#1Citizen's Platform for SDGs, Bangladesh এসডিজি বাস্তবায়নে নাগরিক প্ল্যাটফর্ম, বাংলাদেশ Bangladesh's Eighth Five Year Plan (2021-25): Development Strategy and Interests of the "Left Behind" Presented at the virtual multilogue on অষ্টম পঞ্চবার্ষিক পরিকল্পনা: জাতীয় উন্নয়ন ও পিছিয়ে পড়া মানুষের স্বার্থ Presented by Debapriya Bhattacharya Convenor, Citizen's Platform for SDGs, Bangladesh and Distinguished Fellow, Centre for Policy Dialogue (CPD) 10 December 2020 CENTRE FOR FRIEDRICH EBERTO STIFTUNG UN DP actionaid D iCCO COOPERATION > PLAN INTERNATIONAL WaterAid#2Research Team and Acknowledgement This presentation draws on an ongoing research study titled "Revisiting the National Development Strategy of Bangladesh from the Perspectives of the Left Behind Citizens". The issues highlighted in the presentation reflect on the strategic development issues, less on target programming and implementation concerns. The research team involved in mentioned study includes Debapriya Bhattacharya, Convenor, Citizen's Platform and Distinguished Fellow, CPD Sarah Sabin Khan, Senior Research Associate, CPD Saima Ansar Jui, Research Associate (Project), CPD Tamara-E-Tabassum, Programme Associate, CPD Research support was received from Interns, (Research), CPD - Fahim Shahriar and Mehedi Hasan. Data support received from Nawshin Nawar, Programme Associate, CPD is acknowledged. The research team benefitted from discussions with Professor Mustafizur Rahman, Distinguished Fellow, CPD; Towfiqul Islam Khan, Senior Research Fellow, CPD and Md. Al-Hasan, Senior Research Associate, CPD. Support received from Avra Bhattacharjee, Joint Director, Dialogue and Outreach, CPD; Tarannum Jinan, Senior Administrative Associate, CPD and Md. Sarwar Jahan, Senior Dialogue Associate, CPD is acknowledged. Administrative facilitation extended by AHM Ashrafuzzaman, Deputy Director, IT, CPD and Tamanna Taher, Programme Associate, CPD is recognised. Deb. Bhattacharya: Development Strategy and the Left Behind 2#3Contents - 1. Seventh Five Year Plan - A Period of Achievements 2. Faultlines of the Recent Development Experience 3. Need to Redefine the Upcoming Development Strategy Deb. Bhattacharya: Development Strategy and the Left Behind 3#41. Seventh Five Year Plan - A Period of Achievements ▸ Transition from LIC to LMIC (2015) Meeting LDC criteria (2018) ▸ Significant achievements recorded during last five years (2015- 2020) More than 1 crore people were pulled out of poverty Robust economic growth Macroeconomic stability: low inflation, stable exchange rate Life expectancy at birth increased by one year Literacy rate (aged 15 and above) improved by 10% Rice production increased by 12% ▸ Energy production increased by 41% Remittance earning increased by 20% Share of manufacturing in GDP increased from 30.4% to 35.4%; o/w Manufacturing from 20.2% to 24.2% ▸ Improvement in Gender Gap Index Relative success in COVID management Deb. Bhattacharya: Development Strategy and the Left Behind#51. Seventh Five Year Plan - A Period of Achievements The New Benchmark COVID-19 Impact on Poverty, Employment and Income > Poverty rate will increase from 24.3% (2016) to 35.0% (2020) (Source: CPD) ➤ 1.3 crore people (20.1%, Labour Force Survey 2016- 17) are under risk to lose employment (Source: Citizen's Platform for SDGs, Bangladesh) ➤ Increase in income Gini coefficient from 0.48 (2016) to 0.52 (2020) (Source: CPD) Deb. Bhattacharya: Development Strategy and the Left Behind#62. Faultlines of the Recent Development Experience 2.1 Delink between programmed inputs and recorded outcomes 7FYP: Target vs Achievement of Selected Indicators Items Total Revenue (% of GDP) Total Public Expenditure (% of GDP) Fiscal Deficit (% of GDP) Private Investment (% of GDP) Exports (US$ billions) Remittances (US$ billions) FDI (US$ billions) (FY2020) (FY2020) (FY2020) (FY2020) (FY16-20) Target 16.1 21.1 4.7 26.6 233.8 (FY16-20) 105.8 (FY16-20) 30.2 12.4 17.9 5.3 23.6 179.7 76.1 8.9 (-) 70.5% Actual Achievement (-) 23.0% (-) 15.3% (+) 12.8% (-) 11.3% (-) 23.2% (-) 28.1% rate Source: Based on 7FYP (GED), Export Promotion Bureau (EPB), Bangladesh Bank. How could we attain the GDP growth target when production related indicators had been far away from the mark? deficiency or Data confusion? Deb. Bhattacharya: Development Strategy and the Left Behind - Programming#72. Faultlines of the Recent Development Experience 2.2 Structural Transformation Share of Agriculture sector declined from 16.3% to 13.3% in GDP Share of Services sector declined from 53.6% to 51.3% in GDP The decline in the two sectors was picked up by increasing share of Industry sector (30.4% to 35.4%), driven primarily by large and medium manufacturing sector. ▸ The marginal contribution of small scale manufacturing highlights the challenge of lack of diversification and lower access of small enterprises to policy inputs and incentives. Source: BBS and 7FYP Deb. Bhattacharya: Development Strategy and the Left Behind 7#82. Faultlines of the Recent Development Experience 2.3 Role of Domestic Demand Share of consumption demand in GDP has decreased (77.8 to 74.7%) over the five years. The decrease was driven by the decrease in share of private/household consumptions (72.4% to 68.5%). Share of public consumption has increased from 5.4 to 6.2% Share of investment demand in GDP has increased over the years, albeit below the target rate. The increase in investment has been largely driven by public investments which exceeded the target rate in FY20. In summary, Domestic demand has been driven by public consumption and investment Private consumption declined, investments stagnated with decreasing contribution of FDI Deb. Bhattacharya: Development Strategy and the Left Behind 80#92. Faultlines of the Recent Development Experience 2.4 Disjuncture between aggregate and disaggregate outcomes A. National Consumption, Income & Asset Inequality Increased Between 2010 & 2016 Consumption Inequality Average annual consumption fell from 79 (as a percentage of GDP) to 75 (as a percentage of GDP) from 2010 to 2016 and poorer households experienced slower consumption growth compared to richer households. Income Inequality: GNI index increased from 32.10 in 2010 to 39.5 in 2018. (Income inequality increased by 7.4%) Growing concentration of income accelerated during 2010-2016. The ratio of average household Real Income Per Month for the top 5% and the bottom 5% increased from 32 to 121. Asset Inequality: Top 5% households had 1283 times higher (BBS,2010) share of asset than the bottom 5% households, this was 800 times higher in 2005 (BBS,2005) Deb. Bhattacharya: Development Strategy and the Left Behind#102. Faultlines of the Recent Development Experience 2.5 Disjuncture between aggregate and disaggregate outcomes B. Rural vs Urban Disparity Rural poverty rate (26.4%, BBS) remain higher than urban poverty rate (18.9%,BBS). During 2010-16, the real income per month of the Urban Top 5% increased by 23%. For the Rural lower income group this decreased by 55%. C. Marginalisation of Lower Income Group □ Between 2010 and 2016 the poorest 5 per cent population of Bangladesh in 5 years (2010-16) lost out 2/3 of their share resulting acute marginalisation (in terms of income level). The income share decreased by 3.37% for the bottom 20% from 2010 to 2016. For the bottom 10% the decrease was even higher (5.13%). Deb. Bhattacharya: Development Strategy and the Left Behind 10#112. Faultlines of the Recent Development Experience 2.6 Disjuncture between aggregate and disaggregate outcomes D. Employment Situation a. Aggregate employment target was not achieved by 26% During FY16-20, a total of 95 lakh new jobs were created against the targeted number of 129 lakh Domestic employment situation was more adverse - 45% Shortfall Against a target of 109 million domestic employment, was set as target whereas 6 million new Jobs were created. b. Share of "Not in Education, Employment, or Training" Population increased by 4.4% The percentage of young 'NEET' population increased from 25.4% (LFS 2013) to 29.8% (LFS 2017) c. Youth unemployment rate is significantly higher than the national average unemployment rate In 2016-17, against a national average unemployment rate of 4.2%, the youth labor force (between 15 and 29 years) unemployment rate was about 10.6%. Unemployment rate of educated youth was even more precarious In 2016-17 more than one-third of the youth labour force with tertiary education (34.3%) remained unemployed. During the period of 2013 to 2016-17, 9.1% of Urban Women employment shifted from the formal sector to the informal sector. d. Gender-informalisation of female labour Deb. Bhattacharya: Development Strategy and the Left Behind 11#1215 10 5 2. Faultlines of the Recent Development Experience E. Differential performance in Education The rate of primary School Completion has fallen by 7.5% for the lower-middle class and by 2.6% for the emerging middle class between year 2013 to 2019 Change in Primary School Completion Rate 2012-2019 • Upper Secondary completion rate for the richest group is almost 4 times higher compared to the poorest group Upper Secondary Completion Rate in 2019 32.8 0 27.1 Lowest Second Middle Fourth Richest 20.3 -5 12.1 -10 50.1 Lowest Second Middle Fourth Highest Source: MICS 2019 Source: MICS 2012,2019 Deb. Bhattacharya: Development Strategy and the Left Behind 12#132. Faultlines of the Recent Development ་ Experience F. Differential performance in Health Nutritional Attainment is significantly low About 5.5 million children under 5 years (36 percent) are suffering from chronic malnutrition (stunting or low height-for-age) and 14 percent are acutely malnourished (wasting or low weight-for-height). Deprivation is more acute in the bottom 20% The prevalence of stunting is 2.4 times higher for the lower wealth group (40%) compared with the richest group (17%) (BDHS 2018). Child Mortality Rate is still very high Under-five mortality rate is nearly double in the bottom 20% household compared to the top 20%. (MICS 2019) Deb. Bhattacharya: Development Strategy and the Left Behind 13#143. Redefining the Development Strategy Proposed Strategic Framework for Eighth Five Year Plan (1) Employment-Targetted Inclusive Development (Orientation on LNOBS and PNOBs) → Post-COVID rebound Productivity growth and → social innovation → Economy-wide diversification → Welfare protection (wellbeing promotion) → Beyond traditional income poor to socially excluded and emerging middle class Domestic demand driven → Focused on post-harvest agriculture /rural and non-farm actors, CMSMEs Climate resilient Deb. Bhattacharya: Development Strategy and the Left Behind 14#153. Redefining the Development Strategy A. Escaping the growth delusion ("probridhdhir ghor")? 1. Employment generation as the fundamental (Core/Primary) target indicator 2. Move beyond traditional pro-poor declarative focus to an approach focused on inequality, social exclusion and vulnerabilities. e.g. the emerging middle class and support beyond income Incremental domestic consumption and investment (domestic demand) to be the sources of economic growth 3. 4. 5. 6. 7. 8. Sectoral focus priority to be on domestic market oriented manufacturing growth and diversification agriculture and non farm as lead sectors - post-harvest Productivity growth and technological transformation Promote green growth and resilience to climate change Focus on welfare protection and promoting well-being Resilience in post-COVID rebound and resumption Deb. Bhattacharya: Development Strategy and the Left Behind 15#16Domestic Resource Mobilisation → emphasis on direct taxes (income + asset), greater tax coverage, curbing illicit financial flows 3. Redefining the Development Strategy Proposed Strategic Framework for Eighth Five Year Plan (2) Complimentary: Exchange Rate/Current Account Balance/Fiscal Deficit/Interest Rate Macroeconomic Stability Anchored on Low Inflation Enhanced allocation and improved quality of resource development services (health+education) Animating Private Sector Investment (Domestic + Foreign) More Active Use of Fiscal Instruments vis-à-vis Monetary Instruments Deb. Bhattacharya: Development Strategy and the Left Behind Balanced Global Integration (Beyond RMG and Semi- skilled overseas employment) 16 Universal Social Protection (Scheme + Insurance)#173. Redefining the Development Strategy B. Securing macroeconomic stability 1. Stability anchored in moderate inflation complimented by stable exchange rate, current account balance, manageable fiscal deficits and interest rates 2. 3. Increased focus on mobilising domestic resources through direct taxes Increased allocation towards improvement of quality of education and health services particularly from public and government supported institutions - C. More active use of fiscal instruments with monetary instruments 1. Stimulate private investment including FDI 2. Aim towards balanced global integration - skilled manpower export, high value exports (beyond RMG) 3. 4. Universal social protection Rule of law and strengthened institutions Deb. Bhattacharya: Development Strategy and the Left Behind 17#183. Redefining the Development Strategy Proposed Strategic Framework for Eighth Five Year Plan (3) Three Strategic Safeguards Effectiveness: Improved Public Policy and Institutional Effectiveness (e.g. controlling inflated project costs) Transparency: Accountability: Disaggregated Enforcing Social Data and Disclosure Accountability Deb. Bhattacharya: Development Strategy and the Left Behind 18#193. Redefining the Development Strategy C. Strategic Safeguards 1. Improved effectiveness of public policy and institutions 2. Enhanced transparency through more disaggregated and real time disclosure of data and information 3. Increased accountability through enforcement of social mechanisms and tools Deb. Bhattacharya: Development Strategy and the Left Behind 19#20Proposed Strategic Framework for Eighth Five Year Plan Employment-Focused Inclusive Development (Orientation on LNOBS and PNOBs) Productivity growth and social innovation → Economy-wide diversification → Welfare protection (wellbeing promotion) Post-COVID rebound → Beyond traditional income poor to socially excluded and emerging middle class → Domestic demand driven → Focused on post-harvest agriculture /rural and non-farm actors, CMSMES Climate resilient Macroeconomic Stability Anchored on Low Inflation Complimentary: Exchange Rate/Current Account Balance/Fiscal Deficit/Interest Rate Domestic Resource Mobilisation → emphasis on direct taxes (income + asset), greater tax coverage, curbing illicit financial flows Enhanced allocation and improved quality of resource development services (health+education) Animating Private Sector Investment (Domestic + Foreign) Balanced Global Integration (Beyond RMG and Semi- skilled overseas employment) → More Active Use of Fiscal Instruments vis-à-vis Monetary Instruments Effectiveness: Improved Public Policy and Institutional Effectiveness (e.g. controlling inflated project costs) Transparency: Disaggregated Data and Disclosure Deb. Bhattacharya: Development Strategy and the Left Behind Three Strategic Safeguards Accountability: Enforcing Social Accountability Universal Social Protection (Scheme + Insurance) 20 20#21Thank You! http://bdplatform4sdgs.net/ Deb. Bhattacharya: Development Strategy and the Left Behind 21