The Awami League government has negatively affected the country’s economy by supporting the super-rich who control the capital and launder the funds on board.

Meanwhile, former central bank chief economist Birupaksha Paul said ousted prime minister Sheikh Hasina had declared a zero-tolerance policy against corruption, which was “the biggest mockery of the century”.

The economics professor from the State University of New York in Cortland, US, discussed disproportionate economic growth, distorted data, the connection between democracy and development and many other topics in an interview with The Daily Star last week.

He said the AL’s economic policy had become increasingly biased against the super-rich, who were already occupying the means of production, capital and land in this land-scarce country.

Faulty economic policy greatly affected financing through banks and the capital market malfunctioned. “So in these situations the Awami League has not done a good job at all,” Paul said.

He said despite being a grassroots party, capitulating to oligarchs and pampering the super-rich corrupted the AL’s core morality and deviated from its own commitments.

“And the super-rich not only controlled the capital, they also laundered much of it,” he said.

Paul said market economy was introduced in the early 90s to get rid of monopolies, but AL created some government-backed monopolies.

“Someone controls everything. Someone controls the gold industry, someone controls the banking sector and someone takes over seven banks.

“Why were you (Hasina) talking about the zero tolerance incident when people very close to you were so corrupt? Even before the mass riot, this fact had been exposed by the media but the government did not take any action,” he said.

DATA

Paul also questioned the data of economic indicators. He said even if the World Bank’s calculation that Bangladesh’s average GDP growth was 5 percent in the last 15 years was correct, the rate was not bad.

“The problem is that growth does not necessarily indicate development or eliminate income inequality. The most shocking part is that you are growing, but you are growing disproportionately.”

The economist said the growth came from the industrial sector, especially garments and intermediaries, which have little added value.

Unlike politicians, economists were very serious about the integrity of the data. However, the data was unreliable due to the interventions of some ministers to show high per capita income and growth and low inflation and unemployment.

“The government was not serious about integrity and honesty of policy. And Awami League paid the price for it,” Paul said.

DEMOCRACY AND DEVELOPMENT

Paul said there were some ideal stories where countries like the UK showed that democracy and development were not mutually exclusive. “In fact, democracy can provide a better path to development.”

During AL’s tenure, he initially thought democracy existed but later the government started saying development is very important for democracy.

For a strong democracy, institutions must be strong, but in Bangladesh institutions were mostly run by people who obeyed the government. “The best example was retired bureaucrats who said nothing and were not innovative at all,” Paul said.

“Although South Korea was developing, why couldn’t North Korea do this? The same people, the same culture, but they did not create the institutions. Now South Korea’s income is more than 10 times that of North Korea.”

Paul said AL showed that there are institutions in the country, but even the judiciary, the Anti-Corruption Commission, the Competition Commission, banks and the capital market are corrupt.

“A (AL) leader built 360 houses in London, England, without taking any responsibility. Even the Prime Minister knew this, but did not take any steps.

“That’s why I said zero tolerance for corruption is the biggest mockery of the century.”

Paul noted that East Asian nations invest a lot of money in research, education and health, but these sectors are largely neglected or sometimes outright politicized in Bangladesh.

“We cannot improve our education ranking because we have placed all political people in institutions and politicized the campuses. Now the interim government has done something like banning a party, a student front. Why shouldn’t it ban all student fronts?”

Paul praised incumbent Bangladesh Bank Governor Ahsan H Mansur for his fight against inflation.

To curb inflation, Paul advised authorities to keep the supply chain mechanism friendly to consumers and prevent extortion at all levels.

“A reliable data mechanism should be put in place so that manufacturers can make the right decisions.”

Paul suggested abolishing the Financial Institutions Division within the finance ministry to ensure the government’s influence on the banking sector is minimal.

He proposed the passage of a fiscal responsibility law to ensure fiscal discipline, transparency and long-term sustainability of public finances.

The economist also suggested restructuring the fiscal year starting from January instead of July.