Recent Trends of Growth in Agriculture, Industry and Power

Bangladesh Economic Update

The Unnayan Onneshan, an independent multidisciplinary think-tank, in its current issue of the Bangladesh Economic Update reveals that the continuance in falling rate of growth in agriculture and industry sectors could cause continuation of decline in gross domestic product (GDP) in the current fiscal year.

Pointing out that the rate of growth in agriculture came down from 5.24 percent in 2009-2010 to 5.13 percent, 3.11 percent and 2.17 percent in FY2010-2011, FY2011-2012 and FY2012-2013 respectively, the research organisation anticipates that rate might reach as low as 2.09 percent in FY2013-14, if such trend persists.

As regards the manufacturing sector, the organisation observes that the manufacturing sector might observe 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 FY2010-2011. While in FY2010-2011, the rate of growth in manufacturing sector was 9.45 percent, the rate decreased to 9.37 percent and 9.34 percent in FY2011-2012 and 2012-2013 respectively.

The rate of growth in GDP has declined from 6.71 percent FY 2010-11 to 6.23 percent in FY 2011-12 and then to 6.03 percent in FY 2012-13, which might fall below the decadal average of 6.0 percent in FY 2013-14, the Unnayan Onneshan (UO) projects.

Referring to the declining trend in growth in agriculture sector, the Unnayan Onneshan attributes 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.

The research organisation points 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 urges for publication of regular and credible statistics, and points out non-availability of Quantum Index of Industrial Production (QIP) since November, 2013, though the BBS is supposed to publish such on a monthly basis.

The Unnayan Onneshan detects that the underdevelopments in power sector have been exerting immense adverse impacts on the economy through hindering agricultural and industrial production and development.

Pointing on the frequent tariff hikes during last five fiscal years, the UO states 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 FY2012-2013, 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 farnes 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 FY2008-2009, 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, suggests the Unnayan Onneshan.

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