Bangladesh's quest for economic freedom: From reconstruction to planned development

It will be fair to remember Bangabandhu as a friend of the peasantry on this day of his martyrdom — he too was a son of a well-to-do farmer. 

But he was also very close to the landless and small farmers. He used to mingle with them very closely and was pained by their poverty and hunger. In particular, the 1943 Bengal famine devastated his heart. And he promised to himself that he would always stand by them. 

At the same time, Bangabandhu had a dream of achieving 'Sonar Bangla' — the prosperous Bangladesh. However, he was constrained by the lack of financial resources when he started the heroic journey of rebuilding a war-torn country. Bangabandhu was focused (and rightly so) on emergency needs of rehabilitation and reconstruction immediately after liberation. However, he was also aware of the need for a planned approach to development of his country, which was still primarily an agrarian economy. 

Therefore, within three weeks of his return from the jail in Pakistan, on 30 January 1972, he established the Planning Commission. And he himself became the chairman of this commission. He realised the need to address the prevailing scarcities and inequalities in the war-torn country in a planned way. 

Hence, he opted to engage the eminent economists of the country in this commission as members. He nominated veteran internationally acclaimed economist professor Nurul Islam as the deputy chairman of the commission. And the other three eminent economists engaged as members of this commission were: Professor Mosharraf Hossain, Professor Rehman Sobhan, and Professor Anisur Rahman. The commission also engaged other reputed economists and professionals to prepare the planned documents.

Bangabandhu aimed to establish the Planning Commission as a central coordinating body that would ensure planned development of the primarily agrarian country. It was this commission that, under the leadership of Bangabandhu, developed the First Five Year Plan 1973-78. Bangabandhu got this plan formulated to build a self-reliant country which would consistently progress, adhering to a planned approach to inclusive development so that the disadvantaged groups of rural population could share the benefits of this development. 

This plan encompassed a well-designed set of directives for making policies and programs while prioritising the interest of the many. Bangabandhu himself wrote in the foreword to this document that this was "… a plan for reconstruction and development of the economy, taking into account the inseparable political, social and economic realities of Bangladesh." Here he was equally keen on emphasising the role of the people (majority of whom belonged to rural areas) and wrote "No plan, however well formulated, can be implemented unless there is a total commitment on the part of the people of the country to work hard and make necessary sacrifices." 

Evidently, the First Five Year Plan was aware of the importance of 'social and economic realities', implying its intended sensitivity towards the well-being of the agrarian households of the country (who were the majority). The plan, as pointed out by Bangabandhu in his foreword, also emphasised on "the participation of the people of the country" for its successful implementation. 

Again, as most of the people were residing in rural areas, it implied that success of the planned approach to development was reliant heavily on the contributions of the rural workforce. It clearly demonstrates Bangabandhu's trust in social mobilisation of labour in the context of lack of investible financial resources in the early days of Bangladesh. Indeed, an in-depth review of the overarching objectives of this plan reveals significant implications of each of those objectives for rural development in newly liberated Bangladesh.

As macroeconomic prospects of the newly liberated country as well as the wellbeing of most of its people depended largely on the agriculture sector, the First Five Year Plan prioritised this sector explicitly. As said in the document itself: "The main thrust of the plan, however, is in the agriculture sector, in view of its overwhelming importance. The requirement of a high rate of growth in agriculture has been reflected in terms of interrelated investment in the rest of the economy." This overarching emphasis on agriculture by Bangabandhu was not surprising given his deep understanding of the significance of the agriculture sector in the overall growth of the economy.

During the Pakistan era, agriculture of East Bengal remained as the least prioritised sector to policymakers. In stark contrast with that trend, Bangabandhu's First Five Year Plan focused primarily on the development of rural agrarian communities. Consequently, in comparison with public spending between 1965 and 1970 (last five years of the Pakistan era), development expenditure for the period of the First Five Year Plan was estimated to be 10-15%. As expected, the largest share of this investment was allocated by Bangabandhu for 'Agriculture and Water' (24% of the total allocation). The sum stood at almost Tk11 billion, which was indeed staggering in those days. Of this amount, almost 98% was to be public investment (the remaining would be private investment).

Bangabandhu was aware of the scarcity of local entrepreneurs to manage the large industrial sector. Hence, the First Five Year Plan went for state-led growth of large industries. However, with the industrial sector receiving the second largest chunk of allocations (20%), the plan especially encouraged private sector actors to engage in SMEs. Bangabandhu and his colleagues (politicians and economists alike) rightly identified the scope of growth of rural entrepreneurs in the small and medium industry sub-sector.

Three other sectors that received comparatively higher allocations in the said plan were - transport (13.4%), power and natural resources (11.7%), and physical planning and housing (10.1%). These three sectors were also pivotal for growth of agriculture and upliftment of rural living standards. Enhancing the transport system would bolster agricultural supply chains. Developments in power and natural resources would do the same. And finally, a significant share of the allocations for the physical planning and housing sector would obviously go for improving living conditions of rural Bangladesh.

While the programs and allocations proposed in this plan were timely and prudent, realising the same were extremely challenging given the vulnerability of the mostly agrarian nature of the economy at the time (especially in the context of scarcity of resources). The planners involved in development of this document were adequately aware of this challenge. 

Hence, the then Deputy Chairman of the Planning Commission wrote in the preface of this document, "The room for flexibility is so small, the ability of the socio-economic system to withstand the effects of mistake and waste so severely limited that in the use of scarce resources as well as in experimenting with new institutions great caution and extreme care need to be exercised."

From the discussion so far, it may be inferred that immediately after liberation of Bangladesh, after taking on the helm of the newborn nation, Bangabandhu not only aptly responded to the demands of recovery and reconstruction, but also put forward a medium-term roadmap for inclusive development. 

And while doing so, he remained, as always, focused on the well-being of the rural people. The First Five Year Plan indeed has been a testimony to Bangabandhu's prudent and timely thoughts and actions related to development, which can be a guiding document to any emerging nation. Fortunately, that thrust to agricultural development remains the main focus of development to today's policymakers as well. No doubt, agriculture emerged as the main safeguard against fallouts of the Covid-19 pandemic and Russia-Ukraine war. This legacy of pro-poor and pro-rural leadership deserves to be saluted on this day of national mourning.

The writer is a former Governor of Bangladesh Bank and Emeritus Professor of Dhaka University.