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The benefits of the growing trend in economy the country has witnessed this fiscal year failed to reach the rural poor mainly due to city-centric development, the Centre for Policy Dialogue (CPD) observed yesterday.

The growing trend is reflected in the 5.5-percent increase in Gross Domestic Product (GDP) in the current fiscal year (FY), which was 5.26 percent last year. But, the major contributors to the growth were urban sectors -- 20.8-percent contribution made by manufacturing, 15.8 percent by wholesale trade, 12.5 percent by construction and 11.3 percent by transport and communications -- an interim report of the CPD, an independent think-tank, pointed out.

In comparison, the contribution to the GDP by agriculture sector, which is directly related to the rural poor, was only 11 percent.

"It shows that the economic growth was 'discriminatory' and biased towards urban areas rather than improving the condition of the rural poor," CPD Executive Director Debapriya Bhattacharya remarked while releasing the second interim report on the state of economy in FY 2003-04 yesterday. The centre had released its first interim report on economy in December last.

The GDP growth rate is also dubious, as the growth in investment was not reflected in wage increment, Debapriya noted, adding the real wage increased only by 0.13 percent this fiscal.

He warned the government of a situation [of famine] like that in 1974, as the prices of food and edible oil are shooting up and recommended strong food security measures for the benefit of the poor.

The report maintained that implementation of the Annual Development Programme (ADP) up to a reasonable level and reaching the benefits of the macro-economic developments to the rural poor would be two major challenges the government would face in the future.

According to it, the other key challenges for the government would be: pushing GDP growth beyond 6 percent, ensuring a more equitable distribution of incremental GDP, lifting private investment share beyond 20 percent, improving domestic savings rate to 20 percent, keeping inflation rate under control and maintaining exchange rate stability.

The report suggested expansion of safety net programmes for the poor and pension scheme for elderly people, and special initiative to meet the looming power and energy crises. It also recommended increasing flow of initial public offering (IPO) and keeping a continuous watch on the exchange rate so that it does not face any sudden massive devaluation.

It listed a number of government's successes that include achieving 5.5-percent GDP growth target, buoyant remittance flow, improvement in foreign exchange reserve, stable exchange rate, low fiscal deficit, rising private investment, fresh movement in capital market, import resurgence and continued export recovery.

On the other hand, the report pointed to the government's failure in correcting the gross under-implementation of the ADP, faltering revenue generation, low off-take foreign aid, creeping inflation, 'monga' (near-famine situation) trend and paralysis of privatisation process.

Debapriya expressed his doubt over full implementation of the ADP, as only 45 percent of it was implemented in the first nine months, with 55 percent left for the remaining three months of the fiscal year.

According to his projection, the ADP implementation would face a Tk 4,000-crore deficit, as the implementation level would hardly go beyond Tk 17,000-crore out of the total budget of Tk 21,000 crore.

There is a risk of hasty implementation of ADP projects from political pressure, Debapriya said, adding low quality project implementation is also feared as most of the line ministries hardly have the capacity to spend the allocated money.

The CPD executive director pointed out that an excess liquidity of more than Tk 10,000 crore is lying with the banks, which needs careful handling so that the money is not invested in low quality projects, as "There is a possibility of huge bank loan distribution from political motives ahead of national elections in the country."