World Bank Document

DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION

Public Disclosure Authorized Not For Public Use

Report No. SA-35a

RECONSTRUCTING THE ECONOMY

Public Disclosure Authorized OF

BANGLADESH

VOLUME II _SK L

NOTES ON THE REVIVAL OF ECONOMIC ACTIVITY IN THE

MAJOR SECTORS Public Disclosure Authorized

PART I : TRANSPORT

PART II : INDUSTRY

PART III : FOODGRAINS Public Disclosure Authorized November 20, 1972

SOUTH ASIA DEPARTMENT

This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.

PART,I

TRANSPORT

Page No.

SUMMARY AND CONCLUSIONS

I. INTRODUCTION 1

A. General 1 B. War Damages 2 C. Government Organization 2 D. Sector Policy 3 E. Finances of Public Sector Transport 4 F. Transport Survey 4

II. RAILWAYS 6

A. Physical Features 6 B. Trends 6 C. Consequences of War 8 D. Current Budget 9 E. Prospects 9

III. HIGHWAY TRANSPORT AND HIGHWAYS 11

A. Vehicle Fleet 11 B. Operations of Road Transport Industry 12 C. Road Ferries 13 D. Main Road Network 13 E. Highway Budget and Planning 14

IV. INLAND WATERWAYS 16

A. General. 16 B. Country Boats 16 C. Trends in Mechanized Inland Shipping 16 D. Changes Since Independence 17 E. Future Prospects 18

V. OCEAN PORTS AND SHIPPING 21

A. Pre-War Trends 21 B. War Damage and Current Plans 21 C. Prospects 23 D. Ocean Shipping 23

VI. AVIATION 25 ANNEX I

This report was prepared by Tillman Neuner (Transport Economist). Mr. Neuner was in the field during the month of June 1972.

SUMMARY AND CONCLUSIONS i. The geography of Bangladesh has given rise to a varied and complex transport system. Numerous watercourses traditionally provided the main avenues of commerce; they also are the principal obstacles to the development of other means of surface transportation. The movement of persons and goods very often involves interchanges between two or more modes and the selection of the best means of transport entails an intri- cate choice among several alternative routings and a close comparison between their respective costs. ii. In the decade before the establishment of Bangladesh, some important shifts had occurred in the country's transport sector. The railways experienced relatively little traffic growth and appeared to be losing ground to the other modes which were expanding. Road transport, in particular, became well established even though the total vehicle fleet, which increased more than three-fold to nearly 70,000 units in less than ten years, remained small in relation to the country's population. Despite the high cost of building roads, due to lack of good building material and the requirement for embankments high enough to avoid floods, paved roads more than doubled in the past decade. iii. Transport facilities were severely disrupted during the disturbances of last year. It is estimated that the loss in physical assets approached US $200 million equivalent; most seriously affected were the bridges on the rail and road systems and the fleets of inland and ocean vessels, road motor vehicles and commercial airliners. Service was interrupted on all modes; the most seriously affected were the railways where the main north-south lines were cut by the destruction of crossings over the Padma and Meghna Rivers and the main east-west crossing was cut by the sinking of most ferries at Bahadurabad. iv. By June of this year considerable progress had been made in restoring transport operations. Most of the severed links had been restored, at least on a temporary basis, and Chittagong, the most important port, was handling traffic at volumes approaching pre-independence levels. The United Nations relief effort had made up some of the loss in motor vehicles and had brought in a large fleet of chartered vessels to help in the distribution of imports, particularly food. A new domestic airline had been established and had begun to provide service to most major population centers. However, further work needs to be done especially in the restoration to full service of two main line rail bridges, in permanent rebuilding of other rail and road bridges,in further salvage work at the major ports and in the inland waterways, and in further replacements of losses to the motor vehicle and inland watercraft fleets. - ii -

v. The Government's main objective in regard to transport now is to restore the status quo ante bellum as quickly as possible and nearly one-half of its 1972/73 reconstruction budget is for the transport sector. In addition, nearly 10% of the current development budget is devoted to transport and reflects the Government's intention of resuming the development process as promptly as possible. The development budget consists almost entirely of schemes which had been started during the previous administration. vi. As a result of the change in regime the country now enjoys friendly relations with India. This will have important effects on the transport system, not only through the development of new trade channels but because of cross trade which India wishes to establish between various parts of its territory. These possibilities of change suggest a cautious approach'in committing major investments to the transport sector until new patterns of trade have been studied. vii. Deficiencies in data on transport impeded the formulation of a rational transport plan under the previous regime. A transport survey with U.K. assistance which had begun shortly before the outbreak of hostilities is now being resumed. It will take about 18 months and is expected to provide a well documented basis for management of the transport sector. viii. This brief review of the transport system indicates that Government policy in the near term should emphasize the following points:

(a) Completion of the transport survey as quickly as possible, with particular stress on development of a complete data base.

(b) Postponement to the extent possible of major investment expenditures in transport and continuation of present interim arrangements for a while longer until the'basic results of the survey are available, likely new patterns of trade and traffic have been analyzed, and investment alternatives are properly evaluated.

(c) Review of the reconstruction and development programs in transport in the light of new opportunities created by the independence of Bangladesh, especially the opening of trade with Indis.

(d) Based on the results of the survey and on the likely new patterns of trade, development of a long-range strategy for the transport sector with particular emphasis on analysis of intermodal movements and technologies.

(e) Strengthening of management and planning functions in the various agencies concerned with transport. I. INTRODUCTICN

A. General

1. Bangladesh is divided in the middle along a generally north- south line by the Brahmaputra/Jamuna River, and the two halves are further split in two by the main tributary river systems of the Brahma- putra, the Ganges and the Meghna. In addition, there are many smaller rivers, canals and other watercourses. The monsoon floods necessitate that railways and roads are put on high embankments, which is particularly costly due to the general lack of good building materials. Floods also cause a continuous shifting of channels; thus bridges and ferries frequently have to be moved and navigable waterways need to be cleared or relocated.

2. While no estimate is available on the total movement of people and goods in Bangladesh, in terms of passenger and ton miles, it is generally assumed that most traffic moves by water, primarily in over 300,000 privately owned non-motorized vessels. Over short distances bullock carts also are important carriers. Traffic carried by motor vehicles, mechanized vessels and the railway was concentrated before the establishment of Bangladesh along two north-south corridors based on the ports of Chalna and Chittagong,,respectively,and consisted primarily of foreign trade items (mostly exports of jute and imports of fuel, foodgrains, some raw materials and industrial products). Motorized traffic in the east-west direction across the Brahmaputra was much less important. The railway moved traffic across the river at two points; the main one was the Bahadurabad Ferry at the far northern end of the country. The only road crossing over the Brahmaputra (also by ferry) was more centrally located at Aricha, a point due west of Dacca. Some east-west movements were also made by boat. While the flows of motorized traffic will be modified with the establishment of trade with India, the basic pre-war patterns are expected to persist for some time into the future.

3. The basic characteristics of the transport system prior to the establishment of Bangladesh are displayed in Table 1. Except for numerous waterways, many of the facilities, particularly the railways, date from colonial Indian times when East Bengal focussed its own trade on Calcutta and was also a transit corridor to Assam. Consequently, the orientation of many transport lines does not conform to the requirements of an economically independent entity. Other main features of the transport system are reviewed in the discussion of the individual modes. -2-

B. War Damages

4. The recent disturbances caused major losses in the transport sector; the report of the mission of high-level United Nations consultants under Ambassador Sailer in March-April of this year estimated damage at US $81 million equivalent, not including motor vehicles, country boats and 23 ocean- going vessels. The cost of replacing damaged or lost trucks and busses was estimated at about US $50 million equivalent; no valuation was made of the loss under the other two categories. Many bridges on the railways and roads were blown up, including the two main bridges linking the northern and southern sections of the rail ne-tworks on the east and west sides of the country. While the railways suffered relatively little damage to their rolling stock, about half of the fleet of trucks and buses, according to the Sailer Report, was badly damaged or lost. The ocean ports were blocked by mines and sunken vessels. Destroyed navigation aids and wrecks hampered the use of inland waterways. The ultimate loss in inland vessels remains to be assessed after salvage works are completed but many units have undoubtedly been permanently lost to the fleet. The airports were badly damaged and no commercial airliners were left in the country. 5. Despite the major setbacks suffered by the country's transport system, considerable progress has been made since the beginning of the year in restoring transport services. The bulk of the damaged bridges has been rebuilt at least on a temporary basis. The major ports have been cleared of mines and Chittagong, the largest port, is handling traffic at volumes approaching pre-independence levels. The United Nations Relief Organization Dacca (UNROD) has imported vehicles, about one-third of the trucks lost during the disturbances. Truck shipments can now be effected to all points which were served prior to independence. UNROD has chartered various inland motorized craft to assist in the distribution of foodgrains and other imports. A new airline has been started and some service is being provided to most points where it was previously available. 6. However, further work remains to be done. The two main line bridges on the railways need to be restored to full service; other bridges (both rail and road) need to be rebuilt on a permanent basis. Additional trucks and buses will be needed as well as permanent replacements for the inland waterway fleet. Further salvage work will be required in the major ports and the inland waterways, and additional repairs are required at port installations. While some of these needs are emergency requirements and should be met as soon as possible, others are not quite as urgent and may allow a more deliberate review of the investment alternatives.

C. Government .OrganizaWtion

7. Prior to the establishment of Bangladesh, transport was partly a central subject (aviation, ocean ports and shipping) and partly controlled by the provinces. In East Pakistan, the provincial transport agencies were loosely coordinated through the Railways, Inland Waterways and Road Transport Department; there was no formal liaison mechanism with the centrally controlled -3- modes and little coordination actually took place. Initially after Bangla- desh was established one ministry controlled the whole transport sector; at present responsibility is divided between three ministries: Communi- cations (builds and maintains highways, regulates road transport, supervises the operations of the railways and ports); Shipping, Inland Water Transport and Airways (supervises con;servancy of inland waterways, and regulates inland water transport and superintends the two publicly owned shipping companies and the airline); Prime anistry (runs airports, airways and regulates aircraft). No coordination mechanism has been established although the transport unit of the Planning Commission has the opportunity of coordinating investments.

D. Sector Policy

8. The previous regime had never formulated clear sectoral objectives; one of the purposes of the transport survey which had just begun at the outbreak of hostilities was to fill this lack. So far, the new Government's policy in the transport sector has been directed mainly to restoring the status quo ante bellum. T 519 million, or about one half, of the 1972/73 reconstruction program is for the public and private transport system. This policy mAy at times be pursued without due regard to the possibility that restoration of some facilities may have greater economic merit than others and that in certain cases restoration might not be economically feasible. In its development program for the public sector of the transport system (see Table 2), the Government for the most part has carried on along the lines followed by the previous authorities; the current year's development program is almost wholly'based on continuation of schemes which had previously received sanction and there has been only a limited attempt to assess the continuing validity or priority of the old projects. The 1972/73 development program for transport totals nearly T 310 million which is about 10 percent of the total development budget. As is indicated in Table 2, the current program for transport corresponds roughly to what was spent in prior years for this sector if allowance is made for the rapid inflation during the last year. 9. The structure of the development budget in transport (see Table 2) appears to give somewhat'increased emphasis to railways which for the first time in some years absorb more than one half of the total. No justification was.given for this change of direction; it may, however, be based on ex- pectations regarding bilateral aid. While undue'emphasis should not be given to the policy intentions implied in the structure of the 1972/73 budget which was compiled in great haste, it may establish patterns which will be difficult to break later. For instance, the budget continues the previous practice of scattering investment funds in small amounts over a large number of geograph- ically balanced schemes, with the result that projects take years to build and capital is tied up while benefits are delayed. The nature of the investments in transport is discussed in greater detail under the individual modes. E; Finances of Public Sector- Transport

10. No aggregate data have been collected on the finances of the public part of the transport sector for the pre-war period and it will be some time before finances under the revised tax laws which came into effect on July 1 can be analyzed. Before the war, the railways had been paying some' return on the Government's investment in them but this was much less than the additional new contributions by the Government to their capital (R 35-40 million per annum). Since the disturbances railway finances have deteriorated and they actually drew on the revenue budget. The coming year this condition should be eliminated but no positive contribution to the general budget is expected from the railway budget. However, some revenues will accrue from a tax on rail fares and freight charges.

11. The former provincial government provided for most of the capital needs of the publidly owned bus company and the former East Pakistan Shipping Gor'poration,while the central government similarly looked after the capital requirements of the port trusts, the ocean shipping line and the airline. These needs are now all to be met by the Government of Bangladesh, which will also provide the capital for the formerly private shipping operations which were merged with the East Pakistan Shipping Corporation into the Bangladesh Inland Water Transport Corporation (BIWTC). 12. There were a number of road user charges in effect during Pakistan times, primarily duties and excises on vehicles, parts and fuel; some were collected by the central authorities, some by the provinces and some by the localities. With the emergence of Bangladesh, the tax-system has been reduced to two tiers (national and local) and new rates were put into effect on July 1. User charges are also being collected from patrons of road ferries) from the mechanized waterway operators and from users of aviation facilities. Under the old regime, these amounts were substantially below the Government's expenditures on the corresponding facilities.

13. Thereare no reliable data on investments in the private part of the transport sector. It is, however, substantial as most road vehicles and river craft are privately owned. Investigations on the proper level of user charges and more generally on the financial structure of the transport sector will be one of the main topics to be reviewed by the proposed transport survey. F. Transport.Survey

14. The obvious limitations on data concerning the transport system in Bangladesh and the related lack of a clear transport policy caused the previous Government to initiate the transport survey that was interrupted by the outbreak of hostilities. The work is being resumed shortly and the survey will have to concentrate,in the first instance,on an inventory of the physicalassets of the system. The analysis of traffic flows may have to be delayed somewhat to allow for the effects of the disturbances to wear off and for the emergence of new patterns of trade. The transport survey will also have to expand on the rather limited analytical work which is -5- available concerning transport in Bangladesh (see Annex 1) and is to provide a policy framework for future investments in the sector. The work will take about 15 to 18 months and in the interim the survey team will be available to advise the Government on questions of investment and other policies arising in the course of reconstruction. As the survey team will use not only expatriate specialists but local experts as well, a basis will be established for a permanent and continuous planning effort in the transport sector. II. RAILWAYS

A. Physical 7eatures l5. The position of the railways in the transport. system has been changing for some years and its future is beset with several major difficulties. Statistical and accounting deficiencies of the railway organization preclude a complete exposition of these problems and their causes, but the main features can be readily identified. In the best of circumstances, the railways of Bangladesh would be difficult to operate. They are made up of the truncated portions of two railway systems designed for an entirely different use: on the west side of the Brahmaputra, the railways are the terminal sections of lines (primarily broad gauge) formerly based in Calcutta; east of the Brahmaputra, they are the lower portion of a meter gauge system based on Chittagong with terminal points formerly in Assam. The two systems are interconnected at only two points at the northern end.of the country, a connection which not only requires a crossing by ferry but for many shipments a reloading from wagons of one gauge to another.' The maximum distance that goods can travel on either gauge is short, well under 300 miles. The operating headquarters of the railway has been at Chittagong, at the extreme end of the system, and communication facilities are quite inadequate to the heavy demands created by this arrangement.

B. Trends

16. The physical features of the railroad were not too handicapping as long as there was no serious competion and constituted the sole mechanized means of access to most places. At the time of partition there was less than 300 miles of paved roads and less than 4500 motor vehicles of all types in country. Mechanized river traffic was still carried primarily by old-fashioned steamers of the Joint Steamer Companies and there was virtually no air service in the country. These conditions have changed fundamentally, particularly during the 1960's. Road transport expanded rapidly as paved roads tripled in length, improved in quality and were linked with new ferries. The motorized river fleet has grown not only through the increased use of passenger motor launches but through expansion of goods-carrying capacity. While Pakistan River Steamers, in which the railways had a one third interest, still pre- dominated in mechanized goods traffic on the rivers, there were other carriers as well who might be less restrained in their competition. Towns which were formerly one or two days'journey from Dacca could now be reached in hours by air.

17. The results of these developments were that the railways which had enjoyed a period of growth in both passenger and freight traffic during the first 10 to 15 years after partition, with traffic increasing on the order of 100 percent, were beginning to experience less favorable results during the 1960's as is shown in Table 1 below (in thousands). - 7 -

TABLE 1

Highest traffic in period Traffic in 1969-70 1960-65

Passengers Carried

BG 18,976 (1962-63) 20,112

MG 54,805 (1963-64) 52,911 Total 73,145 (1963-64) 72,885

Passenger Miles

BG 484,o27 (1962-63) 480,034

MG 1,504,079 (1963-64) 1,566,292

Total 2,003,397 (1963-64) 2,061,084

Tons Carried

BG 3,031 (1962-63) 1,631 MG 4,875 (1963-64) 3,515

Total 6,815 (1962-63) 4,802

Ton Miles

BG 318,353 (1962-63) 188,007

MG 767,734 (1963-64) 536,840

Total 1,052,686 (1963-64) 959,495

18. The virtual standstill in passenger traffic occurred during a period of rapid population increase and while rail fares rose only sLowly from Rs,0350 per passenger mile in 1959/60 to Rs.0419 in 1968/69 and were maintained at levels below bus transport. (It should be noted, however, that passenger statistics are not a wholly reliable indication of how many persons are actually using the railways since large numbers of people appear to be riding without tickets). Total freight traffic in the econory undoubtedly increased to some extent with the modest growth in national product, but the railways appeared not to have been able to retain their market share. Part of the explanation for the relative decline in freight traffic may be found in the rapid increase in rates as a result of whi-h -8- revenue rose from Rs .09 per ton mile in 1959-60 to Rs .115 in 1963-64 and t.o Rs .a76 in 968-69. Relative to other prices, this was an increase of over 50 percent.

19. These very challenging physical and competitive problems were made more difficult by the fact that the railway staff was very large, with implications of redundancy, and the railway4s assets were not always operated to their full economic potential. The number of employees had reached over 58,000 in the early 1960's although by 1969/70, their number had declined to some 56,000. Operating problems can be exemplified in the data on the speed of freight trains which have declined in a long term trend on both gauges despite the increased use of diesel traction and ;stood.at 5.68 miles per hour on BG and.6.50 miles per hour on MG in 1969/70.

20. Despite the railway's many problems, finances appear to have been kept reasonably under control. With the steep rise in rates, the railway has always been able to cover its operating expenses (with the exception *of the year just ended). Although the operating ratio has usually been over 80 percent it declined to 77 percent in 1967/68. There has been some doubt as to the adequacy of the depreciation allowance (at least prior to 1968/69) and there may be considerable accumulated renewal expenditures for which no provision had been made in the past. While the return on the Government's investment had declined in 1968/69 to the point where income was insufficient to pay the full statutory "dividend" on the investments, there still appears to have been a small positive financial return on net fixed assets.

C. Consequences of War

21. The events of the last year damaged the railroad, not only in the loss of a significant number of its staff but in physical destruction of property, including the following:

(a) 295 bridges were damaged; as of July 1, 1972, 82 had been restored permanently, 198 bridges had been restored temporarily and 15 remained to be restored, including 4 major bridges (the Hardinge over the Padma, the King George VI over the Meghna and the bridges over the old Brahmaputra and Tista) which interrupt the connections between Chittagong and Dacca and Mymensingh and between the southern and northern parts of Western Bangladesh;

(b) about fifty miles of track were torn up;

(d) communications facilities were damaged; and

(e) the ferries at Bhahadurabad were put out of action; all four passenger ferries were sunk and of the three tugs and 10 barges for transfer of freight cars only 3 barges remain. -9-

22. In contrast to the destruction caused by the disturbances, their political consequences created new opportunities for the Bangladesh railway. Most important among these are the new trade paitterns and the possibilities for transit traffic which may arise as a result of the establishment of friendly relations with India. Bangladesh may begin to import substantial quantities of goods from India, especially bulk coimodities such as coal, and the Bangladesh railway then could very profitably handle the terminal haul of a long distance rail movement. A corresponding pattern could be envisioned for export shipments to India. As the shortest route to Assam from eastern India is through Bangladesh and as Chittagong is the nearest seaport for the easternmost section of India, the Bangladesh railway could develop a considerable volume of cross traffic. The restoration of good relations with India also affords the railway access to a new cheap source of supply of essential railway materials such as coal and ballast and of railway equipment conforming very closely to its own standards. Other factors in the present situation which the railway can use to its advantage include the relocation (perhaps permanently) of the railway headquarters from Chittagong to"amorecentral location in Dacca and the fact that the steep rise in railway rates over the past ten years should have eliminated a considerable part of its uneconomic traffic.

D. Current Budget

23. The railway's 1972/73 investment budget includes T 99.6 million for reconstruction and T 142 .1 million for development. While the detail of the railway's reconstruction budget was not available, major portions of it appear to be devoted to rebuilding the damaged bridges and to the replacement of the railway's marine equipment for the Bhahadurabad ferry. The bulk of the development program goes toward purchase of new rolling stock and rehabilitation of track. Minor amounts are also included for track doublings and new line works which had been under way before the war. The nature of the rolling stock needed and the priority for rehabilitation of lines may very well be affected by the changed economic con- figuration of Bangladesh, as indicated below. Moreover, the quantity of rolling stock to be acquired may be reduced considerably with improved operations. Both factors should be considered in implementation of the budget.

E. Pnospects

24. The railways may be in a very favorable position at present to adapt themselves to changed competitive conditions and to exploit fully their appropriate role in the country's transport system. This objective cannot be attained, however, with an undue emphasis on restoring the status quo ante-bellum or on continuation o' development schemes w1hich were based on a traffic pattern that may now be changed. An alternative strategy for railway development will have to be created, based on the new economic realities of Bangladesh and, in particular, on meeting the increasingly intense competition from other modes. Such a strategy would result from the proposed transport survey but unfortunately could not be expected earlier than 12 to - 10 -

18 months from now. During the interim period, those investment decisions which could preempt many subsequent choices should not be made, and the emphasis should be on investments which would leave as many options open as possible. Investments to restore and improve clearly economic services such as certain long-haul freight traffic should go ahead, while investments on services which are known to be uneconomic should be restrained. III. HIGHWAY TRANSPORT AND HIGHWAYS

A. Vehicle fleet

25. The total number of motor vehicles in use in Bangladesh in 1970 was 68,000 equivalent to less than one vehicle per 1,000 inhabitants. In and around the cities and towns where the roads are crowded congestion is caused not by motor vehicles but by pedestrians, bicycle rickshaws and bullock carts. Only on the main roads and between the towns does motor vehicle traffic pre- dominate. Of the total of 68,000 motor vehicles in use in 1970, 40 percent were motorcycles and autorickshaws. The truck fleet totalling less than 10,000 vehicles had a nominal capacity of around 65,000 tons. Many of these vehicles were old (about 20 percent over 25 years old) and this undoubtedly affected available capacity. This applied also to the bus fleet. About 45 Percent of the vehicle fleet was registered in Dacca and a further 20 percent in Chittagong.

26. There has been no systematic attempt to measure the growth of road traffic in Bangladesh although the loads and Highways Directorate (RHD) of the Ministry of Cormunications is now preparing to repeat its 1968 traffic census. A number of indications are, however, available: the growth in the number of vehicles in use between 1965 and 1970 averaged 8 percent per annum and sales of motor sDirit were 20 percent higher in 1970 than in 1965 while sales of high speed diesel oil were 4O percent higher (despite a drop of 20 percent from 1969 to 1970). Diesel engined vehicles comprise about 45 percent of the truck fleet and 30 percent of the bus fleet. According to the latest licensing return the total of 9,350 private trucks on the road in mid-1970 had been reduced to 3,800 two years later. A further 1,700 were recorded as out of order. Thus the number of trucks temporarily or permanently lost as a result of hostilities may have been as high as 4,500 - 5,500. The licensing returns, however, are probably a less reliable guide to actual vehicle availability than previously. In any case, about 1,500 trucks have already been obtained from India and through UNTROD and are being operated by public sector agencies in association with UNROD. Even when spare parts have become readily available to the private sector, however, it.is likely that about 2,000 trucks will still remain to be replaced. The corresponding figure for buses is estimated at about 1,500. The reconstruction program provides for the procurement of 2,000 trucks and 1,000 buses. In each case, half of these are included in the 1972/73 budget. It is not clear whether the vehicles to be procured include the trucks and buses to be made at the vehicle assembly plant near Chittagong which envisagesan output of 1,200 trucks and 900 bus chassis in FY 1972/73.

27. Road transport costs and charges have been severely distorted by the shortage of vehicles and perhaps more importantly of tires and spare parts. However, some increases in costs rePresenting the over-all inflation in the economty will be permanent. On the basis of inquiries made in June 1972 and - 12 - extrapolations from cost data developed before the disturbances by the transport survey, it is estimated that operating costs may settle at approximately T 1.8 per mile (T 1.2 net of taxes) for a 5-6 ton truck with an annual utilization of 55,000 miles. This would imply a freight charge of around Paisas 65 per ton mile at a 50 percent load factor which is typical on some important routes.

B. Operations of Road Transport Industry

28. The public sector is represented in the road transport industry by the Bangladesh Road Transport Corporation (BRTu), which has about 200 buses plying the roads, mainly in and around Dacca and Chittagong. Although the public sector fleet was expanding slightly faster than the private prior to 1970, a substantial jump in the participation of BRTC may now be expected. When vehicles now in body shops are complete and if the number of vehicles off the road can be reduced to about 20 percent of the fleet, available capacity would rise to some 500 buses. There is also a firm intention in Government planning circles to consolidate the trucks obtained through UNROD into a permanent public sector trucking agency operating a fleet of 1500-2000 trucks. Although the Planning Commission stated that no long-term decision would be made until the results of the transport survey are available, it would be very difficult to alter a provisional decision once an institutional framework is established.

29. The private sector, which hitherto has remained almost unchallenged in the road transport industry, is in the hands of small operators -- many owning only one vehicle and the largest fleets being no more than 10 - 12 vehicles. Since permits allowing vehicles to operate in more than one district were introduced in the early 1960s, transport regulations do not appear to have directly inhibited the growth of the road transport industry. The legal framework is outdated and control of the industry is fragmented among different authorities -- mostly at the district level. Recognizing this, the former Provincial Government appointed a Road Transport Enquiry Committee which reported in 1970 recommending strong central control under a unified Directo- rate of Road Transport. The attitude of the present Government to this recommendation is not known. The fragmentation of control provided opportunities for corruption and tended to frustrate collection of road tax, proper vehicle inspection and such attempts as were made to regulate the industry by means of route Dermits. At least some sectors of the trucking industry appeared to be operating profitably under those circumstances. According to the Road Transport Enquiry the absence of large entrepreneurs was caused by the departure of those who had accumulated substantial capital to other industries where large amounts of capital could be more easily employed. There are indications that the bus industry was operating less profitably. Certainly fares charged by the private sector were frequently kept below the penmitted maximum by caapetitive pressure. This situation continues today. - 13 -

C. Road Ferries

30. Although the development of the road transport industry does not appear to have been much affected by regulation, it has been restricted by foreign exchange constraints and by the limited coverage of the road network. The development of the road network has itself been held up by the high cost of road construction. This high cost is related to the general need for high embankments to avoid flooding, the scarcity of naturally occurring road building materials and the frequent river crossings which necessitate either bridges or ferries. At the river crossings where bridges have not been constructed and ferries have been provided, these ferries have frequently been major bottlenecks due to inadequacies of equipment and operational deficiencies.

31. Responsibility for ferries has been and continues to be shared by several separate authorities. There kre approximately 50 unbridged river crossings on the major roads administered by the Roads and Highway Direc- torate ;(RHD) and the main responsibility for ferry services falls upon the RHD. At many of the crossings, however, the actual operation of the ferries is carried out by private parties under lease from the RHD. The RFD itself operates ferries only at the more important crossings. Services at the three longest crossings were previously provided by the East Pakistan Ship- ping Corporation, which has been succeeded in this function by the Bangladesh Inland Water Transport Corporation (BIWTC). Terminal facilities at these three crossings are provided by the Inland Water Transport Authority (see para- graph below). It has been recommended that responsibility for all ferries for road vehicles should fall under a single Department; the Ministry of Communications favor the creation of a ferry division in the RHD for this purpose.

32. BIWTC ferries can carry all types of vehicles operating in Bangla- desh. The steel catamaran-type ferries operated by the RHD cater, in general, only for vehicles of up to 5-ton gross weight, although some occasionally handle vehicles up to 8-ton gross weight; this limitation effectively ex- cludes the typical loaded truck operating in the country. Many ferry boats were sunk during the hostilities. Some have been salvaged and are back in operation. Additional requirements for ferry capacity have also been created by the substitution of ferries for blown bridges at seven locations. The additional ferry capacity being provided consists mainly of Uniflotes, which are structural steel framed units. Power is provided by outboard engines and the capacity of the ferry depends on the number of units used. The size of ferries being put into operation can carry up to six loaded trucks. Approximately 25 of these ferries -- financed principally by bilateral aid -- are being installed. This will represent a substantial improvement in the quality of ferry services in Bangladesh.

D. Main Road Network

33. The total length of the road network under Central Government and district authorities in Bangladesh is about 18,000 miles. Some 5,o00 miles including all main roads are administered by the RHD.1/ About 2,500 miles are paved roads; a further 1,500 miles have shingle or brick surfaces while 1,000 miles remain unimproved. Most of the paved roads have been constructed during the last 15 years, initially to single-lane standard but some pavement widening and strenthening has also been carried out. At the same time maintenance has suffered from shortage of funds and inadequate work programming. The quality of road communications has declined as a result of hostilities. Approximately 275 bridges (totalling over 16,000 feet) on major roads were damaged during the war. Reconstruction has been completed at about 80 locations and Bailey bridges provided at a similar number. Elsewhere temporary repairs have been made, ferries provided or diversions put into effect.

E. Highway Budget and Planning

34. The provisional budget for the RHD for 1972-73 totalled T 135 million, T 30 million for recurrent expenditure, T 50 million for reconstruction and T 55 million under the annual development program. The T 20 million provision for road maintenance falls below what was budgeted (PRs 24.5 million) and what was spent (PPs 35.2 million) in the last full year (1970/71) before the distrubances. Some roads are in poor condition thus indicating that the previous level of expenditure had been inadequate. In the meantime the general level of costs has risen and the length of road to be maintained by the RHD has increased; the present level of maintenance expenditure thus may be less than what could reasonably be spent for this purpose. The reconstruction budget will not be sufficient to complete repair of war damage and replacement of assets in the current year. A further T 22.5 million has been estimated to be required in subsequent budgets.

35. The provisional annual development program portion of the budget provides for expenditure on 59 different projects, 52 of which were previously ongoing projects. About half of these projects were driginally approved more than five years ago and some more than ten years ago. The total approved cost of these 52 projects is T 1,170 million and the actual expenditures incurred on them up to June 1971 is T 500 million. Approximate- ly one-third of the estimated cost and expenditure incurred relates to two j6r_ fdr&i_n aided-projects, -theiaJcca-Chittag6-na HighwayyTDA) and the Dacca-Aricha Highway (USAID), the main road leading West from Dacca to the Brahmaputra River. The provisional total budgeted for these two projects in 1972/73 was 26 percent of the T 48.7 million for ongoing projects. How- ever, before the budget was finalized agreement was reached with USAID regarding further work on the Dacca-Aricha Highway. As a result, T 48 million, fully covered in project aid, is now budgeted for this project in 1972-73 and the total highway development program has risen to T 93 million. The two foreign-aided projects account for over 60 percent of the final development program.

1/ Very little information is available on the other 12,000 miles of roads under the jurisdication of local bodies except that they are primarily used by non-motorize traffic. The transport survey will make detailed investigations. - 15 -

36. The total budget for the remaining 50 projects represents less than 5 percent of their approved cost. For some of the smaller schemes, howevor, the budget allocation is as much as 20 percent of their estimated cost. Most of the 50 ongoing projects consist of road and/or bridge construction; 8 are specified as road improvements and 4 are other items such as planning and study. About 10 approved projects on which some physical progress had been made and a further 20 on which no progress had been made are excluded from the annual development budget. No clear statement could be obtained on the selection of projects for inclusion in the budget and several projects on which no physical progress had previously been made are included. Similarly no statement was obtained on the method of selection of the new projects included in the provisional development progrant, No estimate is available for the total cost of the seven new projects in the progranti

37. The new road projects included in the annual development budget are among those being studied by Planning Department of the RHD. (Among the other projects listed for study is a bridge over the Jamuna (Brahmaputra) for which a cost of the order of T 2,000 million is being quoted). The staff of the Planning Department of RHD], however, which includes only one economist, will not be in a position to study these projects, which apparently involve considerable technical problems, except in the broadest outline. - 16 -

IV. INLAND WATERWAYS

A.f'leneral

38. The numerous natural waterways of Bangladesh provide an ideal setting for water transport operations both local and arterial in nature. In principle, the number of waterways is almost unlimited and in the monsoon season boats go almost everywhere. The total arterial route mileage operated peren'ially is about 3,200 but during the wet season this increases to about 5,000, the increase bein'g mainly in the northern part of the country. Mechanized cargo vessels generally require a greater draft than passenger vessels and the main cargo routes are limited to about 1,600 miles perenially and 1,900 miles in the wet season.

B. Country Boats

39. Two broad categories of vessels exist: country boaos and the mechanized fleet. Country boats are privately owned and for the most part comparatively small. With few exceptions they are powered by sails supple- mented by oars. It has been estimated that there are over 300,000 of the craft but little is known about their precise numbers or the quantity of the transportation services provided. It is thought that about two-thirds of country boats are cargo carriers and the rest passenger carriers. Most of the cargo carriers are of about four tons capacity but some of the larger boats carry over 20 tons. Although some guesses indicate a substantial loss of country boats during hostilities others are less pessimistic. No firm information is available. The country boat fleet will inevitably play an important role in the transport sector for many years to come. The principal policy in question relates to mechanization. The Inland Water Transport Authority (IWTA), an agency under the Ministry of Shipping, Inland Water Transport and Airways, whichj among other things, is charged with promoting the use of the inland waterways, would like to reactivate a con- tract under which a Japanese firm was to supply, initially, 500 engines for installation in country boats. The question of how these engines would be brought into service remains open. IWTA favors the construction of new boats of 5-7 tons capacity according to a design which is already available. The boats might then be operated by cooperatives. A second development which might be desirable would be for masts to be made collapsible in order to reduce bridging costs.

C. Trends in Mechanized Inland.. 3ipng

40. Information about the size and capacity of the inland mechanized fleet and associated dumb craft is available because they are subject to registration. The latest figures (1967/68) for pre-war fleet strength show a total of ]526 mechanized vessels (including 112 steam powered) and 938 dumb craft. The greater part of the fleet (about 80 percent) was privately owned. Most of the mechanised vessels were passenger launches with a total registered capacity of 110,000 passengers while over 80 percent of the cargo carrying capacity of 260,000 tons was provided by the dumb fleet. - 17 -

Traffic figures indicate that 25 million passengers were carried over a total of 650 million passenger-miles and 2.6 million tons of cargo, a total of 370 million ton-miles but as these figures were collected for revenue purposes severe under-reporting may have occurred.

41. A survey of registered craft early in 1972 indicated that a total of 180 craft with a cargo carrying capacity of some 25,000 tons were sunk, damaged or destroyed during hostilities. Decisions on the salvage of 27 major sunken vessels in inland waters are to be based on survey carried out under bilateral aid in mid-1972. D. Changes Since Independence

42. A major change in the structure of the mechanized part of the inland water transport sector has occurred as a result of the nationalization of the principal private operator, the former Pakistan River Steamers, and miscellaneous smaller companies. The new organization formed to operate the nationalized fleet, the Bangladesh Inland Water Transport Corporation (BIrTC), has also taken over the East Pakistan Shipping Corporation's inland waterway functions, notably the ferry services at Aricha and Daudkhandi/Nara- yanganj (International Shipping is the responsibility of the renamed Bangla- desh Shipping Corporation). As a result of these changes, the public sector now controls the major part of the mechanised cargo-carrying inland water fleet. The future role of the private sector is uncertain. For the time being, however, all new replacement capacity will be assigned to the public sector and the private sector may, therefore, be expected to provide a declining share of the cargo carrying services. At present and for the immediate future, however, the major role is being played by UNROD. On the passenger side the private sector will be allowed to retain the present dominant position. 43. The primary role of the inland mechanized fleet in the 1960's was the movement of jute to Chalna anchorage which, after partition, replaced the Calcutta area as the export center for the jute and jute products of East Pakistan. Imports through Chalna handled by the inland fleet consisted orimarily of foodgrains, coal and fertilizer. Oil products orig- inating internally from the Chittagong area were carried from Chittagong to the Dacca-Narayanganj area by a small fleet of ocean going lighters. Over 80 percent of the cargo traffic was within the Chittagong-Dacca/Narayanganj- Khulna/Chalna triangle and the greatest tonnage was on the short link between Khulna and Chalna Anchorage. In the emergency situation created by the destruction of road and rail facilities, the role of the inland waterways has been considerably magnified. While the inland waterways were previously estimated to have been the mode of final delivery or initial distribution for some 40-50 percent of the traffic to and from the seaports they are now estimated to be carrying around 80 percent. The additional capacity to carry this much higher traffic load has been provided by UNROD. - 18 -

The principal comffponent of this capacity is a fleet of 25 minibulkersV/On charter. This represents an effective capacity of approximately 45,000 tons payload. Each minibulker,if operating on the Chittagong-Narayanganj route, has a monthly capacity of up to 7,000 tons. Additional capacity consists of tugs and barges, some of which are being employed on ferry duties.

E. Future Prospects

4h. The UN operation is due to be phased out during 1973 and Bang- ladesh is faced with the problem of replacing the capacity presently provided by UNITOD. The Government will have to consider numeroub alternatives in the choice of replacement capacity: to what extent should it continue to rely on lightering which has proved very effective during the UNROD operation; to what extent should it develop and expand the system of direct delivery from ship to inland points; should inland water transport be based primarily on conventional ships or primarily on barging which had been relatively less developed in the past; are certain partD of the waterways systems more suitable to one type of shipping operation than another; what are the possibilities for roll-on and roll-off vessels and barges, both for rail and road vehicle use; what are the requirements to make vessels capable of crossing the mouth ox the Jamuna River and other parts of the upper Bay of Bengal, particularly in view of the reestablishment of trade links with Calcutta and other parts of India; what is the most economical source of shipping capacity, in both the near term and long run; should craft be purchased or leased; if purchased, should they be bought new or used and, if leased, on what terms?

45. Quite aside from questions of what is the best way to replace UNROD shipping capacity, there is considerable uncertainty in planning circles as to the extent to which it will be possible or desirable to replace the UNROD inland water capability by other modes of transport. Comparative figures on distribution costs by various modes will not be available until completion of the transport survey. The Ministry resoonsible for inland water transport is working on the assumption that the railway will recapture its former traffic share once its major bridges have been repaired. The inland waterways, on this basis, would only have to cater for future increases in traffic above the pre-war level.

46. Clearly these are complex issues and ideally should only be settled after the results of the transport survey are available. They certainly deserve the most careful consideration which will take time. For this reason it may be economical to lease equipment for a while longer in order to allow for a proper analysis of the problem.

47. A generally cautious approach to the expansion of inland shipping

1/ Flat bottom vessels of 3,160 tons deadweight, 16-foot maximum draft and carrying their own loading gear; at the typical draft at which minibulkers are employed in Bangladesh they carry 1,700-,l800 tons. - 19 _

is reflected in BIWTC's curent investment program. Its allocation in the 1972/73 budget consists only of a reconstruction element. Being a new organization, BIWIC has no ongoing projects of its own to continue under the Annual Development Program and it apparently sees no requirement for any new "projects." The whole recanstruction program of T 71 million is included in the 1972/73 budget. It consists of 10 dry cargo vessels and 5 oil tankers with a total capacity of about 15,000 tons dwt and additional provision for tugs and self-propelled barges. This will bring capacity to approximately its pre-war level. It may be noted, however, that capacity utilisation was comparatively low in the 1960's so that with more efficient operations the fleet projected for mid-1973 could carry a considerably larger share of total traffic than before the war. BIWTC's recon6truction program also calls for the procurement of 10 ferries but 6 ferries, which it is assumed,will operate at Aricha, have already been provided by a voluntary agency. If the Daudkhandi-Narayanganj service is to be abandoned (which would be possible when the installation of improved road ferries on the Dacca-Daucdlkhandi section of the Dacca-Chittagong road is completed) no immediate requirement for additional ferries exists.

48. IWTA is responsible for all conservancy work on the inland waterways and, as such, is involved with the surveying and charting of the river navigation routes, aids to navigation, removal of wrecks, dredging operations, provision of landing stages, etc. It is also responsible for the inland ports. I-PA assets damaged during hostilities included the 'Deccall Navigation chain, navigational aids such as buoys and beacons, survey and inspection launches, and jetties, pontoons, ferry terminals and other buildings. The reconstruction program calls for the replacement or repair of most of these assets in the financial year 1972/73. Bilateral aid commitments have been received or are under active consideration for a major part of the foreign exchange component. The provisional development program prepared by IWTA provided for expenditure on 16 different schemes; on three, described as new projects,no previous physical progress had been made. Nearly half of the budget was allocated to schemes involving the development of inland ports and on-shore facilities. The next largest portion was for dredging and ex- cavation schemes. As a result of an agreement with USAID to expedite work on the development of the Mongla Canal, the final development program was more than twice that provisionally proposed. Two thirds of the final development budget is allocated to the scheme but this portion is fully covered by project aid. The Mongla Canal will shorten the inland waterway route between Chalna and Narayanganj by about 40 miles. Although the general policy of the IWTA is to open up more river routes, no other major schemes are envisaged.

49. The resumption of relations and trade with India is likely to have great influence on inland water traffic. Total cross border traffic on the waterways averaged over one million tons in the early 1960's. Nearly 90 percent of this was transit traffic. The most important route was from Calcutta to Assam via Chalna and Chandpur and then up the Padna, Jamuna, Brahmaputra river route. A second transit route was from Calcutta to Cachar by way of Chandpur and the Upper Meghna. In the current preoccupation with - 20 - reconstruction little consideration has been given to the implications of the resumption of cross-border traffic. As far as the waterways themselves are concerned not very much may need to be done. IIATA has already estimated that it will require an additional expenditure of T 8.4 million for marking of the Meghna and Jamuna routes. The Government of India is making preparation for resumption of the cross-Bangladesh service and Bang- ladesh will profit from the opportunity of sharing the cost of common facilities with India.

50. Any significant change in the role of the inland waterways will have implications for the ports which constitute the inland terminals of waterway operations. The major inland ports are Khulna and Narayanganj/ Dacca. Chandpur and Barisal are the next most important. The inland ports are not only (with the possible exception of Khulna), perhaps not even, primarily transhipment centers; they are also centers of commercial and industrial activity. Beyond this, little is known. Such information as is available relates principally to the early 1960's and current development schemes are apparently based on the studies undertaken by consultants at that time. Althouigh available traffic figures indicate that there was no general increase in cargo handled at the ports during the 1960s, the ports are expected to increase in importance in the future and current improvement schemes may usefully be continued. Any new schemes should be formulated as part of the transport survey. - 21 -

V. OCEAN FORTS AND SHIPPING

A. Pre-War Trends

51. There are two important ports: Chittagong and Chalna Anchorage, a lighterage port. At the beginning of the 1960's 75 percent of foreign trade passed through Chittagong; by the end of the 1960's this had dropped to 60 percent of a substantially increased tonnage. Chittagong has a large excess of imports over exports while at Chalna exports have normally ex- ceeded imports. Until partition, Chittagong was a small railway port serving local needs of East Bengal and overshadowed by Calcutta. Capacity in 1947 was in the neighborhood of 500,000 tons a year and:there were only four jetties. A rapid expansion followed and annual capacity rose to about 4h million tons. The highest volume of traffic recorded was 4,200,000 tons in 1966/67. The principal import items have been bulk shipments of petroleum, oils and lubricants (about 30%), foodgrains (about 20%) and cement (about 15%); much of the increase in total tonnage during the 1960's has been due to oil products and foodgrains. Increasing traffic resulted in many delays and long queues and an expansion program to rehabilitate six jetties was under way when hostilities broke out.

52. Chalna Anchorage was established as a jute export center after partition to replace the traditional Calcutta outlet. Jute is carried to Chalna from the Dacca area, Khulna and other collection points by the inland fleet and loaded into ocean-going vessels directly from barges, which serve as floating warehouses when ships are unavailable. The principal stimulus to the establishment of Chalna Anchorage was that the inland water fleet was not suitable for the passage across the Bay of Bengal to reach the port of Chittagong. The predominance of the jute traffic resulted initially in an unbalanced traffic flow with few imports. But in recent years, as congestion has threatened Chittagong and the rail and road arteries to the north, there has been increased emphasis on imports of bulk items such as foodgrains and coal through Chalna and in years in which the imports of foodgrains has been high, exports have been matched or more than matched by imports. Before the war, the lighterage port of Chalna provided a total of 16 buoy moorings and 16 anchorage points.

B. War Damage and Current Plans

53. Of the two ports Chittagong was more seriously affected by the war. Moreover, the damage suffered during the cyclones of 1960 and 1963 has still not been completely repaired. There were 15 wrecks in the harbor after the war. Three were still afloat and of the 12 partially or wholly submerged, seven were affecting port operations. The length of incoming vessels was restricted to 500 ft; the usable number of alongside berths was reduced to eight (out of a total of 14); the number of river moorings was reduced from three to two and the number of oil moorings from five to two. Four transit sheds, a grab-dredger and various cargo handling equipment were all damaged. The Sailer Report in March-April 1972 estimated the total cost of the damage - 22 -

at US $25 million. The Chittagong Port Trust's total reconstruction programming of T 14 million (US $2 million equivalent) is considerably less than this. Moreover, only T 0.5 million is budgeted for 1972/73.

54. The main rehabilitation work that had been completed before June 1972 was in the clearance of mines and wrecks. It is claimed that the mines, which were laid in an area of approximately 400 square miles, are now completely cleared. The number, location and types of the mines laid are unknown, howe,ver, and continuing checks are being made. Official information on the clearance of wrecks is very limited. The operation is being undertaken by the U.S.S.R. Navy. Berth availability is now stated to be little affelted by wrecks. There is concern that the remaining wrecks may move under natural forces during the monsoon seasons and block approach channels or berthis. Such wrecks as have not been moved will in any case now be more diffipult to move as a result of the siltation during the monsoon.

55. The pri+cipal ongoing development projects included in the annual development program for the Port Trust are for construction, reconstruction and rehabilitation of jetties. Part of this work was previously assisted by USAID but this aid is unlikely to be renewed. The port development program was drawn up on the contrary assumption, with the US aided project accounting for over half of the T 30 million program and external finance being assumed for approximately 60 percent of the project cost. If no alternative source of finance becomes available, capital expenditure is likely to be well below that budgeted. Other items at the port to which the Government attaches priority are the reconstruction of two transit sheds and the repair of the offshore oil terminal. Discussions with the original suppliers regarding the latter have been initiated. Although these schemes are important, capacity limitations at Chittagong are largely operational. UNROD has been circumventing this problem by extensive lighterage operations at outer anchorage.

56. A total of 11 submerged or partially submerged wrecks were located in the approach channel and anchorage area at Chalna after the war and the number of available moorings was reduced to 11. Considerable silting has been observed at the anchorage points but it is not possible to say whether this is due to the presence of known wrecks. Other damages suffered at Chalna as a result of hostilities include losses of navigational aids, survey equipment, motor vehicles, etc.

57. The reconstruction program for Chalna totals T 28.6 million but less than 1 percent is budgeted for 1972/73. The development budget for 1972/73 totals T 1.05 million, most of which is to be spent on a continuing scheme for development of the anchorage. Prior to hostilities, and with Yugoslav financial and technical assistance, work had started on a scheme to construct a permanent port at Mongla near the present anchorage. Some doubts had been expressed regarding the utility of the scheme since inland - 23 -

connections by rail and road are presently lacking and if provided, would include several costly river crossings and since at present drafts are limited to 25-28 feet which is no more than Chittagong. The economic value of the port will depend critically on the possibility of dredging the estuary bar and channel of the Pusar River at reasonable cost to permit vessels of at least 30-32 ft draft to enter freely. Some provision for study of this problem is included in the annual development program. Meanwhile the Bangladesh and Yugoslav Governments are discussing arrangements for continuing the project. The total cost of the project is estimated at T 210 million; the Government of Bangladesh hopes to spend T 47 million in 1972/73 and receive foreign aid for approximately 30 percent of this total.

58. Operational problems at Chittagong and also at Chalna are to a considerable extent a function of poor management and staff. With the exception of a few officers, the ports were left after the war only with staff who had limited experience in major ports. In the absence of suitable indigenous personnel, the difficulties might be alleviated by the recruitment of expatriate staff as executives or advisors on an interim basis. C. Prospects

59. Future strategy regarding the assignment of traffic to the two seaports of Chalna and Chittagong should be based not only on the capacity of the ports themselves but should also depend on the available facilities for transportation of the traffic to its final destination in the country and in the case of exports available backhaul capacity from its origin. This basic concept led the Transport Planning Group of the Provincial Gov- ernment, after study of arterial freight movements in the mid-1960's, to recommend considerable increased use of Chalna. This basic reccnmendation is implicit in the strategy preamble of the 1972/73 annual development program. The underlying situation, however, may be different from that prevailing in the mid-1960's when the recommendation was originally made. Detailed statistics are non-existent. Nevertheless it is evident that even before the war the situation had changed to the extent that the total volume of foreign trade was 40 percent higher than in the mid-1960's and the volume passing through Chalna had doubled. The resumption of trading relations with India has produced a more fundamental change. A substantial proportion of imports may be expected to come overland and by inland waterway direct from India without passing through the seaports. Secondly, Calcutta could to some extent be used for Bangladesh trade and conversely India may wish to make some use of Chittagong for transit traffic to and from Assam. These factors have far-reaching implications for port development strategy.

D. Ocean Shipping 60. Very limited information is available on the Bangladesh ocean going merchant marine nor is it known whether any of the privately owned ocean vessels which were under Pakistan registry before the war are now - 24 - registered in Bangladesh. None of the vessels of the Pakistan Shipping Corporation remain in Bangladesh. A new publicly owned ocean carrier, Bangladesh Shipping Corporation, has been established and in June began operations with one vessel obtained from India. The corporation would like to acquire more vessels but so far has not obtained the necessary commitments of foreign aid. - 25 - VI. AVIATION

61. Before the establishment of Bangladesh, all scheduled domestic air services were operated by the national carrier, Pakistan International Airlines (PIA),which also had international services to Europe and East Asia from Dacca. Dacca was also served by a number of foreign airlines. Domestic services were operated from Dacca to seven points in East Pakistan primarily with F-27's. There were a few other airfields in the country without regular service including two STOL facilities. In the early part of the 1960's PIA introduced helicopter flights to the remote areas in the South which were served only by slow water transport but this scheme had to be abandoned, among other reasons, because of the helicopters' complex maintenance problems. Since then PIA had also been exploring the possibility of developing STOL services for the more isolated regions of the country. Information could not be obtained on the traffic carried by PIA's East Pakistan services or on revenue and profitability of these routes. An effort should be made to obtain this information to plan properly for future air services in Bangladesh.

62. Of all parts of the internal transport system, aviation suffered the most serious loss as a result of the war. Many airfields were heavily damaged by bombing and communication facilities were destroyed. No PIA planes are now available in Bangladesh and the bulk of PIA's administrative organization was located in the West. A new airline has been established (Bangladesh Biman) which operates with leased equipment from Dacca to Chitta- gong, Comilla, Jessore, Ishurdi, Sylhet and Calcutta. Two F-27 were purchased recently under Dutch aid and the airline eventually hopes to resume all internal services previously offered.

63. The development of domestic aviation was the subject of an International Civil Aviation Organization study in April of this year which not only reviewed the damages suffered by civil aviation in Bangladesh but also assessed the immediate requirements for restoration of service and commented broadly on future development of this sector. The report indicated a requirement of nearly US $2 million of imported equipment for airports and navigation aids during the next two and a half years. It also suggested a large scale training program for air traffic controllers. While the report proposed the preparation of an airport development program, including an assessment of the need for more STOL fields, it suggeststhat this be delayed until the results of the transport survey are available. This recommendation appears appropriate and could be applied more broadly to any major new investment expenditures on aviation before completion of the survey. For this reason, it might be useful to continue the present practioe of chartering at least part of the fleet for a while longer to avoid the need of making irrevocable decisions now.

64. Some international services have been resumed at Dacca; most of these flights are through Calcutta which also serves as the communications center for international operations to Dacca. Bangladesh Biman international - 26 -

operations now are limited to Calcutta but Bangladesh Biman hopes to introduce other regional and some intercontinental services as well. For the latter purposes it would like to buy two jets, possibly a medium range Boeing 727 and along range Boeing 707. For these operations feasibility studies are even more essential !than for expanded domestic servX.ee,s not only to assess the market but also the capacity of the airline to master the organizational and management problems which are involved in competitive international service. Similarly, completion of a new international airport at Kurmitola, near Dacca, which has been u,ndr qonstruction for some time, should await further studies of the likely economic returns in the light of the changed traffic pattern as a result of independence. Table 1 page 1

BANGLADESH

Transport Infrastructure, Rolling Stock and Equipment

1963 .1965 1967 1969 1970 1971 1/ I. RAILWAYS

Length of Routes (miles) 1713 1713 1713 1746 1775 NA

Locomotives - Steam 406 381 376 350 349 NA

- Diesel 72 102 119 119 143 NA

Passenger Cars 1099 1295 1278 1208 1192 NA

Freight Cars 16936 19509 18792 17582 16830 NA

Average Passenger Trip (miles) 26.9 26.9 27.5 30.3 28.3 NA

Average haul per ton of cargo 155.9 147.0 157.2 153.0 199.8 NA (miles) Operating ratio (%0) 83.0 80.4 84.7 86.0 83.7 NA

II. ROADS

Road NetwJork (miles) By type Metalled Roads "1499 1964 2212 2348 2398 NA

By administration Administered by Roads & Highways Directorate NA NA NA NA NA About 5000

Administered by Others " 12000

:III. MOTOR VEHICLE FLEET

2assenger Cars 11408 15402 19106 22581 23074 NA

Buses 2593 2969 4339 5054 5676 NA

Trucks 6721 6965 7901 9355 NA

Subtotal 20722 25336 31346 36935 38105 NA

Others (mainly motorcycles & auto-rickshaws) 11505 20402 23831 27985 29952 NA

Total 32227 45738 55177 64920 68057 NA Table 1 page 2

-2-

1963 1965 1967 1969 1970 1971 IV. INLAND WATER

1. River RQutes (miles) Perennial 3090 NA 3146 'NA NA NA

Seasonal 1617 NA 1643 NA NA NA

Estuary Rough 206 NA 206 NA NA NA

2. Vessels - motorized

C,argo tons (excluding dumb craft) 17442 NA 42875 NA NA NA Cargo tons (including dumb craft) 162754 NA 224480 NA NA NA

Of which:

Bay drossing NA NJA 42408 NA NA NA

V. 0C,i=A1 PORTS

Cargo handled (thousands) tons)

Foreign 3682 3603 4742 5091 4726 4440

Coastal 1047 685 1535 1571 2068 1270

1/ Year indicated is fiscal year endin,g June 30.

Source: Govermnmnt of Bangladesh, M,inistry of Planning (Bangladesh TraAsp6rt Survey) Transport Statistics, 197?; Government of Pakistan, Central Statistical Office ;Ionthly Statistical Bulletin. BANIGLADESH

PUBLIC SECTOR DEVEWI3PH.IENT AND RECONSTRUCTION EXPaIDITURS

Selected Fiscal Years 1963-1973

(Millions of Pakistan Rupees or millions of Takas)

Dev. Expenditures Dev. Budget Reconstr. Budget 1963 1965 1967 1969 1970 1971 1972 1973 1973 Post 1973

Railways 74.9 83.8 67.8 79.4 60.9 89.2 55.6 142.1 99.6 145.5 1/ 2/ 2/ Roads 78.7 116.7 59.5 88.5 83.7 82-4 53-5 93.0 50.0 22.5

Road Transport Corp. .5 2.2 10.1 13.4 7.8 2.6 5.4(3-5) 1.3 8.2 2.6

Inland Wlater Authority 26.9 26.6 29.4 24.8 18.0 11.7 21.3 33.1 25.8 b.4 3/ Inland Water Transport Corp. - 8.3 1.4 0.4 0.3 - 7.0 - 71.1 -

Scubtotal 181.0 237.6 168.2 206.5 170.7 185.9 142.a 79 904.7 174.9

Civil Aviation NA_(3.0) 4.-7 52.2 -33.2

Airline NA 9.0 35.7 -

Subtotal NA__ 25.6 T7_79

Chittagong Port NA _ 30.6o 0.5 13.9 4/ 3 Chalna Port NA_ 1.1 - 28.6

Total NA ___ 309.9 293.1 252.6

Ocean Shipping Line NA ___ 0.3 -

l/ Does not include expenditures on roads under rural works program; data available for 1964, 1965, 1966 and 1967 only wshen sums expended were P.R.s. 94, 79, 54 and 42 million respectively. 2/ The reconstruction program also includes T 223 and 28.5 million for trucks and buses of wihichi lh is to be spent in 1973 and half thereafter), there is no indication as to the ultimnte operator of these vericles. 3/ TTo definite iTrfornation is -rVailable on propcsed dcvalon,er;t. tue- f'ui LGihe inl.and .,Zater Transport Corporation but indications are that this amount is nil. 4/ This arount wzill increase to Taka 46.7 million if the Yugoslav credit for Chalna nimrovemernt is reastivated.

Annex 1

BANGLADESH

Bibliography on Transport Sector 1967 - 1972

1. Ammann & Whitney, Engineering and Economic Feasibility Study for Dacca ByPass and for PenetratorRoad, 1968

2. De Leuw, Cather & Company, Economic Analysis of Dacca-Chittagong Highway, March 1967

3. EWP Associates , A Study on Cost Fare and Freight of Pakistan Eastern Railway, October 1967

4. Government of Bangladesh, Ministry of Planning, (Bangladesh Transport Survey) Road Traffic Survey 1971, Volume 1, January 1972

5. Government of Bangladesh, Ministry of Planning (Bangladesh Transport Survey), Status of Implementation of On-Going Schemes (Transport & Communication Sector), January 1972

6. Government of Bangladesh, Ministry of Planning (Bangladesh Transport Survey), Transport Statistics, January 1972

7. Government of East Pakistan, Report on Comprehensive Survey of Ferries of Roads and Highways Directorate, April - August 1970

8. Government of East Pakistan, Railways, Waterways and Road Transport Department, Inland Water Transport Authority, Survey of Inland Waterways and Ports 1963-67 (date not available).

9. Government of East Pakistan, Railways, Waterways and Road Transport Department, Roads and Highways Directorate, Traffic Survey, 1968 (title and date not certain).

10. Government of East Pakistan, Road Transport Enquiry Committee, Report, July 1970.

11. Government of Japan, Study on Proposed Road from Jessore to Dachurghat, 1967 (Title and date uncertain)

12. Government of Pakistan, Ministry of Communications, Central Roads Organization, Basic Road Statistics 1966-67, June 1969. Also same publication for 1967-68 (date not available)

13. Government of Pakistan, Ministry of Communications, Central Roads Organization, Road and Road Transport Statistics 1966-67 (date not available). -2-

14. Government of.Pakistan, Ministry of Communications, Central Roads Organization, Road Statistics 1967, November 1969.

15. GovreArnment of :Pakistan, Ministry of Communications, Central Roads QOrg?anization, Road Statistics, East Pakistan District Councils1966-67. Also,same publication for 1967-68. (Dates not available)

16. Government ,of Pakistan, Ministry of Communications, Central Roads -Organization, Road Statistics, East Pakistan Highways 1966-67. Also same publication for 1967-6d (dates not available)

*17. Government of Pakistan, Ministry of Communications, Central Roads .Organization, Road Statistics Under Municipal Committees, Town rCommittees,Cantonment Boards, 1967-6d. March 1970

18%. Government of Pakistan, Ministry of C3ommunications, Central Roads -Organization, Roads and'Road Transport Statistics (1947-66),November 1968

19. Hashmi, Tajamma H., Roads and Road Transport Development (Suggestions for the Fourth Plan),1970

20. International Civil Aviation Organization, Report on Civil Aviation Facilities for Bangladesh, April 1972 (Title and date uncertain)

21. Netherlands Engineering Consultants, Surveys of Inland Waterways 'and Ports 1963-67, July 1967

22. :Pakistan Eastern Railways, Annual Report; Budget;.Coaching and Goods Revenue Statistics; Monthly Statistical Results; Commercial and ;Operating Yea-r Book.

23. -Rashid, A.K.M. Harunar, An Economic Evaluation of a Proposal for the Construction of an Overpass at a Rail Road Crossing in Dacca, September 1970.'

124. Rashid, A.K.M. Harunar, An Economic Evaluation of the Ilshashat-Bhola- *Charmadrass Road, November 1970

-25. Sailer, Erna, Report on the Mission of High-Level United Nations Consultants to Bangladesh March - April 1972, April 1972.

26. U.S. Department.of Trans.portation, Economic Analysis of Proposed Reconstruction of Jetties 1 -through 6 at the Port of Chittagong, East Pakistan, 1969.. IBRD - 3941R2

88° 908 OCTOBER 1972 rLt>~ m¢, tX >BANGLADESH

TRANSPORTATION NETWORK

SCALE

10 20 30 40 so 60 70 60 90 1' MILES

_10 20_30 40 5060&7000o90 1q=11010106-0.ETER0

2 1,!~~~~~~~~~~~~~~~~... 1

istagt H.,d~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 88o B,idg. 24'-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2

B Ra-lway Broad Gauge ------Gauge Railway Meter Primary Roads _ _ 9 . h ' , ,,r . -Other Roads \(_ F Principal Ferries\' 1 - Main Coastal and Inland Water Route _\g

PART II

INDUSTRY

Page No.

SUMMARY AND CONCLUSIONS i

I. INTRODUCTION 1

II. PAST DEVELDPMENT TRENDS 2

III. POST WAR INSTITUTIONAL CHANGES AND THE RECOVERY EFFORT 4

IV. PROBLEMS AND FROSPECTS 6

A. Lack of Imported Raw Materials 6 B. Lack of Local Raw Materials 6 C. Other Inputs 6 D. Disruption of Linkages 7 E. Organizational Gaps 7 F. Management Problems 8 G. Labor Problems 8 H. Small-Scale Industry 10 I. Unstable Financial Position 12 J. Industrial Finance 12 K. Annual Plan 1972/73 14

V. THE SITUATION IN KEY INDUSTRIES 15

A. Jute 15 B. Cotton Textiles 19

STATISTICAL APPENDIX

This report was prepared by Vladimir Dragomanovic (Industrial Economist), who was in the field from mid-July to mid-August, 1972.

SUMMARY AND CONCLUSIONS

i. Historically, the manufacturing sector of Bangladesh has been greatly influenced by the scarcity of natural resources. Today, the industry is a tiny, but important segment of this emerging national economy. It accounts for some 8 percent of GDP, and 6 percent of total emply- ment. Perhaps two thirds of all industry is agro-based, and the textile sector alone (that is, jute and cotton processing) accounts for more than two fifths of total industrial value added, and for more than a half of total industrial labor force. On the other side of the industrial picture is the small-scale sector composed mostly of cottage-type units. Between these two extremes are industries processing food, tobacco, skins and hides, wood, metals, oil, and natural gas. Bangladesh has among the lowest levels of per capita production and consumption of industrial goods of any country.

ii. Compared with other sectors, the direct physical damage to industries caused by the war has not been very sizeable (probably less than 30 million dollars), but the sector as a whole was seriously affected by the disruption of vital material linkages of enterprises, and by general uncertainty. In order to revive industry, the new Government took over all the "abandoned" (i.e. West Pakistani-owned)property, nationalized all jute, cotton and sugar mills, replaced the former organization of the public sector by ten new industrial corporations under a ministerial body, and promised to introduce workers1 participation in management. The Government has not pushed the reorganization further, preferring to wait for findings of the studies it has launched, some of them with assistance of foreign experts. In the meantime, the Government has concentrated its efforts on revitalizing the key sector -- the jute industry -- and restoring the channels of raw material supplies for other industries. iii. The results of this approach have been mixed. The recovery of industrial production went well in the first months; by the end of June, jute mills attained 85 percent of 1969/70 output level, or about 75 percent of their capacity, while most other industries reached or approached 40-60 percent capacity utilization. On the other hand, difficulties impeding the return to full production are showing up in many fields. While the supply of imported raw materials is on the way to being normalized, the supply of local raw materials, other than jute, is becoming a serious bottleneck. The sudden breakdown of former inter-industrial and market linkages with West Pakistan has inevitably produced certain new gaps, shortages, lack of market outlets, and cost increases. The activities in the small-scale sector are at a standstill, and prospects are unclear. The departure of a number of experienced factory managers and skilled workers has affected operations in many industries. For various reasons, the financial position of mos-t enterprises is still very precarious. Ongoing projects and new development financing are also areas where action has been postponed. Foreign participation, private investment, pricing and other policies, call for urgent consideration. Probably the most difficult subject, however, is the unresolved labor problems. The recovery of production has already been greatly affected by those and all the other positive efforts and programs may be endangered unless they are tackled soon. - ii -

iv. Along with bringing the labor situation under control through positive measures, deliberate action is needed to improve the management situation in public sector enterprises and corporations. The Government should speed up the work on organizational changes in the relationships between enterprises, sector corporations, the ministry, and autonomous agencies A new industrial financing scheme is needed, as well as measures that would help enterprises ease their current financial burden. The small- scale sector calls for special attention from the planners and decision- makers, both in regard to its short-term and long-term needs. A decision on the future of some important ongoing projects (e.g., Machine Tools Factory, DiBsel Pump Factory, Chittagong Steel Plant, cement projects) should be made as soon as possible. The new investment program and policy should be carefully devised to take into account structural anomalies now besetting the manufacturing sector. I. INTRODUCTION

1. It is not easy to describe with any measure of accuracy what the manufacturing sector in today's Bangladesh really represents, what its magnitude, relative importance, and structure are. Whatever statistical series on the contribution of industry to the gross domestic product are available, have repeatedly been revised, and are still awaiting final revision. They can therefore be used only to indicate some rough orders of magnitude, rather than for any more refined analysis.

2. There are about 4,000 industrial establishments with more than 10 workers in Bangladesh today, along with several hundred thousand smaller, mostly cottage-type units. The former type of industry gives employment to perhaps 400,000 people which is less than 1.5 percent of the total labor force, and the latter to at least 1.6 million people, many of whom may still be involved in agricultural activities as well. Very roughly, the share of the industry as a whole in the GDP is 8 percent, with the relationship between the large-and small-scale sectors being roughly 5:3. The contribution of industry to the country's exports is well over one half of the total (see Annex Table 5). The major manufactured exports are jute products, tea, paper, and matches, together with semi-processed items like tanned leather and timber. About two thirds of all industry is agro-based, with jute manufacturing having, by far, the largest share (25 percent of the total industrial product).

3. In terms of population size, Bangladesh is one of the least industrially developed nations in the world. Its per capita consumption of steel does not exceed 6 kg, cement 5 kg, cotton cloth 7 yards, sugar 2.5 kg, and power 13 kwh. For over-populated country with subsistence levels of per capita income, and for an economny that has only started on its course as a separate entity, industrial development, its presumptions, concepts, methods and policies, are certainly one of the prime concerns. It will take much time and effort to conceive a strategy for development in the realities of Bangladesh. 4. The short history of industrial activities in East Bengal has been influenced by two preponderant factors: lack of resources other than water, some agricultural and forest raw materials and a large unskilled labor force; and peripheral status of the area as related first to big Indian manufacturing agglomerations and then to emerging West Pakistan's centers. 5. At the time of partition, there were hardly any large-scale manufacturing units in the then East Pakistan. In 1949, there were only two sectors of any substantial size: tea processing (with production of 47 million pounds) and cotton cloth manufacturing (48 million yards). Other manufacturing included cotton yarn (16 million pounds), some jute goods and small quantities of sugar (26,000 tons), cement {40,000 tons) and matches (60,000 gross boxes)l/. On the other hand, the small-scale sector was much more developed and comprised rice and wheat milling and production of textiles, cigarettes, salt, and agricultural implements.

6. As shown in Tables 1 and 2, in the period 1949/50-1969/70 the net industrial output grew at a 6-7 percent annual rate, increasing the share of the sector in total GDP from 4 to 7 percent. The large-scale sector,i/which had started from a much lower level, grew at 19 percent through the fifties and 10 percent through the sixties, so that its share in total industri71 product has increased from 15 percent to 61 percent in twenty years i . It should be noted, however, that the share of the large-scale sector has not been increasing since 1967/68 and, in terms of current prices, since 1965/66. 4- 7. In 1953 there was no production of wearing apparel and footwear, paper, steel, electrical equipment and supplies, and hardly any production of cigarettes, furniture, leather and rubber goods, and metal products. All these industries were established in the fifties. Several further new industries have been added during the sixties (fertilizer, steel plants ; many chemical, pharmaceutical, and engineering factories), but generally, the growth of the manufacturing sector appears to have been somewhat slowed down through the decade. The number of registered factories as well as employment has been almost stagnant since 1962/63.

1/ Pakistan Economic Survey 1970/71, Statistical Section, pp. 22-23. 2/ Establishments employing more than 10 workers and using power in manufacturing operations.

3/ Small-scale production figures are of little usefulness, however, since they represent only rough estimates,and production trend is arbitrarily taken as equal to the population trend. 4/ Generally, only about 60 percent of all registered factories are covered by industrial censuses. Due to extraordinary circumstances prevailing in 1971, when the census of manufacturing industries for 1969/70 was dealt with, the response of the factories did not surpass 50 percent then. Of course, the coverage was much higher in terms of production. -3-

Table 1

Value Added in Manufacturing Sector, 1949/50-1969/70 (at constant 1959/60 factor cost) 1949/50 1954/55 1959/60 1964/65 1969/70

Total in million rupees 472 651 912 1,210 1,696

Large scale 69 200 406 633 1,041 Small scale 403 451 506 577 655

Share in total GDP in %:

Total manufacturing sector 4.1 4.9 5.9 6.3 7.2

Large scale 0.6 1.5 2.6 3.3 4.4 Small scale 3.5 3.4 3.3 3.0 2.8

Source: IBRD Reports, and Pakistan Economic Survey 1971/72.

Table 2

Annual Compound Growth Rates in Manufacturing Sector, 1949/50-1969/70

(value added at constant 1959/60 factor cost, in %)

1949/50- 1949/50- 1954/55- 1959/60- 1964/65- 1969/70 1954/55 1959/60 1964/65 1969/70 Total manufacturing sector 6.6 6.6 7.0. 5.8 7.0 Large scale 14.5 24.6 15.2 9.3 10.5 Smale scale 2.5 2.3 2.3 2.6 2.6

Source: Same as Table 1. III. POST WAR INSTITUTIONAL CHANGES AND THE RECOVERY EFFORT

8. Acbrding to a Planning Commission's provisional estimate, the value of assets destroyed or lost during 1971 amounts to T 203 million in ifidustrial sector, of wnich T 135 million is in the public sector industries. The foreign exchange component of total damage has been estimated at T 104 million (T 64 million in the public sector).l/ The direct physical damage to industry appears not to have been very significant in monetary teirms, representing only a tiny fraction of total inuu8trial assets or annual 'value added. But indirect and non-measurable consequences of the war, suchi as pro'duction dislocations, lack of maintenance, transfer of monetary assets, departure of a number of top managers and skilled workers, market disruptions and loss of future income, have been much more serious. B-r the end of 1971, most of the manufacturing industries had come to a virtual standstill.

9. The new Government was faced with the problem of reorganizing the sector in view of the difficulties caused by the departure of factory owners and managers. Since many of the large-scale factories were owned and managed by West Pakistani entrepreneurs (particularly in the jute, c'otton textile, chemical, pharmaceutical, and engineering industries), they came under the category of "abandoned property" and were takeh over by the Government and put under government-appointed administrators, often chosen from among the remaining Bengali factory managers.2/ The nationalization went beyond this category, however, and also covered Bengali and foreign non-Pakistani-owned jute, cotton textile and sugar mills.3/ In addition, though not specifically stipulated by any legal act, industrial establishments in other sectors with 'assets exceeding T 1.5 million were taken over by the Government except for those under foreign ownership.4/ The principle of compensation payment was adopted with respect to the shares vested in the Government under the Nationalization Order with the provision that ''such compensation shall not exceed the paid-up value of such shares" (Article 9).

10. Previously, all public sector firms -- almost 30 percent of all industry in terms of the value of assets -- had been under the East Pakistan Industrial Development Corporation (EPIDC) which had become a huge and complex'shareholding and managing organization. In April 1972, this agency -- now called BIDc -- was dissolved and replaced by ten new sector corporations.5/

1/ The Annual Plan 1972/73, p. 39.

2/ Bangladesh Abandoned Property (Control, Management and Disposal) Order,1972.

3/ The Bangladesh Industrial Enterprises (Nationalization) Order, 1972.

4/ Enterprises under joint venture schemes in the sectors other than jute, cotton and sugar have not been subject to nationalization, and neither has the Bengali ownership within these schemes.

5/ Jute Mills Corporation; Cotto'n Mills; Sugar Mills; Steel Mills; Paper and Board; Fertilizer, Chemical ana Pharmaceutical; Engineering and Shipbuilding; Minerals, Oil and Gas; Food and Allied Products; and Forest Product Corporation. Their function is to "supervise and coordinate ... the activities, business and affairs of the scheduled industrial enterprises" (Article 17). Together with the former BIDC companies, some 254 enterprises (among them 67 jute, 64 cotton and 15 sugar mills ) were placed under the control of these ten corporations and a number of smaller units added to them subsequently. The supreme controlling agency is, of course, the Ministry of Industries, through its Nationalized Industries Division.

11. Investment and financing functions with respect to both public and private companies have been in the hands of a number of overlapping institutions such as Pakistan Industrial Credit and Investment Corporation (PICIC, now BICIC), Industrial Bank of Pakistan (IDBP, now IDBB), and three smaller specialized agencies, along with the BIDC and Bangladesh Small Industries Corporation (BSIC, formerly EPSIC). Some of these organizationd became relatively independent of the central and provincial governments, although highly dependent on their headquarters or parallel bodies in West Pakistan. This scheme, as has already been announced, will undergo major changes with the objective of making the system simpler and more functional. Another important institutional change will be to give the workers two- member representation on a five-member management board in each public enterprise. A consultant team from PA Associates (U.K.) has been engaged to recommend optimal organizational and managerial solutions in all these fields.

12. Considering the circ-amstances, the pace of recovery of industrial production has been quite remarkable in the first months of 1972. This is particularly true of the jute sector. With 41i,600 tons, the output of jute goods stood in June 1972 at 85 percent of the average 1969/70 level or at about 75 percent of capacity. The results of recovery have, however, been different in different sectors as shown in the following estimate of capacity utilization achieved by June 1972: 1/

70 percent or above: jute, matches and some other minor products;

Around 50 percent: cotton textiles, food processing, petro- leun products, paper, wood processing;

20 percent - 45 percent: chemicals, engineering units, steel mill, tanneries, cement, fertilizers;

Below 20 percent: sugar, most pharmaceuticals.

13. This picture may change considerably with the restoration of particular units which have not yet resumed production for various reasons (North Bengal paper mill, machine tools factory, several jute,cotton textile and sugar mills). One should bear in mind, besides, that even under "normal" conditions before the war, the degree of capacity utilization in many sectors was very low (steel, wood processing, sugar, cotton textile weaving).

1/ The estimate is based on fragmentary data supplied by the Planning Commission and Industrial Corporations. -6-

IV. PROBLEMS AND PROSPECTS

14. Despite impressive intial results, there is evidence to suggest that the pace of industrial recovery has slackened somewhat recently. Difficulties impeding return to full production have arisen in several fields. While some of them have been directly caused by war dislocations and destructions, the others may be attributed to inherited structural dis- tortions or policy factors. A. Lack of Imported Raw Materials

15. The lack of material inputs such as raw materials, spare parts and components, transportation and power, is still a major problem for many industries. For understandable reasons, the lack of raw materials has been treated by the Government as a short-term emergency problem. Raw materials stocks in most import-oriented industries (industries using raw cotton and cotton yarn and thread, rape and mustard seeds, iron and. steel, petroleum, tobacco, chemicals, and limestone) had been heavily depleted during the 1971 disturbances. In the first months after liberation, the sequence of stock replenishments depended more on aid availability in individual sectors than on Government priorities. In any case, the Govern- ment was not very prompt in determining priorities for foreign exchange allocations, particularly if the time lag between placing orders and actual deliveries is taken into account. The Chittagong steel plant was probably the only industry of some significance which was satisfactorily supplied with the raw materials needed; in most other industries the gap amounted to much more than 50 percent of the pre-war requirements. The prospects are much better for the second half of 1972.

B. Lack of Local Raw Materials

16. Wlile the lack of imported raw materials may be on the way to being eliminated as a major bottleneck, sectors based on local raw materials (other than jute, tea and fish-based industries) are likely to remain affected by shortages for a longer time to come. These are, of course, industries using sugar cane, wood, hides and skins, rubber, and natural gas. In July 1972, some sugar mills, one paper mill, eight out of 20 tanneries in Dacca area, and three out of 9 wood processing units under the Forestry Corporation, were closed mainly due to raw material shortages. In these sectors the capacity utilization is generally not. higher than in the sectors dependent on imported raw materials. A thorough reassessment of these sectors' future role in terms of raw materials availability, factory locations and transport facilities, is a matter for consideration in the mid-term planning process.

C. Other Inputs

17. Accumulated spare parts, components and accessories requirements have become an important issue for almost all industries. Many productive units remain closed, or operate at reduced capacity, due to difficulties in providing spare parts after a prolonged period of neglect and poor maintenance of machinery. Apart from these accumulated shortages. the big - 7 - question is how to provide for regular inflow of spares and replacements in a country which greatly lacks engineering and servicing facilities. The problem is aggravated by the fact that a considerable part of the two major sectors, jute and cotton textiles, consists of rather obsolete machinery. There is only one, fairly small factory capable of producing certain spares and replacements for jute mills. Many mills are trying to manufacture certain simpler parts in their own workshops. The situation in the jute sector may be improved in 1973, provided full use is made of the IDA and U.K. credits for that purpose. It is important, however, to plan for the future role of local engineering industries in covering requirements for spare parts, components and replacements in major manufacturing sectors.

D. Disruption of Linkages

18. The consequences of the sudden interruption of inter-industrial and market linkages with West Pakistan, no matter how little developed they were, are beginning to show up in the form of consumer goods shortages, shortages of raw materials and intermediate goods, reduced market size, un- suitable produce mix, and cost increases. Most of the Eastern wing's needs in raw cotton, cotton yarn and thread, rape and mustard seeds, tobacco and cement, were normally covered from West Pakistan. 1/ On the other hand, many important industries were geared to producing for the Pakistani market as a whole, and in some cases explicitly for the West Pakistani market. Exported to West Pakistan were significant quantities of jute goods, 85 percent of total tea production, 60 percent of paper, substantial quantities of tanned leather, matches, timber , all of the rayon and cellophane, 60 percent of the tubes from the National Tubes Factory, some parts for Honda motor scooters, steel plates, cables, pharmaceuticals, etc. In the overall context of a serious shortage of manufactured guods, anomalous situations have arisen of some factories with excess stocks of finished goods with no market or of industries with tne wrong types and sizes of some products. It will be necessary to evolve a careful investment policy to fill in some of the more striking gaps, and reorient or close down units which cannot be made useful under the changed circumstances. These structural adjustments will have to take fully into account the new international environment, particularly potentials for intensifying economic cooperation with neighboring countries.

E. Organizational Gaps 19. Faced with difficult problems of industrial recovery, and more generally of the efficient functioning of the enlarged public sector, the Government has undertaken to study the organization of the sector at macro and micro levels. A consultant team from PA Associates (U.K.) has been engaged to recommend optimal organizational and managerial solutions, for individual manufacturing sectors as well as for the sector as a whole. There are many questions requiring urgent clarification and Government action. What should the scope of operational and decision-making autonomr of the enterprises be? How should the coordinating and supporting functions of the corporations be interpreted? How far is the Nationalized Industries

1/ In 1969/70, the imports of these items from West Pakistan amounted to Rs. 524 million. Division supposed to go in performing its supervisory function? Should export activities, and trade activities in general, be the responsibility of enterprises, corporations, or specialized organizations? How should development financing be organized: through the budget or autonomous financing institutions, tnrough loans or equity sharing? How are the hostile attitudes which are now evolving between labor and management to be transformed into a more constructive relationship? While the Govern- ment is waiting for the Consultants' recommendations, the position of individual enterprises within each corporation, as well as the corporation's profile and delineation of its functions as related to the enterprises and the ministry, remain unclear and therefore subject to arbitrary solutions. Most of the corporations have not yet been properly set up and, with several notable exceptions, the quality of their management leaves much to be desired. There is a tendency for the bureaucratic image of the old EPIDC to be repro- duced in the new corporation. The Government is probably waiting too long to take a stand on some of the unsettled issues. Establishing certain rules and procedures for public enterprises, agencies and corporations, at least on a temporary basio, would be helpful in today's situation.

F. Management Problems

20. In this period of searching for new paths for the public sector to follow,the management problem deserves special attention. A large number of top factory managers and experienced foremen of Pakistani or Bihari origin have left the country, and the operations of some industries have been greatly affected. In the jute and cotton textile sectors, where this exodus was the greatest, production has been affected by the absence of expert people, but its gradual recovery has not been seriously hampered due to a relatively large number of medium-level Bengali technicians and skilled workers. In some of the more sophisticated industries, like pharmaceuticals and engineering, the consequences have been much more serious, and in some cases the factories have been out of operation due to non-availability of production managers and technological specialists. In addition, industries are short of general managers and organizers, economic analysts, higher level accountants, and marketing specialists. Most of these were in short supply before the war and the situation is even more difficult now. In order to prevent this situation from becomrga permanent bottleneck, urgent action is needed in three directions. First, all the existing potentials - the universities, management development centers and others-- should be engaged in those management and technical training programs which are needed most. For the present, these institutions continue to work along traditional lines. Second, whatever trained and experienced management personnel are available should be utilized in a more flexible way; for example, two or three neighboring jute or cotton textile or sugar mills might be put under one management (this might be sensible even if there were no presently greatly increased problems), And third, no new projects should be undertaken without an assessment of the availability of management.

G. Labor Problems

21. Unresolved labor problems have emerged as a serious production constraint. There is no statistics on working days lost due to labor unrest, but the numDer must be an impressive one despite the fact that -9-

strikes have beer banned for the six months period until the end of November, 1972.1/ Even more important, work discipline is generally deteriorating, making the full recovery of industrial production perhaps unreachable. This development is clearly influenced by unstable political relationships, but is also linked to worsening living conditions, poor employment prospects, under-operation of industrial capacity, and a mounting feeling of social insecurity. It is important to note that along with many unrealistic demands, workers are manifesting a sound interest in improving tne industrial situation at both the enterprise and the national level. Workers!'aspirations include inter alia: participation in management, autonomy for enterprises, debureaucratization of corporations, productivity rewards, more efficient conciliatory procec res, status improvement for temporary workers, etc. Unfortunately, the present fluid2,egislative environment, with the multiplicity of workers' organizations,./ allows too much room for- numerous demands which are unrealistic in the present context, such as large: back-payments, housing for all, ambitious social benefits schemes, and a large number of trivial things like dissatisfaction over promotions or patterns and sizes of work clothes. Such pressures are mushrooming to the detriment of workers' positive aspirations. Along with work stoppages, "gheraos"* have become a popular technique for expressing these pressures.3/ Under these circumstances many of the managers of enterprises and corporations tend to ask for backing from conservative, bureaucratic structures rather than cooperate with workers. The Government's attitude towards these problems has so far been hesitant and indecisive. Its program of including workers' representatives on managing board calls for much more elaboration before it can be carried out. How effective can worker participation be in a management with a Government appointed majority? The role of-the workers' representatives will probably be reduced to trans- mitting workers' views and complaints, with all decision-making power being left to the chief executive official. Besides, what can be taken as the "workers' views" in a situation with two or more competing or even conflicting workers' unions? It is therefore an urgent matter to promulgate new labor legislation and policies under which workers will be involvei in sharing the responsibil- ities, profits and losses of their enterprises.4/ This implies, of course,

1/ The strike ban does not apply to work stoppages within individual sections of an enterprise.

2/ Labor relations are still being regulated by the executive orders from the old Pakistan times. In any enterprise of a certain size, workers are per- mitted to organize more than one trade union, but negotiating powers accrue to the biggest union.

3/ "Gherao" indicates a situation when factory managers are surrounded in their offices with no access to food, until they decide to meet workers' demands.

4/ It might be interesting to study the experience of those rare undertakings where workers have been given greater responsibility in management -- for instance,in Dacca Cotton Mills, the enterprise in which the workers' representatives have five out of seven board members. - 10-

application of incentive schemes for both enterprises and individual workers. (The Government has established a special body to work out a new wage system for the country.)

H. Small-Scale Industry

22. Very little is clear about the role of tthe small-scale industry in Bangladesh. The data on this sector are scanty and unreliable. There have been a few statistical surveys on the small-scale sector, but-each of them was different in scope, coverage and definitions. The "Survey of Small Industries in East Pakistan", conducted by the EPSIC in 1962/63,l/ covered around 21,000 units with 186,000 workers while leaving out all of the cottage industries. The "Survey on Small and Household Industrie2 in Bangladesh, 1970", conducted by the Bureau of Statistics in 1969/70, encompassed 330,000 establishments with 863,000 workers; however, only rural areas were covered by this survey. In the regular statistical publications, the coverage of small industries was first confined to the units employing less than 20, and later less than 10 workers. The figures on production growth in the small-scale sector are derived simply by applying the long-term population growth rates.

23. Irrespective of all statistical inaccuracies, the importance of the small-scale sector in Bangladesh cannot be denied, neither for today nor for a long time to come. With at least 30,000 small industry estab- ishments employing about 180,000 persons, 300,000-400,000 handlooms giving some income to perhaps 900,000 people, and about 300,000 other cottage-type units employing at least 600,000 people, this sector gives support to at least 5 percent of the country's total labor force. Its share in total industrial output is still probably more than 40 percent. Small industrialists produce a wide variety of goods, particularly textiles, food, tobacco, furniture, clay products and light engineering goods, as well as many types of services. In the course of the last two decades, about 1,000 small industry units have been established each year. On the other hand, cottage- type manufacturing activities have, by and large, been stagnating in recent years-- at least those in the textile sector-- due to the lack of supporting policies, but also to the growth of the large-scale sector in both wings of Pakistan.

24. It is obvious that the overall role of small industries must now be reconsidered in the light of the new national and institutional setting. With large-scale industrial enterprises being nationalized, the demarcation line between small and large scale industry is almost the same as the one between the private and public sector. Since there are limits to the

1/ Small industries under this Survey were defined as units "run mainly by hired labor and not using mechanical motive power" and those using mechanical power but employing less than 50 workmen, with assets not exceeding Rs. 250,000.

2/ Industries under this Survey were defined as those "primarily carried on with the help of family workers" and whose total capital outlay does not exceed Rs. 500,000. public sector role in the present context, it seems important that where the private sector can operate effectively, it should be encouraged to do so. A clear example of this is the situation in cotton cloth production. Formerly, the development of both large-scale weaving and the handloom sector was limited by competition from more proficient West Pakistani producers. Now, because the local large-scale cotton spinning industry is unable to cover more than a small fraction of total national needs in cotton yarn, the handloom sector has to take over the largest share of cloth production. 1/ If this is to succeed, the four hundred thousand handloom operators should be given better facilities through an improved, credit-supported system of yarn distribution. In addition, small-scale industries might be able to fill the gaps created by the disintegration of the former combined market, and could also utilize by-products, manufacture spare parts, and develop ancillary industries.

25. It seems, however, that the present institutional framework is far from being suitable for supporting these new developments. The Bangla- desh Small Industries Corporation (formerly EPSIC), created in 1957, was intended to be a public-private shareholding company with a specific role in assisting the development of small industries. Instead it has remained a promotional agency which has been involved in establishing industrial estates, lending and pre-investment activities, providing technical training and extension services, and setting up its own cottage enterprises. In the past the Corporation's performance was somewhat mixed, though this may have been due to general policies which were not conducive to the development of small-scale industry, rather than managerial inadequacies. Since liberation there has been no change in the legal status or functions of the BSIC, but the level of its activities has been substantially reduced, if not completely discontinued (there has been no new lending to small industries since liberation). The main function of BSIC at the moment is organizing cotton yarn distribution, an assignment that has provoked many complaints from the handloomers. The new management of the BSIC has plans for other activities, mostly along previous lines, which are dependent on future resource avail- abilities. While it is high time that new small-scale industrial projects be launched, it is extremely important at this point that all financing, managerial, promotional and institutional aspects of the small-scale sector be thoroughly but expeditiously examined and decided upon. There are pro- posals for revitalizing the handloom industry, revising the concept of industrial estates, interconnecting small- and large-scale industries, but the practical implications of these still have to be worked out.

26. What is also needed is to extend credit facilities to small industrialists, facilitate supply of raw materials and spare parts, improve managerial and technical skills through adequate programs, preferably linked with credit programs. In addition, the small-scale sector must be made an integral part of the development program.

27. The Annual Plan for 1972/73 makes no reference to the small-scale sector, except that most relief and rehabilitation resources are intended

1/ This approach may be changed, however, once the broader and longer-term objectives for the industrial sector are reassessed, primarily for private citizens. Counting on reconstruction and rehabil- itatipri funds, t,he BSIC has prepared an investment schedule for an amount of T 70 miliion, cpvering all major sectors, with a foreign exchange com- po,nent of T 36 million. i/ The largest portion -- T 56 million - is being .envisaged for new capacity, the remainder for balancing and modernization purposes. It i,s .anticipated that as many as 100 small industrial units may be set up, mostly in food manufacturing, manufacture of textiles, chemic4as and metals and miscellaneous industries. The first four in- di1.stries account for T 31 million or 44 percent of total investment for the sector.

I. Unstable Financial Position

28. The productivity and profitability of industrial enterprises are generally low, and their f,inancial position precarious, making their full recovery even more difficult. There are a nu,mber of industries which have traditionally incurred losses (sugar and paper mills, some engineering an,d timber units, steel plants). Under present circumstances, probably more ,than half of all large-spale enterprises may be regarded as financially unyia,ble. The reasons for this include: prolonged low production or sales levels, transfer of liquid funds by former owners, accumulation of charges on c,apital, excessive and unproductively used short-term drawings from th,e ba,ks, adverse consequences of devaluation on import-oriented industries (it has been observed that production costs in the cotton textile industry have risen more than by 25 percent due to devaluation), and price policy ponstraints (for example, the price of sugar has not been chang,d sin,ce 1969, of newsprint since 1968, making it impossible for producers to recover- production costs). No specific measures have been undertaken by the Govern- ment to attenu,ate the liquidity crises, except that an almost universal cessa,tion of credit repayments and payments of interest charges has been tolerated.

J. Industrial Finance

29. Industrial financing is another area where important decisions are needed. The new ordinance regulating this matter, originally expected by the end of August 1972, has not yet been issued, apparently because the Government has changed its views on how the new organizational set-up in this field should look. Two basic approaches have emerged so far: (1) three investment and credit organizations, the BICIC, Investment Cor- poration of Bangladesh (ICB, formerly ICP) and National Investment Trust (NIT) would merge to form the Bangladesh Industrial Credit Corporation (BICC), to deal with:setting up and expanding large-scale industries (those with fixed assets exceeding T 2 million). For credit with a lower ceiling, the IDBB and.Equity Participation Fund (EPF) would merge to form

1/ 'The'IDA credit of $3 milliofihincluded. 13 the Bangladesh Industrial Bank (BIB) which would cater to the needs of the small-scale sectorjl/ or(2) the BICIC and IDBB would merge to form the BICC with the task of making long-term loans to industrial enterprises,while the NIT, ICB and EPF would merge to form the Bangladesh Investment Corporation (BIC).Z/ While in the first case the new institutions would specialize in making loans and equity investment according to the size of industrial enterprises, in the latter case they would specialize according to the type of service (supplying loans or equity shares), and would' be rendering these services to both large and small-scale industries. Another major novelty which is being contemplated would give the new institutions a money mobilizing function, since they would be able to attract deposits on a long-term basis. Both new institutions would, in addition, have their own resources (up to T 50 million of the paid-up capital each, according to the suggestion).

30. Generally, the functional centralization (specializing in the type of service) has the advantage of limiting the exposure of the institution in an enterprise and of making the staff more expert in one kind of service. On the other hand, this proposition may contain a very definite risk of neglecting the interests of the small-scale sector. Unless some other built-in mechanism is provided to safeguard and promote those interests, a specialized institution with the authority, finance and expertise to do this, would seem more appropriate for a country like Bangladesh.

31. While waiting for the reorganization to take place, the existing financing institutions are going through difficult times. They have not resumed operations yet, and have not been able to recover any outstanding payments from debtors. Ongoing projects, now at a standstill,are facing difficulties due to legal complications, considerable cost increases, and changed market conditions. It is a matter for some urgency that proper study and decisions on reorganization take place expeditiously.

32. One open question is, how autonomous the financing institutions will be in selecting, processing and financing industrial projects. In the past, out of 97 projects financed through what is now BICICOin the former East Pakistan, 53 were in the textile sector (mostly jute). With the changed circumstances, the Government will no doubt wish to change this investment pattern through the planning mechanism, but how will the Govern- ment's preferences be reconciled with the economic principles which autonomous financing institutions are supposed to observe? One possibility is for the government to specify a limited number of investments and to finance these directly from the budget. The rest of the resources available for industrial development would be invested by the autonomous agencies. Thus the bulk of industrial investment would not be "invented" by the Planning Commission but would be included in development programs as a result of selections based on the economic motivations of interested productive and financial organizations.

1/ BSIC would, of course, continue as a separate agency for investment in and promotion of small-scale industry. 2/ The latter-scheme was not mentioned in Vol. I (para. 79) of this report, since it has been launched only recently. - 14 -

K. Annual Plan 1972/73 33. The short-term industrial strategy, as envisaged in the 1972/73 development plan, is based on the following objectives: to repair most of the physical damage to industries, complete the institutional changes already started, continue with a number of selected ongoing projects, and ensure the return to pre-war output levels. Development expenditure in the manufacturing sector amounts to T 300 million or 9.4 percent of total development expenditure for 1972/73. It comprises the completion or further development of two pulp and paper factories, three fertilizer plants, three jute mills, six cotton textile mills, two cement factories, opening new production lines in the Machine Tool Plant and Diesel Plant at Joydebpur, as well as starting works on some new projects with T 13 million of expenditure (a new cement plant, a pesticide plant and preliminary works on a petrochemical complex).

34. The Plan is clearly geared to the public sector, leaving private investment and the small-scale sector out of the picture, but promising a comprehensive blueprint for small and cottage industries for the medium- term plan. It does not deal, except in very general terms, with some of the organizational and policy matters which are essential to the functioning of the economy (for instance, the roles of sector corporations and individual enterprises, policies for labor, investment, prices and wages, and questions of foreign participation, export promotion, etc.). Unless some of these questions-- and particularly the labor problem--are actively tackled soon,. the target of restoring pre-war production levels by December 1973 may prove to be unrealistic. V. THE SITUATION IN KEY INDUSTRIES

(A) Jute

35- At the time of partition, there was no jute manufacturing in the then state of Pakistan. Today, Bangladesh processes almost half of its raw jute domestically and obtains for it more foreign exchange than for the raw fiber. Jute accounts for one foiurth of total industrial output and over 40 percent of total industrial employment. The share of Bangladesh in world exports of jute goods exceeds 25 percent. This development has been based on this region's unique comparative advantage in jute production. Suit- able soil and adequate climate, high quality raw fiber, low labor cost (lower than in India) in this labor-intensive industry, insignificant dependence on imported inputs (around 4 percent of the gross value of production), inexpen- sive water transport and the determination to make use of this comparative advantage to promote industrialization-- all these factors have made the jute sector dominant. 36. The growth of jute goods production in the fifteen-year period (1955/56-1969/70)is shown in Table 3. The production of jute goods increased in the said period 4.5 times or at a compound annual rate of 11 percent. The biggest increase occurred during the last five years, when the number of operating looms more than doubled. The relative share of sacking declined from 73 percent in 1955/56 to 50 percent in 1969/70, in favor of higher quality goods, hessian and carpet backing (the latter being produced only since 1962/63). Annual output per loom decreased from 31 to 27 tons in the same period, which may well be an indication of reduced efficiency in the sector, particularly in view of the fact that this sector has never been exposed to raw material shortages.

37. The war period and its aftermath have, of course, reversed this upward movement and created unprecedented difficulties for the jute industry. Basic indicators of this change are contained in Table 4.

38. With the number of looms installed rising slightly during last three years, 1/ the percentage of looms operating dropped sharply from 95 percent in 1969F70. to 80 percent in 1971 and 62 percent in 1971/72 . After almost complete standstill in December 1971, recovery began promptly, increasing the proportion of the loomage operating from 36 percent in January to 85 percent in June 1972.2/ The most difficult period was December 1971 - February 1972, when only 9,000 tons per month were produced. Those mills which were active averaged 11 working days per month during that period. Compared with the 1969/70 level, the loss in terms of output amounted to 117,000 tons in 1970/71, and 284,000 tons in 1971/72. The total loss is likely to be

1/ This increase occurred mainly in the months preceeding the war. 2/ These percentages should not be taken as indicators of actual capacity utilization. Not all of the looms operating are operating all the time in a certain period. This explains the discrepancy between the figures on actual output and looms operating. -Table 3

.Production of jute goods, a-955/56 - 1969/70 (in thousand tons) .19.55/56 1958/59 :.961/62 '.1964/65 1967/68 1968/69 .19.69/70

Looms Operating (OQO) 4.2 6.9 8.1 10.0 16.4 19.1 21.5

Total Production 13Q 203 2-71 289 512 518 -587

Sacking 95 -141 186 193 334 285 297

Hessian 30 52 73 8.1 .140 189 235

Carpet Backing . - 6 25 27 33

,Other Goods -5 .11 12 8 14 .17 22 H

Employment 55_/ 54 177 110 150 175

6 a/1959/ 0 . '

Source: IBRD, Report No. SA-ila, Vol. II, P.15; Bangladesh Jute Mills Association,

Monthly Summary of Jute Goods Statistics, No. 184-186, Oct.-Dec. 1971;

Statistical Digest of Bangladesh 1970 - 71. -- 17 - equivalent to one year's output, or around 600,000 tons. In June 1972, the output of jute goods reached 41,600 tons or 85 percent of the average monthly level in the last normal year, 1969/70. Since in the first months after liberation the exports of jute manufactures failed to keep pace with the recovery of production, stocks of finished goods rose to 65 percent above the "normal" level of previous years.

39. A monthly review of the jute industry's operations in the first half of 1972 suggests a certain slowing down of its growth towards the end of this period. To the extent that the industry is exhausting its recovery potentials and approaching previous output levels, this slowing down is natural. Certain questions still remain, however. In June 1972 the loomage operating was about the same as in the year 1969/70 (see Table 4), yet the output achieved was 15 percent below 1969/70 level. Moreover, in the same month there were 2,200 more looms installed than in 1969/70 (what is equivalent to 7 average size factories). Assuming the same loomage utilization rate as in 1969/70, the jute mills should have produced in June around 54,000 tons instead of 42,000 tons. That means that 77 percent of the pre-war production level,as applied to increased loomage, has been achieved by June 1972.

40. There are 76 jute mills under the Bangladesh Jute Mills Corpo- ration (BJMC), three of them with a total of 1,000 looms, still not quite completed. The structure of the installed loomage is roughly as follows: hessian - 14,900; sacking - 8,000; broad looms - 2,200; and cotton bagging - 200. It is important that at this stage, the composition of jute industry capacity and production be carefully reassessed before any further expansion is contemplated. FTinding a proper balance between the short-term and long-term considerations in further expansion of the industry,l/ will certainly call for sensitive political decisions.

41. In the meantime, the industry has to cope with many old and new problems, such as the lack of experienced managers, labor troubles, transport and power supply constraints, lack of marketing and research, etc. The new Jute Mills Corporation has been able to rely largely on the former Association's organization and staff. It is still not clear how much of their operational autonomy the mills are going to retain. It is intended that they will preserve their financial and commercial identity, but obviously much of this will be delegated to the Corporation (price setting, sales and exports negotiating, determining cost and employment standards, treatment of losses, investment decisions, etc.). At the moment, many of the difficulties which the mills face stem from their poor productivity and profitability, and from their general precarious financial position. The typical jute mill is overstaffed, with unfavorable loom-weaver ratio, operates in two shifts, is troubled with rising prices of inputs, lacks working capital, maintains huge stocks of unsold goods, and is far from normalizing management-labor relations.

1/ In the short run,it would be rewarding to process an increasing part of domestic raw jute output since this would reduce exportable supply of raw jute, raise its international price and herewith manufactured goods prices, and strengthen the competitive position of Bengali manufacturers. In the long run, the competition of synthetics may be of overriding importance, especially as jute goods manufacturers outside Bangladesh may well turn to the production of synthetics-based products. Table 4 Jute Industry Situation, 1969/70-1971/72 (in thousand tons)

Jan. Feb. Mar. Apr. May June 1969/70 1970/71 1971/72 1972 1972 1972' 1972 1972 1972 a b Looms installed (000) 22.6 23.8 24.4 24.3 24.3 24.3 24.3 24.3 24.8 Looms operating (000) 21.5 19.1 15.2 8.8 12.6 16.6 17.0 17.3 21.2 Total production 587 470 303 7 18 30 36 40 42 Sacking 297 191 139 4 9 15 18 19 20 Hessian 235 211 127 3 6 12 14 15 16

Carpet backing 33 40 33 0 2 2 4 5 5 Others 22 28 4 0 1 1 0 1 1

Monthly Production 49 39 25 7 18 30 36 40 42 Stocks 63 75 8 4 c 82 98 105 110 106

a January - June 1971. b January - June 1972. c Average for July 1971 - May 1972.

SOURCE: Bangladesh Jute Mills Association - 19, -

(B) Cotton Textiles

42. With 43 factories and 46,ooo employed persons, the cotton textile industry is the second largest in Bangladesh. It grew initially as sub- sidiaries of large Indian textile producers, 9 then of the West Pakistani cotton manufacturing sector. Although no cotton was grown in East Bengal (later East Pakistan), the industry attracted private investors because of the abundance of cheap labor. It has remaine1 dependent on imported raw cotton and partially on imported cotton yarn.;J

43. The first eleven textile units built in pre-Pakistan times, had all been composite, that is integrated spinning and weaving mills, rather small in size. After 1952, along with some integrated mills, a number of spinning units were set up to feed yarn to the huge number of handloom cloth and netting industries.

44. As is apparent from Table 5, the number of both installed spindles and installed looms doubled between 1955 and 1965/66. Since then; 100,000 new spindles were installed by February 1971, while the number of looms was more or less constant at 6 to 7 thousand. The operational efficiency of the spinning sector has improved in the course of the decade, the output of yarn per spindle being increased from 133 pounds in 1960/61 to 160 pounds in 1969/70. As a result, the output of yarn rose from 48 to 106 million pounds in the same period. On the other hand, the production of cloth dropped by 10 million yards to 59 million yards, the number of looms in operation remaining almost unchanged. The reasons for these opposite movements are, among others: on the one hand,the much higher returns on sales in the spinning sector owing to steadily increasing demand level on the part of small industrial and cottage producers; and,on the other hand,the competition from West Pakistani cloth manufacturers.

45. M4any things have changed in the cotton textile sector as a result of the chain of events triggered by the war and liberation struggle, but some constants have still remained. What has not changed, is this industry's importance particularly in terms of job creation and feeding the vast handloom sector; its dependence on imports as far_as raw cotton, dyes, spare

1/ The first mill was established in Kushtia, 1908. Some of the subsequent mills were simply transplanted from India.

2/ In 1969/70, the then East Pakistan imported Rs. 168 million worth of raw cotton (of which only Rs. 2 million from the countries other than West Pakistan) and Rs. 97 million of cotton yarn (Rs. 11 million from countries other than West Pakistan). Table 5

Cotton Textile Industry: Capacity and Production

'1947-- 1970/71

-a/ X2~. 1955 -1960/61 '196j/65 195A66 -1966/67 .19/676i9 868 /69 -969t9 o 17970/71

Number of reporting mills I1 .20 20 29 33 38 37 I2 .44 44

Installed capacity:

Spindles (000) 110 323 364 617 6$4 661 662 631 750 754

Looms (000) 3 3 3 5 .6 7 7 7 7 6

Working-capacity;

Spindles (000) 99 -- 361 564 573 555 .563 646 660 658

Looms (000) 2 -- 3 4 3 4 4 4 3 4

Production of yarn

(Mn. lbs) -- -- 48 64 73 74 77 96 106 69

Production of cloth -- 69 49 50 55 52 61 59 46 (Mn. yards) a/ July 1970-February 1971

Source: EPIDC, Market Study of the Cotton Textile Industry in East Pakistan, Dacca, 1969; Statistical.Digest of Bangladesh, 1970-71; Monthly Statistical Bulletin of Bangladesh, March 1972. - 21 -

parts, replacements and stores are concerned;Y/ low productivity and sub- optimal size of most factories (only 12 out of 43 mills have more than 20,000 spindles); and a whole range of crucial open questions about structure, such as: the emphasis on the large-scale or small-scale sector, spinning or weaving within the large-scale sector, modernization or expansion, cotton imports or domestic production of synthetic substitutes. 46. What are the changes? First, of course, there has been some physical damage to machinery, factory buildings and workers' quarters, and other direct consequences of the disturbances, the departure of a number of managers and middlemen being the most important among them. Second, stocks of raw materials, spares and:stores, have been depleted sufficiently to produce stoppage of operations in most of the mills. At the time of liberation, the entire stocks of raw cotton probably did not exceed 10,000 bales-- a quantity sufficient for 10-day production under normal conditions. The first raw cotton shipments were of a lower quality, which caused- tech- nical difficulties with the machinery geared to using West Pakistan's high quality cotton. Third, along with general price rise, the costs of most inputs have risen considerably and this,in combination with the impact of devaluation, and the pressure of deferred demand led to higher prices. And fourth, there is a feeling of uncertainty-- common to other industries as well-- caused by too many important institutional and policy issues remaining unresolved for too long.

47. As a result of these difficulties in January-May 1972, the yarn production was only 2.8 million pounds per month, as compared with 8.7 million pounds per month for the period July 1970-February 1971 that pre- ceeded the war. Production of cloth amounted to 0.5 million yards as compared with 5.7 million yards in the same periods. 2/ 48. There are 64 enterprises under the Cotton Mills Corporation as listed in the Second Schedule of the Bangladesh Industrial Enterprises (Nationalization) Order, 1972. Forty three of these are in operation and 6 mills with about 80,000 spindles are scheduled to be completed in 1972/73. Out of 15 remaining projects, nine relate to various specialized textile undertakings (synthetics, wool, etc.). Therefore, no drastic change in the overaU capacity picture is expected for the next few years.

49. The following is an estimate of the deficit in yarn and cloth production in 1974/75, after the projects which are now at an advanced stage of completion have entered normal production.

1/ An unsuccessful attempt to grow raw cotton domestically in some dry areas was undertaken in mid-sixties. To explore possibilities further, a cotton cultivation committee has been appointed by the Government. The crucial question is probably not whether a good quality raw cotton can be cultivated or not, but rather whether Bangladesh can afford to devote a part of its highly scarce cultivable land to this purpose. 2/ Annual Development Plan, 1972/73. - 22 -

Cotton Textile Estimates for 1974/75

1. Population 80 million

2. Cloth requirenent (7.5 yards per capita): 600 million yards

3. Production of cloth (5,850 working out of 6,500 installed looms, 2 shifts, 300 working days per capita, 30 yards per loom/shift): 105 million yards

4. Task for the handloom sector (2-3): 495 million yards

5. Yarn required to produce 105 million yards of cloth (4 oz. weight per yard, 5 percent waste allowance): 27.56 million pounds

6. Yarn required to produce 495 million yards of cloth (4 yards of cloth per pound of yarn): 123.75 million pounds

7. Yarn required to produce the total of 600 million yards of cloth (5 and 6): 151 million pounds

8. Production of yarn (819,000 working out of 910,000 installed spindles, 3 shifts, 300 working days per year, 2.5 oz. per spindle/shift): 115 million pounds

9. Yarn deficit (7-8): 36 million pounds

10. Number of additional spindles needed: 284 thousand.

This is, of course, a hypothetical estimate, but it may be taken as an indication that there is room for further expansion of the cotton processing industry in Bangladesh if full import substitution in spinning is the objective. TAPLE 1 Number of Factories and Employment

Number of registered/reporting factories Average daily employment 1965/66 1969/70 19 5 3 a 1 9 5 9 / 6 0 a 1 9 6 5 / 6 6 b 1 9 6 9 / 7 0 b 1953 1959/60 1 Food manufacturing ao3/93 - 74 g.514/334 ... /254 6,422 13,580 22,743 25,916

Tobacco industries lA ... /13 17/17 ... /16 ... 473 2,721 4,033

Manufacture of textile 25/22 ... /84 .942/470 ... /387 14,847 81,954 107,253 128,260

Wearing apparel and footwear -- ... /9 228A66 ... /78 -- 777 1,761 1,795

Wtood manufacturing 4/3 ... 15 125/57 ... /33 * . 1,079 1,442 799

Paper and paper products -- ... h7 33/27 *../h7 -- 3,278 5,997 3,187

Printing and publishing 14/6 .../72 140Al2 ... /88 147 3,716 3,595 2,172

Leather and leather products 4/3 ... /45 148/86 ... /70 227 1,829 2,573 2,13B

Rubber products 3/1 ... /2 5/3 ... * 39 45

Chemicals and chemical products 14/12 ... /67 572/313 ... /221 1,026 9,275 18,087 13,687

Non-metallic mineral products 7/6 ... 16 144/40 ... /36 1,135 3,182 3,990 2,759

Basic metal industries -- ... /6 24/16 .../21 -- 393 1,827 2,069

Metal products exc. machinery 17/8 ... /80 263/194 ... A1o 335 4,960 6,006 3,726

Machinery exc.- electrical machinery 17/15 .../24 78/62 *../57 767 1,300 1,733 2,458

Electrical machinery & supplies -- .../5 32/24 ... h8 -- 362 1,063 1,396

Transport equipment 21/5 ... /19 57/50 ... /25 1,041 2,547 3,934 2,820 4 44 Other industries 68/45 ... /79 240/101 ... /57 5,056 10,158 2,840 2,

Total 399/220 ... /707 3,362/2,072 3,134/1,491 31,336 138,863 187,604 199,704 a Factories with 20 or more workers. b Factories with 10 or more workers. Source: Statistical Digest of Bangladesh 1970-71; Census of Manufacturing Industries 1953, and 1969/70. ,a,lue ,Ad,ded 1> >3.Ind.u,6titt.GrobupsMjo

._.__In miitit 6n.. .. . ,,rupees, , _,,,,... ,,,,,,perqentage ,Shares,in

i953 1959/60 1965/66 1969/7o 1953 1959/60 1965/66 1969 /70

Fo6d manufacturing 12M 5a 36i4 302.1 237.5. 12.2 9.3 23.8 16.7 Tobacco industriesdb6a 17,5 125.2 225.1 4.5 4.5 9.9 15.8 nu'acture of t6tki-e 24i7 195-5 034.6 607.7 24.2 49.8 34.2 - 42.6

'iWeing appare'1 and f6'otwear 71 [email protected] o.6 o.6 0.8

Wood ma-nidattiiig 0,2 2,6 4.6 2.9 0.2 0.7 o.4 .0.2 Pape'r and paper.products -14i ' 72.8 25.9 -- 3.6 5.7 1.8 -i"nting &hd puibi ihifig 0.3 10,0 9.8 8.6 0.3 2,5 0.8 o.6

Lheathef and riubb'e'p'dUc&t 0o5 14-7 7.5 14.4 0.5 1.2 o.6 1.0 thtiaf' nid ch'e'mica1 p6duii6t6 L.o &7Tb 1-43a9 131.2 3.9 9.4 11.3 9.2

Nen-Meta11ic mii~fneipThd'icts .3;7 6v2 1M.3 i6..9 3.6 1.6 1b 1.2

Basiic m'etal industries - t2.8 182 39.0 -l 0.7 1.4 2.7

Metal .prducts e*c. achiehr 0,7 i5-5 2200 14.6 0.7 4.0. 1.7 1.0 Machinery exc. el'ectricai m'achine'ry 2. 30i 7o0 14-.4 2.4 0.8 o.6 1.0 Electrical machinery & supplies - O'8 116 18.0 - 0.*2 0.9 1.3

TPansport 'equipment 1i5 6-.9 114.4 1l91 1.5 1.8 1.1 1.3 Other industries 14 6.9b 36i6 j0.7 10546.0 9*3 5.6 2.8

Total 102.1 392i2 1,268i9 1,427.0- 100.0 100.0 100.0 100.0 a) EstMate3 obased on average productioh ~peer faitoiy -fijuresTfor Pbki;tan. b) !s'Mstly Jute pressing.

31-ei-se as in tahbi'Ila TAhBLE 3 Employment and Value of Industrial Production 1969/70

No. of est blishments No. of employees (in 000) gross value of Value adied covered - |Totai In-production production

covexea -* In ~~~~~~~~~i T millioj Food, beverages & tobacco 270 22.9 21.1 1,062 h63 Textile industries 42 128.8 117.8 1,218 609 Wlood products and furnitur h. 0.8 o.6 8 3 Paper and board 17 3.2 2.3 70 26 Printing and publishing 88 2.2 1.6 15 9 Leather and rubber products 95 3 5 2.8 134 25 Chemical industries 221 13.7 10.9 260 131 Petroleum products 3 0.2 0.2 21 8 Non-metalic mineral products 34 2.6 2.0 29 9 Iron and steel industry 21 2.1 1.6 160 39 Metal products exc. machinery 110 3.7 3.0 h6 15 Machinery .75 3.9 3.1 -67 32 Transport equipment 25 2.8 2.h 36 19 Miscellaneous industries 57 2.h 1.4 3172

Total 1.491 199.7 170.8 3,299 . 1,1e7

/a 1,h91 out of 3 0h0 registered factories with more than 10 workers have been covered by this Census.

Note: Details may not add up to totals due to rounding. Source: Census of Manufacturing Industries in Bangladesh, 1969-70. Summary Statistics. TABLE, 4 Production of Selected Indastries. 1962/63-1970/71

Industries Unit 1962/63 63/64 64/65 65/66 66/67 67/68 68/69 69/70 70/71

Textiles Jute Manufactures 000 tons 298 331 289 409 404 513 518 593 470 Cotton Yarm Mn. lbs. 54 64 64 73 74 77 96 105 74a Cotton Cloth Mn. yds. 55 48 49 40 55 52 61 59 48a Art Silk & Rayon Cloth Mn. sq. yds. 0.2 0.2 0.1 0.4 1 5 6 5 3a

Food, Beverages & Tobacco

Sugar 000 tons 75 88 77 84 113 110 57 88 7 2 a Vegetable Products 000 tons 4 5 5 5 5 6 6 7 3a sLlt 000 tons ...... 149 242 269 260 140a Tea Mn. lbs. 54 61 62 62 67 63 64 68 52a Soft Beverages Mn. bottles ...... 20 19 21 24 24 6b Cigarettes Billion 4 5 6 10 13 15 17 18 lla

Chemical Industries

Urea Fertilizer 000 tons 72 106 72 91 93 112 87 94 51 Caustic Soda 000 tons 1.3 1.6 1.5 3.3 3.2 3.7 3.7 3.3 2.7 Sulphuric Acid 000 tons 1.5 2.0 2.0 2.4 2.4 5.5 5.5 6.6 4.6a Chlorine Gas 000 tons 1.2 1.4 1.3 2.9 2.7 3.2 3.3 3.0 2.4 Paints & Varnishes 000 gallons 70 96 93 75 71 72 72 76 58a Paper And Newsprint Paper 000 tons 32 32 41i 42 34 39 44 42 3 0 a Newsprint 000 tons 31 30 38 34 37 39 39 36 26a Matches Mn. gr. boxes 10 12 11 12 10 11 13 13 9 a Ty-res and Tubes 000 No. 29 38 65 106 166 231 328 336 239a Cement 000 tons 94 65 56 43 75 82 63 64 59

Mild Steel Products 000 tons ...... 55 63 162 210 174 47c

Electric Fans 000 No...... 22 18 21 2 21 5c

Bicycles 000 No...... 444 43 38 26 18

a July 1970 - March 1971. b July 1970 - January 1971. c July 1970 - December 197.0.

Source: -;atistical Digest of Bangladesh 1970-71; Monthly Statistical Bulletin of Bangladesh, March 1972. TAELE 5

Exports of Industrial Goods, 1961/62 - 1970/71 a/ (million Rupees)

1961/62 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71

Tea 137.5 254.5 292.0 228.9 257.1 243.3 274.4 Jute manufactures 400.9 702.8 762.1 760.2 814.2 927.5 748.6 Leather 23.3 48.0 76.5 70.7 104.8 88.1 64.4 Paper and paste board 63.3 78.9 77.5 91.3 109.6 109.5 75.6 Matches 30.9 -39.6 29.5 31.7 42.7 44.8 40.3 Other articles b 3.3 14.5 17.8 16.7 33.1 36.4 27.0 Total industrial exports 659.2 1,138.3 1,255.4 1,199.5 1,361.5 1,,449.6 1,230.3 Total exports 1,708.3 2,225.9 2,405.9 2,269.1 2,411.2 2,593.5 2,054.9 Industrial exports/ Total exports () 39 51 52 53 56 56 60

a/ Comprises exports to West Pakistan and other exports.

g/ Cotton textile goods, drugs and medicines, and timber.

Source: Statistical Digest of Bangladesh, 1970-71; Monthly Statistical Bulletin of Bangladesh, March 1972.

PART III

FOODGRAINS

Page

SUMMARY AND CONCLUSIONS i

I. BACKGROUND 1

II. AGRICULTURAL DEVELOPMENT PROGRAMS 3

III. AFTERMATH OF CYCLONE AND WAR 9

IV. AGRICULTURAL REHABILITATION AND DEVELOPMENT PROGRAM FOR 1972-73 11

A. Targets and Strategy 11 B. Requirement of Agricultural- Inputs 13

V. FOODGRAIN POSITION AND PROSPECTS 17

A. Present Situation 17 B. Foodgrain Requirement and Import Program for 1972-73 18

STATISTICAL APPENDIX

This report was prepared by U Hpu (Agriculturalist) who was in the field from mid-July to mid-August, 1972.

SUMMARY AND CONCLUSIONS

(i) Agriculture constitutes the most important sector in the econonm of Bangladesh, employing 80 percent of the population and generating about 60 percent of the Gross Domestic Product. In this near-subsistence econory, rice is the main crop and improved growing techniques, mainly dependent on high yielding rice varieties, have allowed production to increase during the last half of the 1960's, though at a pace too slow to keep up with population increase. Most other areas of agriculture were seriously neg- lected. Production of all crops during the last two years has suffered seriously because of natural disasters and war.

(ii) The most important short-run priority of the Government is the rehabilitation and development of agriculture to allow sufficient foodgrain supplies. This short-run strategy for increasing output is again based on the utilization of high yielding varieties of rice seeds. While sufficient quantities of seeds will probably be available this year to allow a return to the pre-war levels of production, the effort to increase rates of growth of production may well be hindered by shortfalls in complementary inputs.

{iii) The most serious shortfall is in fertilizer availability. The aman (autumn) rice crop will have insufficient quantities of fertilizer that will probably only enable production to reach previous levels, despite the increased use of IR-20 high yielding seed. Pesticides will also be in short supply. The planned increase in the boro (winter) rice crop will be dependent, in large part, on the successful fielding of a large number of low-lift pumps and tubewells. Several important steps are being taken to provide these.

(iv) Despite the projected recovery over the year in rice production, large imports of foodgrains are required this year due to the seasonal nature of the crop, part drawdom of stocks, and other considerations. While a number of factors make it difficult to estimate foodgrain requirements with any great degree of precision, it is certain that a record quantity of imported foodgrains will be required. At the time of the mission's departure in mid-August, the Government's program of apprb-idmately 2.8 million tons of imports seemed a reasonable assessment of requirements. However, the failure of the monsoon in late August and September may well add further to import requirements.

I. BACKGROUND

1. Agriculture dominates the economny of Bangladesh. It employs 80 percent of the population (72 million in 1969-70) and generates 60 percent of the Gross Domestic Product. The major industries of the country are also agriculture-based and their growth is dependent on the performance of agriculture. However, the production of foodgrains, mainly rice, which accounts for 82 percent of the production of all major crops in the country (see Tables 1 and 2) is insufficient to feed the population, which is increasing at an annual rate of about 3 percent. Accordingly, Bangladesh has become increasingly dependent on foodgrain imports which increased from 170,000 tons in 1955-56 to 1.55 million tons in 1969-70 (Table 11).

2. Bangladesh is a deltaic plain of 33 million acres of which approximately-22.5 million acres are cultivated, and most of the soils are fertile. It has a tropical monsoon climate with high rainfall and humidity, with an annual rainfall in excess of 50 inches. About 80 percent of the rainfall is concentrated in the monsoon months of June to October with the remainder occuring during the period March to May as northwesterly thunderstorms. The spread of rainfall over 8 months enables the farmers to practice double cropping in areas with adequate rainfall and which are not liable to deep flooding during the monsoon season or inundated with saline water. However, agricultural development in Bangladesh is greatly handicapped by a number of related factors:

(a) There are only very limited possibilities for further expanding the cultivable area which has already increased from 21.6 to 22.5 million acreas in the 1961-1970 decade (see Table 3 ) and, therefore, agricultural production can be increased only by more intensive use of the cultivable area and by more efficient production each time it is used.

(b) As much as a third of the country is normally flooded annually and these normal floods limit increases in crop-- ping intensity. This includes (i) about 1.5 million acres located in very low lying areas called 'hoar' which is deeply flooded (over 15 feet) from June to October and are thus possible for cultivation only after the flood subsides in November; and (ii) about 6 million acres annually flooded from 3 to 15 feet. This area is suitable for cultivation of only one crop of floating rice (broadcast Aman) which occupies the land for as long as nine months from April to December.

(c) During the dry season from November to March about 80 percent of the cultivated area has to be left fallow due to lack of soil moisture, and effective intensive cultivation on any scale during this season will require irrigation. -2- l b) .np,iJfloods and droughts and cyclonic storms occuring fme #Te to tim,e hamper agricultural production.

(?)T- a,population density of about 2,100 per square mil pf cultivated land, farms are very small (about 2.5-3 a,cp,sp pon th,e average) and agriculture is characterized l,aely by s,ubsistence farming. Farms are also greatly fzar,mented, Thus average rural fam-ily income is low, abouit US$ i80 per year, most of this representing the uvaep,f ri,pe set aside for family cons,mption. -3-

II. AGRICULTURAL DEVELOPMENT PROGRAMS

3. For full development of agriculture over the whole countr-y extensive water control (drainage flood control and irrigation) would be essential, but it would take considerable time and resources to plan and execute major water control projects. Therefore, while priority was given to com- pleting and bringing into full production all water projects under implementation, and initiating some new projects within the limitations of existing conditions and available resources, for the short-term strategy major emphasis was placed on increasing agricultural production through increased utilization of high yielding varieties of seed, fertilizer, plant protection and low-lift pumps and tubewell irrigation. Emphasis has also been placed on improving the supporting services including planning, research and extension, and credit, and on development of the necessary rural infrastructure.

(a) Agricultural Inputs

(i) Improved Seed - Rice

4. In Bangladesh there are three main crops of rice, namely, Aus, Aman and Boro. Aus is an early rains crop with a short life period usually broadcast in April-May and harvested in July-August. Aman is the main crop which has two groups, namely, broadcast Aman or floating rice and transplanted Aman. The broadcast Aman which has a life period of about 250-270 days is sown with the early rains in April. It may grow up to 15 feet according to the depth of the flood during the monsoon and is harvested in November-December. The transplanted Aman is sown in nurseries in June- July, transplanted in August-September and harvested in November-December. It has an average life period of 150-180 days. The Boro crop which is usually sown in the 'hoar' areas is sown in December-January and harvested in April-May. The proportionate importance of these crops is as shown below:

Percentage Percentage of of Acreage Production

1964-65 1969-70 1964-65 1969-70 1. Aus 29 33 24 25 2. Broadcast Aman 24 20 20 18 3. Transplanted Aman 42 38 50 41 4. Boro 5 9 6 16

(See Table 4 for actual acreage and production of Aus, Aman and Boro)

5. A large number of IRRI varieties of rice were tried for the first time in 1965-66. Of these, one dwarf variety called IRRI-8 was found to be promising. As this variety was non-sensitive to photoperiod it was at first thought that it might be suitable for growing in all the rice seasons on -4-

land which is not flooded for more than one foot. However, it was later found that this variety would do well only as Boro and early Aus under controlled irrigation, but not as Aman crop under Bangladesh conditions. Another shortcoming of this variety is its long life period (160-170 days in the Boro season and 140-150 days in the Aus season) and this could not fit in with the cropping pattern of a large number of farmers. Therefore, the area under this crop could reach only 600,000 acres with a production of 900,000 tons of rice mainly as Boro crop by 1969-70. Although this high yielding variety has limited scope in Bangladesh, it has nevertheless boosted up the production of Boro rice from 0.6 million tons in 1964-65 to 1.0 million tons by 1969-70, thereby raising the contribution of Boro to total rice production from 6 percent in 1964-65 to 16 percent by 1969-70.

6. For the Aus and Aman crops, a number of high yielding varieties have been tried, but none of-them could be introduced on a significant scale until 1969-70. Only by 1969-70 was it found that one variety (IR 532-E-576) has considerable prospects for cultivation as a transplanted Aman crop. An accelerated rice production program was, therefore, initiated in July 1970 to release this variety as IR-20 or IRISHAIL on some 200,000 acres of T. Aman area involving the import of 1,800 tons of seed from the Philippines. The actual area planted was 167,000 acres with an average yield of 28.5 maunds of rice 1/. This compares with the average yield of 13.4 maunds of rice from the local variety. In 1971-72 some 570,000 acres were sown to IR-20.

7. During the last three years, it was also found that two other varieties, namely, IR 532-1-176 (which was later released as Chandina) and IR 272-4-1-2 would be suit-able for both the Boro and Aus seasons. They would be better than IRRI-8 as they have a shorter life period (150 days for Boro and 110-120 days for Aus) and are taller in height and better in eating quality than IRRI-8. Moreover, IR 272-4-1-2 was found to grow well as broadcast Aus on higher land. Therefore, these varieties have also been released for multiplication and distribution.

(ii) Improved Seed - Wheat

8. During the second half of the 1960-70 decade a high yielding variety of Mexican dwarf wheat (Mexipak) was introduced to Bangladesh. The area under this variety increased from practically nothing in 1966-67 to 3,795 acres in 1967-68 and then to 22,500 acres in 1969-70. The average yield of this variety was double that of the local variety - 1,500 lbs. per acre as against 735 lbs. per acre for the whole country, while in the irrigated areas with improved cultural practices and correct fertilizer application the acre yield was found to go up to 3,300 lbs. or about 40 maunds. (iii) Fertilizer

9. There has been a rapid development in the fertilizer input program since 1965. Following the development of low-lift pump irrigation and the 1/ Source: Bureau of Agricultural Statistics - 5 - introduction of package programs for increased production of rice. juxte and sugarcane, the consumption of f-ertilizer has increased from 102,000 tons in 1964-65 to 291,000 tons in 1969-70. In terms of nutrient the increase was from 45,000 tons in 1964-65 to 133,000 tons in 1969-70, with an average annual expansion rate of 23.5 percent (see Table 5). Accordingly use of fertilizer per cropped acre has increased from an average 3.6 lbs. nutrient in 1964-65 to 9.5 lbs. in 1969-70. There has also been an encouraging improvement in the balanced use ox fertilizers as N:P:K: ratio in 1969-70 was 100:22:10 as against 100:28:7 in 1964-65 and 100:15:5 in 1960-61.

10. However, the present fertilizer use is still far short of the recommended fertilizer dosage and N:P:K ratio. The farmers tend to use only a small portion of the recommended dosages on local varieties of rice, but they have now begun to realize the importance of applying higher dosages of fertilizer on high yielding varieties of rice and wheat. Therefore, it is very likely there will be a rapid growth in fertilizer distribution with the increase in area under high yielding varieties of rice and wheat, but within the limitations of available resources to the farmers. It appears that improvement in demonstration work and extension activities and provision of more credit facilities are essential to make farmers use more balanced and adequate dosages of fertilizers.

(iv) Plant Protection

11. As the hot and humid climate of Bangladesh is very favorable for rapid development of.,insect pests and crop diseases, plant protection measures are essential to avert losses caused by crop pests and diseases. With the introduction of high yielding varieties of crops, the returns from effective plant protection measures increase significantly.

12. The spray acreage with ground operation increased from 4.3 million in 1964-65 to 8.5 million in 1969-70, and that with aerial operation from 0.5 million to 1.5 million during the same period. Seed treatment also increased from 3.2 million maunds in 1964-65 to 4.7 million maunds in 1969-70 (see Table 6).. With the introduction of high yielding varieties of rice, there has also been a growing need for use of granular pesticides for control of stem borer in the Boro season. This type of pesticide is easy to apply and its use is likely to expand rapidly with the increase in area of HYV rice.

(b) Irrigation and Flood Control

(i) Projects of the Bangladesh Water Development Board (BWDS)

13. The short-term strategy for water development gave priority to completion of, and bringig into full production, the projects under implementation Snd-to minor flood control and drainage schemes, low-lift pumps and tubewells. Of the projects under implementation before 1969-70, the Coastal Embankment project aims at protecting a total of 2 million acres from salt water inundation through construction of 2,262 miles of embankment and 745 sluices in 87 polders to be completed by the end of 1970-71. -6-

Up to the end of 1969-70, 1,911 miles of embankment and 653 sluices have been completed in 59 polders which would protect 1.63 million acres of land. However, an evaluation study completed in December 1969 indicates that to derive full benefit from this project, further development work is necessary involving water management studies and formulation and implementation of water management development programs. The Brahmaputra Embankment Project, to give protection to about 580,000 acres3 has been completed, but the embankment is now breached in nine or ten places. 14. Of the irrigation projects, four projects, namely, the Ganges- Kobadak-Kushtia Unit Phase 1, Northern Tubewells, Northern Low-Lift Pumps and Dacca-Demra Projects, with a total commanded area of 273,000 acres, had been completed before 1969-70. However, due to lack of field channels to carry water from the outlets of secondary and tertiary canals to the individual plots of farmers, the use of irrigation water by farmers was rather slow at the beginning. With the construction of the necessary field channels along with intensive extension activities, the net land area in these projects has increased from 119,000 acres in 1967-68 to 170,000 in 1969-70. There has also been appreciable increase in cropping intensity in all the projects. However, the net land irrigated area is still short of the commanded area, being only 62 percent as shown below:

IRRIGATION AREA IN BWDB'S PROJECTS

(Thousand Acres)

Commanded Irrigated Net Land Area Area 1968-69 1969-70 1970-71

1. Ganges-Kobadak, Kushtia Unit - Phase I 120 58 85 95 2. Northern Tubewells 80 58 62 55 3. Northern Low Lift Pumps 58 11 11 11 4. Dacca-Demra 15 8 10 9 Total 273 135 168 170

(ii) BADC's-Projects

15. Increasing emphasis has been placed on mobile low-lift pump irrigation to enable rapid acceleration in the cultivation of high yielding varieties of rice in the Boro season and crop diversification. The farm holdings in Bangladesh are very small and also fragmented, and the average capacity of a 2-cusec pump is about 50-60 acres of Boro crop. Therefore, about 50 farmers have to be organized into a pump grouo for operation of a 2-cusec pump. Previously, when only a small number of pumps were in operation, it was possible for ADC to take overall responsibility, both for organization of farmers into pump groups and for distribution, operation -7-

and. maintenance of low-lift pumps. However, with the program for rapid increase in the number of pumps for fielding, it would be too much for BADC to continue taking the overall responsibility. Again, with the prelvious system of suspplying irrigation water on the basis of a flat rate per acre, it was immaterial to pump-users, whether a pump irrigated only a few acres or up to its maximum capacity. Therefore, to enable operation of a larger number of pumps and to obtain maximum efficiency per pump, a new program called the Thana Irrigation Program (T.I.P.) was introduced in 1967-68 after some trials in the previous year.

16. Under the new system BADC is responsible for distribution on hire, operation and maintenance of the low-lift pumps, while the organization of pump group, extension and provision of Thana workshops for maintenance and repairs, and financial support for staff and payment of subsidies for the hire of pumps, is made through the Thana Irrigation Program (T.I.P.). The T.I.P. is under the overall control of the Ministry of Local Governmiienft Rural Development and Cooperatives, and work at the Thana level is managed by the Thana Irrigation Committee. The Thana Irrigation Committee is presided over by a Thana Development Officer and includes representatives of the BADC, Agricultural Extension Directorate and Cooperative Directorate. On the whole, there has been a very rapid increase in the use of low-lift pumps for irrigation. The number of pumps in operation has increased from 2,238 irrigating 131,000 acres in 1964-65, to 17,800 pumps irrigating 639,000 acres in 1969-70 (see Table 7 ). This is reflected in the rapid increase in the production of Boro rice.

17. BADC is also implementing programs for installation of deep tubewells to enable rapid acceleration in foodgrain production. About 1,000 wells have been installed up to 1970-71. The total area irrigated by BADC's low-lift pumps and tubewells increased from 429,000 acres in 1968-69 to 848,000 acres in 1970-71 as shown below: AREA IRRIGATED BY BADC's PROJECTS

(Thousand Acres)

1968-69 1969-70 1970-71

1. Low-Lift Pumps 425 639 820

2. Tubewells 4 22 28

Total 429 661 848

(See also Tables 7 and 8.) -8-

18,. Following the rapid development of agricultural inputs and irrigation programs, particularly of low-lift pumps,the cropping intensity has increased from 127 percent during the 1960-61/1964-65 period to 146 percen-t in 1969-70 with a general increase in agricultural production. 19. Rice production has increased from 10.34 million tons in 1964-65 to 11,.81 million tons in 1969-70 at an average annual expansion rate of 2.7 percent. This compares with an expansion rate of only 1.4 percent during the 1950-60 decade. The increase is mainly in respect of the Boro crop (see Table 4 ) and this was achieved mainly through increased cultivation of HYV rice with low-lift pump irrigation. There was a small increase in Aus, but thr,ough increase in acreage and not through increase in yield. Aman could not make any contribution to growth at all up to 1969-70 as HYV rice for the T. Aman crop was evolved only towards the end of 1969-70. Now that HYV rice has been evolved for some areas of the T. Aman crop which are not liable to be flooded for more than one foot and for some Aus, there are now good prospects for making a breakthrough in rice production in the 1970-80 decade,

20. Wheat. The introduction of HYV wheat together with some:increase in the area under local wheat boosted the wheat oroduction in the country from 34,000 tons in 1964-65 to 103,000 tons in 1969-70 and )AO,OOO 1tons in 1970-71. Alt.hough the progress is quite considerable, the present.Droduction ponstitutes less than 1 Percent of the total foodgrains production in the countr.y. -9-

III. AFTERMATH OF CYCLONE AND WAR

21. However, the events of the past two years have dealt very serious blows to the agricultural economy. The abnormal floods of June-July-August 1970 affected the production of the 1970-71 croDs of Aus, Aman and Jute. Then came the unnrecedented cyclone of November 1971 which destroyed boats, houses, coastal embankments and power lines along with larger number of human lives and cattle badly affeGted the standing !man crop of 1970-71 in the coastal areas. Accordingly, the production of rice declined from 11.82 million tons in 1969-70 to 10.97 million tons in 1970-71.

22. The ten months of confusion and disruption between March 1971 and January 1972 imposed an almost total hiatus on the economy of Bangladesh. A UTNImission of March-April 197i2, reported on the agricultural sector as follows:

"Agriculture: The war had a deep impac-t on the rural life of Bangladesh where 80 percent of the population are found. Many deaths occurred, many people became refugees and many more were deprived of their productive assets. Villages were burned and cattle were slaughtered for food. The agricultural economy was affected in four principal ways. First, there was an immediate and substantial decline in production of rice, jute and tea. Second, stocks of food, seed and inputs were run down. Thi rd, production capacity including draft animal and implements, fishing boats and nets, irrigation pumps and handles were destroyed or damaged par ticularly in border areas. Fourth, transport facilities and workshops and buildings of the Agricultural Administrative Services were lost. Finally, a number of important land and water development projects were interrupted.,,

23. The "3ectoral iHeport on Agriculture and Rural Plehabilitation of the above Mission goes on to detail the production losses of rice, jute and tea and the damage to means of oroduction. Due to the disturbances and the exodus of the rural nopulation to India, large areas of Aus and Pman rice crops were left fallow in 1971. As a result the production of txus and Aman crops of rice in 1971 was considerably lower than in 1970 which was itself a bad year because of abnormal floods and the November 1970 cyclone. For these crops, production in 1971-72 was only 7.9 million tons, as compared to 9.9 million tons in 1969-70 and 8.8 million tons in 1970-71.

1/ Ambassador Erna Sailer's report on the "Mission of High-level United Nations' Consultants to Bangladesh", March-April, 1972. - 10 -

24.. There was ialso 'a subs'tantial decline in the 1971-72 Boro output due to lack of fertilizer and fuel for pumps, as envisaged by the above .Mission, .4-though Jit did a little better than anticipated, showing a decrease of (only 20 percent instead of 25 percent as anticipated.. On the whole the 1971-72 Ycrop of rice was only 9.8 million tons, 17 percent lower than the 1969-770 level (11.8 million tons).

25. Damage to mebans of production in the agricultural sector includes losses!of large numbers of animal draft power, animal drawn implementsj fishing boats and fishing equipment, vehicles, machinery., workshops and. .spare oparts and.about 1,000 low-lift pumps. According to Government esti-P mates, more than half a million pairs of bullocks were slaughtered or have disappeared, together with 4,000 improved dairy cows and. a large number of indigenous dairy cattle. IV. AGRICULTURAL PEHABILITATION AND DEVELOPMENT PROGRAM

26. It is befitting that the Government's Annual Plan for 1972-73 w'hlich is the First Annual Plan for independent Bangladesh gave very high priority to agricultural rehabilitation and development to benefit the largest number of people in the country. Allocations for Agriculture, lural I]nstitutions and lWater and Flood Control together constitute 50 percent of the total Ievelopment Plan expenditure of T 3,145 million, and 14 ercent of the total Feconstruaction expenditure of T 1,167 million.

27. As the country is currently faced with a serious food deficit .;riich has grown during the last 2 decades, overriding priority is given to the program for increasing Droduction of foodgrains in 1972-73, including rice and wheat aiming at attaining near self-sufficiency in foodgrain production by 1974-75.

A. Targets and Strategy 28. The strategy outlined in the Annual Plan is more or less in line with the recommendations of the Sailer Mission, the major emphasis being on increased production of IR-20 rice in the 1972 T. Aman season and increased Droduction of Boro and Transplanted Aus in early 1973. The Annual Plan assumes an extension of the area under HYV rice (IR-20) from 0.6 million acres in 1971 to 2.2 million acres in the 1972 Aman season; an increase in area under H{YV Boro rice from 0.6 million acres in 1972 to 1.1 million acres in 1973 and an increase in area under HYV Aus from 100,000 in 1972' to 200,000 acres in 1973. 29. The program to cultivate 2.2 million acres of IR-20 rice in the current Aman season requires 550,000 maunds of seed. This requirement has been met by import from the PhiliDpines and India, by local procurement and distribution by BADC, and by farmer-to-farmer sales.

30. However, there is likely to be a serious shortfall in fertilizer availability, particularly in respect of urea, for the current Aman crop. The reouirement of fertilizer for the current Aman crop is estimated at 300,000 tons. (220,000 tons for 2.2 million acres of IR-20 and 80,000 tons for 7 maillion acres of local T. Aman). Against this requirement. BADC has a total stock of 100,000 tons (69,000 tons in godowns and 31,000 tons at ports and in.transit) and can exoect to receive only up to 40,000 tons from Fenchunganj factory and from imports before October 1972. Again,as the Aus crop was late due to drought, this year, the sowing of the current T. Aman crot was also late. Thus, it is likely that the presenit Aman crop will Produce much less than the target of 7.6 million tons as visualized in the 'nnual Plan.

31. Regarding the Boro crop, BADC intends to field 35,000 low-lift pumos. Therefore it seems reasonable to expect an acreage of 1.1 million acres of HYV Boro. But in view of the rapid expansion, the average yield may be a bit lower than the target as visualized in the Annual Plan. On -12 - the whole Bangladesh will have don /well if the foodgrain production can -16ddh 11,9 millioh tons in 1972-73- as follows. The comparative figures fob the past 3 years are shown below:

1969-70 1970-71 1971-72 1972-73 1972-73 (Mission 2/ (ADA' Estinate) Targets)

PRODJUCTION

.'.c' (m illion tons)

1.; runTan Broadcast 2.2 1.6) ) 1.6 1.9 2. Aman - Local ) 5-1) Traf8DIlant 4.8 4-1) 3.6 3.5 3; I.Afth ITR20 (HYV) - 0.2 0.6 1'.6 2.2 4. Boro.- Local 1.3 1.0 0.8 1.0 1.0 5; Boro6 - HYV 0.6 1.2 1.0 1.5 1.6 6. Aus Local,l/ 2.8 3-2) 2.2 2.3 2.5 7. Aus - Hvl 0.1 0.1) 0.2 0.2

Total Rite 11.8 10.4 9.7 11.8 12.9

!,heat (million tons) 0.1 0.1 0.1 0.1 0.1

TOTAL FOODGRAIN 11.9 10.5 9.8 11.9 13.0

Fi ce (million aeres)

1. Aman - Broadcast 5.1 4-5) 4.5 2. Aman - Local ) 13.4 7.0 TransDlant 9.7 9.4) 3. Ainan - IIT-20 (HYV) - 0.2 0.6 2.2 L. Boro - Local 1.6 1.6 1.6 1.5 5. Boro - HV 0.6 0.8 0.8 1.1 1 6. -.us - Local, ' 7.8 0.1) 7.5 7. Aus - .YVl 0.1 0.1) 0.2

Total Rice 24.9 23.1 22.2 24.0

.1heat (million acres) 0.3 0.3 0.3 0.1

TOTAL FOODGRAIN 25.2 23.4 22.5 24.1

1/ The acreage and production figures for Aus are shown against the year of cultivation and not against the year in which it is harvested as shown in Table 4.

2/ Due to serious drought conditions in August and September after the mission',s departure, the Aman crop may be much lower than the above.estimate. - 13 -

39. iequirement of Agricultural Im2orts

32. inoroved beed. The proposed 2.2 million acres of I-)-20 rice for the current T. Aman season require 50,000 maunds of seed. 188,000 rmazunds have been received from the Philippines through charitable organizations, 80,000 maunds ran India through Government Aid and 113,000 tons through procurement by BADC locally. It is understood that distribution has been completed and it is expected that famrers' own and farmer-to-farmer exchange seed would amount to about 160,000 maunds.

33. For the coming Boro and Aus crops, the Annual Plan visualizes an expansion of the area under HYV rice, mainly IR-8, by 300,000 acres and 100,000 acres,respectively. Arrangements have been made for t-rocurement and distribution of 32,000 maunds of seed and it is expected the balance will be met through farmer-to-farmer distribution as TT?-8 is now well known in Balngladesh. Arrangements have also been made for procurement and dls- tribution of 10,000 maunds of fYV Mexipak wheat seed for the coming wheat cror.

34. Fertilizer. The oosition in respect of requirement and availability of fertilizer for 1972-73 is shown in Table lO,page 2, and is summarized below: - 14 -

(Thousand Tons) Urea T.S.P. M.P. Total

A- R} uirement

l, For distribution in 1972-73 275 110 140 1425 2; Balance stock on July 1, 1973 39 55 17 'i.11 To-tal 314 165 57 536 B. AVailability

1; Opening balance stock on July, 1972 36 214 27 87 2. Expected local production 200 36 - 236 3. Imports - Fir~m

Cormmitment 124 73 - 197

Total 3601/ 133 27 520

Additionial Import Requirement Nil 32 30 62 j/ Includes contingency of 46,000 tons in case of shortfall in Ghorasal fadctory production.

35. As ihdicatod above the estimated requirement of fertilizer for distribution in 1972-73 is 1425,000 tons. This is 145)000 tons more than the estimate of the Sailer Mission. Most of the difference is due to the fact that the IR-20 program under the Annual Plan is bigger than that visullize.j by the Sailer Mission (2.2 million acres instead of 165 million acres).

36. Including the nOcessary carry-ove-r stock on July 1, 1973 the total requireiment for 1972-73 has been estimat'ed at 536,000 tons including 314,000 tons urea, 165,000 tons T.S.P. and'57,000 tons M.P. The availability of urea including a contingency of 46,000 tons in case of shortfall in production from the Ghorasal factory amounts to 360,000 tons and this is numerically adequate to meet the requirement of urea for 1972-73. 'iowever, judging from the present stock position and arrival schedule, the available supply of urea during the current Aman's season will be much short of the requirement. In regard to T.S.P. and Muriate of Potash, the availability is only 133,000 and 27,000 tons, respectively,against the estimated requirement of 165,000 tons and 57,000 tonsjrespectively. This leaves an uncomnitted import requirement o6'32,000 tons T.S.P. and 30,000 tons Muriate of Potash with a total estimated value of $5.5 million. - 15 -

37. The two T.S.P. fertilizer factories at Chittagong with a total canacity of 150,000 tons T.S.P. a year need Rock Phosphate and the import requirement of R.ock Phosphate during 1972-73 is estimated at 187,000 tons valued at $5.5 million. The production of T.S.P. from the two factories is projected at 36,000 tons in 1972-73 and 96,000 tons in 1973-74.

38. The sale price of urea fertilizer has now been doubled while that of Tri-le Super Phosphate (T.S.P.) and Muriate of Potash (M.P.) has been inlcreased by 50 percent. There are two reasons for the upward revision of the prices: firstly, the import price of fertilizers has been increased after the devaluation of the Bangladesh currency; and secondly, there has been a tendency to smuggle fertilizers across the border to India due to the large difference between the existing prices in the two c cuntries. However, since the farmers are now well aware of the benefits of using fertilizer, particularly on HYV varieties, such a orice rise should not adversely affect the food self-sufficiency program.

39. Plant Protection. The requirement of pesticides for the agricultural development program for 197e-73 is estimated at 12,000 tons including 6,000 tons conventional and 6,000 tons granular pesticides. Against this, about 3,500 tons of conventional and 5,000 tons of granular pesticides have been contracted for leaving an uncommitted balance of 2,500 tons conventional and 1,000 tons granular pesticides (see Table 10, page L4 ). The Planning Commission hopes to meet these requirement from bilateral sources.

140. F'or efficient application of liquid pesticides an adequate number of o:aerable hand and power sprayers are essential. The total recuirement i| estimated at 350,000 in terms of hsand snrayers. Against this requirement, the n umber in stock and firm comriitment of import total 250,000, leaving an uncommitted balance of 100,000 hand sprayers with an estimated value of 41.25 million.

41. Low Lift PuMps. In view of the verv rapid increase in the oroduc- ticn of Boro rice through increased low-lift pump irrigation and increased agriculture inputs (see para. 19 ), the Annual Plan aims to increase the fielding of low-lift pumns fLrom 214,254 with l44,600 cusecs irrigating 8614,2147 acres in 1971-72 to 35,000 with 63,350 cusecs to irrigate 1.27 million acres in 1972-73 (see Table 9 ). Including a reserve stock of 3,500 the total reouirement of low-lift pumps for this program will be 38,500. Against this requirement BADC has in stock about 28,000 low-lift Pumps in good condition and 4,500 engines, and has contracted for 1,250 pumps and trolleys. 'Ihis leaves an import requiremen t of 6,000 low-lift oumps mostly of 2 cusec capacity and 3,250 pumps and trolleys together with spare parts and tools worth about $11.66 million (see Table 10, pp. 1-3). As these must be received and distributed before November 1972, BADC has already invited tenders and financing (which could be served through the program credit) is not yet sought.

42. Trucks including pick-ups, tank lorries, cargo launches, tugs, oil tankers, fuel dump barges and storage tanks are also necessary for transport of low-lift pumps, fuel, fertilizer and other inputs. The value of these is estimated at $1.87 million (see Table 10, page 1). - 16 -

43. Deep.Tubewells. For areas inaccessible to low-lift pump irrigation from surface water sources, BADC has a program which aims to construct 2400 deep tubewells durin.g 1972-73. This would be financed under the IDA Northwest Region Tubewelis Project and suppliers credits from the U.K. and Yugoslavia, and from government resources. It is likely that there will be substantial slippage from this target.

44. Shallow Tubewells. A major initiative has recently been launched to construct lower cost wells involving labor-intensive construction techniques and locally available materials. The Annual Plan contains provisions for instal-ling 4000 wellpoints in 1972-73, and funds for experiments involving different types of low-cost tubewells and improved dugwells are included in the Northwest Region Tubewells Project. To implement a major program along these lines will require imported pumps, engines, screens, casings and drilling equipment amounting to about $ 6.0 million equivalent. Because the distinction between "shallow" wells and "deep" wells is really not as distinct as these wnords suggest much of this equipment would be equally useful in deep or shallow wells. The more important distinction is between Western and indigenous construction methods. - 17 -

V. FOODGraIN POSITION AND PA)SPECTS

4. Present Situation

45. With increased assistance from the international community (either bilateral or through the United Nations) it has been possible for the Ministry of Food to step UD its foodgrain distribution program through rationing systems and for relief purposes.

46. Pledges of foodgrains for Which agreements were finalized before the end of June 1972 amounted to 2.156 million tons comprising 0.525 million tons of rice and 1.631 million tons wheat.

47. Of the total commitment of 2.156 million tons 947,000 tons were received from January to June 1972. Tn viewi of the damage done to the ports of disruoted commuunications and the time taken for shipment from abroad, the arrivals during the first 3 months were mainly from India via rail and road. -dith improvement in port facilities and transport, the arrivals have increased from 98,000 tons in March to 281,000 tons in May n-d 372,000 tons in June 1972.

48. This enabled the Food Ministry to step up its foodgrain distribution through rationing systems and for relief purposes. The offtake increased from 82,059 tons in January 1972 to 245,619 tons in June 1972, the total distribution for 6 months from January to June 1972 being 1.07 million tons. This may be compared with the distribution of 0.6 million tons during the same period in 1970-71 and 0.63 million tons in 196Q-70

49. However, the foodgrain situation was still characterized by: (a) Dangeiously Low Stocks in many parts of Bangladesh: Local supply depots (LSD'sY only held 97,000 tons in July 1972, enough only for 24 days of normal offtake on the average including some with stock enough only for 3.to 8 days normal distribution,

(b) Risin Foodgrain Prices: The average minimum retail price per maund_ of coarse rice increased from T 52.52 in March to T 63.30 in June 1972 while in the border areas such as FLajashahi the price i-n June was as high as T 73.17 (Tables 12 and 13). Recent reports indicate that the rice prices have now risen to well over T 80 ner maund.

1/ maund = 82.2 lbs. - 18 -

50.. The high prices may be due to many reasons, chief amongst which are the devaluation of the Taka, very low stocks in CSD's, LSD's and private sector, disruptions of communications and possibly smuggling over the frontier with India. The rising prices may be due to the fact that this year's Aus crop harvested in July-August is very poor due to the very long period of drought during the growing season. The Planning Comriission envisages a production of only 2.1 to 2.2 million tons as against 2.86 million tons in 1970 and 2.96 million tons in 1969. Again due to the fact that many markets, private grain storage godowns, and huts were burnt during the war and as the last crop of Aman ,was poor, the carry-over stock with the farmers is probably very low.

B. Foodgrain Reouirement for 1972-73

51. Because of the above reasons the first 5 months of 1972-73 must be considered as very critical. Therefore, the orogram of the Goverrunent is to increase the public sector food distribution to 300,000 tons a month from July to September and to further increase it to 400,000 tons a month in October and Ilovember until the full Airian harvest in December-January when the distribution will be reduced to 150,000 tons a month.

52. If the monthly foodgrain requirements is matched against the estimated production levels and the projected public distribution during these 5 months, it will be seen that the cumulative private stock will decrease up to 690,000 tons in October. Therefore, if the carry-over private stock in the hands of farmers and traders is below this le-el the price rise may even continue till December in spite of increased projected distribution.

53. In order to outline a suitable schedule for foodgrain imports and distribution, the seasonal nature of crop production in Bangladesh must be assessed carefully. The 1972 Aman crop and the 1973 Boro crop are expected to yield 6.8 and 2.6 million tons which together with the oroduction from the 1972 Aus crop will total 11.5 million tons. After allowing 1.15 million tons for seed, feed, waste and losses, the available supply may be estimated at 10.35 million tons against an estimated reouirement of 12.12 million tons. But as will be seen from Table 15 the seasonal nature of crop oroduction is such that while 100 percent of the Aus production will be consumed in 1972-73, some of the 1972-73 Aman and Boro crops, about 10-12 percent should be carried over to next year in the form of private stock in the hands of farmers and traders. Furthermore, uncertainties regarding private stocks, geographical distribution of foodgrains, the great difficulties or impossibility of local procurement, and many other factors have been incorporated into the Government estimate of foodgrain import requirements of 2.8 million tons. STATISTICAL TABLES

1. Area Under Main Crops in Bangladesh

2. Production of Main Crops

3. Land Utilization

4. Acreage and Production of Different Crops of Rice from 1950-51 to 1971-72

5. Distribution of Fertilizer

6. Plant Protection (1965-72) 7. Low-Lift Pump Program (1960-72)

8. Number of Tubewells, Commanded Area, and Area Irrigated

9. BADC Low-Lift Pumps -- Districtwise Distribution and Area Irrigated

10. Fertilizer Distribution Program and Import Requirement During 1972-73

11. Foodgrains Imports

12. Average Retail Price Per Maund of Course Rice in Bangladesh

13. Trend of the Minimum Retail Prices of the Coarse Rice Districtwise, Since May 1972

14. Procurement and Distribution of Foodgrain (Rice and Wheat) by the Food Ministry

TABLE 1

BANGLADESH

AREA UNDER MAIN CROPS,IN BANGIADESH

(Million Acres)

1960-61/ 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 Average

1. Rice (a) Aus 6.64 7.32 6.96 8.22 7.66 8.46 7.88 (b) Aman 14.52 14.67 14.06 14.68 14.40 14.84 14.18 (c) Boro 1.04 1.14 1.39 1.53 2.01 2.18 2.42

Total (22.20) (23.13) (22.41) (24.43) (24.77) (25.48) (2 4.4g) 2. Wheat 0.15 0.14 0.18 0.19 0.29 0.30 031 3. Other Cereals 0.22 0.20 0.24 0.26 0.29 0.28 0.30 4. Pulses 0.93 0.83 0.90 0.89 0.92 0.91 0.92 5. Oilseeds (a) Rape & Mustard 0.54 0.47 0.49 0.53 0.55 0.54 O.53 (b) Til & Linseed 0.18 0.18 0.17 0.16 0.17 0.16 01r5 (c) Groundnut 0.02 0.02 0.04 0.06 0.08 0.08 0.08

Total ( 0.74) ( 0.67) ( 0.70) ( 0.75) (.0.80) C 0.78) ( 0.76) 6. Spices 0.41 0.36 0.39 0.42 0.41 0.42 OS1O 7. Sugarcane 0.32 0.38 0.41 0.42 0.41 0.40 0jo 8. Potato 0.14 0.15 0.17 0.19 0.21 0.21 0-21 9. Sweet Potato 0.10 0.11 0.15 0.16 0.17 0.18 001.8 10. Fruits & Vegetables 0.62 0.58 0.58 0.60 0.63 0.64 0,63 11. Jute 1.73 2.20 2.17 2.34 2.17 2.46 2420 12. Cotton 0.04 0.04 0.04 0.04 0.03 0.03 0.02 13. Tea 0.08 0.10 0.10 0.10 0.11 0.11 0.3.1 14. Tobacco 0.10 0.11 0.11 0.11 0.11 0.11 0.11 15. Others 0.10 0-54 0.49 0.54 0.51 0.53 O.5K) Total All Crops 27.88 29.54 29.04 31.44 31.13 32.84 31r53

Net Cropped Area Including Current Faslow 21.91 22.33 22.43 22.48 22.41 22.49

Cropping Intensity 127% 132% 129% 140% 139% 146% BANGLADESH

PRODUCTION 'OF hIIAIN CROPS

(thousands of tons)

Crops 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72

1. Rice 10,337 10,333 9,421 10,995 11,160 11,816 10,968 9,810

2. Wheat 34 35 58 58 92 103 110 12.3

3. Gram and Pulses 234 239 274 272 275 293 296 209

-4. Edible Oil Seeds -a. Rape & Mustard & TI).1 112 128 150 151 156 1`3 163 112 b.. Groundnut 12 14 24 38 52 51 )i7 38 c.S. Total 124 133 152 188 203 2C7 210 150

5.. Potato 395 486 591 701 786 857 849 741

6. sugarcane 6,231 7,550 8,070 7,589 7,429 7,418 7,598 5,686 (thousand bales)

7. Jute 5,328 6,693 6,400 6,670 5,754 7,171 6,670 4,193

8. M'esta n.a. n.a. n.a. n.a. n.a. 220 131 93

(million lbs)

9. Tea 63 60 63 65 62 67 69 22

10. Tobacco 61. 83 83 86 86 85 86 n.a. H

.Source: Directorate of Agriculture, MAinistry cf Agriculture. TABLE 3

BANGLADESH

LAND UTILIZATION (millions of acres)

5-year 5-year average average ending ending Particulars 1959-60 1964-65 1967-68 1969-70

1. Forest 5.h6 5.46 5.54 5.54 2. Not available for cultivation 5.59 5.97 6.24 6.50 3. Cultivable waste 1.95 1.82 1.03 o.74

Total 13.00 13.25 12.81 12.78

4. Current fallow 1.32 0.93 0.73 0.73 5. Net cropped area 20.33 20.98 21.75 21.76

Total 21.65 21.91 22.48 22.49 6. Total cropped area 25.91 27.88 31.44 32.84

7. Cropping intensity percentage 120% 127% 140% 146%

Sources: Directorate of Agriculture, Ministry of Agriculture, Government of Bangladesh.

Planning Commission, Goverment of the Peoples Republic of Bangladesh. TABLE 4

BANGLADESH

'ACREAGE AND PRODUCTION OF DIFFERENT

CROPS OF RICE FROM 1950,-51 TO 1971-72

Area in Million Acres Production in Million Tons 'Au Aman Boro Total Aus Aman Boro Total

Over'age 1950151 - 54/55 5.71 14.34 0.83 20.88 1.83 5.34 0.33 7.50 Pverage 1955/56 - 59/60 5.84 13.48 0.79 20.11 1.94 5.23 0.34 7.51 1960-61 6.30 14.58 1.01 21.89 2.50 6.57 0.45 9.52 1961-62 5.87 14.08 1.01 20.96 2.33 6.65 '0.48 9.46 1962-63 5;19 1L.22 1.07 21.48 2.20 6.05 0.48 8.73 1963-'64 6.59 14.60 1.07 22.26 2.66 7.29 0.5i 10.46 1964-65 6.64 15.11 1.05. 22.80 2.50 7.26 0.57 10.34

5-Year Average 6.32 14.52 1.04 21.88 2.44 6.76 '0.50 9.70

1965-66 7.32 14.67 1.14 23.13 2.92 6.80 0.62 10.33 1966-67 6.96 14.06 1.39 22.41 2.67 5.92 0.83 9.42 1967-78 8.22 1,4.68 1.53 24.-43 3.07 6.81 1.11 10.99 i968-69 7.66 14.40 2.01 24.07 2.68 6.87 1.61 11.16 1969-70 8.46 14.84 2.18 25.48 .2.96 6.95 1.90 11.81

5-Year Average 7.72 14.53 1.65 23.90 2.86 6.67 1.21 io.74

19t0-71 7.88 14.18 2.42 24.48 2.86 5.91 2.19 10.96 1971-72 7.42 13.00 2.20 22.62 2.34 5.69 1.78 °.&1

Fource: Ministry of Agriculture, Government of Bangladesh TABLE ig

BANGL' )ESH

DISTRIBUTION OF FERTILIZER

(1964-65 - 1971-72 and Target for 1972-73)

(Quantity in '000 tons)

1964 1965 1966 1967 1968 1969 1970 Targot 1965 1966 1967 1968 1969 1970 1971 1971-72 1972-73

Fertilizer

1. Animonium sulphate 7.3 21.3 6.2 15.4 12.1 13.4 13.6 10 12 2. Urea 71.1 83.3 120.9 151.9 159.9 196.5 212.4 168 275 3. Single Super- phosphate 0.3 0.1 0.1 0.0 0.0 0.0 0.0 - - 4. T.S.P. 19.0 20.5 34.5 48.1 52.9 65.8 75.6 60 110 5. Muriate of Potash 3.9 3.8 8.3 11.5 12.5 15.4 17.8 14 40

Total Fertilizer 101.6 129.0 170,0 226.9 237.4 291.1 306.4 252 437

In Terms of Nutrient 45.4 54.5 77.7 102.1 107.9 132.7 140.8 110.0 204.0

NPK "Ratio" N 100 100 100 100 100 100 100 100 100

0 P2 5 26 22 28 30 32 32 36 38 40

K2 0 7 5 9 9 10 10 11 11 19

Source: Planning Commdssion, Government of Bangladesh TABLE 6

BANGLADESH

PLANT PROTECTION (1965-1972) (Millions of Spray Acres)!!'

1965-66 1966-67 1967-68 1968-69 1969-70 1970-71

Crops

1. Paddy 3.14 4.61 5.o6 5.40 6.50 6.62 2. Jute o.46 o.65 0.86 0.52 0.56 0.54 3. Sugarcane 0.57 0.61 0.60 0.48 0.46 0.h3 4. Vegetables 0.47 0.72 0.60 0.69 0.61 0.74 Potato 0.16 0.17 0.19 0.17 0.14 0.20 5. 0.06 6. Pruit Trees 0.03 o.06 0.09 0.06 0.05 7. Rodent Control 0.07 o.o6 0.09 0.12 0.10 0.08 8. ITeed Control 0.05 0.04 0.04 0.°4 0.64 0.°4 Total 4.95 6.92 7.53 7.48 8.46 8.71 Seed Treatment (million maunds) 1.56 1.21 2.42 2.45 4.72 4.27 Pesticide Used (tons) 3,000 2,670 3,265 3,000 5,152 Aerial Operatiop (mil. spray acres) 0.48 0.52 1.00 1.91 1.47 n.a.

1/ Source: Plant Protection Division of the Agricultural Extension Directorate. TABLE 7

BANGLADESH

LoW-LIFT PUMP PROGRAM (1960-1972)

Average Number of Number Area Irri- Total Area Pumps in of Cusecs gated Per Irrigated Years Operation Per Pump Cusec Acres Acres

1960-61 1,267 n.a. n.a. 64,528 1961-62 1,543 n.a. n.a. 98,163 1962-63 2,024 1.70 38.5 133,043 19 6 3- 6 4 2,456 1,85 34.1 156,281 1964-65 2,238 1.95 30.0 131,129 1965-66 3,420 2.05 24.6 173,553 1966-67 3,990 2.14 26.4 225,105 1967-68 6,558 2.08 23.3 317,903 1968-69 10,582 1.89 20.7 424t,799 1969-70 17,844 1.84 19.6 639,000 1970-71 24l,454 1.85 18.3 820,074 1971-72 24,254 1.84 19.4 864,427

Source: Bangladesh Agriculture Development Corporation. TABLE 8

BANGLADESH

NUMBER OF TUBEWELLS, COMMANDED AREA, AND AREA IRRIGATED

1970-71

1/ 2/ 3/ B.W.D.B. B.A.D.C.- Private and Co-operatives3 Total Commanded Area Commanded Area Commanded Area Commanded Area No. of Area Irrigated No. of Area Irrigated No. of Area Irrigated No. of Area Irrigated District Wells Acres in Acres Wells Acres in Acres Wells Acres in Acres Wells Acres in Acres

Chittagong - - - - Chittagong H.T. - - - - 4/ - - ______Comilla - - - 3167 18,960 13,221 200 12,000 10,800 516 30,960 24,021 Noakhali - - - 24 1,440 389 - - - 24 1,440 389 Sylhet - - - - Dacca - - - 56 3,360 721 - - - 56 3,360 721 Faridpur - - - 45 2,700 428 - - - 45 2,700 428 Mymensingh - - - 102 6,120 1,453 4 240 204 106 6,360 1,657 Tangail - - - 15 900 835 - - - 15 900 835 Barisal - - - - Jessore - - - 59 3,540 1,232 - - - 59 3,540 1,232 Khulna - - - Kushtia - - - 18 1,080 275 - _ _ 18 1,080 275 Patuakhali - - - - Bogra 52 3,120 1,659 - - - 52 3,120 1,659 Dinajpur 365 72,000 54,578 75 4,500 940 - - - 440 76,500 55,518 Pabna - - - 76 4,560 2,421 - - - 76 4,560 2,421 Rajshahi - - - 132 7,920 2,823 39 2,340 1,989 171 10,260 4,812 Rangpur - - 98 5,880 1,430 19 1,140 969 117 7,020 2,399

Total 365 72,000 54,578 1,068 64,080 27,827 -262 15,720 13,962 1,695 151,800 96,367

Source

1/ Bangladesh Water Development Board Land & Water Use Directorate 2/ Bangladesh Agricultural Development Corporation 3/ Integrated Rural Development Board (Estimates) 4/ Includes Thana Co-operative Association Wells in Comilla District Thanas other than Comilla-Kotwali Thana. .KBLE 9

BANGLADESH

B.A.D.C. LOW LIFT PUMPS - DISTRICTWISE DISTRIBUTION AND AREA IRRIGATED

(PER CUSEC AND TOTAL)

ACTUAL FOR 1970-71 AND 1971-72; AND PROGRAM FOR 1972-73

1970-71 1971-72 1972-73 Program Average Area Average Area Average Areaa No. of Irrigated Total Area No. of Irrigated Total Area No. of Irrigated Total Area No. of Cusecs Per Cusec Irrigated No. of Cusecs Per Cusec Irrigated No. of Cusecs Per Cusec Irrigated Pumps Per Pump (Acres) (Acres) Pumps Per Pump (Acres) (Acres) Pumps Per Pump (Acres) (Acres)

Chictagong 2,281 1.87 21.0 89,811 2,328 1.84 18.2 78,036 2,600 1.78 20.0 92,460 Chittagong H.T. 361 1.46 17.1 9,008 327 1.42 13.5 6,300 350 1.29 20.0 9,060 Comilla 2,158 1.87 13.8 55,700 2,161 1.88 24.1 97,739 3,000 1.85 20.0 110,860 Noakhali 733 1.95 18.0 25,727 674 1.94 17.4 22,790 800 1.84 20.0 29,500 Sylhet 2,266 1.81 17.4 71,200 1,911 1.77 24.8 84,204 3,000 1.77 20.0 106,500 Dacca 2,200 1.83 18.1 73,004 2,555 1.85 21.2 100,500 3,600 1.73 20.0 124,780 Faridpur 974 1.82 12.4 22,000 978 1.82 17.9 31,897 1,500 1.80 20.0 54,000 Mymensingh 4,449 1.89 21.0 176,719 4,254 1.89 19.3 155,683 5,800 1.88 20.0 218,340 Tangail 817 1.82 21.7 32,227 811 1.82 20.4 30,194 850 1.65 20.0 28,000 Barisal 2,637 1.79 19.6 92,556 2,931 1.82 17.3 92,360 5,500 1.87 20.0 206,000 Jessore 440 1.72 16.4 12,367 419 1.71 16.5 11,842 700 1.71 20.0 24,000 Khulna 596 1.76 19.5 20,500 593 1.78 15.1 16,000 1,200 1.81 20.0 43,500 Kushtia 164 1.87 15.0 4,590 180 1.85 7.6 2,525 250 1.80 20.0 9,000 Patuakhali 1,249 1.90 20.5 48,700 1,152 1.88 20.3 44,050 2,000 1.87 20.0 75,000 Bogra 569 1.88 20.6 22,000 546 1.87 20.0 20,460 600 1.83 20.0 22,000 Dinajpur 237 1.75 5.1 2,130 207 1.79 10.4 3,877 300 1.75 20.0 10,500 Pabna 455 1.77 24.8 20,000 471 1.77 20.6 17,157 700 1.71 20.0 24,000 Rajshahi 1,248 1.85 12.6 29,073 1,130 1.83 16.9 35,000 1,450 1.78 20.0 51,500 Rangpur 620 1.84 11.2 12,742 626 1.84 11.9 13,813 800 1.81 20.0 29,000

TOTAL 24,454 1.84 18.3 820,074 24,254 1.84 19.4 864,427 35,000 1.81 20 0 1,268,000

Source:

Bangladesh Agricultural Development Corporation.

1/ Minimum Target set by the Planning Commission. TABLE 10

:BANGIADESH

FFFTILIZER DISTRIBUTION PROGRAIA AYID) ThORT REQUIRE1NT DURING 1972-73

,QUANlITY IN 1.000 TONS

Anmonium Mriate Suilphate Urea .T..S.P. 0of Potash Total Remarks

Requirement

1. For Distribution in 1972-7; 275 110 40 25 2. Balance Stock on July 1, 1973 39 55 17 111

-Total 3174 165 57 536

B. Pvailability

1. Opening Balance on July 1, 1972 36 21, 27 87 2. Local Production

(a) Fenchuganj 60 - _ From 1st July 1972- about 5,000 tons monthly (b) Ghorasal 11,o - From 1st 3ept. 1972- about 111,000 tons monthly (c) Chittagong _ 36 From Jan. 73 to June 73 - about 6,000 tons monthly Imports-Firm Comutment

(a U 302/ - Oct. to Feb. shipment-/ August-Sept. shipment2/ (b) r;-eden 13 30 _ July-Sept. shipment (c) Poland 30 - Jul'y-August shipment (d) Mi7-sia 1 (e) U.• 10 - (f) UblOT) - 3__ _

TQI , 360/ 133 27 714 Includes contingency of H 46,000 tons in case of o ddit4Lnal -Ieor'neuirement INil 32 30 62 shcrtf ll irn Thorasal production.J/ TABLE 1

BANGLADESH

FOODGRAINS IMPORTS

(1955-56 to 1971-72)

Rice Wheat Total ------Thousand Tons ------

1955-56 149 21 170 1956-57 521 69 590 1957-58 556 118 670 1958-59 379 87 466 1959-60 464 148 612 1960-61 46!4 234 698 1961-62 206 202 408 1962-63 5h2 894 1,436 1963-64 346 656 1,002 1964-65 95 250 3b5 1965-66 360 529 8L9 1966-67 432 647 1,079 1967-68 308 712 1,020 1968-69 236 884 1,12(u 1969-70 502 1,045 1,547 1970-71 381 898 1,279 1971-72 658 1,068 1,726

Soumrce: Bangladesh Planning Commission TABLE 12

AVERAGE RETAIL PRICE PER MAUND OF COARSE RICE IN BANGLADESH

1971-72 MPITHS 1967-68 1968-69 1969-70 1970-71

38.92 JULY 39.48 39.o6 41.04 37.17 38.60 AUGUST 35.54 37.73 37.04 35.81 41.26 SEPTEMBER 35.87 38.03 39.04 35.19 41h.26 OCTOBER 35.57 38.7.3 39.86 35.77 41.72 NOVEMBER 33.70 38.02 38.02 34.35 N.A. DECEMBER 31.57 3h.63 34.10 33.33 4O.98 JANUARY 31.85 36.06 35.09 34.19 43.h8 FEBRUARY 31.87 37.56 35.b2 35.o8 52.52 MARCH 32.79 41.92 38.12 N.A. 54.32 APRIL 34.o8 40.27 39.87 48.75 63.06 MAY 35.22 39.h8 39.h8 42.68 4°.47 63.30 JUN4E 38.17 41.24 39.79

Source: Ministry of Food, Government of Bangladesh TABLE 13

TREND OF THE MINIMUM RETAIL PRICES OF THE COARSE RICE DISTRICT-WISE SINCE MAY, 1972 (Figures in Taka) Name of May 1972 June 1972 the ltj~jeekj 2nIe I 3r195 we th weekl 1st week J2nid r ek r kr 4bt week Districts (1315 3/014h0/5) (3/6) (10/6¶ ?16/e 2 /6) I1. -2. 3. - 4. 5.-6. 7. . 9. A. Surplus District. 1. Khulna 61.00 66.67 75.33 77.00 70.00 69.66 70.00 66.67 2. Dinajpur 50.00 58.50 60.62 63.75 63.75 65-50 67.50 69.oo 3. RaJshahi 58.75 62.35 68.79 73.25 73.05 69.25 68.85 73.17 4. Bogra 59.00 62.00 65.00 67.00 70.00 67.00 71.00 67.00

5. Mymensingh. 51.49 49.48 51.84 55.97 54°00 54.09 54.39 55.56

6. Tangail 50.00 58.00 65.00 68.oo 68.oo 67.00 66.oo 68.oo

7. Bakergonj 69.38 69.14 74.87 69.50 60.75 69.25 64.12 60.50 8. Patuakhali 58.50 58.50 64.50 67.00 65.50 67.50 66.50 55.00

9. Sylhet 49.25 47.00 46.50 51.25 50.75 49.25 49.25 51-75 Average of surplus area 54.15 59.07 63.60 65.86 63.98 64.28 64.18 63.18 B. Deficit District 10. Dacca 63.62 60.50 61.00 59.75 57.25 52.00 56.00 58.97 11. Faridpur 65.h5 69.20 71.20 69.15 64.50 62.82 65.15 63.20 12. Ctg. 52.25 57.25 52.25 52.25 51.75 59.00 57.00 53.00 13. Comilla 53.66 57.93 59.66 61.80 57.27 54.00 57.20 56.67 14. Noakhali 63.75 64h30 61.40 64.00 64.oo 65.00 63.75 64.90 15. Pabna 65.00 65.00 73.75 ,65.00 66.25 65.00 67.50 73.75 Average of Deficit area 60.62 62.36 63.21 61.99 60.17 59.44 61.10 61.73 C. Self sufficient dist. 16. Jessore 63.00 69.87 75.55 72.62 71.31 69.50 68.50 65.00 17. Kushria 6h.20 67.00 78.16 72.33 70.67 70.00 72.33 68.33 18. Rangpur 53.75 51.50 59.62 71.12 60.12 65.37 65.50 65.50 19. Ctg. H. Tracks55.00 55.67 56.33 56.33 56.67 55.33 57.00 61.33 Average of Self- Sufficient Area 58.98 61.01 67.jl 65.60 6h.69 65-05 65.83 6 5.0o Country's average 57.91 60.81 64.74 64.48 62.95 62.92 63.70 63.30

Source: Ministry of Food, Government of the Peoples' Republic of Bangladesh. TABLE 14

BANGLADESH

PROCUREMENT AND DISTRIBUTION OF FOODGRAIN (RICE AND WHEAT) BY THE FOOD MINISTRY

1971-72 QUANTITY IN TONS

Opening Import Total Off Take Shortage Closing Balance Actual Supply Actual & Losses Balance

July 1971 499,476 85,069 584,545 99,602 11,281 473,662 Jiugust 473,662 176,074 649,736 102,337 12,950 534,449 September 534,449 229,781 764,230 140,053 15,010 609,167 October 609,167 221,075 830,242 138,993 16,810 674,439 November 674,439 19,909 694,345 118,48Z 24,490 551,376 December 551,376 - 551,376 35,911 50,800 464,665 Half Year (July-Dec. '71)

Sub-total 1- 499,476 731,905 1,231,384 635,375 131,341 464,665 January 1972 464,665 12,615 477,280 82,659 9,028 385,593 February 385,593 65,854 451,447 131,896 7,684 311,867 March 311,867 98,125 409,992 193,289 2,893 213,810 April 213,810 143,231 357,041 185,130 2,667 169,244 May 169,244 281,857 451,101 230,128 3,540 217,433 June 217,433 392,119 609,552 245,619 4,696 359,237 Half Year (Jan.-June 172)

Sub-total_/ 464,665 993,801 1,458,466 1,068,721 30,508 359,237

1971-72 ANNUAL'TOTAL 499,476 1,725,709 2,225,185 1,704,099 161,849 359,237

Source: Planning Commission, Bangladesh 1/ The annual and half year stock balances are from the Food Ministry Bangladesh 2/ The annual and half yearly storage losses are the estimate of the Planning Commission, Bangladesh. Monthly breakdown of storage losses are mission estimates.