93
Recovery 15.95 0.66 0.55 0.82 1.1 1.09 0.57 20.74
Rate of recovery (%) 92.84 137.50 63.95 90.11 104.76 102.83 41.01 90.45
No. of beneficiaries 23274 631 1290 1302 1189 1676 1987 31349
Bangladesh Krishi
Disbursement 243.24 98.3 144.43 123.39 120.36 90.92 33.6 854.24
Recovery 167.55 76.44 101.84 118.17 118.18 101.44 42.66 726.28
Rate of recovery (%) 68.88 77.76 70.51 95.77 98.19 111.57 126.96 85.02
No. of beneficiaries 538445 136834 376638 134556 120882 87274 36035 1430664
Rajshahi Krishi
Disbursement 56.84 7.27 21.43 21.43 21.81 18.00 7.03 153.81
Recovery 45.27 5.96 8.48 14.71 17.06 17.84 7.3 116.62
Rate of recovery (%) 79.64 81.98 38.57 68.64 78.22 99.11 103.84 75.82
No. of beneficiaries 71050 8077 14920 22560 22950 25287 5582 170426
Total
Disbursement 4789.17 596.22 760.16 554.14 696.92 633.23 370.91 8400.75
Recovery 4256.02 552.63 454.54 619.62 722.89 787.03 436.81 7829.54
Rate of recovery (%) 88.87 92.69 59.80 111.82 103.73 124.29 117.77 93.20
No. of beneficiaries7618219 1019040 1159118 577672 800821 726219 386073 12287162
Source: Related Banks

*
Rate of recovery has been calculated in Tables 13.27 and 13.29 as follows: Rate of recovery = (Recovery/Disbursement) x100

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Micro-credit Program of other Commercial and Specialised Bank: Micro credit Program of
other commercial and private banks are also in operation besides NCBs (table: 13.28). Up to June
'02 the total number of beneficiaries were 2,33,370 and cumulative disbursement was Tk.299.04
crore.

Table 13.28 Micro-credit Programmes of other Commercial and Specialised Banks

Commercial and Number of Beneficiaries Disbursement up to Rate of


Specialised Bank Women Man Total June'02 (in Crore Taka) Recovery (%)
Social Invest Bank Limited 4700 1300 6000 16.21 94.00
National Bank Limited 1900 50 1950 7.55 95.00
Islami Bank Limited 7379 98041 105420 167.02 99.00
The Trust Bank Limited 20,000 0 20,000 50.85 95.00
Basic Bank Limited 40,000 60,000 10,000 57.41 99.00
Total 73,979 1,59,391 2,33,370 299.04 --
Source: CDF statistics, Volume 14

Micro Credit Programmes of Administrative Ministries/Divisions

The government has been disbursing micro-credit for poverty alleviation through different
administrative Ministries/Divisions/Departments. The cumulative credit disbursement and
recovery till December, 2002 stood at Tk. 4269.50 crore and Tk. 3508.38 crore respectively. Of
the total allocation under micro credit programmes undertaken by different Ministries/Divisions,
55.06 percent carried out by Rural Development and Co-operative Division, 12.14 percent by
Ministry of Social Welfare, 4.63 percent by Ministry of Women and Children's Affairs, 11.70
percent of Ministry Youth and Sports, and the rest by other Ministries/Divisions (Table 13.29).
To sustain the micro-credit programmes for poverty alleviation, the government has given more
importance to micro-enterprise development. The Ministry of Fisheries and Livestock including
Ministry of Finance are working in this area. To develop small entrepreneurship, Ministry of
Finance has been implementing a Small Enterprise Development Project through Agrani Bank,
and Community Livestock and Dairy Development Project through Grameen Matshya
Foundation.

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13.29: Status of Micro Credit of Administrative Ministries/Divisions (In Crore Taka)
Ministry/Division Agency Cumulative up to 2002-03
June'98
1999-00 2000-01 2001-02 ( Dec.'02)
Cumulative up to Dec'02
Ministry of Banking Wing:
Finance Disbursement 39.84 18.31 20.32 23.38 12.33 114.18
Recovery & Rate (%) 23.02(57.78) 13.6(74.28) 16.16(79.53) 19.43(83.11) 10.58(85.81) 82.79(72.51)
Share (%) 1.67 3.39 4.07 4.38 3.83 2.67
Rural BRDB
Development & Disbursement 1337.31 305.77 219.8 278.52 130.49 2271.89
Cooperative Recovery & Rate (%) 1095.64(81.93) 205.33(67.15) 205.44(93.47) 243.19(87.32) 125.12(95.88) 1944.85(85.60)
Division Share (%) 56.03 56.62 44.00 52.12 40.58 53.05
BARD
Disbursement 51.91 5.98 8.17 8.23 4.25 78.54
Recovery & Rate (%) 44.33(85.40) 7.47(124.92) 8.3(101.59) 8.31(100.97) 4.11(96.71) 72.52(92.34)
Share (%) 2.17 1.11 1.64 1.54 1.32 1.83
RDA
Disbursement 2.62 1.42 1.41 1.5 0.55 7.5
Recovery & Rate (%) 2.43(92.75) 1.39(97.89) 1.4(99.29) 1.44(96.00) 0.54(98.18) 7.2(96.00)
Share (%) 0.11 0.26 0.28 0.28 0.17 0.18
Ministry of Directorate of Women
Women and Disbursement 149.09 15.95 19.91 10.52 2.79 198.261
Children Affairs Recovery & Rate (%) 80.77(54.17) 14.45(90.60) 15.9(79.86) 9.64(91.63) 2.14(76.70) 122.9(61.99)
Share (%) 6.25 2.95 3.99 1.97 0.87 4.63
Jatiyo Mohila Sangstha
Disbursement 9.42 4.27 4.45 1.08 0.47 19.69
Recovery & Rate (%) 4.81(51.06) 3.09(72.37) 2.82(63.37) 3.95(365.74) 1.18(251.06) 15.85(80.50)
Share (%) 0.39 0.79 0.89 0.20 0.15 0.46
Ministry of Social Social Welfare
Welfare Disbursement 326.39 47.68 51.17 47.93 46.9 520.07
Recovery & Rate (%) 296.15(90.74) 45.43(95.28) 47.34(92.52) 43.15(90.03) 40.9(87.21) 472.97(90.94)
Share (%) 13.67 8.83 10.24 8.97 14.58 12.14
Ministry of BMET:
Labour and Disbursement 9.66 2.15 0.38 0 0 12.19
Employment Recovery & Rate (%) 3.4(35.20) 4.68(217.67) 6.54(1721.05) 7.72(0) 4.07(0) 26.41(216.65)
Share (%) 0.40 0.40 0.08 0.00 0.00 0.28
Cabinet Division * Disbursement 2.14 0.64 1.27 2.78 2.16 8.99
Recovery & Rate (%) 2.07(96.73) 0.6(93.75) 1.15(90.55) 2.18(78.42) 1.69(78.24) 7.69(85.54)
Share (%) 0.09 0.12 0.25 0.52 0.67 0.21
Ministry of Dept. of Fisheries:
Fisheries and Disbursement 7.84 0.28 6.84 10.4 5.51 30.87
Livestock Recovery & Rate (%) 3.36(42.86) 0.1(35.71) 5.2(76.02) 6.22(59.81) 0.79(14.34) 15.67(50.76)
Share (%) 0.33 0.05 1.37 1.95 1.71 0.72
Depart of Livestock:
Disbursement 33.07 28.53 12.21 13.14 7.8 94.75
Recovery Rate (%) 17.73(53.61) 28.44(99.68) 11.39(93.28) 12.49 (95.05) 0(0.00) 70.05(73.93)
Share (%) 1.39 5.28 2.44 4.86 2.43 2.51
Ministry of BSCIC:
Industries Disbursement 69.38 16.42 18.97 23.19 11.17 139.131
Recovery & Rate (%) 50.68(73.05) 14.78(90.01) 16.6(87.51) 18.45(79.56) 10.2(91.32) 110.71(79.57)
Share (%) 2.91 3.04 3.80 4.34 3.47 3.25
SERWTCI
Disbursement 11.87 0.6 1.08 1.16 0.72 15.43
Recovery & Rate (%) 8.16(68.74) 0.8(133.33) 1.06(98.15) 0.97(83.62) 0.37(51.39) 11.36(73.62)
Share (%) 0.50 0.11 0.22 0.22 0.22 0.36
Tula Unnayan Board:
Ministry of Disbursement 2.4 0.35 0.19 0.194 0.17 3.30
Agriculture Recovery & Rate (%) 2.53(105.42) 0.37(105.71) 0.2(105.26) 0.205(105.67) 0(0.00) 3.31(100.03)
Share (%) 0.10 0.06 0.04 0.04 0.05 0.08
Dept. of Agriculture
Disbursement 23.33 10.59 16.3 33.9 50.35 134.47
Recovery & Rate (%) 21.04(90.18) 7.37(69.59) 7.84(48.10) 24.13(71.18) 33.34(66.22) 93.72(69.70)
Share (%) 0.98 1.96 3.26 6.34 15.66 3.14
Disbursement 21.95 7.32 6.65 8.99 0 44.91
Ministry of Land Recovery & Rate (%) 18.11(82.51) 4.24(57.92) 4.85(72.93) 7.92(88.10) 0(0) 35.12(78.20)
Share (%) 0.92 1.36 1.33 1.68 0.00 1.05
Local Govt. Local Govt. Division
Division Disbursement 6.17 3.29 18.91 13.5 12.06 53.93
Recovery & Rate (%) 6.03(97.73) 2.76(83.89) 3.15(16.66) 3.21(23.78) 7.41(61.44) 22.56(41.83)
Share (%) 0.26 0.61 3.79 2.53 3.75 1.26
Dept. of Youth
Ministry of Youth Disbursement 280.17 68.75 86.66 35.99 29.62 501.19
and Sports Recovery & Rate (%) 216.51(77.28) 45.99(66.89) 50.07(57.78) 55.09(153.07) 19.55(66.00) 387.21(77.26)
Share (%) 11.74 12.73 17.35 6.74 9.21 11.70
Ministry of Hand Loom Board
Textiles Disbursement 2.22 1.74 4.91 7.1 4.23 20.2
Recovery & Rate (%) 0(0.00) 0.6(34.48) 1.26(25.66) 2.2(30.99) 1.43(33.81) 5.49(27.18)
Share (%) 0.09 0.32 0.98 1.33 1.32 0.47
Total* Disbursement 2386.78 540.04 499.6 521.51 321.57 4269.50
Recovery & Rate (%) 1896.77(79.47) 471.62(87.33) 406.67(81.40) 469.90(90.10) 263.42(81.92) 3508.38(82.17)
100.00 100.00 100.00 100.00 100.00 100.00
Source: Concerned Ministries and Divisions. * IFAD project under Cabinet Division Completed June’02
Note. Figures in parentheses indicate rate of recovery. Shares (%) indicate share in total disbursement.

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CHAPTER-14
PRIVATE SECTOR DEVELOPMENT

The present government, recognising the private sector as the major driving force of the market
economy, is committed to take supportive steps towards enhancing the involvement and active
participation of the private sector in the overall development activities of the country.
Consequently, reform and liberalisation programmes have been made more functional and
effective to strengthen the structure of the market economy as well as to develop an efficient
private sector. Government is now changing its stand from the role of a regulator to that of a
facilitator and partner. Besides privatising the state owned enterprises (SOEs) and investment in
the traditional sectors, similar initiatives are also there to encourage private entrepreneurs in
different service sectors like power and gas, mineral resources, transportation and
communication, education and health. The initiatives taken under various policies that have been
formulated and implemented to support this goal are yielding substantial positive results towards
the overall development of the country.

Slowdown of the world economy along with the political unrest in the international arena had its
adverse impact on Bangladesh economy too. In particular, the export of ready-made garments and
knitwear suffered a serious set back. In spite of that, the multifaceted measures of the government
for stimulating investment, production and export as well as for infusing dynamism in the stock
market were successful to boost up the faltering economy. In this recovery process, private sector
has made its mark.

Developing a Private Investment Friendly Environment


Government has been striving for ensuring the much-desired private-investment-friendly
environment for achieving the coveted investment goal in the private sector. Various government
policies, specially the National Industrial Policy had its reflection. Moreover, several institutions
have been established to provide all out support to private investments. Establishment of the
Board of Investment and Privatization Commission, and development of the Capital Market are
three important ones among other such bold steps.

Industrial Policy Reform


The principal objective of the present Industrial Policy is to gear up the process of
industrialisation by attaching topmost priority on the private sector. With this end in view, all the
procedural and institutional processes required in establishing private industries have been made
simpler and unregulated. Under the current Industrial Policy, all the industries, except four
reserve sectors, have been made open for private investment. Moreover, foreign investors require
no permission for investing in any sectors, excluding the reserve ones. Irrespective of the amount
of investment and limit of equity share, joint venture or 100% foreign investment to set up new
industries or BMRE (Balancing, Modernisation, Replacement & Extension) of any existing

176
industry does not require permission from the government. Besides, many other facilities have
been offered to encourage investments in private sector which include: relaxing the Foreign
Exchange Control Act, increased tariff rebate, tariff rebate on imported capital machinery for
100% export-oriented industries, tax holiday, protection of industrial goods through tariff
rationalisation, simplification of the raw material import policy and reduction of tariff rate etc.

To attract foreign direct investment and private investment in Bangladesh, several steps have
been taken. Among these steps some important ones are:

• Enactment of the law regarding establishment of Export Processing Zone in private


sectors;
• Adopting policies for establishment of Power Generation Plants in private sector;

• Amendment of the Petroleum Act for encouraging private entrepreneurs in the Petroleum
sector;
• Opening up the telecommunication sector for foreign as well as local private investors;

• Encouraging private investments in infrastructure development as well as service sector.

Role of the Board of Investment*


The ‘Board of Investment' (BOI) is the apex body of the Government to support and facilitate
accelerated development of private industrial sector and placed under the Prime Minister's office.
The activities of BOI have again been reorganised in order to provide the local as well as foreign
private investors all out support and improved services. BOI has improved its courtesy services at
Zia International Airport, Dhaka to assist the prospective foreign investors on their coming to
Bangladesh and set up a Utility Service Centre at its HQ to render all sorts of counseling and
advice regarding required utility services to investors in setting up of their industries.

A database has been set up in BOI which would be able to provide necessary information to meet
demand of investors at home and abroad and thus, contributes not only to saving time
significantly but also to establish transparency. To provide rapid information-service to foreign
investors BOI has updated its interactive website. With introduction of e-governance soon,
foreign investors will be able to apply electronically for setting up of an industry from abroad and
can see for themselves the latest status of their applications by tracking down the file through
website. By providing these services, BOI endeavors to transform itself into a pro-active
organization that caters to the need of investors. A congenial atmosphere has already been created
for private investment and to gain confidence of investors.

177
Box 14.1: Investments Registered in the BOI
During financial year 2001-02, the Board of Investment has registered a total number of 2,964 units of
industries. Total investment outlay of these industries is 1,05,400 million taka (1,833 million US). Out of
2,964 industries, there are 2,875 domestic projects having an investment outlay of 88,060 million taka
(1,531 million US$) and 89 joint venture & 100% foreign investment projects having an investment
outlay of 17,340 million taka (302 million US$). The number of total projects registered from July 2002
to June 2003 is 2,200. The investment outlay of these industries is 1,37,711 million taka (2,395 million
US$) registering a growth of 30.7%. Out of these domestic investment is 1,16,526 million taka (2,027
million US$) in 2,101 projects. The investment, outlay of joint venture & 100% foreign investment
proposals is being 21,185 million taka (368 million US$) in 99 units.

Source: Board of Investment (BOI)


* This section has been rewritten based on the latest information provided by BIO.

Formation of the Privatisation Commission


To manage the privatisation programmes more efficiently, the 'Privatisation Commission' has
been established as institutional framework. Earlier, privatisation used to be carried out by
various agencies following different procedures which created confusions. To avoid of such
confusions, Privatisation Commission has been empowered to perform all the necessary
formalities regarding privatisation. Management of the industrial enterprises proposed for
privatisation would be vested with the Privatisation Commission. To ensure the privatisation of
the enterprise, the Commission would retain all the necessary power. The Commission would be
the only authority of supplying information, rendering advice, conducting discussion and
maintaining all sorts of contacts with the prospective buyers. To strengthen the role of the private
entrepreneurs in the economy, government has undertaken policies to privatise the SOEs and
other commercial & service providing organisations gradually.

In addition, the 'Privatisation Law - 2000' has been formulated to implement the privatisation
programme within a legal framework. Commensurate with the provisions of this Law, a more
detailed Policy called as "Privatization Policy - 2001' has also been formulated. Subsequently,
this Policy had been revised to make it more consistent with the widespread economic reform
programmes and socio-economic development imperatives of the present government. This
Policy protects the interests of the employees and other stakeholders, which would help to obtain
support from them in the privatisation procedure. The major principles of this Policy are as
follows:
• The government will take special care to ensure that the labour and staff are not left
deprived of their legal claims;
• Instead of considering maximum sale proceeds, government will consider issues like
additional employment and the buyer's interest, concrete plan and commitment for
developing the institution further;

178
• Closure of the enterprise will be cautiously avoided in most cases;
• Using the prevailing market price as selling price;
• Lawful right of the buyer would be ensured on the assets handed over;
• The principle of transparency would be followed at every stage in implementing the
privatisation programme of the government.

Privatisation Programme
Privatisation programme has been further strengthened in FY2002-03. Accordingly, important
reforms have been made in the privatisation policy to facilitate privatisation in the desired way.
The government has made a policy decision for selling the SOEs completely free from any
outstanding liabilities. All the existing liabilities of the enterprises proposed for sale would rest
with the government and the buyer would not have to take any responsibility for the same. It is
expected that these reform measures would add a new dimension and infuse extra dynamism in
the process of privatization. In order to obtain the realistic market price of the enterprises, new
directives have been prepared based on International Accounting Standards and they have been
incorporated in the draft Privatisation Regulations. Government has also decided to sell the
government owned shares of the selected companies in the Stock Exchange floor at par with their
current market prices. Besides, the draft of the Privatisation Regulations formulated by the
Commission is also in the process of approval by the government. A lot of changes have also
been made in the existing directives for valuation of the SOEs. It is believed that these reform
initiatives would accelerate the privatisation programme of the government.

Box 14.2: Privatisation Programme for different Organisations*


Since the inception of the Privatisation Commission (formerly called Privatisation Board) in 1993, a total
of 42 public enterprises have been privatised so far. Among these enterprises, 27 have been privatised
through sale and 15 have been privatised through selling of shares.
In FY2002-03, Letters of Intent have been issued to the prospective buyers for 6 industries after
completion of the tender process. Proposals for the sale of another 5 industries have also been approved
by the Commission on completion of the tender-process. International tenders have been invited for
selling another 19 industries. Besides, valuation of 30 industries has been completed for selling them and
valuation of another 19 are in the process. Meanwhile, the Commission has taken necessary initiatives
for the sale of 4 petroleum marketing and distribution companies.
* This section has been revised based on the latest information provided by the Privatisation Commission

Developing the Capital Market


Capital market has a very significant role in the private sector development and economic
prosperity of a country. To strengthen its role in the overall development of the country, various
reform measures had been initiated since the beginning of 1990s to make the capital market more

179
efficient, effective and reliable. Consequently, in 1993 the Securities and Exchange Commission
(SEC) had been established in Bangladesh. Later on, alongside the ongoing reforms, the
government took various initiatives for keeping the reform programme ongoing. Among them the
major ones are: structural development, modernisation of the programmes related to capital
market and adopting and using the international standards and procedures. In this regard Asian
Development Bank (ADB), World Bank and International Monetary Fund (IMF) have extended
valuable assistance. Besides, in order to enhance transparency in foreign investment in the capital
market, SEC made necessary rules for bringing the Securities Custodian within the scope of
registration. Included among the several initiatives under consideration are:
• Ensuring effective governance in the capital market, particularly for the listed companies;
• Preparing the financial statements according to the international standards and ensuring
transparency in the accounts by using the International Auditing Standards;
• Encouraging bond-issue and buying and selling of bonds by adopting the 'Securities and
Bond Issue Rules '.
• Helping public to invest in the capital market more prudently by providing them with the
credit rating services.

Along with a range of endeavours put in to inject dynamism and transparency in the capital
market, initiatives to enhance participation of the private sector continued unabated. 'Securities
and Exchange Commission (Mutual Fund) Regulations, 1997' has been adopted. A mutual fund
amounting five crore taka has already been formed. SEC has approved this fund under the Mutual
Fund Regulations. This mutual fund in the private sector would be considered as a milestone in
the capital market of the country. Moreover, a depository company has been established under
private initiatives to provide depository services.

To facilitate asset management, merchant banking and securities broking, the Investment
Corporation of Bangladesh (ICB) has been thoroughly reorganised and registered as three
subsidiary companies for simplifying institutional investments. To enhance institutional
investment further, the Commission (SEC) has arranged to provide the commercial banks
registration for doing the merchant banking activities by opening a separate wing without a
subsidiary company. Following this, the Prime Bank Ltd. has already received the license as a
merchant banker. Shares with fundamental base would increase in the capital market if shares of
SOEs, particularly from gas, power, fuel and communication sectors are transacted through the
stock exchange. Along with many other steps, the commission has therefore taken steps to float
government shares in the multinational companies and other companies through the stock
exchange.

180
Privatisation Activities in Various Sectors of the Economy
Infrastructure: Oil and Gas
Exploration of new gas fields and their development is of great significance for the economy.
Foreign investors have been permitted on attractive terms under Production Sharing Contracts
(PSC) for quick exploration and expansion of the gas resources. Consequently, a number of
multinational oil companies have responded positively. Under the first and second round bidding,
PSC has been signed for 12 blocks so far. The oil companies are: Occidental Exploration of
Bangladesh limited, UNOCAL, Cairn Energy and Holland Sea Search JV, Rexwood Okland JV,
United Meridian Corporation, UNOCAL/BAPEX, Chevron, Tallow, Texaco, BAPEX and Shell
Bangladesh Exploration and Development B.V. Meanwhile, one of these companies has
discovered a gas field, named Sangu, on the Bay of Bengal. Production from this gas field has
commenced since 1998 according to the PSC arrangement. Besides, another company has
explored two new gas fields in Bibiyana and Moulvibazar.

Government has taken initiatives for privatising six enterprises including three oil-marketing
companies of the Bangladesh Petroleum Corporation (BPC). Besides, the imports of lubricating
oil, LPG and transformer oil have been made open in consideration of the fact that the
participation of private fuel import and marketing companies would create a competitive market.
Power

The government has pledged to make electricity available to everybody by the year 2020. As a
policy to realise this vision, private sector participation is being encouraged in power sector.
Formerly, production, transmission and distribution of electricity were vested with the
Bangladesh Power Development Board (PDB). Government took initiative to change this
situation gradually. As a result, the private sector's role to power generation is enhancing. In
recognition of the need for private investment in the power sector, the government has formulated
the Private Sector Power Generation Policy in 1996.

Besides, policy has also been formulated in 1998 to facilitate private investments in
small-scale power generation plant (of 10 MW capacity). Under this policy, the investors
have been allowed to sell the surplus power after meeting their own need to the local
consumers. Investors are also allowed to set up power generation plants beyond 10 MW
capacity, if necessary. In FY2002-03, two power generation plants, AES Haripur 360
MW and AES Meghnaghat 450 MW, started power generation. As a result of these
initiatives, total power generation capacity rose to 3500 MW which was 2650 MW
previously.
The reform programmes initiated for enhancing overall efficiency in the power sector, coupled
with the policies for encouraging private sector investment, have started yielding positive results.
The notable ones among these achievements are:

181
• Under the adopted 'Private Sector Power Generation Policy of Bangladesh', approved for
power generation and distribution in the private sector, 1290 MW capacity power plants
has been established so far.
• Under the policies enunciated in 'Policy Guideline for Small Power Plants in Private
Sector', one 10 MW power plant has already been set up and some more are in the
progress.
• Along with Independent Power Providers (IPPs) in private sector, government has also
taken steps to install power plants in future with different mode of financing including
joint venture, commercial bank loan, self-financing. Under these initiatives,
establishment of three 450 MW power plants at Sirajgonj, Bheramara and Meghnaghat
are in progress.

Reform programmes have also been taken up to privatise some activities relating to the
transmission and distribution in the power sector. As part of this reform programme,
Power Grid Company of Bangladesh (PGCB) and Dhaka Electricity Company (DESCO)
have been established in 1996 under the provision of the Companies Act, 1994 for the
separation of the transmission system. PGCB has already acquired all the transmission
assets of PDB.
Information and Communication Technology
Developing a reliable information system has become highly essential for the efficient and
effective management system in both the public and private sector. Information and
communication sector has already been declared as the thrust sector in Bangladesh. Moreover, in
October 2002, the present government has formulated the 'National Policy on Information and
Communication Technology (ICT)'. Alongside the government sector, the participation of the
private sector in the development of ICT has highly been emphasized in this policy. The major
issues highlighted in this policy involving the private sector are:
• To develop skilled ICT manpower, ICT education would be introduced widely in
public and private educational institutions;
• To support the growing demand of the ICT sector, appropriate ICT infrastructure
would be established immediately both in public and private sector.
• To ensure public access to information, Cyber Kiosks would be set up in all post
offices, Union and Upazila complexes. Private sector participation would be
encouraged to set up these facilities.
• High speed gateway facilities would be provided for Internet Service Providers
(ISPs) on commercial basis.
• National Information Infrastructure (NII) would be developed and it would be
directly connected to Global Information Infrastructure through information
superhighway to create, collect and sell software and provide ICT enabled
services to the world market through involvement of both the public and private
sectors.

182
• The service sub-sector of the ICT industry would be dominated by local private
firms.
• Bangladesh Computer Council would encourage coordination of ICT related
R&D activities carried out by the public and private sector organisations.
• NGOs interested to contribute in the extension of ICT sector would be provided
with necessary support.
• Development of Bangladesh Health Portal should be given priority for
appropriate growth of e-health and telemedicine referral system. International
tele-consultation through telemedicine for critical patients would be promoted in
both private and public sectors.
• ICT would be used for online booking and ticketing services of all public and
private transport companies.

Telecommunication
Government has given permission to Bangladesh Telecom Pvt. Ltd. to introduce radio trunking,
naval-radio telephone network and paging and cellular radio telephone in 1989 for the first time
for encouraging private investment in this sector. Consequently, digital cellular mobile phone had
been introduced in private sector through invitation of international tender in 1995. As a result of
this initiative, three private operators (Grameen Phone Ltd., Telecom Malaysia International
(Bangladesh) and Sheba Telecom Pvt. Ltd) had been given license in 1996. Up to June 2003,
there are four private cellular mobile companies operating in Bangladesh which are serving
around 1379 thousands clients in total. The number of clients of these private companies as on
June 2003 is shown in Chart- 14.1.

Chart 14.1: Customer distribution of different private cellular


mobile companies (in thousands)

45
187

212

935

Grameen Phone Ltd T.M.International Bangladesh


Pacific Bangladesh Telecom Ltd Sheba Telecom Pvt. Ltd

In addition, two other companies have been providing fixed telephone lines in the rural
areas. They are: Bangladesh Rural Telecom Authority (BRTA) and the Rural
Telecommunication project of the Sheba Telecom Private Limited. Up to June 2003,
BRTA and Sheba have connected 22,404 and 2,944 fixed lines respectively.

183
Box 14.3: General Objectives of Bangladesh Telecommunication Regulatory Commission
Formerly, Ministry of Post and Telecommunication used to play the regulatory role in telecommunication
sector. With the enforcement of Telecommunication Act, 2001, Bangladesh Telecommunication Regulatory
Commission has assumed that role. General objectives of the Commission are:
• To encourage and develop a well disciplined telecommunication system capable of expediting and
integrating socio-economic development of Bangladesh.
• To ensure a reliable, reasonably priced and modern telecom and internet service for the majority of
the people keeping in view of the prevailing socio-economic condition of Bangladesh.
• Enhancing the efficiency and capacity of competitiveness of local telecommunication system at
national and international level.
• Prevention and abolition of existing discriminatory system in telecom services, gradually attaining
dependency on competitive market system and for that purpose, ensuring an effective regulation
consistent with the aims of the Commission.
• Introducing new telecom service and conducive environment for investment in telecommunication
sector for domestic and foreign investors and for expatriate Bangladeshis, etc.

To utilise ICT in the socio-economic development of the country and to meet the growing
demand in this sector, adequate and appropriate ICT infrastructure needs to be set up.
Telecommunication sector is an important infrastructure for ICT. Considering that, government is
committed to open the telecommunication sector for private entrepreneurs and investors.
Government is also committed to extend basic telecommunication facilities to the rural and
underdeveloped areas of the country to bring the greater mass into the stream of ICT activities by
involving both the public and private sector.

Transport Sector
Air Transport Sector: To make the domestic airlines internally competitive, Bangladesh
government approved private airlines in the domestic sector in the early nineties. Government has
opened air cargo for the private sector since 1996. Three private organisations have been
permitted so far for operating commercial flights in different domestic routes. These are: GMG
Airlines Ltd., Aero-Bengal Airlines and Air Parabat Ltd. Currently, GMG is operating in the
domestic routes on regular schedule. It has been flying to different local and international
airports. Air Parabat is operating seasonal flights to the southern and southwestern airports of the
country. Best Aviation and Bismillah Airlines are delivering private cargo service for the first
time. Moreover, some private airlines are planning to operate flights in the Short Take-off and
Landing (STOL) ports.

The effort initiated in 1999 for restructuring and commercialisation of Biman (Bangladesh
Airlines) through strategic partnerships with an established Airlines and/or financial institution
also continued in 2001. Though the consulting firm has completed its study, the recommendations
could not be implemented due to depressed condition in the aviation market. According to the
Privatisation Policy of the government, civil aviation authority has planned to privatise the non-

184
regulatory activities in the airport. In the meantime, initiative has been taken to employ private
companies for the operation and maintenance activities, except the regulatory ones, of the Shah
Amanat Airport. Besides, plan for privatising the 'cargo handling' in Zia International Airport is
under consideration.

Tourism: To attract and increase private investment in the tourism sector, government has started
privatising operations and managements of some of the commercial ventures of the Bangladesh
Tourism Corporation (Parjatan Corporation of Bangladesh). In the meantime, the management of
the following projects has already been privatised: Motel Probal (Cox's Bazaar); Motel Upol
(Cox's Bazaar) and Parjatan Restaurant (Madhobkunda). Besides, privatising the management of
several others are in progress. These are: Sylhet Parjatan Motel, Parjaton Motel Laboni (Cox's
Bazaar); Ruchita Restora and Bar (Dhaka) and Parjatan Motel (Bandarban and Khagrachari).
Moreover, PCB has undertaken several other projects for setting up new tourist's
spot/points/resorts on its own property either on Build, Operate and Transfer (BOT) basis or on
direct private investment. These projects are:
• Sylhet Amusement Shishu Park;
• A modern tourist spot with various facilities like, food village, auditorium, book shop and
amusement-point, in the vacant land of PCB's Head Office;
• A modern tourist resort in the vacant land of PCB's in Cox's Bazaar;
• A shopping complex cum international Hotel in the premises of the Parjatan Motel Soikat
in Chittagong;
• An international-standard tourist resort in Foy's lake in Chittagong;
• An international-standard Hotel in the premises of the Fairly House in Dhaka;
• A modern tourist complex in Muzgunni, Khulna; and
• Setting up a tourist's point at Mahastan Garh, Bogra;

It is believed that these undertakings in the tourism sector would increase private investments in
this sector encouraging the private entrepreneurs to invest more and more.

Bangladesh Railway (BR):


The process of involving private sector in the Railway sector has started since 1987. To improve
the quality of passenger-service, commercial activities of the train-service in different routes have
been privatised. Up to June 2003, operations of 46 trains, which include mail-train, express-train
and local-train, have been privatised. Privatisation of another 26 mail, express and local trains are
in the process. Moreover, on-board services of 16 inter-city trains have been outsourced to private
sector. The participation of private operators has raised the standard of services in this sector and
ensured comfortable and pleasant journey for long distance passengers.

185
Water Transport
The water transport policy of the government has encouraged the participation of private
entrepreneurs in this sector. At present private contactors are operating in all the terminals
(Ghats) of Bangladesh Inland Water Transport Authority (BIWTA) through leasing system.
Similarly, all the tankers of Bangladesh Inland Water Transport Corporation (BIWTC) are being
operated by the private operators. Stevedoring of the Chittagong and Mongla port are fully in the
hand of private entrepreneurs. Besides, container handling in Chittagong Port to some extent and
all containers of Inland Container Depot are being operated by private sector.

BIWTA has taken an initiative to install one inland container terminal in Khanpur of Nawabganj
and one in Pangaon of Dhaka by the private sector on the BOT basis. Chittagong Port Authority
is going to employ private operator to operate and manage the container terminal under
construction in the New Mooring area soon. Besides, BIWTA is planning to involve private
entrepreneurs in the development and management of nearly 400 landing stations. Mongla Port
Authority (MPA) has entered into contracts with 10 industries to operate its activities on its own
land under BOOT system on a 30-years' Lease Contract basis. Moreover, MPA is now attempting
to engage private operators to complete the 4 jetties under construction and operate them on
commercial basis. The Ministry of Shipping has recently established 'Bangladesh Land Port
Authority' that has decided to privatise the infrastructure development and operation of several
land ports. These are: Bhomra, Darsana, Sonamasjid, Hilli, Birol, Banglabandh, Burimari,
Haluaghat, Tamabil, Akhaura and Bibirbazaar.

The government has drafted the policies regarding participation of the private sector with the
assistance of Infrastructure Investment Facilitation Centre (IIFC). Necessary measures would be
taken to finalise this draft in 2003-04.

Financial Sector
Banking and Insurance: In the field of banking and insurance, private sector has a very active
and boisterous presence. Now, there are 40 private banks (30 domestic and 10 foreign) operating
in Bangladesh. 60 private insurance companies (43 domestic and 17 foreign) have got approval to
operate commercially. In addition to these banks and insurance companies, currently there are 28
financial institutions in the private sector. The existence of banks, insurance companies and other
financial institutions in the private sector has created a competitive environment in the financial
sector and that has remarkably improved the quality of services in this sector. Government is now
considering the privatisation of one of the nationalised commercial banks.
Education
Private sector is being encouraged in the education sector, particularly to reduce the pressure on
the revenue expenditure as well as to diminish our dependence on foreign countries for education.

186
This initiative encouraged establishment of many schools, colleges, madrasahs (religious
educational institutions) and universities in the private sector. Currently, there are 3,245 junior
schools, 15,849 secondary schools, 2,260 general colleges, 7 polytechnic institutes, 801 S.S.C.
vocational schools, 7,684 madrassas and 22 universities in private sector in the country.
According to the provisional data, up to 2002, the total number of registered and unregistered
private primary schools is 24,736, which was 24,667 in 2001. The number of private primary
schools from 1996 to 2002 in Bangladesh, in comparison with the government primary schools, is
shown in table 14.1 and Chart 14.2.

Table 14.1: Number of Primary Schools


Chart 14.2: Yearwise information on the number in the Government and Private sector
of Government and Private Primary School Year Government Private
50000
1996 37,710 26,405
Number of School

40000
1997 39,710 24,963
30000
1998 37,710 25,824
20000
1999 37,682 25,292
10000
2000 37,677 24,440
0
1996 1997 1998 1999 2000 2001 2002 2001 37,671 24,667
Government Private 2002 37,671 24,736
Source: Ministry of Primary and Mass Education

To encourage the expansion of female-education and empowerment of women, measures


have been taken to establish 'Asian University for Women' in Bogra in the private sector.
There have been initiatives to form a Private Sector Commission like Public Service
Commission for recruitment, promotion and transfer of teachers with a view to bringing
discipline in all the schools and colleges under Monthly Payment Order (MPO) scheme.
Initiative has also been taken to amend the Private University Law, 1992.
Health
Private initiatives are being encouraged in the health sector alongside the government-
efforts. To this end, the government provides grants from revenue budget to various
hospitals and other organisations operating in the private health sector. Currently, there
are 642 private hospitals and clinics having 11,660 beds in the country. The government
is encouraging establishment of private medical colleges. Now there are 20 registered
private medical colleges and 5 private dental colleges in the country. Moreover, the
support service and STD/AIDS programme under the Health and Population Sector
Programme (HPSP) are being implemented through the NGOs. Private health-institutions
are now providing specialised services and thereby, saving the country from substantial
drainage of valuable foreign currency. Besides, around 40 NGOs are receiving financial

187
supports for providing health services under the HPSP in collaboration with DFID. This
is being implemented by involving the NGOs under a programme named Bangladesh
Integrated Nutrition Programme.
Agriculture
Substantial changes have been made in the Agricultural Policy of Bangladesh to make it
consistent with market-oriented reforms. Various steps have been undertaken to
encourage private initiatives and to ensure an investment-friendly environment. Existing
policy-structure limits the role of the government in providing a set of public goods and
services vital for the sectoral growth of agriculture. These include: research, extension,
large-scale irrigation, land protection management, supplying of market-information etc.
In all other scopes of agricultural sector, private initiatives are being encouraged.
Selling shallow tube-well initiated the privatisation process in the agricultural sector in
1970-71, which accelerated the expansion of irrigation network. The privatisation process
of deep tube-well and low-lift pump started in 1979-80. Side by side, by the end of
1980s, substantial reforms took place in the small-scale irrigation development policy for
the development and privatisation of irrigation. Consequently, many small agricultural-
equipment had become available to the farmers. The irrigation system is now fully
privatised.
Special emphasis has been laid on the participation of the private entrepreneurs in the
production, processing and marketing of high quality seeds. The import of germplasm in
private sector is permitted for research, development and production of mother seeds.
Import and sale of seeds of all type of crops, except paddy, wheat, sugarcane, potato and
jute are open for the private sector. Moreover, private entrepreneurs have been allowed to
collect breeder seeds from various research organisations for the production and
distribution of mother seeds and others.
Fertilizer distribution through private sector started experimentally in one administrative division
in 1979. Later, in 1980, it was extended to all over Bangladesh. To encourage wholesale business,
relevant business people were allowed to sell fertilizers at any place in the country after collecting
them directly from the factories and ports (in case of imported fertilizer). The network in the
private sector is now managing the import and distribution of fertilizer at the market price.
Jute Industry
Raw Jute: Production of raw jute, its domestic use and export are in the private sector. Jute is
exported to 40/42 countries around the world. The continued effort of Bangladesh Jute
Association (BJA) for developing and maintaining foreign markets for raw jute as well as
ensuring its uninterrupted export is yielding into an earning of about Tk.350-400 crore worth of
foreign exchange every year from raw jute.

188
Jute Goods: In private sector, production and export of jute goods are being carried out by
Bangladesh Jute Mills Association (BJMA) and Bangladesh Jute Spinners Association (BJSA).
There are 99 jute mills in private sector (49 under BJMA and 50 under BJSA), among which 73
are in operation. In the FY2002-03, a target has been set for earning Tk.680 crore (Tk.68 billion)
from 2.25 lakh metric tons of jute goods.

Privatisation Process: In 1980 Bangladesh government decided to privatise the jute mills
gradually. In 80s, ownership of 35 mills had been transferred to the previous owners. In 1997,
one mill had been privatised and currently, another five are in the process of privatization.
However, the privatisation programme has become more active since the present government
took office. Adamjee Jute Mills has already been closed down.

Diversified Uses of Jute: Continuous efforts through private entrepreneurs is there to increase
diversified uses of jute. As part of this effort, in November 1999, an 'Investors Forum' was
formed in coordination with Ministry of Jute, Board of Investment, International Jute
Organization (IJO), EC delegation, Dhaka and Dhaka Chamber of Commerce & Industries. So
far, 15 projects have been identified for implementing in the private sector. An institutional set up
named Jute Diversification Promotion Centre (JDPC) is in place to extend assistance for
implementing these projects. Among the projects identified by the JDPC, implementations of two
have already started. One project would start commercial production soon. Moreover, another
project for producing pulp from jute, named 'Biotechnological Application of Enzyme for Making
Paper Pulp from Green Jute', is under implementation by International Jute Study Group (IJSG)
(former IJO).
Textile
There are more than 182 cotton-spinning mills in Bangladesh, of which 156 belong to the private
sector. In the spinning sub-sector, a quantity of about 32 crore kgs of cotton and artificial fibre is
being used every year. In the weaving sub-sector about 2.12 lakh out of 5.12 lakh handlooms are
in operation. There are 43 thousand looms comprised of specialised textile mills, powers looms
and weaving mills almost all of which are in private hands. There are about 178 semi-mechanised
and 115 mechanised dyeing and finishing units in the country producing 70 and 550 million
meters of textiles respectively. Production from these dyeing, printing and finishing factories
meet the export demand along with meeting most of the domestic demand. Among these privately
managed units, few units are engaged in supplying fabric for export oriented garments industry.

Readymade garments, operating in private sector, constitute the most important sub-sector of the
textile sector. There are about 3800 export-oriented garments industry in the country with a
production capacity of 180 million dozens of dresses. About 1.8 million people are employed in
this sector.

189
For the development of private sector, a number of projects has been undertaken. Notable among
them are: operation of public sector mills under service charge system; encouraging the private
entrepreneurs for setting up backward linkage industry; privatisation of the state owned textiles;
establishing garments-village; implementing the project 'Rajshahi Silk Industrial Estate' in the silk
producing area of Rajshahi; distribution of 906 plots at section-17, Mirpur, Dhaka to the
Benarashi weavers of Mirpur for setting up factory-cum-residences, show rooms and sales-centre
for production and marketing of handloom products; small credit programme costing Tk.50 crore
for the development of handloom in private sector etc.

The present government aims to develop a private sector led sustainable industrial-base to
accelerate the economic growth of the country. This has been reflected in the
government's undertaking to adopt a range programmes designed to support those goals.
The timely and appropriate strategies of the government resulted in acceleration of the
desired momentum in the private industrialisation in 2002-03. Private investment is
increasing on a desired scale. According to BOI statistics, during the first half of the
current fiscal year (July-December, 2002) the import of capital machinery by industrial
undertakings has increased by 48.23% compared to the import of the same period of
FY2001-02. The commencement of production in these industries would result in a
substantial growth in the industrial sector.

190
STATISTICAL APPENDICES

191
Appendix 1.1 : Macroeconomic Indicators :1991-92 to 2002-03
(in billion Tk.)
1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
GDP at current price 1195.4 1253.7 1354.1 1525.2 1663.2 1807.0 2001.8 2197.0 2370.9 2535.5 2732.0 3004.9
GDP at constant price 1392.0 1455.7 1515.1 1589.8 1663.2 1752.8 1844.5 1934.3 2049.3 2157.4 2252.6 2372.6
GDP Growth at constant price(%) 5.0 4.6 4.1 4.9 4.6 5.4 5.2 4.9 5.9 5.3 4.4 5.3
Per capita GDP at current price (Tk.) 10579.0 10991.2 11583.6 12838.2 13768.5 14739.1 16078.4 17394.9 18507.9 19518.6 20760.0 22525.1
Population (million) 113.0 114.9 116.9 118.8 120.8 122.6 124.5 126.3 128.1 129.9 131.6 133.4

Consumption 1029.7 1099.5 1176.7 1325.0 1418.4 1519.6 1653.2 1808.0 1946.9 2079.2 2235.9 2456.9
Public 53.2 62.1 66.1 70.6 73.2 78.9 94.7 100.8 108.4 114.3 136.6 148.9
Private 976.5 1037.4 1110.6 1254.4 1345.2 1440.8 1558.6 1707.1 1838.5 1964.9 2099.3 2308.0
Savings
Domestic 165.7 154.2 177.4 200.2 244.8 287.4 348.5 389.0 423.9 456.3 496.1 547.9
National 230.8 225.1 254.5 291.7 332.5 374.5 435.9 490.1 547.6 568.1 640.4 713.4
Investment 206.9 225.0 249.2 291.6 332.5 374.5 433.0 487.6 545.9 585.4 632.4 697.4
Public 83.4 81.2 90.0 102.8 106.7 127.0 127.5 147.6 175.7 183.8 174.0 202.0
Private 123.5 143.8 159.2 188.8 225.8 247.5 305.6 339.9 370.1 401.5 458.4 495.4
Budget
Total Revenue 98.8 114.5 124.9 150.1 153.3 173.9 190.2 197.7 200.7 243.4 278.9 310.7
Tax Revenue 78.2 91.0 95.8 120.5 121.2 142.6 153.9 161.7 160.8 197.8 213.3 249.7
NBR Tax Revenue 73.5 86.4 90.0 105.2 113.7 125.0 138.0 148.7 151.2 187.7 202.2 237.5
Non-NBR Tax Revenue 4.8 4.6 5.8 15.3 7.5 17.6 15.9 13.0 9.6 10.0 11.1 12.2
Non-Tax Revenue/1 20.6 23.5 29.1 29.5 32.1 31.2 36.3 36.0 40.0 45.6 65.6 61.0
Total Expenditure 155.5 162.5 203.7 220.1 231.6 240.8 258.6 297.8 344.6 374.0 407.6 437.1
Revenue Expenditure/2 79.5 84.7 91.1 101.5 117.1 123.0 142.3 165.6 182.0 205.4 227.0 252.9
ADP/3 56.6 62.9 87.9 101.2 98.7 108.9 108.7 123.3 152.2 159.0 150.5 169.0
Other Expenditure/4 19.4 14.9 24.8 17.5 15.9 8.9 7.6 8.9 10.5 9.6 30.1 15.2
Budget Deficit (excluding Grants) -56.7 -48.0 -78.8 -70.1 -78.3 -67.0 -68.4 -100.1 -143.9 -130.6 -128.6 -126.4
Budget Deficit (including Grants) -25.5 -16.0 -50.4 -34.3 -50.7 -35.6 -42.5 -70.9 -107.4 -103.4 -101.1 -101.9
Financing 76.0 70.7 75.8 67.9 75.5 76.5 77.7 97.1 126.8 122.6 129.6 125.4
Net Foreign Financing 53.5 56.1 51.7 57.3 46.0 49.7 45.9 54.5 59.3 51.5 58.1 69.9
Grants 31.2 32.0 28.4 35.8 27.6 31.4 25.9 29.2 36.5 27.2 27.5 24.5
Loans 30.3 33.5 33.9 34.1 31.3 31.8 34.0 41.7 42.7 46.7 55.3 74.3
Pricipal Repayments -8.0 -9.4 -10.6 -12.6 -12.9 -13.5 -14.0 -16.4 -19.9 -22.4 -24.7 -28.9
Domestic Financing 22.5 14.6 24.1 10.6 29.5 26.8 31.8 42.6 67.5 71.1 71.5 55.5
Bank Loan 14.4 3.0 7.6 -0.7 17.0 17.1 12.6 19.8 35.2 29.0 24.8 12.5
Central Bank -4.8 2.5 -4.4 2.4 17.8 14.5 8.1 10.7 17.4 20.1 18.8 -30.0
Commercial Banks 19.2 0.5 12.0 -3.1 -0.9 2.6 4.5 9.1 17.9 9.0 6.0 42.5
Public Loan (Net) 8.1 11.7 16.5 11.2 12.5 9.7 19.2 22.9 32.3 42.1 46.7 43.0
Imports 134.5 159.3 167.7 234.6 281.0 305.4 341.9 384.8 421.3 503.7 490.5 559.2
Exports 75.9 92.6 101.0 139.3 158.8 188.1 234.2 254.9 288.2 348.6 343.7 379.2
Trade Balance -58.6 -66.7 -66.7 -95.3 -122.2 -117.3 -107.7 -129.9 -133.1 -155.1 -146.8 -180.0
Current Account Balance -4.6 -10.6 -4.1 -27.1 -38.9 -23.5 -11.7 -18.9 -0.9 -55.3 14.0 19.0
Foreign Exchange Reserve(m. US$) 1608.0 2121.0 2765.0 3070.0 2039.0 1719.0 1739.0 1523.0 1602.0 1307.0 1583.0 2470
Net Foreign Assets 40.3 60.8 91.5 104.6 67.4 65.5 67.9 64.0 85.7 74.9 95.9 140.9
Broad Money (M2) 285.3 315.4 364.0 422.7 457.6 507.1 558.7 630.3 747.6 871.7 986.2 1140.0
Inflation 4.6 2.7 3.3 8.9 6.7 2.5 7.0 8.9 3.4 1.6 2.4 5.1
Source: Bangladesh Bank, BBS, Finance Division, NBR, ERD and National Savings Board.
Note: Budget & Financing figures of 2002-03 are based on MTMF .
1. As per convention of IMF, the loss of Railway and Post Offices have not been deducted from the Tax Revenue.
2. The losses of Railway and Post Offices have been added and food subsidies have been deducted to revenue expenditure.
3. The amount of self financing has been deducted from ADP budget.
4. The expenditures on Food, Capital and Development have been included in "Other Expenditure".

192
Appendix 1.2: Macroeconomic Indicators: 1991-92 to 2002-03
(As percentage of GDP)

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
Consumption 86.1 87.7 86.9 86.9 85.3 84.1 82.6 82.3 82.1 82.0 81.8 81.8
Public 4.5 5.0 4.9 4.6 4.4 4.4 4.7 4.6 4.6 4.5 5.0 5.0
Private 81.7 82.7 82.0 82.2 80.9 79.7 77.9 77.7 77.5 77.5 76.8 76.8
Savings
Domestic 13.9 12.3 13.1 13.1 14.7 15.9 17.4 17.7 17.9 18.0 18.2 18.2
National 19.3 18.0 18.8 19.1 20.0 20.7 21.8 22.3 23.1 22.4 23.4 23.7
Investment 17.3 17.9 18.4 19.1 20.0 20.7 21.6 22.2 23.0 23.1 23.1 23.2
Public 7.0 6.5 6.6 6.7 6.4 7.0 6.4 6.7 7.4 7.2 6.4 6.7
Private 10.3 11.5 11.8 12.4 13.6 13.7 15.3 15.5 15.6 15.8 16.8 16.5
Budget
Total Revenue 8.3 9.1 9.2 9.8 9.2 9.6 9.5 9.0 8.5 9.6 10.2 10.3
Tax Revenue 6.5 7.3 7.1 7.9 7.3 7.9 7.7 7.4 6.8 7.8 7.8 8.3
NBR Tax Revenue 6.1 6.9 6.6 6.9 6.8 6.9 6.9 6.8 6.4 7.4 7.4 7.9
Non-NBR Tax Revenue 0.4 0.4 0.4 1.0 0.5 1.0 0.8 0.6 0.4 0.4 0.4 0.4
Non-Tax Revenue 1.7 1.9 2.1 1.9 1.9 1.7 1.8 1.6 1.7 1.8 2.4 2.0
Total Expenditure 13.0 13.0 15.0 14.4 13.9 13.3 12.9 13.6 14.5 14.8 14.9 14.5
Revenue Expenditure 6.6 6.8 6.7 6.7 7.0 6.8 7.1 7.5 7.7 8.1 8.3 8.4
ADP 4.7 5.0 6.5 6.6 5.9 6.0 5.4 5.6 6.4 6.3 5.5 5.6
Other Expenditure 1.6 1.2 1.8 1.1 1.0 0.5 0.4 0.4 0.4 0.4 1.1 0.5
Budget Deficit (excluding Grants) -4.7 -3.8 -5.8 -4.6 -4.7 -3.7 -3.4 -4.6 -6.1 -5.1 -4.7 -4.2
Budget Deficit (including Grants) -2.1 -1.3 -3.7 -2.2 -3.0 -2.0 -2.1 -3.2 -4.5 -4.1 -3.7 -3.4
Financing 6.4 5.6 5.6 4.4 4.5 4.2 3.9 4.4 5.3 4.8 4.7 4.2
Net Foreign Financing 4.5 4.5 3.8 3.8 2.8 2.8 2.3 2.5 2.5 2.0 2.1 2.3
Grants 2.6 2.6 2.1 2.3 1.7 1.7 1.3 1.3 1.5 1.1 1.0 0.8
Loans 2.5 2.7 2.5 2.2 1.9 1.8 1.7 1.9 1.8 1.8 2.0 2.5
Pricipal Repayments -0.7 -0.7 -0.8 -0.8 -0.8 -0.7 -0.7 -0.7 -0.8 -0.9 -0.9 -1.0
Domestic Financing 1.9 1.2 1.8 0.7 1.8 1.5 1.6 1.9 2.8 2.8 2.6 1.8
Bank Loan 1.2 0.2 0.6 0.0 1.0 0.9 0.6 0.9 1.5 1.1 0.9 0.4
Central Bank -0.4 0.2 -0.3 0.2 1.1 0.8 0.4 0.5 0.7 0.8 0.7 -1.0
Commercial Banks 1.6 0.0 0.9 -0.2 -0.1 0.1 0.2 0.4 0.8 0.4 0.2 1.4
Public Loan (Net) 0.7 0.9 1.2 0.7 0.8 0.5 1.0 1.0 1.4 1.7 1.7 1.4
Imports 11.3 12.7 12.4 15.4 16.9 16.9 17.1 17.5 17.8 19.9 18.0 18.6
Exports 6.3 7.4 7.5 9.1 9.5 10.4 11.7 11.6 12.2 13.7 12.6 12.6
Trade Balance -4.9 -5.3 -4.9 -6.2 -7.3 -6.5 -5.4 -5.9 -5.6 -6.1 -5.4 -6.0
Current Account Balance -0.4 -0.8 -0.3 -1.8 -2.3 -1.3 -0.6 -0.9 0.0 -2.2 0.5 0.6
Net Foreign Assets 3.4 4.9 6.8 6.9 4.0 3.6 3.4 2.9 3.6 3.0 3.5 4.7
Broad Money (M2) 23.9 25.2 26.9 27.7 27.5 28.1 27.9 28.7 31.5 34.4 36.1 37.9
Source: Bangladesh Bank, BBS, Finance Division, NBR, ERD and National Savings Board.

193
Appendix 2: Gross Domestic Product (GDP) at Current Price
(crore Tk.)
Sector/Sub sector 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(prov.)
1. Agriculture & Forestry 26187 26900 31006 32438 35046 38136 42990 44692 45631 46003 48800
a) Crops & Vegetables 19144 19490 23057 23992 25997 28424 32395 33418 34064 33896 36035
b) Livestock 4498 4762 5055 5362 5697 6050 6443 6858 6893 7118 7474
c) Forestry 2545 2648 2894 3084 3352 3662 4152 4417 4674 4989 5291
2. Fisheries 5507 6582 7631 8550 9642 10874 12485 13674 13406 13897 14259
3. Minning & Quarring 1271 1370 1544 1669 1800 1952 2066 2311 2640 2997 3302
a) Natural Gas & Crude 802 841 923 992 990 1042 1080 1277 1502 1733 1894
Oil
b)Other Mineral Resources 469 529 621 677 810 910 986 1034 1138 1264 1409
4. Industry (Manufac.) 17995 19979 22456 24635 27060 31269 32783 34837 38234 41805 46238
a) Large & Medium 12616 14084 16034 17573 19031 22175 23527 24939 27340 29596 32558
b) Small 5379 5895 6422 7062 8029 9094 9256 9898 10894 12209 13680
5. Electricity, Gas & Water 1952 2112 2269 2401 2554 2643 2838 3072 3346 3640 4035
a) Electricity 1674 1790 1906 2020 2159 2213 2388 2579 2804 3053 3383
b) Gas 200 225 264 281 290 310 318 343 375 399 444
c) Water 78 97 99 100 105 120 132 150 167 188 207

6. Construction 7535 8320 9696 10999 12169 13859 15625 17622 19334 21159 23483
7. Wholesale & Retail Trade 14987 16359 18873 20608 22037 24844 27232 29204 32479 35312 38744
8. Hotel & Restaurent 730 804 884 978 1033 1156 1317 1463 1590 1740 1937
9. Transport, Storage & 11948 12683 13525 14483 15584 16741 18041 19743 22129 25524 31215
Communication
a) Land Transport 8389 8903 9531 10276 11050 12024 13083 14463 16098 18869 24105
b) Water Transport 2292 2288 2270 2282 2310 2326 2404 2490 2616 2725 2823
c) Air Transport 238 266 244 250 239 280 320 373 393 413 446
d. Support transport services,
411 429 530 585 616 641 676 772 934 992 1066
storage
e. Post & tele-communication 618 897 950 1090 1369 1470 1558 1645 2088 2525 2775
10. Financial Intermediations 1803 2006 2246 2517 2760 2992 3351 3648 3911 4207 4588
a) Bank 1597 1755 1930 2102 2243 2391 2639 2828 2988 3179 3430
b) Insurance 173 211 266 377 398 471 565 660 761 861 986
c) Others 33 40 50 78 119 130 147 160 162 167 172
11. Real Estate, Renting & other 10856 11996 13095 15104 16295 17629 19584 21139 22365 23995 25578
Business Activities
12. Public Administration and 3106 3381 3687 4016 4419 4960 5552 6234 6695 7117 7785
Defence
13. Education 2571 2824 3673 3304 3610 4137 4718 5386 5852 6352 6971
14. Health and Social Work 2926 3154 3380 3639 3942 4371 4842 5376 5722 6079 6545
15. Community, Social and 11357 12174 13073 14295 15381 17029 18497 20360 21665 23698 26684
Personal Services
Import Duty 4638 4768 6080 6688 7369 7585 7776 8325 8547 9676 10321
GDP at Current Market Price 125369 135412 152518 166324 180701 200177 219697 237086 253546 273201 300485
Growth Rate (%) 4.87 8.01 12.63 9.05 8.64 10.78 9.75 7.91 6.94 7.75 9.99
Source: BBS
Note: According to SNA 93. Base year: 1995-96.

194
Appendix 3: Gross Domestic Product at Constant Price (Base year: 1995-96)
(in crore Tk.)
Sector/Sub sector 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(prov.)
1. Agriculture & Forestry 32632 32420 31793 32438 34246 34808 35937 38425 40551 40300 41748
a) Crops & Vegetables 24829 24417 23582 23992 25538 25810 26614 28769 30548 29819 30775
b) Livestock 4984 5105 5231 5362 5500 5646 5798 5957 6124 6412 6701
c) Forestry 2819 2898 2980 3084 3208 3352 3526 3700 3879 4070 4272
2. Fisheries 6909 7455 7961 8550 9200 10026 11024 12002 11458 11713 11986
3. Minning & Quarring 1343 1412 1548 1669 1729 1828 1852 2028 2225 2326 2473
a) Natural Gas & Crude 802 841 923 992 982 1029 1004 1150 1311 1376 1485
Oil
b)Other Mineral Resources 541 571 625 677 747 799 848 878 914 951 989
4. Industry (Manufac.) 19377 20955 23152 24635 25879 28091 28988 30368 32398 34174 36436
a) Large & Medium 13785 14922 16630 17573 18270 19967 20803 21709 23130 24194 25656
b) Small 5592 6031 6522 7062 7609 8124 8185 8659 9267 9980 10780
5. Electricity, Gas & Water 2030 2163 2277 2401 2447 2496 2646 2826 3035 3267 3556
a) Electricity 1715 1820 1914 2020 2059 2086 2227 2380 2561 2760 3005
b) Gas 229 246 264 281 285 300 302 319 338 360 391
c) Water 86 97 99 100 103 110 117 127 136 146 161
6. Construction 8467 9252 1137 10999 11950 13083 14250 15459 16796 18243 19755
7. Wholesale & Retail Trade 17283 18243 19695 20608 21737 23038 24538 26328 28021 29868 31856
8. Hotel & Restaurent 845 888 932 978 1027 1094 1167 1247 1335 1427 1527
9. Transport, Storage & 123617 13124 13774 14483 15280 16149 17102 18142 19579 20863 22393
Communication
a) Land Transport 8916 9265 9740 10276 10835 11566 12332 13112 13947 14886 15930
b) Water Transport 2411 2366 2316 2282 2264 2242 2279 2319 2332 2340 2339
c) Air Transport 237 256 235 250 223 261 298 348 364 303 318
d. Support transport services,
434 440 532 585 589 609 635 718 848 809 822
storage
e. Post & tele-communication 619 797 951 1090 1369 1471 1558 1645 2088 2525 2985
10. Financial Intermediations 2175 2284 2400 2517 2646 2786 2937 3098 3270 3489 3732
a) Bank 1925 1998 2062 2102 2151 2227 2312 2402 2498 2636 2790
b) Insurance 210 240 284 337 381 438 496 560 636 714 802
c) Others 40 46 54 78 114 121 129 136 136 139 140
11. Real Estate, Renting & other 13661 14116 14607 15104 15638 16233 16853 17499 18096 18715 19370
Business Activities
12. Public Administration and 3494 3691 3856 4016 4238 4488 4743 5026 5322 5637 6027
Defence
13. Education 2892 3083 3222 3304 3462 3742 4030 4342 4651 5004 5398
14. Health and Social Work 3291 3444 3543 3639 3781 3954 4136 4335 4548 4789 5068
15. Community, Social and 13174 13535 13907 14295 14693 15112 15558 16033 16538 17073 17659
Personal Services
Import Duty 5378 5449 6172 6688 7332 7520 7669 7769 7913 8374 8276
GDP at Constant Market Price 145568 151514 158976 166324 175285 184448 193429 204928 215735 225261 237259
Growth Rate (%) 4.57 4.08 4.93 4.62 5.39 5.23 4.87 5.94 5.27 4.42 5.33
Source: BBS
Note: According to SNA 93. Base year: 1995-96.

195
Appendix-4: Sectoral Growth Rate of GDP at Constant Prices ( Base year:1995-96)
(in percentage)
Sector/Sub sector 1992-93 1993-94 1994-95 1995-96 1996-971997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(prov.)
1. Agriculture & Forestry 1.35 -0.65 -1.93 2.03 5.57 1.63 3.24¤ 6.92 5.53 -0.62 3.59
a) Crops & Vegetables 0.97 -1.66 -3.42 1.74 6.44 1.05 3.11 8.10 6.18 -2.39 3.21
b) Livestock 2.38 2.42 2.47 2.51 2.58 2.64 2.69 2.74 2.81 4.70 4.51
c) Forestry 2.97 2.80 2.84 3.46 4.03 4.51 5.16 4.94 4.85 4.91 4.97
2. Fisheries 8.49 7.91 6.79 7.39 7.60 8.98 9.96 8.87 -4.53 2.22 2.33
3. Minning & Quarring 8.91 5.15 9.65 7.81 3.56 5.76 1.32 9.48 9.75 4.53 6.32
a) Natural Gas & Crude Oil 12.25 4.83 9.88 7.41 -0.99 8.80 -2.46 14.55 13.99 4.93 7.92
b)Other Mineral Resources
4.30 5.62 9.33 8.40 10.23 7.02 6.18 3.47 4.19 3.96 4.00
4. Industry (Manufac.) 8.62 8.15 10.48 6.41 5.05 8.54 3.19 4.76 6.68 5.48 6.62
a) Large & Medium 9.00 8.25 11.44 5.67 3.97 9.28 4.19 4.35 6.55 4.60 6.04
b) Small 7.70 7.88 8.10 8.28 7.75 6.77 0.75 5.80 7.02 7.69 8.01
5. Electricity, Gas & Water 7.01 6.54 5.29 5.43 1.93 2.01 6.00 6.78 7.40 7.63 8.86
a) Electricity 7.12 6.11 5.17 5.52 1.98 1.30 6.75 6.87 7.60 7.78 8.85
b) Gas 3.24 7.42 7.43 6.24 1.39 5.30 0.63 5.61 6.05 6.53 8.41
c) Water 15.92 12.69 2.07 1.52 2.49 7.20 6.44 8.06 7.05 7.52 10.14
6. Construction 5.99 9.28 9.56 8.50 4.64 9.48 8.92 8.48 8.65 8.61 8.29
7. Wholesale & Retail Trade 3.08 5.55 7.96 4.63 5.48 5.98 6.51 7.30 6.43 6.59 6.66
8. Hotel & Restaurent 4.98 4.98 4.98 4.98 4.98 6.50 6.65 6.94 7.00 6.92 7.00
9. Transport, Storage & 3.04 4.02 4.95 5.15 5.50 5.61 5.90 6.08 7.92 6.56 7.33
Communication
a) Land Transport 3.91 3.91 5.13 5.50 5.44 6.75 6.62 6.32 6.37 6.73 7.02
b) Water Transport -2.99 -1.83 -2.12 -1.46 -0.84 -0.92 1.60 1.78 0.57 0.34 -0.05
c) Air Transport 11.81 8.17 -8.44 6.25 -10.68 16.89 14.46 16.80 4.62 -16.84 4.90
d. Support transport services,
9.17 1.20 21.02 9.98 0.72 3.36 4.24 13.15 18.10 -4.62 1.53
storage
e. Post & tele-communication 8.68 28.85 19.29 14.71 25.57 7.42 5.96 5.57 26.92 20.93 18.19
10. Financial Intermediations 2.84 5.01 5.09 4.87 5.14 5.27 5.40 5.50 5.54 6.70 6.96
a) Bank 3.83 3.75 3.22 1.94 2.34 3.49 3.85 3.87 4.01 5.42 5.83
b) Insurance -6.60 14.70 18.35 18.35 13.28 14.95 13.05 13.09 13.46 12.35 12.28
c) Others 10.86 14.82 17.07 46.36 45.34 6.50 6.20 5.54 -0.03 2.05 1.01
11. Real Estate, Renting & other 3.37 3.33 3.48 3.40 3.54 3.80 3.82 3.83 3.41 3.42 3.50
Business Activities
12. Public Administration and 14.77 5.64 4.47 4.16 5.50 5.90 5.70 5.97 5.88 5.92 6.93
Defence
13. Education 7.50 6.61 4.49 2.57 4.77 8.10 7.70 7.74 7.11 7.58 7.87
14. Health and Social Work 5.32 4.63 2.89 2.70 3.90 4.59 4.60 4.80 4.92 5.30 5.82
15. Community, Social and Personal 2.72 2.74 2.75 2.78 2.79 2.85 2.95 3.06 3.15 3.24 3.43
Services
Import Duty 10.97 1.33 13.27 8.35 9.63 2.57 1.97 1.31 1.84 5.84 -1.18
GDP growth rate (%) 4.57 4.08 4.93 4.62 5.39 5.23 4.87 5.94 5.27 4.42 5.33
Source: BBS

196
Appendix-5: Sectoral Share of GDP at Constant Prices (Base year: 1995-96)
(in prcentage)
Sector/Sub sector 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03
(prov.)
1. Agriculture & Forestry 23.28 22.20 20.81 20.32 20.39 19.67 19.35 19.49 19.51 18.58 18.23
a) Crops & Vegetables 17.71 16.72 15.43 15.03 15.21 14.59 14.33 14.59 14.70 13.75 13.44
b) Livestock 3.56 3.49 3.42 3.36 3.27 3.19 3.12 3.02 2.95 2.96 2.93
c) Forestry 2.01 1.98 1.95 1.93 1.91 1.89 1.90 1.88 1.87 1.88 1.87
2. Fisheries 4.93 5.10 5.21 5.36 5.48 5.67 5.93 6.09 5.51 5.40 5.23
3. Minning & Quarring 0.96 0.97 1.01 1.05 1.03 1.03 1.00 1.03 1.07 1.07 1.08
a) Natural Gas & Crude 0.57 0.58 0.60 0.62 0.58 0.58 0.54 0.58 0.63 0.63 0.65
Oil
b)Other Mineral Resources 0.39 0.39 0.41 0.42 0.44 0.45 0.46 0.45 0.44 0.44 0.43
4. Industry (Manufac.) 13.82 14.35 15.15 15.43 15.41 15.88 15.60 15.40 15.59 15.76 15.91
a) Large & Medium 9.83 10.22 10.88 11.01 10.88 11.29 11.20 11.01 11.13 11.16 11.20
b) Small 3.99 4.13 4.27 4.42 4.53 4.59 4.40 4.39 4.46 4.60 4.71
5. Electricity, Gas & Water 1.45 1.48 1.49 1.50 1.46 1.41 1.42 1.43 1.46 1.51 1.55
a) Electricity 1.22 1.25 1.25 1.27 1.23 1.18 1.20 1.21 1.23 1.27 1.31
b) Gas 0.16 0.17 0.17 0.18 0.17 0.17 0.16 0.16 0.16 0.17 0.17
c) Water 0.06 0.07 0.06 0.06 0.06 0.06 0.06 0.06 0.07 0.07 0.07
6. Construction 6.04 6.33 6.63 6.89 7.12 7.39 7.67 7.84 8.08 8.41 8.63
7. Wholesale & Retail Trade 12.33 12.49 12.89 12.91 12.94 13.02 13.21 13.35 13.48 13.77 13.91
8. Hotel & Restaurent 0.60 0.61 0.61 0.61 0.61 0.62 0.63 0.63 0.64 0.66 0.67
9. Transport, Storage & 9.00 8.99 9.01 9.07 9.10 9.13 9.21 9.20 9.42 9.62 9.78
Communication
a) Land Transport 6.36 6.34 6.37 6.44 6.45 6.54 6.64 6.65 6.71 6.86 6.96
b) Water Transport 1.72 1.62 1.52 1.43 1.35 1.27 1.23 1.18 1.12 1.08 1.02
c) Air Transport 0.17 0.18 0.15 0.16 0.13 0.15 0.16 0.18 0.18 0.14 0.14
d. Support transport services,
0.31 0.30 0.35 0.37 0.35 0.34 0.34 0.36 0.41 0.37 0.36
storage
e. Post & tele-communication 0.44 0.55 0.62 0.68 0.82 0.83 0.84 0.83 1.00 1.16 1.30
10. Financial Intermediations 1.55 1.56 1.57 1.58 1.58 1.57 1.58 1.57 1.57 1.61 1.63
a) Bank 1.37 1.37 1.35 1.32 1.28 1.26 1.24 1.22 1.20 1.22 1.22
b) Insurance 0.15 0.16 0.19 0.21 0.23 0.25 0.27 0.28 0.31 0.33 0.35
c) Others 0.03 0.03 0.04 0.05 0.07 0.07 0.07 0.07 0.07 0.06 0.06
11. Real Estate, Renting & other 9.74 9.66 9.56 9.46 9.31 9.18 9.07 8.88 8.71 8.63 8.46
Business Activities
12. Public Administration and 2.49 2.53 2.52 2.52 2.52 2.54 2.55 2.55 2.56 2.60 2.63
Defence
13. Education 2.06 2.11 2.11 2.07 2.06 2.12 2.17 2.20 2.24 2.31 2.36
14. Health and Social Work 2.35 2.36 2.32 2.28 2.25 2.23 2.23 2.20 2.19 2.21 2.21
15. Community, Social and 9.40 9.27 9.10 8.95 8.75 8.54 8.37 8.13 7.96 7.87 7.71
Personal Services
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source: BBS.

197
Appendix-6: Consumer Price Indices (CPI) for Middle Class Families of Dhaka City
(Base year: 1973-74=100)

Sector Weight 82-83 83-84 84--85 85-86 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98

(%)

General 100.0 326 357 397 436 481 536 579 633 689 724 734 747 786 818 850 904

Food 63.00 313 350 388 429 483 535 566 606 648 684 676 679 732 774 812 871

Energy and electricity 7.00 461 466 503 539 542 562 621 674 945 1008 1055 1061 1014 1030 1056 1082

Housing and household requisites 12.00 402 417 454 507 551 648 723 808 867 893 946 1019 1040 1047 1067 1110

Clothing and Footwear 6.00 200 225 255 274 293 319 348 374 399 410 422 431 439 439 473 493

Miscellaneous 12.0 299 335 392 419 460 524 598 707 720 756 788 805 860 883 899 976

Rate of increase (%) General - 9.8 9.7 10.9 9.9 10.4 11.4 8.0 9.3 8.9 5.1 1.4 1.8 5.2 4.1 3.9 6.4

Food - 8.7 11.8 10.9 10.6 12.6 10.8 5.8 7.1 6.9 5.6 -1.2 0.4 7.8 7.7 4.9 7.3

Non-food - 11.9 6.0 10.9 9.1 8.6 12.0 10.3 11.8 12.0 4.5 4.8 3.7 1.9 1.5 2.5 4.7

Source: Bangladesh Bureau of Statistics.


Note: BBS has not published ''Consumer Price Index (CPI) for Middle Class Families of Dhaka City (Base year: 1973-74=100) after 1997-98

Appendix-7: Consumer Price Indices (National)


(Base Year: 1985-86=100)

Sector Weight 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02 2002-03
(%)
General 100.00 154.44 158.67 163.87 178.40 190.27 195.07 208.70 227.29 235.05 238.76 244.39 256.95
Food 64.47 154.30 157.17 161.80 176.77 189.13 191.85 205.55 229.72 239.13 241.40 244.40 256.47
Non-food 35.53 154.69 161.38 167.69 181.38 191.86 200.99 214.46 223.10 228.93 235.30 245.92 259.50
Rate of increase
(%)
General 4.56 2.74 3.28 8.87 6.65 2.52 7.0 8.9 3.4 1.6 2.4 5.1
Food 4.18 1.86 2.95 9.25 6.99 1.84 7.1 11.8 4.1 1.0 1.2 4.9
Non-food 5.27 4.32 3.91 8.16 5.78 4.76 6.7 4.0 2.6 2.8 4.5 5.5
Source: Bangladesh Bureau of Statistics.

Appendix-8: Consumer Price Indices (All Urban)


(Base Year: 1985-86=100)
Sector Weight 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02 2002-03
(%)
General 100.00 153.24 157.74 162.70 175.26 185.96 191.27 204.41 222.59 229.88 233.91 240.28 251.76
Food 57.27 153.95 158.25 162.88 175.27 188.22 191.36 206.57 233.22 242.65 245.30 249.24 260.90
Non-food 42.73 152.28 157.06 162.46 175.25 182.93 191.17 201.52 208.33 212.77 218.64 228.26 239.51
Rate of increase
(%)
General 4.92 2.94 3.14 7.72 6.11 2.86 6.7 8.9 3.3 1.8 2.7 4.8
Food 5.19 2.79 2.93 7.61 7.39 1.69 7.9 12.9 4.0 1.1 1.6 4.7
Non-food 4.56 3.14 3.44 7.83 4.38 4.50 5.4 3.4 2.1 2.8 4.4 4.9
Source: Bangladesh Bureau of Statistics.

198
Appendix-9: Consumer Price Indices (All Rural)
(Base Year: 1985-86=100)

Sector Weight 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02 2002-03
(%)
General 100.00 154.47 158.10 163.66 179.06 191.50 196.35 210.15 228.88 236.79 240.39 245.78 258.71
Food 66.90 154.42 156.80 161.43 177.36 189.60 192.31 205.84 229.26 237.94 240.08 242.76 254.97
Non-food 33.10 154.56 161.78 168.16 182.48 195.34 204.44 218.87 228.10 234.46 241.03 251.88 266.25
Rate of increase
(%)
General 4.36 2.35 3.52 9.41 6.95 2.53 7.0 8.9 3.5 1.5 2.2 5.3
Food 3.85 1.54 2.95 9.87 6.90 1.43 7.0 11.4 3.8 0.9 1.1 5.0
Non-food 5.40 4.67 3.94 8.52 7.06 4.65 7.1 4.2 2.8 2.8 4.5 5.7
Source: Bangladesh Bureau of Statistics.

Appendix-10: Wholesale Price Indices of Agricultural and Industrial Products

Weight
Sector 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 2000-01 2001-02
(%)

Agriculture 67.9 1023 1087 1174 1276 1297 1333 1353 1437 1519 1606 1611 1701 1848 1847 1802 1810
Product
Food 41.1 1029 1073 1152 1231 1236 1285 1289 1370 1469 1564 1513 1604 1821 1813 1729 1717
Raw Material 25.9 1002 1096 1200 1338 1385 1400 1443 1536 1593 1666 1754 1842 1882 1890 1916 1932
Fuel 0.9 1327 1399 1442 1536 1549 1580 1675 1670 1692 1798 1940 2052 2101 2148 2164 2235
Industrial 32.1 915 964 1033 1118 1232 1303 1331 1361 1392 1459 1478 1537 1573 1526 1563 1562
Product
Food 8.0 1019 1103 1212 1326 1375 1412 1415 1495 1435 1574 1673 1769 1840 1813 1813 1722
Raw Material 6.3 753 774 881 978 1011 1029 1080 1059 1085 1166 1186 1212 1253 1268 1302 1305
Energy & 6.2 1004 1054 1071 1036 1470 1621 1620 1655 1642 1613 1628 1781 1830 1840 2097 2166
Power
Manufac. 11.7 892 924 974 1081 1129 1210 1258 1280 1331 1458 1426 1420 1430 1305 1286 1253
Agri.& Ind. 100 988 1087 1129 1225 1276 1323 1346 1413 1479 1559 1568 1648 1760 1753 1726 1730
Product
Rate of - 8.1 10.0 3.9 8.5 4.2 3.7 1.7 5.0 4.7 5.4 0.6 5.1 6.8 -0.4 -1.5 0.23
increase
Source: Bangladesh Bureau of Statistics.

199
Appendix-11: Cost of Living Index of Industrial Workers of Narayanganj, Chittagong and Khulna
(Base: 1973-74=100)

Year General Food Clothing and Footwear Housing and Households


N. ganj Ctg. Khulna N. ganj Ctg. Khulna N. ganj Ctg. Khulna N. ganj Ctg. Khulna
1984-85 869 914 784 863 908 789 914 1038 868 1079 1067 863
1985-86 950 990 882 931 980 879 1035 1082 943 1258 1265 1057
1986-87 1059 1105 1018 1052 1117 1029 1132 1123 998 1371 1409 1270
1987-88 1158 1166 1067 1159 1188 1081 1180 1140 1013 1536 1488 1397
1988-89 1237 1220 1169 1227 1243 1183 1260 1189 1082 1682 1542 1550
1989-90 1336 1315 1252 1318 1325 1266 1332 1268 1127 1833 1701 1619
1990-91 1434 1413 1310 1399 1417 1290 1484 1364 1236 2058 1894 1848
1991-92 1496 1472 1374 1456 1477 1358 1547 1383 1250 2114 1975 1947
1992-93 1515 1446 1385 1452 1422 1359 1564 1423 1247 2220 1998 1979
1993-94 1549 1505 1463 1489 1584 1451 1587 1470 1271 2256 2031 2020
1994-95 1635 1631 1563 1603 1643 1588 1605 1520 1279 2291 2096 2020
1995-96 1710 1716 1583 1711 1716 1615 1626 1549 1300 2370 2337 2032
1996-97 1723 1719 1547 1694 1685 1584 1657 1517 1345 2437 2587 1956
1997-98 1832 1794 1618 1821 1758 1644 1701 1580 1470 2517 2754 1982
1998-99 1990 2005 1768 2027 2003 1835 1727 1621 1542 2587 3049 2046
1999-00 2032 2065 1823 2076 2059 1884 1745 1674 1581 2624 3134 2149
2000-01 2048 2092 1856 2088 2078 1896 1762 1709 1616 2650 3198 2303
2001-02 2077 2116 1881 2114 2092 1911 1786 1732 1634 2689 3275 2374
Source: Bangladesh Bureau of Statistics.
Appendix-12: Wage Rate Indices by Major Sectors
(Base: 1969-70=100)

Year Nominal Wage Indices Cost of Living Real Wage Indices


Agri. index of
Industrial Manufac.
General Manufac. Const. Fishery Workers General Const. Agri. Fishery

1984-85 734 776 775 642 702 856 86 91 91 75 82


1985-86 895 958 938 767 856 941 95 102 100 82 91
1986-87 1085 1154 1122 941 1054 1061 102 109 106 89 99
1987-88 1201 1220 1326 1049 1189 1130 106 108 117 93 105
1988-89 1288 1325 1452 1115 1225 1208 107 110 120 92 101
1989-90 1426 1502 1475 1245 1403 1301 110 115 113 96 108
1990-91 1482 1575 1487 1321 1452 1386 107 114 107 95 105
1991-92 1553 1641 1512 1425 1547 1448 107 113 104 98 107
1992-93 1639 1724 1579 1523 1641 1449 113 119 109 105 113
1993-94 1709 1828 1598 1593 1699 1506 114 121 106 106 113
1994-95 1786 1947 1613 1653 1770 1610 111 121 100 103 110
1995-96 1900 2064 1754 1738 1882 1674 114 123 105 104 112
1996-97 1990 2161 1848 1804 1974 1663 120 130 111 109 119
1997-98 2141 2395 1990 1870 2053 1748 122 137 114 107 117
1998-99 2259 2522 2163 1950 2138 1921 118 131 113 102 111
1999-00 2390 2701 2286 2037 2220 1973 121 137 116 103 113
2000-01 2489 2832 2356 2141 2292 1999 125 142 118 107 115
2001-02 2637 3035 2444 2262 2411 2024 130 150 121 112 119
2002-03 2926 3501 2624 2443 2563 2068 141 169 127 118 124
Source: Bangladesh Bureau of Statistics.

200
Appendix-13.1: Revenue Budget
(Revenue Receipts: 1986-87 to 1996-97)
(in crore Tk.)
Particulars 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97
a) Tax receipts
1. Customs duty 1550 1618 1820 2166 2328 2820 2835 3070 3670 3900 4252
2. Excise duty 900 1172 1400 1700 1713 1360 320 175 180 180 207
3. Income tax 550 664 750 875 1071 1300 1720 1735 1560 1510 1735
4. Sales tax 550 525 540 531 823 -- -- -- -- -- --
5. VAT -- -- -- -- -- 1675 2500 2775 3275 3742 4440
6. Land tax 56 89 85 114 60 85 100 120 150 170 185
7. Supplementary duty -- -- -- -- -- 20 945 1290 1450 1700 2173
8. Non-judicial stamp 140 170 170 177 187 251 312 355 420 477 527
9. Motor vehicles receipts 16 20 20 35 35 40 50 60 85 110 130
10. Registration fees 65 60 63 70 70 80 96 120 130 150 165
11. Narcotics duty -- -- -- -- 20 25 22 25 25 26 27
12. Other taxes and duties 26 49 48 113 76 85 130 155 165 268 233
Total tax receipts 3853 4367 4896 5781 6383 7741 9030 9880 11110 12233 14074
b) Non-tax receipts
13. Profit and dividend from SOEs 257 135 185 128 163 320 429 418 654 526 525
14. Profit and dividend from non- 92 80 70 50 276 381 360 415 227 219 216
financial institutions
15. Interest income 200 225 220 345 300 300 350 350 465 450 530
16. Economic services 58 52 92 120 133 132 140 163 300 311 316
17. General administration and 99 122 104 109 125 154 181 220 242 310 414
services
18. Jamuna Bridge surcharge and 45 58 60 65 70 80 45 58 -- 2 --
levies
19. T&T Department (net) 38 65 110 80 244 283 325 459 635 659 630
20. Post Office Department (net) -30 -28 -32 -270 -24 -29 -30 -28 -28 -36 -26
21. Railway (net) -104 -149 -150 -139 -149 -126 -100 -95 -90 -159 -89
22. Agriculture and allied services 60 61 78 33 40 49 64 69 78 92 103
23. Social and Community services 30 37 44 47 55 55 78 93 108 143 158
24. Transport and Communication 20 23 42 42 48 35 42 43 46 68 89
(others)
25. Other non-tax receipts 36 65 89 127 131 133 143 185 400 644 127
26. Revenue from capital 59 31 13 17 24 9 3 50 53 50 78
investment
27. Irrigation, water resources, 4 2 1 -- 3 -- -- -- -- -- --
transport, etc.
Total non-tax receipts 864 779 926 997 1439 1776 2030 2400 3100 3279 3071
Total Revenue 4717 5146 5822 6778 7822 9517 11060 12280 14210 15512 17145
Source: Finance Division, Ministry of Finance.

201
Appendix-13.2:Revenue Budget
(Revenue Receipts: 1997-98 to 2003-04)
(In crore Tk.)
Particulars 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
(original)
a) NBR Tax Revenue
1. Tax on income and profit 2100 2335 2980 3600 4100 4788 5365
2. Tax on transfer of property and assets 11 10 2 0 0 1 1
3. Value Added Tax (VAT) 4692 4800 5405 6132 6960 8071 9117
4. Customs duty 4460 4755 4536 4770 5350 5875 7628
5. Excise duty 214 205 240 275 300 310 348
6. Supplementary duty 2384 2540 2664 3363 3850 4390 4902
7. Electricity duty 120 90 45 20 8 10 2
8. Other taxes and duty 119 115 128 140 162 305 387
Sub-total (a) 14100 14850 16000 18300 20730 23750 27750
b) Non-NBR Tax Revenue
9. Narcotics duty 28 40 27 40 30 35 50
10. Motor vehicles tax 115 125 111 144 145 225 240
11. Land tax 197 215 266 214 214 206 213
12. Stamp (non-judicial) 561 625 692 792 811 734 818
Sub-total (b) 901 1005 1096 1190 1200 1200 1321
Total (a+b) 15001 15855 17096 19490 21930 24950 29071
c) Non-Tax Revenue
13. Dividend and profit 815 1017 1064 774 1162 832 924
14. Interest 570 525 547 550 449 725 725
15. Royalty and income from property -- -- 1 1 2 7 12
16. Administrative fees 889 900 887 1022 872 779 941
17. Penalty and forefeiture 23 24 11 11 11 41 46
18. Receipts from services 141 148 199 254 274 471 542
19. Rent and leasing 50 66 76 121 125 104 127
20. Tolls and levies 48 52 43 46 57 89 103
21. Non-commercial sale 143 139 165 213 252 296 422
22. Receipts from irrigation 2 10 1 2 0 1 1
23. Receipts from defense 90 90 73 111 114 126 134
24. Non tax receipts 241 138 203 252 238 481 729
25. Railway -81 -75 -76 -134 390 415 453
26. Post office department -40 -51 -38 -75 132 133 141
27. T & T Board 765 767 1018 1260 1603 1600 1700
28. Capital receipts 120 95 75 275 59 70 100
Sub Total (c) 3776 3845 4249 4683 5740 6170 7100
Total (a+b+c) 18777 19700 21345 24173 27670 31120 36171
Source: Finance Division, Ministry of Finance.

202
Appendix- 13.3: Revenue Budget
(Revenue Expenditure: 1986-87 to 1996-97)
(In crore Tk.)
Revenue Expenditure 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97
1. Organs of government 32 43 32 52 58 79 57 69 64 151 87
2. Administration and Law 28 29 30 34 33 40 50 47 51 52 53
3. Audit 25 27 28 34 35 39 48 57 61 62 63
4. Fiscal services 114 128 131 175 177 245 268 273 293 292 350
5. Secretariat 55 44 46 52 53 56 71 81 89 93 93
6. Foreign Affairs 62 91 67 73 93 105 103 106 117 110 113
7. Administration (Excluding Police 149 175 189 210 199 219 245 253 294 324 333
& BDR)
8. Police 198 230 245 304 305 350 419 449 490 519 579
9. Bangladesh Rifles 90 102 124 130 140 171 205 209 136 249 255
10. General services 111 150 161 174 188 208 238 241 248 253 279
11. Defence 739 832 1015 1149 1180 1301 1494 1634 1887 2069 2265
12. Education 747 820 948 1094 1182 1382 1674 1756 2008 2148 2296
13. Health and poulation control 275 305 321 367 387 431 517 607 685 730 769
14. Pension and retirement benefits 95 123 144 169 224 250 300 370 650 508 565
15. Social and community services 337 525 720 563 709 621 689 727 805 990 1039
16. General economic services 46 53 56 63 66 74 86 98 104 120 122
17. Agriculture and allied services and 128 149 156 188 203 212 346 393 451 570 528
water resources
18. Industry, mining and energy 22 22 23 28 26 29 33 36 43 40 41
19. Water, electricity and power 46 47 78 68 79 87 -- -- -- -- --
20. Communication (except Railway, 64 86 98 113 118 167 209 242 245 296 277
T&T and Post ffice)
21. Extraordinary expenditure -- -- - -- 66 5 -- -- -- -- --
22. Subsidies 69 65 706 941 771 589 287 242 296 285 483
23. Grants-in-aid contribution 79 84 119 96 101 109 124 135 159 173 162
24. Interest on domestic debt 205 240 250 285 417 565 550 519 606 1040 1080
25. Interest on foreign debt 240 350 483 377 438 473 475 549 600 700 676
26. Unexpected expenditure 2 10 - 1 63 23 22 57 18 40 27
Total revenue expenditure 3956 4730 6170 6740 7310 7900 8510 9150 10300 11814 12535
Source: Finance Division, Ministry of Finance.

203
Appendix- 13.4: Revenue Budget
(Revenue Expenditure: 1997-98 to 2003-04)
(In crore Tk.)
Particulars 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
(original)
1. President 3 3 3 3 3 4 3
2. National Parliament 26 26 35 33 31 32 42
3. Prime minister 46 40 48 53 57 57 61
4. Cabinet Division 8 7 13 14 10 15 10
5. Special Affairs Division 106 -- -- -- -- -- --
6. Election Commission 56 22 51 88 103 78 88
7. Ministry of Establishment 208 210 235 248 260 309 278
8. Public Service Commission 4 4 5 5 5 6 5
9. Finance Division-loans and advances, except repayment 1274 1330 1363 1514 1760 2731 4526
of domestic loan and investment
10. Internal Resources Division 338 462 697 1063 1029 567 559
11. Economic Relations Division 29 18 20 21 24 22 20
12. Planning Division 8 9 10 10 48 51 50
13. IMED 2 2 3 3 3 3 3
14. Statistical Division 29 32 35 37 - - --
15. Ministry of Foreign Affairs 134 156 168 174 174 184 176
16. Local Government Division 277 291 314 348 377 449 472
17. Rural Development and Cooperatives Division 69 74 81 83 83 86 287
18. Ministry of Chittagong Hilltracts Affairs - 69 85 91 99 98 76
19. Ministry of Defense 2644 2940 3217 3392 3391 3406 3534
20. Ministry of Law and Justice 88 100 116 128 133 144 143
21. Ministry of Home Affairs 1181 1299 1520 1587 1605 1803 1791
22. Ministry of Primary and Mass Education 1145 1199 1312 1378 1428 1469 1501
23. Ministry of Education 1544 1769 1945 2209 2311 2494 2607
24. Ministry of Science, Information and Com. 65 69 69 86 73 78 80
Technology
25. Ministry of Health and Family Welfare 813 887 972 1099 1286 1334 1410
26. Ministry of Social Welfare 86 126 136 181 202 255 319
27. Ministry of Women and Children Affairs 13 15 41 22 27 28 132
28. Ministry of Disaster Management and Relief 490 1050 688 772 661 611 683
29. Ministry of Liberation Affairs 9 47 73
30. Ministry of Housing and Public Works 228 233 259 285 299 369 434
31. Ministry of Information 117 118 126 144 137 186 173
32. Ministry of Cultural Affairs 28 29 31 31 32 35 34
33. Ministry of Religious Affairs 17 20 22 27 30 45 28
34. Ministry of Youth and Sports 36 26 42 36 39 49 78
35. Energy and Mineral Resources Division 6 7 7
36. Power Division 6 7 7 8 2 2 2
37. Ministry of Agriculture 205 273 284 307 308 331 352
38. Ministry of Fisheries and Livestock 117 121 132 147 156 184 200
39. Ministry of Environment and Forest 44 47 52 57 59 72 70
40. Ministry of Land 122 141 148 160 165 173 168
41. Ministry of Water Resources 132 146 138 177 165 202 190
42. Ministry of Food 3 2 2 2 2 5 3
43. Ministry of Industries 23 23 26 28 30 36 36
44. Ministry of Jute 8 7 8 8 8 8 8
45. Ministry of Textile 10 11 12 14 16 19 16
46. Ministry of Commerce 35 32 25 24 24 27 32
47. Ministry of Labour and Employment 27 28 31 35 25 13 12
48. Ministry of Expatriate Welfare & Overseas 11 29 27
Employment
49.Ministry of communication ( Except Railway) 313 321 337 374 916 1026 1178
50. Ministry of Shipping 22 23 24 27 29 31 31
51.Ministry of Civil Aviation and Tourism 1 1 1 2 1 2 1
52. Ministry of Post and Telecommunication (Except P 1 1 1 1 520 521 523
T&T)
53.Interest on Domestic Debt 1594 2221 2769 3306 3585 4617 5461
54. Interest on Foreign Debt 725 725 785 820 935 957 976
Total 14500 16765 18444 20662 22692 25307 28969
Source: Finance Division, Ministry of Finance.

204
Appendix-14: Annual Development Programme (ADP)
(Allocation and Expenditure)
(in crore Tk.)
FY Allocation Expenditure
Total Taka PA Total Taka PA
1982-83 3126 1812 1314 2688 1657 1031
(86%) (91%) (78%)
1983-84 3585 1932 1653 3006 1905 1101
(84%) (99%) (67%)
1984-85 3498 1933 1565 3167 1875 1292
(91%) (97%) (83%)
1985-86 4096 1912 2184 3628 1882 1746
(89%) (98%) (80%)
1986-87 4513 2025 2488 4439 1998 2441
(98% (99%) (98%)
1987-88 4651 2007 2644 4150 2015 2135
(89%) (100%) (81%)
1988-89 4596 1960 2636 4622 1985 2637
(101%) (101%) (100%)
1989-90 5103 1853 3250 5717 2653 3064
(112%) (143%) (94%)
1990-91 6126 2451 3675 5269 2297 2972
(86%) (94%) (81%)
1991-92 7150 3100 4050 6024 2632 3392
(84%) (85%) (84%)
1992-93 8121 3892 4229 6550 3163 3387
(81%) (81%) (80%)
1993-94 9600 5240 4360 8983 4886 4097
(94%) (93%) (94%)
1994-95 11150 6510 4640 10303 5993 4310
(92%) (92%) (93%)
1995-96 10447 5987 4460 10016 6060 3956
(96%) (101%) (89%)
1996-97 11700 6776 4924 11041 6808 4233
(94%) (100%) (86%)
1997-98 12200 7086 5114 11037 6823 4214
(90%) (96%) (82%)
1998-99 14000 8226 5774 12509 7844 4665
(89%) (95%) (81%)
1999-00 16500 9750 6750 15471 9730 5741
(94%) (100%) (85%)
2000-01 18200 10726.40 7473.60 16151 10329 5822
(89%) (96%) (78%)
2001-02 16000 9180 6820 14090 8589 5501
(88%) (94%) (81%)
2002-03 17101 10742 6359 15408 10287 5121
(90.1%) (95.8%) (80.5%)
Source: IMED, Ministry of Planning.
Note: Figures in the parenthesis indicate percent of total expenditure.

205
Appendix- 15.1: Economic Classification of Revenue Expenditure
(1989-90 to 1996-97 )
(In crore Tk.)
89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97
1. Expenditure on goods and services 4038.2 4294.6 4774.8 5459.2 5991.1 6735.7 7323.5 7597.4
1.1 Pay and Allowances 2251.3 2307.4 2810.7 339.5 3598.2 3958.2 4207.6 4391.5
1.2 Operation and maintenance 277.6 319.1 434.8 548.3 663.7 780.7 828.0 837.1
1.3 Works 240.2 250.8 235.6 252.0 183.3 185.0 200.0 210.0
1.4 Other-contingencies 1269.1 1417.3 1293.7 1319.4 1545.9 1811.8 2087.9 2158.8
2. Interest Payments 662.1 854.6 1107.6 1025.0 1067.8 1206.1 1739.7 1755.5
2.1 Domestic 285.1 417.1 634.4 550.0 519.0 606.1 1039.7 1080.0
2.2 Foreign 377.0 437.5 473.2 475.0 548.8 600.0 700.0 675.5
3. Subsidies and other curent 2296.4 2391.8 2248.1 2231.0 2331.2 2727.7 3177.6 3480.1
transfers 631.4 372.7 343.6 153.4 149.0 248.0 273.0 294.0
3.1 Subsidy on food grains 309.4 397.3 245.8 133.8 92.6 47.6 11.6 188.6
3.2 Other subsidies 282.2 387.0 277.5 295.0 261.5 325.0 415.0 471.0
3.3 VGD and test Relief 166.1 173.0 155.0 129.7 122.6 118.0 194.8 114.9
3.4 Operational deficit of
departmental enterpises
(139.4) (149.1) (125.8) (99.5) (95.0) (90.0) (158.8) (89.3)
Railway (26.7) (23.9) (29.2) (30.2) (27.6) (28.0) (36.0) (25.6)
Post Office 53.9 54.5 55.4 56.3 73.0 70.9 71.3
50.0
3.5 Transfers to local govt. 684.9 783.7 831.6 1057.6 1179.2 1356.1 1563.9 1630.1
3.6 Grants-in-aid and other transfer 169.4 224.1 340.0 405.2 470.0 560.0 648.4 710.0
payment 63.2 23.2 22.2 45.8 18.1 37.3 27.0
0.7
3.7 Pension and retirement benefits
(receipts)
4. Unallocated
Total 6997.4 7604.2 8153.6 8736.6 9446.9 10687.6 122778.1 12860.0
5. Deduct:
5.1 Recoveries 91.0 120.9 98.6 96.9 174.2 269.6 269.4 210.0
5.2 Deficits of departmental 166.0 173.1 155.0 129.7 1226.6 118.0 194.8 114.9
enterprises
Net 6740.0 7310.2 7900.0 8510.0 9150.1 10300.0 11813.9 12534.9
Source: Finance Division, Ministry of Finance.

206
Appendix- 15.2:Economic Classification of Revenue Expenditure
(1997-98 to 2003-04)
(In crore Tk.)
Particulars 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
(original)
Pay and Allowances 4645 5100 5715 5949 6801 7282 7502
Pay of Officers 527 551 586 612 637 702 772
Pay of Staff 2230 2434 2529 2644 2996 3122 3196
Allowances 1888 2115 2600 2693 3168 3458 3534
Goods and Services 2045 2256 2456 2839 3452 4265 4469
Supply and services 1425 1440 1641 1974 2421 3052 2912
Repair and maintenance 620 816 815 865 1031 1213 1557
Payment of Interest 2319 2946 3554 4126 4520 5574 6437
Domestic 1594 2221 2769 3306 3585 4617 5461
Foreign 725 725 785 820 935 957 976
Subsidies and current transfers 3829 4850 4846 5578 5915 7084 7808
Subsidies 553 433 594 544 681 1463 1400
Grants-in-aid 2467 3322 3126 3615 3648 3931 4611
Subscription to the international 27 17 18 20 22 23 23
organizations
Write-Off of Loans &Advances 0 2
Pension and gratuity 782 1078 1108 1399 1564 1667 1772
Block 779 643 914 1238 1231 566 1967
Unexpected -- -- 100 90 81 100 1700
Other -- -- 814 1148 1150 466 267
Procurement of assets & public works 1162 1024 1014 1023 1106 1053 1243
Procurement of assets 922 786 709 758 831 801 960
Purchase of land 11 15 44 5 38 15 13
Construction and works 229 242 261 260 237 237 270

Total: 14779 16819 18499 20753 23025 25824 29426


Deduction-recovery 73 54 55 91 333 517 457
Extraordinary expenditure 206 -- -- -- -- -- --
Net: 14500 16765 18444 20662 22692 25307 28969
Source: Finance Division, Ministry of Finance.

207
Appendix- 16: Money Supply and its Components
(in crore Tk.)
FY Currency Demand Narrow Time Broad % of currency % of demand % of time
(June balance) ouitside Deposits Money deposit Money outside bank in deposits in deposits in
Banks Supply (M1) Supply (M2) money supply money supply money supply
1 2 3 4 5 6 7 8 9
1982-83 1138 1496 2634 3264 5898 19.30 25.36 55.34
1983-84 1556 1994 3550 4836 8386 18.56 23.77 57.67
1984-85 1723 2509 4232 6302 10534 16.35 23.82 59.83
1985-86 1953 2975 4928 7410 12338 15.83 24.11 60.06
1986-87 2075 3188 5263 9090 14353 14.46 22.21 63.33
1987-88 2415 2633 5048 11360 16408 14.72 16.04 69.24
1988-89 2616 2845 5461 13617 19078 13.71 14.91 71.38
1989-90 3188 3181 6369 15929 22298 14.30 14.26 71.44
1990-91 3612 3592 7204 17801 25005 14.44 14.47 71.19
1991-92 4073 4185 8257 20269 28526 14.28 14.67 71.05
1992-93 4480 4583 9063 22473 31536 14.21 14.53 71.26
1993-94 5416 5751 11167 25236 36403 14.88 15.80 69.32
1994-95 6565 6614 13179 29089 42268 15.53 15.65 68.82
1995-96 7123 7336 14459 31301 45760 15.57 16.03 68.40
1996-97 7575 7592 15167 35544 50711 14.94 14.97 70.09
1997-98 8153 7735 15888 39981 55869 14.59 13.85 71.56
1998-99 8667 8563 17250 45777 63027 13.78 13.59 72.63
1999-00 10176 9705 19881 54881 74762 13.61 12.98 73.41
2000-01 11478 10869 22347 64827 87174 13.17 12.47 74.36
2001-02 12531 11630 24161 74455 98616 12.71 11.79 75.50
2002-03 13902 12842* 26744 87251 113995 12.19 11.27 76.54
* including deposits of the other financial institutions
Source: Bangladesh Bank.

Appendix- 17: Bank Advances Classified by Economic Purposes


(in crore Tk.)
Economic Sector June'94 June'95 June'96 June'97 June'98 June'99 June'00 June'01 June'02
a) Agriculture, forestry & fisheries 5288 5895 6434 6740 6990 8038 8675 9315 9646
b) Manufacturing (other than working 8329 9029 9713 11174 14141 15352 16895 18155 17854
capital financing)
c) Working capital for manufacturing 2917 2811 3913 4949 5090 5804 5199 6209 9801
d) Constructionn 1583 1943 2049 2424 2621 3184 3406 3919 4573
e) Electricity, gas and sanitary services 10 80 102 13 16 11 20 94 162
f) Transport and communication 384 505 527 661 946 762 817 990 1265
g) Storage 310 329 435 524 754 848 909 987 990
h) Trade 7785 10142 11114 12085 13300 14693 17224 20361 23607
i) Miscellaneous 1718 2245 2879 3195 4132 5292 6217 8748 8874
Total 28327 32979 37166 41765 47990 53984 59362 68778 76772
Source: Bangladesh Bank.

208
Appendix- 18:Bank Advances Classified by Economic Sectors
(in crore Tk.)
Sector June'94 June'95 June'96 June'97 June'98 June'99 June'00 June'01 June'02

1. Public Sector 4248 4661 3876 4734 4570 5498 5691 5827 6965
a) Government 173 207 438 485 395 672 600 539 787
b) Autonomous and semi 567 869 569 608 644 799 756 754 707
autonomous bodies
c) Financial institutions (excluding 134 3 4 180 8 10 15 77 61
deposit money banks)
d) Non-financial institutions 3255 3519 2793 3281 3423 3901 4185 4413 5356
e) Local authorities 119 63 72 180 100 116 135 44 54
2. Private Sectors 24079 28318 33290 37031 43420 48486 53671 62951 69807
a) Farmers and fishermen 4287 4759 5300 5540 5689 6726 7080 7526 7718
b) Manufacturing companies 8361 9457 11678 13316 16586 18272 19537 21819 25099
c) Trade and commerce 7874 9814 11430 12323 14273 15716 17459 18984 20443
d) Transport companies 257 317 292 356 509 353 479 140 304
e) Construction companies 793 795 859 909 1007 1038 1112 1285 1388
f) Storage companies 178 256 332 346 484 614 566 987 988
g) Trust Fund and non-profitable 34 20 15 10 36 34 27 21 10
organisations
h) Private financial institutions 282 480 442 554 537 448 505 740 652
(except Deposit Money Banks)
i) Personal ( professional and self 1703 2034 2568 3007 3472 3601 4667 5462 5645
employed persons)
j) Others 310 386 374 670 827 1684 2239 5987 7560
Total 28327 32979 37166 41765 47990 53984 59362 68778 76772
Source: Bangladesh Bank.

209
Appendix- 19: Domestic Credit through Banking System
(in crore Tk.)
FY Net credit to Gross credit to Total credit to Gross credit to Total domestic
(June Balance) Government public sector public sector private sector credit (4+5)
(2+3)
1 2 3 4 5 6
1982-83 1606 2463 4069 3097 7166
1983-84 2069 2552 4621 4914 9535
1984-85 1988 3230 5218 6890 12108
1985-86 1853 3973 5826 8356 14182
1986-87 1979 4355 6334 8974 15308
1987-88 1820 4360 6180 10896 17076
1988-89 1373 4634 6007 13359 19366
1989-90 2017 5011 7028 16005 23033
1990-91 2188 5357 7545 17823 25368
1991-92 3626 5643 9269 17939 27208
1992-93 3922 6034 9956 19318 29274
1993-94 4682 5041 9723 20972 30695
1994-95 4614 5414 10028 26057 36085
1995-96 6310 5482 11792 31660 43452
1996-97 8017 5875 13892 35505 49397
1997-98 9272 6250 15522 40118 55640
1998-99 11249 6021 17270 45638 62908
1999-00 14773 6172 20945 50544 71489
2000-01 17677 7360 25037 59071 84108
2001-02 20164 7243 27407 67571 94978
2002-03 19061 7260 26321 77663 103984
Source: Bangladesh Bank.
Appendix-20: Bank Deposits*
(in crore Tk.)
Type of account June'94 June'95 June'96 June'97 June'98 June'99 June'00 June'01 June'02
a) Fixed deposits 11832 12356 13192 14621 16001 18548 22312 26085 31114
1. 3 months to less than 6 2714 3130 2087 3033 2759 3116 4322 5245 6105
months
2. 6 months to less than 1 year 1623 2082 1893 2604 2370 2533 3062 3665 4706
3. 1 year to less than 2 years 3333 3249 3981 4211 4390 5336 6659 8238 9807
4. 2 year to less than 3 years 1165 1556 2509 2111 2161 2604 2698 2616 3555
5. 3 years and above 2996 2339 2722 2653 4321 4959 5572 6321 6941
b) Saving deposits 9188 11396 12931 14429 16062 17828 21067 24316 27782
c) Current deposits 4725 5743 5885 6361 6784 7418 8814 9448 9246
d) Call deposits 175 187 217 432 195 - - - -
e) Deposit withdrawable on sight 1154 1476 1555 1621 1725 1852 1685 2017 1883
f) Foreign curreny accounts of non 328 342 360 338 393 386 690 774 736
residents
g) Convertible taka a/c of foreigners 60 53 69 68 55 73 150 103 141
h) Deposit with withdrawable notice 4054 4559 4683 5666 6083 6973 8438 10208 11794
i) Deposit pension scheme 2207 2564 2862 3465 4483 5494 7349 8113 9525
j) Negotiable certificate of deposits 225 248 187 197 223 422 476 586 863
Total deposits 33948 38924 41941 47198 52004 58994 70981 81650 93084
Source: Bangladesh Bank.
* including government deposits.

210
Appendix- 21:Production of Major Agricultural Crops and Acreage
(production in '000' mt.and acreage in '000' acre)
FY Aus Aman Boro Wheat Barley Tobacco
Acre Production Acre Production Acre Production Acre Production Acre Production Acre Production

1982-83 7805 3065 14812 7516 3542 3548 1282 1098 61 9 129 50
1983-84 7756 3222 14845 7843 3463 3350 1299 1229 71 18 128 48
1984-85 7260 2783 14112 7930 3891 3909 1670 1483 61 15 128 49
1985-86 7031 2828 14876 8542 3789 3671 1334 1060 54 14 132 46
1986-87 7176 3130 14958 8260 4082 4010 1444 1092 48 12 114 40
1987-88 6891 2993 13816 7689 4800 4731 1475 1048 44 11 117 42
1988-89 6333 2856 12606 6857 6026 5831 1384 1022 46 11 113 39
1989-90 5593 2488 14095 9209 6205 6167 1463 890 46 12 111 41
1990-91 5216 2328 14273 9167 6297 6357 1480 1004 44 11 94 34
1991-92 4735 2199 14067 9269 6512 6804 1420 1065 40 10 91 34
1992-93 4288 2075 14442 9680 6423 6587 1574 1176 30 8 89 36
1993-94 4076 1850 14029 9419 6378 6772 1520 1131 25 6 91 38
1994-95 4111 1791 13824 8504 6582 6538 1580 1245 23 6 89 38
1995-96 3810 1676 13953 8790 6804 7221 1732 1369 23 6 90 39
1996-97 3935 1871 14399 9552 6876 7460 1749 1454 23 6 86 38
1997-98 3868 1875 14353 8850 7138 8137 1988 1803 23 6 81 36
1998-99 3519 1617 12762 7736 8715 10552 2180 1908 21 5 78 29
1999-00 3339 1734 14097 10305 9024 11027 2057 1840 17 5 77 35
2000-01 3274 1916 14110 11249 9295 11920 1909 1673 14 4 74 37
2001-02 3069 1808 13955 10726 9319 11766 1833 1606 10 3 75 38

FY Pulses Oilseeds Spices Sugarcane Jute Potato


Acre Production Acre Production Acre Production Acre Production Acre Production Acre Production

1982-83 742 203 726 253 370 299 410 4257 1425 886 272 1149
1983-84 1985 951 1503 468 369 295 412 6960 1701 946 272 1166
1984-85 1938 553 1478 784 362 299 404 6878 1671 928 275 1159
1985-86 1837 519 1462 469 354 295 396 6640 2614 1571 268 1102
1986-87 1770 510 1393 437 347 288 407 6896 1908 1225 263 1069
1987-88 1822 539 1351 449 352 304 428 7207 1266 853 205 1276
1988-89 1817 496 1415 434 354 295 425 6707 1343 805 275 1089
1989-90 1823 512 1418 438 366 323 461 7423 1339 812 288 1066
1990-91 1799 523 1407 448 364 319 472 7682 1442 962 306 1237
1991-92 1782 519 1399 461 356 322 463 7446 1453 957 316 1379
1992-93 1763 517 1392 474 355 320 450 7507 1236 892 313 1384
1993-94 1752 530 1382 470 355 325 447 7111 1182 808 324 1438
1994-95 1755 534 1381 480 354 318 445 7446 1383 966 325 1468
1995-96 1725 525 1370 471 353 318 431 7165 1133 739 327 1492
1996-97 1715 528 1370 478 355 320 434 7520 1253 883 331 1508
1997-98 1590 519 1386 483 355 316 433 7379 1427 1057 337 1553
1998-99 1351 417 1264 448 621 395 430 6951 1181 811 605 2762
1999-00 1231 383 1079 406 623 406 421 6910 1008 711 601 2933
2000-01 1170 366 1040 385 624 397 417 6742 1107 821 615 3216
2001-02 1152 341 919 287 300 457 402 6502 1128 859 587 2994
Source: BBS

211
Appendix- 22: Import of Foodgrains
('000' mt.)
FY Rice Wheat Total foodgrains
Food aid Import Total Food aid Import Total Food aid Import Total
1981-82 30 114 144 1111 - 1111 1141 114 1255
1982-83 131 186 317 845 682 1527 976 868 1844
1983-84 117 62 179 1324 553 1877 1441 615 2056
1984-85 125 570 695 1181 717 1898 1306 1287 2593
1985-86 27 10 37 1060 103 1163 1087 113 1200
1986-87 108 150 258 1317 192 1509 1425 342 1767
1987-88 192 398 590 1595 732 2327 1787 1130 2917
1988-89 40 21 61 1316 759 2075 1356 780 2136
1989-90 41 258 299 908 326 1234 949 584 1533
1990-91 10 - 10 1530 37 1567 1540 37 1577
1991-92 39 - 39 1375 150 1525 1414 150 1564
1992-93 19 - 19 716 448 1164 735 448 1183
1993-94 - 74 74 654 238 892 654 312 966
1994-95 - 813 813 935 820 1755 935 1633 2568
1995-96 1 1137 1138 737 552 1289 738 1689 2427
1996-97 10 24 34 608 325 933 618 349 967
1997-98 - 1105 1105 549