Bangabandhu's thoughts on development: Focus on industrialisation

Bangabandhu's thoughts on development: Focus on industrialisation

"To build a Golden Bengal, we need Golden People. Bangladesh is plagued by exploitation, oppression, and looting. To solve these problems and to build a happy and prosperous Bangladesh, the people needs to work hard to increase production." - Bangabandhu Sheikh Mujibur Rahman (December 15,1974).

These were words from the heart of our Father of the Nation. He knew the country was in a dire situation after the liberation war, but he also realised the potential of the people to overcome all the hurdles and turn the tide. He rightly believed in uniting the people and leading them towards the desired direction of inclusive development as the only way to true prosperity. He intended to lead the country in this direction and was well on his way. Within only a few years after independence, he succeeded in materialising the growth potential of Bangladesh to a significant extent.

He inherited an economy of only eight billion US dollars. There was not even a dollar in our foreign exchange reserve. But thanks to his committed leadership the economy started moving forward despite many insurmountable challenges including war-ravaged physical and social infrastructures and virtually no regulatory institutions. There was acute shortage of food grains following national and international natural shocks. But Bangabandhu led from the front in rebuilding this devastated economy with meagre domestic resources and international humanitarian support. The people of the country started believing in their own power as well. But on  August 15, 1975, Bangabandhu was murdered (along with many of his family members), and our journey towards inclusive development got halted. The country started moving in the opposite direction denying the mass aspirations for equality which grew out of our war of liberation. Of course, his daughter, Prime Minister Sheikh Hasina is now following in his footsteps and has been able to successfully establish Bangladesh as a model of sustainable and inclusive development for the rest of the world. But still, we wonder how it would have been if we had not lost our beloved Bangabandhu, who was the main light house of a fighting nation. It is the 43rd year since we lost him, and on this occasion, I would like to shed some light on his thoughts on development focusing mainly on industrialisation.

ASPIRATION FUELLED BY PAST GLORY: The phrase 'Sonar Bangla' (meaning Golden Bengal) was very common in speeches and writings of Bangabandhu well before the independence of Bangladesh. He was always thinking about reestablishing 'Sonar Bangla'. But this was not a mere political rhetoric for him. This aspiration was based on his consciousness about the past glory of this land. He knew that only a few centuries back Bangladesh was really a land of prosperity, a golden country. This country was famous for its agricultural production (fuelled by favourable climate conditions, fertile land, riverine geography etc.). It was famous for its exports like muslin, silk, cotton, spices and even ship building. Bengal was a real trade hub during that era. It is because of these that  the British East India Company chose to build a base here in Bengal. In the 18th century the living standards of Bengal was comparable with that of the Great Britain. Bangabandhu was aware of this glorious past, and strongly believed that the past glory could be revived through a proper struggle for economic emancipation of the people. 

And he began this struggle well before the independence of Bangladesh. In fact, he laid the foundation for that struggle during the early years of Pakistan era which tried to make East Bengal (today's Bangladesh) a virtual `neo-colony' of West Pakistan. He saw this process of exploitation from very close quarters, both as a people's leader and also as a Minister in the Provincial Cabinet for a short period of time.

STRUGGLE FOR EQUALITY: PROPOSITION OF 'TWO ECONOMIES': Since the beginning of Pakistan, the government never treated Bangladesh (then East Bengal/Pakistan) equally. Bangabandhu was aware of this. He realised that along with social and political dimensions this inequality had economic dimensions as well. He strongly condemned the 'Federal Control of Industries Act' which virtually gave full control of the industrial sector to the central government bypassing the provincial authorities. In between 1953 to 1956, the central government allocated 350 million (35 crore) taka for 150 large industrial units in West Pakistan, and only 20 million (2 crore) for 47 such units in East Pakistan (i.e. Bangladesh). While East Pakistan had better agricultural growth potential, the then central government was spending more on agricultural development in West Pakistan (1.98 billion (198 crore) taka was allocated for agricultural development of West Pakistan). The farmers of Eastern Province of Pakistan produced excellent quality jute and yet more than 90 per cent of the foreign exchange earned through export of jute and jute goods went to West Pakistan to pay their import bill. Even large industrial units in East Pakistan (e.g. Karnaphuli Paper Mill, Platinum Jubilee Jute Mill etc.) ware being handed out to West Pakistani owners. Pakistan was then an oligarchy (only 22 families getting all the business) and industrialisation and development of Eastern Province of Pakistan was the last thing in their mind.

Bangabandhu was determined to bring about positive change in favour of the people of East Pakistan (i.e. today's Bangladesh). Hence, when he oversaw the Provincial Ministry of Industry he focused on industrial growth of East Pakistan. He bargained with the central government for a fair share of the economic benefits to the entrepreneurs and people of the then East Pakistan. Bangabandhu's propositions as the provincial Minister of Industry could be summarised as below:

  •  Import licenses to be issued by provincial government

  •  Industries such as Jute, Cotton and Garment will be controlled by the provincial government

  •  An office of the Import-Export Chief Controller will be established in East Pakistan

  •  A separate office of Supply and Development Department Director General to be placed in East 

  •  50 per cent of the foreign exchange will be going to East Pakistan (previously only 10 per cent was going to East Pakistan).

According to Bangabandhu's proposals, East Pakistan was to gain full control of its industry and trade from January 1957. He even asked for constituting an Economic Commission to identify the sources of disparity. The central government responded positively to his proposal and an Economic Commission was constituted where economists from East Pakistan echoed his views. The Commission Report was soon sent to the cold storage and never saw the light of the day. The Pakistan Central Government did not keep their words. And eventually Bangbandhu had to begin a prolonged political movement to address these inequalities. He was put to jail off and on. Yet, he remained steadfast and uncompromising. Because of this movement led by Bangabandhu, the Ayub Khan regime eventually collapsed.

Bangabandhu was a politician, not an economist. Yet he was the first one to propose two separate economies for East and West Pakistan. He claimed, "East and West Pakistan being 15 hundred miles apart is a geographic truth. Hence, there is no alternative to develop separate economies for these two". Bangabandhu's aspiration for economic autonomy and the Pakistan (essentially led by West Pakistanis) regimes denying his claims is one of the core reasons behind the initiation of the war of liberation in 1971 and eventually the independence of Bangladesh.

THE NEW COUNTRY: INDUSTRIALISATION AND DEVELOPMENT FOR ALL: After the liberation, as already indicated in the beginning of this piece, Bangabandhu got a war-ravaged country with infrastructural backbone broken, economy in a shambles, millions of hungry people, and challenges arising out of a very difficult geo-politics as the US opposed directly our struggle for freedom. Yet he did not lose hope. On the first anniversary of independence he uttered: "We will turn this war-ravaged country into a golden one. In the Bengal of future, mothers will smile, and children will play. It will be a society free of exploitation. Start the movement of development in the fields and farms and in the factories. We can surely rebuild the country through hard work. Let us work together so that the Golden Bengal shines again."

As evident here, Bangabandhu rightly prioritised agriculture and industrialisation as the forces to rely on. He understood that agriculture will not only provide food to feed the people, but also will remain as the main source of income for majority of the people for many years to come. A vibrant agriculture can also ensure supply of raw materials for a burgeoning industrial sector.

Immediately after the independence of the country, Bangabandhu took some prudent initiatives to ensure agricultural growth. Some of these initiatives are: rebuilding the war-ravaged agricultural infrastructure, ensuring supply of agricultural equipment on emergency basis free of cost or at concessional rates, ensuring adequate supply of seed, cancelling 1.0 million certificate cases for loan default against farmers filed during the Pakistan period, fixing minimum fair prices for agro-products, ration facilities for poor and marginal farmers etc. The Bangabandhu government took these steps during the early days of his rule. He took these steps as he believed that agricultural development was then the most important prerequisite for sustainable and inclusive development of the country.

Bangabandhu was also conscious about the complementarity between agricultural and industrial sectors. For example, fertilisers are critically important agricultural inputs and so he prioritised establishment and operationalising fertiliser factories across the country. Bangabandhu knew there was no alternative to industrialisation. Industrial expansion was needed on the one hand, for producing goods to consume internally and to export; on the other hand, industrialisation would ensure employment for a growing population. However, just after the independence, with no foreign reserve, no foreign investment, very little backward and forward linkages, and above all, very few people with entrepreneurial experience, industrialisation perhaps was the biggest challenge that Bangabandhu had to face.

Entrepreneur-friendly Bangabandhu was always for facilitating businesses to grow. Even when he was the Provincial Minister for Industry, he proposed initiatives that would reduce cost of doing business (by saving time and overcoming red tape). During that time, he encouraged entrepreneurs from home and abroad to invest in East Pakistan and committed full support to them from the provincial government. But in the post-liberation era, the situation was entirely different. Due to reasons mentioned above, there was little to no scope for private sector to grow. In the newly liberated country, Bangabandhu rightly chose to go for state-led industrial growth. He nationalised major banks and insurance companies, all jute mills, sugar mills and textile mills as all the Pakistani owners and managers left these enterprises, often taking away with them all the money and inputs. Even the cars were shipped to Pakistan when they could anticipate that Bangladesh was emerging. Moreover, it was prudent of Bangabandhu that these enterprises were given to public ownership as he was deeply committed to social justice. And the early results were rewarding. In the first year since independence, the jute mills were producing at 56 per cent of their capacities. The same ratio for textile mills, paper mills and fertiliser factories were 60 per cent, 69 per cent, and 62 per cent respectively. All these factories were doing better than they were during the Pakistan period.

While Bangabandhu chose to expand industrial sector through nationalisation at the beginning (due to obvious conditions), his medium to long-term plan was to create enabling environment for the private sector. These are visible in the first five-year plan and budget proposals of the government of the newly independent country. For example, in the budget for FY 1974-75, the upper limit for private investment was shifted from 250 thousand (25 lakh) taka to 30 million (3.0 crore) taka, and there was provision for developing new industries by the private sector. Apart from these, 133 abandoned industrial units were handed over to private sector during this government. So it is evident that the process of deregulation began during Bangabandhu's time.

BACK ON TRACK: There is no doubt that Bangabandhu was leading the country along the path of inclusive development based on prudent agricultural and industrial policies. But evil forces took him away and left us off track. After a long time and after a lot of sacrifice we are again back on that prudent growth path under the leadership of his daughter, Prime Minister Sheikh Hasina. We must do our very best to ensure this journey continues. If we can do so, we will indeed have a country with golden future - the true 'Sonar Bangla'. For that to happen we must remain focused on completing the mega-projects initiated by the present government including Padma Bridge, Special Economic Zones, major power plants, deep sea port, metro rails, upgradation of rail and waterways and, of course, developing digital infrastructures to promote e-commerce and f-commerce. We must also remain mindful of promoting skills and digital entrepreneurship to address the burgeoning challenge of unemployment among educated youths. We should continue to support mechanisation of all shades of agriculture, particularly in promoting mechanised combined harvesting and user-friendly mulching of cows. Finally, we must remain focused on developing sources of renewable energies including solar and wind energies to achieve our SDGs (Sustainable Development Goals) in time. We must also encourage the private sector and non-state non-profit sectors for joining the government for a collaborative mission of achieving SDGs. We will also have to be welcoming foreign direct invest (FDI) by taking the opportunities of the foreign entrepreneurs shifting out of China given their rising cost and a looming trade war with the US. Surely, we will be able to celebrate the platinum jubilee of Bangbandhu's birth anniversary in forward-marching Bangladesh. Based on this strong foundation, we will certainly be able to complete our mission of transforming Bangladesh into a upper-middle economy in 2031 and a developed economy by 2041 as aspired by Prime Minister Sheikh Hasina. For this, we must also remain focused on socio-political and financial stability at any cost.

Dr. Atiur Rahman is an eminent economist and former Governor of Bangladesh Bank.

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