An Overview of Poverty Reduction Strategies: First FYP to Fifth FYP

1. An Overview of Poverty Reduction Strategies: First FYP to Fifth FYP Presentation by Dr. Muhammad G. Sarwar Civil Service College, Dhaka 13 June 2011

2. Presentation Contents • Poverty in Post-Independent Bangladesh • Historical Context of Mid-Term Planning • Planning for Poverty Reduction • First Five Year Plan 1973-78 • Tow Year Plan 1979-80 • Second Five Year Plan 1981-85 • Third Five Year Plan 1986-90 • Fourth Five Year Plan 1991-95 • Fifth Five Year Plan 1997-2001

3. Poverty in Post-Independent Bangladesh

4. Planning for Poverty Reduction: Bangladesh Development Planning is based on the State Constitution (Part II, Articles 9 -20) • Article 14: emancipation of the peasants and workers from all forms of exploitation; • Article 15: provision of basic necessities of life- food, clothing, shelter, education, and medical care; • Article 16: rural and agricultural development; • Article 17: free and compulsory education; • Article 18: improvement of nutrition and public health; • Article 19: equality of opportunity to all citizen; • Article 10: participation of women in national life. • Article 9: promotion of local govt. institutions for improving public service delivery;

5. Historical Context of Mid-Term Planning • After Bolshevik Revolution Soviet Union initiated mid-tem five year centralized state planning in early 1920s • Newly emerged decolonized independent countries in Asia and Africa followed the mid-term five year centralized mixed economy planning in 1950s after the Second World War

6. 1970s: Dominant Development Planning Paradigm In 1970s Dominant Development Planning Paradigm was Keynesian economic model that advocates state interventions in economic management. Technical framework mostly based on H-D model along with with I-O tables • First Five Year Plan 1974 – 1978 • Two Year Plan 1979 -1980

7. First Five Year Plan 1973-78:Plan Objectives • To reduce poverty • To continue and complete the reconstruction work to the benchmark of 1969/70 • To expand the output of essential consumption items • To arrest the inflation (rising trend in the general price level) • To increase the GDP growth rate • To increase per capita income • To attain self-sufficiency in food-grain production • To reduce population growth rate • To reduce dependency on foreign aid • To consolidate the gains made so far in socialist transformation of Bangladesh

8. First Five Year Plan: targets • Increasing GDP growth rate to 5.5% per annum • Increase per capita income at the rate of 2.5% per annum • Employment creation of 54 lakh man-year (against 39.3 lakh man-year additional employment requirement in the Plan period) • Reducing dependency on foreign aid to 27% of total investment requirement • Reducing population growth rate to 2.8% from 3.0% per annum

9. First Five Year Plan:Plan outlay and its financing (Crore Taka at 1972/73 prices)

10. First Five Year Plan: strategies • Recovery of the war damaged economy • Growth of Output and Income • Equitable distribution of income • Employment creation (generating 54 lakh man-year in crop agriculture, rural works programme, construction, industry, and social sectors against 39.3 lakh man-year additional employment requirement in the Plan period)

11. First Five Year Plan: achievements /failures • GDP growth rate per annum: 4.0% (GDP grew by 44%) • Domestic resource mobilization: 20% of Plan outlay • Money supply grew by 148%, so was the general price level • Terms of trade deteriorated to 69 by 1978 from 100 in 1973

12. 1980s: Dominant Development Planning Paradigm Keynesian model was discredited 1098s due to bad performance of the State Enterprises, however, Keynesian Planning model continued. Technical Framework incorporated SAM in addition to I-O table • Second Five Year Plan (1981 – 1985) • Third Five Year Plan (1986 -1990)

13. Second Five Year Plan 1981-85: Plan Objectives/targets • Attaining 5.4 % GDP growth rate per annum on average • Equitable growth • Expansion of employment • Eliminate illiteracy and achieve universal primary education • Reducing population growth rate • Strengthening local government • Domestic resource mobilization to attain self-reliance

14. Second Five Year Plan 1981-85:Plan Strategies • Emphasis on rural development • Increasing agricultural production • Regional / spatial planning to reduce regional disparity • Developing Institutional Framework for local level production planning • Industrialization • Balancing public and private sector development • Population planning

15. Second Five Year Plan 1981-85:Plan Outlay and Financing(Crore Taka at 1979/80 prices)

16. Third Five Year Plan 1986-90: Objectives/targets • Reduction of population growth rate from 2.4% to 1.8% • Expansion of productive employment to reduce unemployment • Attaining universal primary education and HRD • Development of technological base for structural change in the economy • Attaining food self-sufficiency • Satisfying of basic consumption needs • Accelerating Economic growth for poverty reduction • Domestic resource mobilization for attaining self-reliance • Upazila development program

17. Third Five Year Plan 1986-90:Plan Outlay and Financing(Crore Taka at 1984/85 prices)

18. 1990s: Dominant Development Planning Paradigm • In 1990s Neo-liberal ‘Washington Consensus’ emerged that advocated market liberalization for higher economic growth and targeted safety-net programs for poverty reduction. • Keynesian Planning Model along with neo-classical growth model with more emphasis on market economy followed- Fourth Five Year Plan (1991 – 1995) Fifth Five Year Plan (1998 – 2002)

19. Fourth Five Year Plan 1991-95 • Plan Objectives/targets • Attaining 5% per annum average economic growth in the plan period • Poverty Alleviation and HRD • Increasing self-reliance

20. Fourth Five Year Plan 1991-95:Strategies • Export led economic growth • Intra-sectoral balance in sectoral planning • Efficiency culture in the economy • Mainstreaming women development in Planning • Reduction of population growth rate • Restructuring administrative system • Increasing private and public investment • Community participation through NGOs • Local level (district level) planning

21. Fourth Five Year Plan 1991-95:Plan Outlay and Financing(Crore Taka at 1989/90 prices)

22. Fifth Five Year Plan 1997-2001:objectives • Poverty alleviation through accelerated economic growth rate • Employment generation • Creating an equitable soceity • Attaining food self-sufficiancy • Human Resources Development • Development of Physical Infrastructure • Development of CHT, north-west and coastal regions

23. Fifth Five Year Plan 1997-2001:objectives (contd.) • Reducing population growth rate • Strengthening scientific and technological base • Protection of environment • Closing gender gap • Establishing social justice • Development of local governments.

24. Fifth Five Year Plan 1997-2001:targets • Achieving on average 7% per annum GDP growth rate in the plan period • Reducing population growth rate to 1.3 % per annum at the terminal year of the Plan.

25. Fifth Five Year Plan 1997-2001:plan outlay and financing(Crore Taka at 1996/97 prices)

26. Five Year Plans: Public vs. Private Investment

27. Financing Five Year Plans:Domestic vs. Foreign aid

28. Comparative Performance of Five Year Plans(Million Taka at respective base year prices)

29. Realized GDP Growth Rate in Mid-Term Plans

30. Trends in Poverty and Inequalityover the Plan Periods

31. Poverty Trends. 1974 - 2005

32. Inequality Trend 1991 - 2005

33. Critique of Development Planning in Bangladesh • All the Five Year Plans were implemented only partially indicating the lack of political will and institutional capacity to implement successive Five Year Plans • Non of the Five Year Plan did set specific poverty reduction targets implying stated ‘poverty reduction’ objective has been a political economy rhetoric to some extent • While Bangladesh has a success story to tell to some extent regarding ‘poverty reduction’ but the down side of planning has been the rising inequality

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