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The Financial Express

Charting the course to inclusive growth


Bangladesh: Connecting  minds  in quality  education Bangladesh: Connecting minds in quality education

A report published by the UN in 2018 about the world happiness index reveals that the richest  people are not the happiest. Finland has been shown as the happiest country and the US has been ranked 18th in the index. The world is advancing in an unbalanced way that means few people are very rich, some are in the middle class and most of the people are in living under the poverty line.

Moreover, the latest Household Income and Expenditure Survey released by the Bangladesh Bureau of Statistics (BBS) reveals that the income share of the poorest five per cent of our population was 0.23 per cent of the overall income, a sharp fall from 0.78 per cent in 2010. In contrast, the richest 5.0 per cent people's share of the income grew to 27.89 per cent, up from 24.61 per cent in 2010. This basically means that the poorest five per cent people's share of national income has decreased, whereas the richest five per cent's has increased. So, the scenario in Bangladesh is in line with the world economic condition, although the economy of Bangladesh is growing faster. Let's see where the solutions lie.

Firstly, knowledge is the base for development for any nation. If the general people do not have the right attitude i.e. how to talk and behave with the citizens, that nation can never be civilised, although they have educational qualification. So, the attitude makes a difference between an educated person and a knowledgeable person. Knowledge gives the solution when people spend time thinking about how to solve a problem. Education with a positive attitude provides the basis for a philosophy that guarantees inclusive growth.

Secondly, a developing country like Bangladesh cannot take up any large-scale investment project like a deep-sea port, wider roads and highways, healthy hospitals and etc. due to a shortage of capital. Digitisation of the currency can be is one of the best solutions to the financial inclusion and formation of capital for the country. If a country can introduce a 100 per cent digital currency, it can disburse an infinitive level of loans and advances as loans create deposits. For example, if there is no paper money and a bank receives Tk. 100 in deposit, after deduction of Tk. 19 on account of cash reserve requirement (CRR) and statutory liquidity ratio (SLR), the bank can disburse the remaining Tk. 81 as loans and advances. As there is no paper money, the Tk. 81 will be back in the bank in the form of deposits as the recipients will use the money through the bank. Again on deduction of Tk 15.39 from the Tk 81, the remaining Tk 65.61 will be disbursed. And it will continue until the amount reaches the zero level. Finally, it will be found that the total deposits will be Tk. 526.22. In the same way, if the banks do not make any SLR and CRR provisioning, then the total loans and advances will be at an infinite level.

In Bangladesh about 80 per cent of the population have mobile phones and most of the sets are smart phones. Now, if the banks can introduce easy, secure and inexpensive apps for digital transactions and the government takes initiatives for inexpensive internet services, digitisation of the currency will happen and that will help in cent per cent financial inclusion and ensure infinite loans and deposits.

Thirdly, businesses are more vital for inclusive growth while trust is the main principle of business and consumption is also important for growth. The business attitude is vital for nation-building. An ideal scenario of business can be ensured as is stated in the book titled Wealth and Welfare Business. In the book it is mentioned that (i) entrepreneurs have to be honest and skilled and the business has to be interest-free, (ii) business has to be run for welfare of the human beings, (iii) two types of investors will be there where one type of investors do not take any responsibility and do not participate in policy making but take proportionate profits, if an organisation can make profits. On the other hand, the second type of investors will participate in policy making and take responsibility as well as profit at last, (iv) employees will get higher salaries in comparison with the income, (v) corporate social responsibility (CSR) will be carried out at the rate of zakath, allowed by Islam, and (vi) a certain amount of tax to be paid to the public exchequer. All of the activities will be helpful for growth of business.

As there is no standard rate for CSR and no economist can present a justified distribution model in economics, the idea of zakath can be treated as the best solution for CSR. The CSR makes the nation stronger and if general people can be strong, then their consumption habit as well as working attitude will increase and that will ultimately help build a business-friendly nation. Bangladesh can take an initiative to make the country business-oriented instead of agriculture-oriented. The whole process will ultimately help in ensuring inclusive growth. In short, we can say quality education, thinking minds, work, digitisation of the currency, building a business-oriented society and finally CSR at the rate of Zakath can ultimately help in achieving inclusive growth.

The writer is a banker

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