Window on Asia
Mandate of Democracy - How Can it be Sustained
THE present Government came to power in June 1996, one and a half year back, with the clear mandate of democracy. The Government today has the full authority, given by the people, to govern the country for a full five-year term. However, this is only the general assumption in a democracy which will remain valid so long Government is able to deliver economic success - entirely to the benefit of the people in general. Delivery of economic success is the key to sustainability of the mandate of democracy. No party is voted to power for its inaction on the economic front. In a developing country like Bangladesh, the right to rule must be continually renewed by promoting economic growth, creating more employment, generating higher incomes, spreading literacy, improving health and, above all, alleviating poverty.
The five-year term is not too long for public memory. People are nobody's fool and money alone cannot pave the way at the voting time. In fact one does not have to wait for the polls. The price of stagnation is likely to be severe. On the other hand, it is on record that people are going to tolerate some degree of authoritarianism if it will deliver widespread economic returns for them.
The easiest way for the government to deliver economic success is to concentrate on those sectors and activities, where its involvement is minimum - where government plays the role of a catalyst, again at the least cost to the government, facilitating delivery of solid outputs of considerable economic value. Telecommunication is one of those sectors where it may only create the level playing field for private operators to compete evenly with each other and the results could be dramatic. Today, Bangladesh is infamous for its notoriously low telephone density, i.e., number of telephone connections per 100 persons. It is lower than Nepal and in order to come up to the density level of India (which itself is pretty low compared to world standards), the size of the industry today must expand five folds. Only by encouraging the private sector, without a single taka worth of public expenditure, government, by the election time in 2001, can ensure that telephones are widely available, all over the country and for all to use; while enhancing government revenue by hundreds of crores of taka from 15 per cent VAT collected on every telephone bill.
It is not only in the telecom sector. By speedy completion of the pending exploration and drilling contracts for oil and gas exploration, flow of a billion dollar (if not more) investment by the year 2001 can be ensured. Of immediate economic success should be the private sector power plants. The government can prove, without spending a single taka, that load shedding and power shortage are nightmares of the past by the third year of its five-year term. Award private parties the right to clear municipal garbage; augment urban water supplies through private vendors while build-operate-own type of contracts can build toll ways in order to reduce traffic congestion. Thus telecommunication, electricity, oil and gas, and urban infrastructure can be developed, creating preconditions for greater inflow of investment into the economy from both domestic and international sources. Hardly any government expenditures will be involved. On the contrary, public revenue earning capacity would increase many fold.
And, the most significant outcome will be at the polls - three and a half years later. It can be proved that the mandate of democracy given to the party in power was sustained through economic growth. There will be increased income and employment. Capacity of the government to expand investment in education and health will be realised. Unfortunately, bold and decisive actions are significantly lacking. There must be the vision of Bangabandhu, "Switzerland of the East", on the forefront. Awami League would let the nation down if it fails to pursue the vision of Bangabandhu.
From the least cost (to Government) to more complex as well as expensive interventionist role of the government will also be involved in the realm of economic reform. If economic success should be delivered, hard decisions cannot be avoided. Banking sector reform cannot be delayed any longer. Borrowed money ought to be paid back and for this purpose, some of the industrial conglomerates may stand as flimsy castles in sands. Those cannot be strengthened by ignoring the outstanding debt issue or putting in more funds on those bottomless pits. Henceforth, banks ought to be allowed to operate on the basis of their own independent judgment on where to and how to lend money. If the loans are bad, the banks must suffer and if need be, liquidate themselves. If there is corruption within a particular bank, it will suffer automatically.
The rejuvenated banking system should also take into account reform of the existing interest rate policies. The high rates of interest that prevail today should be moderated and related to a structure of rates which is internationally competitive - even at the cost being mildly inflationary if it promotes domestic investment. The sustained economic growth in China had been considerably influenced by cost of borrowing which remained less than half of similar costs in Bangladesh.
A major reform awaiting state intervention is privatization of state enterprises. Unfortunately, the government has gone back on its earlier promise. It has signed a deal with workers organizations to withhold privatization and ensure salary increase with retrospective effect. This simply means government's confused perception of what is best for its own good - three and half years later. With continued budgetary burden of loss-ridden state enterprises and basically holding the nation hostage to labour unions imply negation of the mandate of democracy and government's utter incapacity to deliver economic success. Therefore, sustainability of the five-year tenure might become questionable.
The South Asian Growth Quadrangle (SAGQ) holds promise of additional economic opportunities through economic regionalism. The port of Chittagong as well as other ports which may be developed along the adjoining coastline can become gateways to the entire eastern part of the subcontinent. Transportation between India and Bangladesh can be vastly improved. The investment potential of the proposed SAGQ run into billions of dollars. If within the next three and half years, only a part of the grand regional vision is realized, economic success would stand delivered to a significant extent.
There has never been an economic miracle in our country. After the recent turmoil in East and South-east Asian economies, perhaps we do not expect any miracle in the short run. However, achieving solid economic returns for the people and the nation does not call for any miracle. Positive results out of initiatives already taken should be sufficient. After all, there is always a capacity limitation and with expansion of employment within government, the capacity, instead of rising, seems to have gone down. Expansion of government infrastructure is inversely related to productivity.
The strategy should be to build up on a minimum programme basis, concentrating first on those areas where private sector is in a position to deliver goods; and secondly, financial sector reform is a must which should not be delayed any longer. The government need not take up any new major scheme. Let the ongoing programmes and plans be completed in right earnest. Expand micro-irrigation, rural roads, export processing zones, rural health centres and primary schools. These are all within the scope of existing activities of the government and all of them have proved their economic success. There is no need for old age of pension or a new employment bank since the success rate of nay new venture in the public sector is extremely low. Government is already burdened with plenty of white elephants; there is no point in creating new ones.
Revamp and strengthen what we have and facilitate others, private sector in particular, to play their due roles. The end result cannot but be good. The mandate of democracy will be sustained.
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