Continued falling rate of growth in agriculture and industry sectors could cause continuation of decline in GDP in the current fiscal year, Unnayan Onneshan, an independent think-tank, says in its current issue of the Bangladesh Economic Update.
Pointing out that the rate of growth in agriculture came down from 5.24 percent in fiscal 2009-10 to 5.13 percent, 3.11 percent and 2.17 percent in 2010-11, 2011-12 and 2012-13 respectively, the multidisciplinary research organisation anticipated that the rate might reach as low as 2.09 percent in fiscal 2013-14, if such trend persists, reports UNB.
It also observed that the manufacturing sector might see a further decline in rate of growth than the preceding year and the business as usual scenario project a 6.02 percent rise in the current fiscal.
The manufacturing sector has been undergoing a declining rate of growth since the fiscal 2010-11. While in fiscal 2010-2011, the rate of growth in manufacturing sector was 9.45 percent, the rate decreased to 9.37 percent and 9.34 percent in 2011-12 and 2012-13 respectively.
The rate of growth in GDP has declined from 6.71 percent in 2010-11 to 6.23 percent in 2011-12 and then to 6.03 percent in 2012-13, which might fall below the decadal average of 6.0 percent in 2013-14, the Unnayan Onneshan projected.
Referring to the declining trend in growth in agriculture sector, the Unnayan Onneshan attributed this to gradual loss of cultivable land, lack of invention, adoption and dissemination of new technology, and lack of sufficient support for agricultural research and extension, resulting from lack of proper policy support.
It pointed out that the falling trend of growth in manufacturing sector can be ascribed to unavailability of infrastructural facilities, recent hiccups in garment sector, constraints originating from limited size of the domestic market, instability in property rights, and missing of institutions.
The think tank also urged publication of regular and credible statistics, and points out non-availability of Quantum Index of Industrial Production (QIP) since November, 2013, though the Bangladesh Bureau of Statistics (BBS) is supposed to publish this on a monthly basis.
It detected that the underdevelopments in power sector have been exerting immense adverse impacts on the economy through hindering agricultural and industrial production and development.
Pointing to the frequent tariff hikes during last five fiscal years, the Unnayan Onneshan stated that this has caused the entrepreneurs in both agriculture and industry to face the challenge of cost-push in production.
Referring to the government’s dependence on oil-based rental power plants to purchase power, the research organisation adds that this has caused the power tariff to hike.
Whereas in fiscal 2012-13, the total cost of generating one kilowatt hour power by using gas was Tk 2.59, the cost was Tk 16.37 and Tk 20.73 for the use of furnace oil and diesel oil respectively in generating the same amount of power.
Observing the gap between installed generation capacity and maximum generation of power, the think tank finds that the gap has been increasing since 2008-09, implying the inefficiency in power generation and availability of economic rent in the sector.
The development of power sector needs to be highly prioritised with a view to providing a conducive environment for investment and growth in the economy, suggested the Unnayan Onneshan.