Financial Development of Bangladesh

Bangladesh is one of the poorest countries in the world, with overpopulation addition to its financial woes and it is a great deal reliant on overseas help. The country's financial system is based on agriculture. Rice, jute, wheat, sugarcane, tea and tobacco are the principal crops. Bangladesh is the biggest producer of jute in the world. Fishing is also a significant financial movement and beef, dairy products and poultry are also formed.

Financial year of Bangladesh 2005-2006 and budget estimate

In Bangladesh, three-fifths of the population engaged in farming. Jute and tea are principal sources of foreign exchange. Except for restricted quantities of oil, natural gas (found along its eastern border), coal and a little uranium, Bangladesh possesses only some raw materials. Dhaka and Chittagong (the country's main docks) are the major industrial centers- garments and cotton textiles, newsprint, jute products and chemical fertilizers are manufactured and tea is processed. In adding to garments, jute and jute products, leather, fish, exports include tea and shrimp. Remittances from several million Bangladeshis working abroad are the second principal foundation of foreign earnings. Capital merchandise, chemicals, textiles, iron and steel, food and fuel products are the chief imports. The USA, Western Europe, India and China are the chief trading associates.

Major impediments to growth comprise recurrent cyclones and floods, incompetent state-owned enterprises, not enough port facilities, a rapidly growing labor strength that cannot be engrossed by cultivation, delays in exploiting power resources (natural gas), lacking power supplies and slow completion of financial reforms. Financial improvement is stalled in many instances by supporting infighting and dishonesty at all levels of administration. Development also has been infertile by opposition from the system of government, public division unions and other vested interest groups. For superior GDP enlargement, investments in both community and private sectors will require to be accelerated. The prevailing political and financial constancy has greatly confident investment in the confidential sector. The trend of overseas straight investment is very hopeful. The administration is committed to marketplace financial system and has been pursuing policies for supporting and hopeful personal investment and eliminating infertile expenditures in the community sector.

A number of dealings have been taken to make stronger the setting up system and intensify reforms in the economic sector. The present administration believes that wastage of resources is a far greater obstacle to growth than insufficiency of resources. It is ordinary information that many expansion efforts in the past years turned into exercises in uselessness because of incompetence and corruption in high seats. Violence was allowed to paralyze rule and regulate. Management was over federal at the cost of local administration institutions. The administration has, therefore, certain to spread out government in the quickest promising time. The role of innermost remittance on the financial system has in fact been slowly increasing throughout the last two decades.

It is now measured as a chief influencing issue over the financial policy-making process of Bangladesh. The increasing flow of remittance has been plummeting Bangladesh's outside help dependence. The growing official inflow of remittance alone is at present corresponding to more than fifty percent of total administration revenue collection. The increasing significance of remittance can also be comprehensible if we compare the yearly (1999-2009) inflow of remittance as a percentage of the country's gross domestic manufactured goods and export income. During 1999, formal remittance wages as a percentage of GDP and export income were 3.74 percent and 32.04 percent correspondingly. During 2009, formal remittance as a percentage of GDP and export income had increased to ten percent and 68.37 percent correspondingly.

Garments sector plays a vital role in Bangladesh's financial system

This increasing contribution of remittance wages has not only enabled the state to tackle its growing trade shortfall but also to uphold a stable foreign currency set aside. This country is poised to follow China and India’s current growth pattern of rising per capita earnings as the current allocation of financial increase has shifted in favor of short and middle earnings countries. Bangladesh’s approximation of financial increase is predicated upon its imposing growth presentation of per capita income averaging 5 to 7.5 percent over the last decade and hope of continued positive financial presentation. In addition, it was able to reduce its inhabitant’s growth rate from 2.7 percent in 1970 to 1.58 percent in 2012, which will contribute to its population organize and a steady rise of per capita earnings.

Moreover, Bangladesh has a good quality forecast to attain the United Nation’s Millennium Development Goals (MDG) as they have abridged poverty below forty percent, gained sexual category equality, improved education levels, maintained relative political constancy over the last twenty years and shifted their financial system from cultivation in favor of industrial technology and announcement including capturing service in the global outsourcing worker market. Bangladesh’s improvement progress is of current source. It happens in 1990 through sound macroeconomic methods, investment in education, drawing upon communication technology and maintaining family member political constancy.

The history of Bangladesh is connected to the departure of colonial British India during 1947 when India was originally dissected into three countries- India, East Bengal and Pakistan. Then East Bengal was compound with Pakistan and became East Pakistan (Purbo Pakistan). On the other hand, due to cultural disagreement, East Pakistan seceded and shaped Bangladesh in 1971 after nine months of bloody fight for liberty. It took Bangladesh an extra two decades to get well from the destruction and brutality of the war and reach a state of normalcy and constancy. At present Bangladesh have two major political parties- Awami League and BNP (Bangladesh Nationalist Party) which have been ruling alternatively throughout the last twenty years. A system of a neutral Caretaker Government has been in charge for administering elections for the last fifteen years. Although this method has been abolished, the system has contributed to nonviolent change of political power and should be re-instated and sustained. Prediction for continued financial growth look very promising, particularly if Bangladesh begins progress and rebuilding projects, including disaster attentiveness essential for incessant monsoons, instituting construction codes for earthquake shelter, invigorating waterways and construction communications of road and cities.

As a basically delta area with many rivers and one edge of coastal land on the Bay of Bengal, waterways take part in a significant role in the financial system. During British rule a lot of the waterways were fortified and flooding compensation was minimizing throughout dams and barrages, which were not kept up in the temporary age. The building of this communications will add to important growth of employment in the financial system and such projects will improve setting up of hydroelectricity generators, which will give substantial renewable power. Improving communications is vital also to creating an optimistic foreign and domestic investment weather to mitigate the weather-related financial danger. Relations of Bangladesh with India will have a main manner upon the forecast of Bangladesh to link the rich club along with India and China.

There are disputes among Bangladesh and India over unsettled water ways. Bangladesh has filed a lawful act with the International Court of Justice (ICJ) to decide the marine border regarding the rights in Teesta River, the fourth biggest river in the state. These disputes need to be determined moderately either through the court method or bi-lateral cooperation. The decree of these disputes will free Bangladesh to discover its natural sources of gas and lubricate within its water territories. In addition, India blocks a greater part of Bangladesh’s exports to India via extreme obligation of tax. Indeed the two nations have to arrive at trade agreement that will be equally advantageous and resolve the water way disagreements expeditiously.

At the last point, in spite of sustained domestic and global efforts to get better economic and demographic prospects, the country remains one of the world's poorest, most heavily populated and least urbanized nations. The financial system is mainly agricultural, with the cultivation of paddy the single most vital activity in the financial system. Urbanization and population enlargement have abridged the quantity of families which have control over creative sources. With the shift from informal to a formal financial system, the elderly are probable to face even fewer opportunities for creative rendezvous. Physical partition may also reduce the economic support in terms of remittances, partially because of the elevated cost of urban living or the loss of moving ties between parents and kids as a effect of prolonged absence. Other factors include work-related and biological mobility, urbanization and the augmented proportion of women working exterior the home.

Agricultural system of Bangladesh

Even though younger members of the family are leaving the home of their parents in rising figures, their financial liability towards the elderly does not shrivel away. They carry on giving support to their elderly, but finding it ever harder to live with elderly members in combined households. Such structural changes might create it ever harder to care for the elderly. Rising rural/urban relocation has also resulted in the growth of unlawful tenant and shantytowns next to conglomerates in a lot of the big cities in Asia. The elderly in such situations must be completely responsible for them and depend on outside support since the living operating costs are prohibitively elevated.