Bangladesh is heading for an economic boom that can benefit the Indian states around it, writes Subir Bhaumik
The back-to-back one-day international series wins against Pakistan, India and South Africa in the summer of 2015 has made Bangladesh emerge out of its self-image as minnows in world cricket. But its cricketing success is no fluke. Bangladesh's success in outpacing India and Pakistan in social and human development has already been documented - specially the progress it has made in areas of female education and empowerment or in bringing down infant and maternal mortality. Its success in fighting terrorism has been recognized by both the United States of America and India - the latest arrests being that of the Bangladesh coordinator of al Qaida in the Indian Subcontinent, Maulana Mainul Islam, and his advisor, Maulana Zafor Amin. The AQIS had claimed responsibility for the murders of secular bloggers, Avijit Roy and Ananta Bijoy Das, and the security agencies have been on their trail for a while. As one Muslim majority nation which rejects the idea of an Islamic State, Bangladesh is considering a new counter-terrorism policy that may serve as a model for other Muslim-dominant nations. An extensive dialogue is on with experts in the region to integrate elements of 'soft power' and 'use of Bengali culture' in the counter-terrorism policy, alongside the usual hard options.
But what may be news to many is that Bangladesh's economy, once consigned to the very bottom in the world, is looking up as never before. That should be good for India, because any growth in Bangladesh is bound to rub off on India's poorly developed eastern and northeastern states and also because Bangladesh is only too keen to partner India in regional development. A recent assessment indicates that if Bangladesh and India partner each other with Nepal and Bhutan and link up appropriately with Myanmar and the Southeast Asian countries beyond it, the whole region could experience a 60 per cent growth in trade in the Association of Southeast Asian Nations-South Asian Association for Regional Cooperation region, minus Pakistan. In fact, the Indian envoy in Dhaka, Pankaj Saran, has said India is keen to partner Bangladesh in becoming a middle-income country by 2021. The good news is that Bangladesh is already on course to achieve that target before time.
The World Bank has announced in July that Bangladesh is no more a lower income country - it has joined the ranks of lower-middle-income countries with its annual per capita income close to the $1500 mark. The World Bank ranks countries with per capita income between $1,046 to $4,125 as lower-middle-income countries. In May, the Bangladesh Bureau of Statistics had said the country's per capita income had touched $1314 - up from $1,190 last year. Now the World Bank has stamped its approval. But Bangladesh does not seem to suffer from the complacency seen in India, West Bengal included, where chest-thumping over the smallest of achievements has become the order of the day. So the day after the World Bank announcement, the prime minister of Bangladesh, Sheikh Hasina, went on record to revise targets - she said Bangladesh now wants to become a higher-middle-income nation by 2019, instead of 2021 that had been set as the target two years ago. The year 2019 is when she faces the next election - 2021 is when South Asia's youngest nation turns 50.
The country's finance minister, A.M.A. Muhith, is confident that Bangladesh will register a 7 per cent gross domestic product growth in 2015-16 - a target he set for his budget in June. The World Bank and the Asian Development Bank have projected Bangladesh's GDP growth at 6.3 per cent - some economists in Bangladesh say it could be just below 6 per cent. The interesting fact is that all economists are circumspect about Muhith's projections and not for economic reasons. Their conservative estimates are prompted by the threat of political strife, what with Begum Khaleda Zia threatening 'peaceful agitations' yet agin. Many economists say a 6 per cent GDP growth would be no mean achievement but Muhith says he is sure the violent strikes and blockades by the country's Islamist Opposition is a thing of the past. The World Bank and the ADB are wary of such optimism, which is why their projections are 1 per cent less than Muhith's. But he appears confident that the Opposition can only revive violent agitations at great cost to their political credibility and that his government is confident of crushing them because "my countrymen will no longer tolerate obstruction in development". Although Begum Khaleda Zia has predicted that Hasina's government "may collapse like Hirak Raja", Muhith entertains no such fears. Bangladesh has set a target of emerging as a 'middle-income country' by 2021 - the golden jubilee of its birth - but Muhith is sure the target will be achieved by the time his government's tenure ends in December 2018. Somewhat like its success in achieving the millennium development goals 2015 (set by the United Nations) - a good two years in advance.
Bangladesh has a current account surplus of more than $ 2 billion, likely to improve further if oil import prices stay low. Its foreign exchange reserves have touched $25 billion and its annual remittance inflow has crossed the $15 billion mark. Its ready-made garment exports touched $17 billion in 2014-15 and is likely to touch $20 billion if India opens up its markets fully. The Bangladesh Garments Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association met the Indian prime minister, Narendra Modi, during his Dhaka visit and asked for land in Gujarat to set up a warehouse for facilitating easy market access in India. After Bangladesh's decision to allow transport of goods and people between the Indian mainland and its remote Northeast, these are the kind of favours India needs to do to create a win-win situation. Bangladesh has also streamlined its labour exports, cracking down hard on illegal migration, specially agents who promote it for huge commissions. Illegal migrants do not send back remittances, the legal ones do.
Bangladesh's effort to build the 6.5 kilometres railroad bridge on the Padma with its own resources will, when completed, link Dhaka to 21 southern districts. Economists estimate that will add 1 per cent to the national GDP. Bangladesh now seems to be going for two deep sea ports - one at Matarbarhi funded by the Japanese, the other at Sonadia possibly funded by the Chinese. It intends to boost its railways and water transport with the additional $1 billion line of credit extended by India. This is good news for India, which seeks to access its Northeast by using these ports. Chittagong and Mongla are old ports not capable of taking the additional load Indian cargo traffic will put on Bangladesh's networks.
The former minister for the development of northeastern region, Mani Shankar Aiyar, had once said that India should allow Bangladesh private capital to be invested in the Northeast because Indian private capital just will not. Tripura has taken the cue, getting the food-and-beverage giant, PRAN, to invest in a fruit processing unit near Agartala. A tyre plant using Tripura rubber is likely when Bangladesh's Nitol-Niloy Motors goes ahead with its plans to manufacture Tata's Nano cars in Bangladesh. The recently held Tripura Conclave, a private policy dialogue platform in the state, has urged Bangladesh's fledgling information technology industry to use Tripura as its backyard. Tripura's capital Agartala will soon emerge as India's third internet gateway after Mumbai and Chennai following an India-Bangladesh agreement to extend the submarine Net cable from Cox's Bazar to Agartala. India also signed an agreement with Bangladesh to purchase 10 Gbps (gigabits per second) surplus bandwidth that can go upto 40 Gbps after the second year.
Coordinated with Bangladesh's own plans to develop its IT industry and earn $1 billion for IT exports by 2017, one could be looking at the replication of a Bangalore-Hyderabad syndrome in Bangladesh and India's east. The organizers of the Tripura Conclave are looking at the prospects of an IT park on the lines of the one that Bangladesh's Summit Group is setting up in Gazipur, north of Dhaka, in partnership with Infosys. "Tripura is where the India-Bangladesh IT partnership can take shape," says the Tripura Conclave convener, Saumen Sarkar. Such trans-border ventures will benefit the eastern and northeastern states which are in need of investments. Rising income in Bangladesh also means more students and tourists flowing into eastern India, spending heavily on shopping to education to medical treatment. It is no secret how many of Calcutta's hospitals break even on patients from Bangladesh.
Foreign ventures in Bangladesh, multiplying steadily in recent months, are looking to extend production facilities in eastern and northeastern Indian states to improve market access and also target markets in Myanmar and China and beyond. But Indian business houses not yet confident of investing in Bangladesh are looking to invest in Tripura which promises power, peace and proximity to Bangladesh. Ratan Tata's recent visit to Agartala is significant - after bitter experiences in both Bangladesh and West Bengal, the former Tata chieftain may be looking at a safe place not far from the bigger markets of Bangladesh and West Bengal. That he stressed Tripura's excellent connectivity pointed to a gaze at markets beyond the tiny state.
Bangladesh also has plans to develop , in partnership with India, its 'blue economy', something that could positively impact the growth in India's east. With its new coastal shipping agreement with India, the thrust on 'blue economy' opens prospects for much cross-border investment. For the mandarins in Nabanna, it may often be useful to look east in the immediate neighbourhood rather than far west to London or far east to Singapore.
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