Prime Minister Sheikh Hasina has resigned and fled the country. How rapidly and suddenly her regime has unraveled.  It started with an anti-quota protest. But more about it later. She had won her fifth term in office earlier this year. Her government won its fourth consecutive term, having ruled since 2009. She has been the longest serving leader since the formation of the country of Bangladesh. In her previous victory of 2018, her party the Awami League secured a landslide victory winning 288 out of 300 seats in parliament. She is the daughter of Sheikh Mujibur Rehman, considered the Father of the nation, who founded the Awami League in 1949. 

During Sheikh Hasina’s last three terms since 2010, Bangladesh has had extraordinary economic growth during the decade, averaging around 6 to 8 percent per annum, peaking at 8.2 percent in 2019. Even during Covid the economy had a positive growth rate of 3.5 percent which then rebounded to 6.9 percent in 2021. Briefly Bangladesh’s per capita income measured in dollar terms exceeded that of India.

The poverty rate since 2010 has fallen from 31 percent to 20 percent, and Bangladesh will graduate out of the “least developed country” category as per the World Bank by 2026. One of the spectacular successes of Bangladesh has been the export of readymade garments (RMG), in which it has now overtaken India and is the second largest exporter in the world. The RMG constitute 80 percent of manufacturing exports, 11 percent to GDP, and employ 2.5 million women, and attracts foreign direct investment.

Economic downturn 

But all this economic growth and resilience is for nought thanks to the meltdown due to countrywide rioting. Since 2022 the economy has been affected by high inflation (upward of 8.5) especially in food and commodities. That inflation is mostly imported, due to geopolitics and the conflict in Ukraine. As a result, the Bangladeshi trade deficit has worsened, putting pressure on foreign exchange reserves and causing a stress in debt repayment. It is knocking on the doors of the International Monetary Fund (IMF) for relief loans. The financial sector is very vulnerable. Income and wealth inequality has risen to unprecedented levels. 

And don’t forget that Sheikh Hasina’s party’s victory earlier this year was marred by a boycott by the main opposition party, and a voter turnout of barely 40 percent. The turnout was 80 percent in 2018. This economic backdrop is important to keep in mind as we witness the large-scale riots and crumbling social order in our neighbouring nation.

Unemployment and quotas 

The immediate provocation was the reinstatement of quotas in government jobs for relatives and descendants of freedom fighters of the 1971 liberation war. That initial quota was introduced in 1972 and was 30 percent. Over the years it expanded to nearly 56 percent. But there was increasing resentment against it. It was seen as detrimental to the interests of meritorious candidates. 

In 2018 due to widespread protests, mainly from young job seekers and students the quota system was scrapped.  But there was an appeal against the scrapping in the High Court. This year in June the High Court reinstated the quota system, triggering nationwide riots, again mainly by the youth and students. This time since inflation and youth unemployment are high, there is economic aggravation adding to the quota question. 

The protests turned violent causing concern even from the United Nations. More than 300 people have died so far in the civil unrest. The government has clamped down harshly, imposing curfew, banning the assembly of people and suspending the internet. In a hasty decision the Supreme Court overturned the High Court judgement.  

Spiralling protests 

The government has banned the Jamaat-e-Islami, which is also blamed for inciting violence and for terrorism. The anti-quota unrest turned into an anti-government movement and political opponents took advantage of the deteriorating situation. Last year too there were violent protests against Hasina and her party, ostensibly against alleged corruption. The protesters demanded the resignation of the Prime Minister, but now she has resigned and fled the country. Actually, the constitution of Bangladesh anyway does not allow political parties based on religion like the Jamaat. But it had managed to survive till now.

There are lessons from Bangladesh’s descent into chaos. The anti-quota protesters felt that meritorious youth were being denied opportunities, because of quotas based on birth or blood relationships to freedom fighters. They see this as irrelevant in the present context. Besides there was large-scale fraud in obtaining freedom fighter credentials and certificates. In India the quotas work on the basis of being part of historically socially disadvantaged groups in society. But there have been instances of fake caste certificates for grabbing quota benefits. 

Recipe for a tinder box  

In Bangladesh nearly 40 percent of the youth in the age-group of 15 to 29 are in the NEET category i.e. not in employment, education or training.  Some 18 million youth are jobless. According to the Bureau of Statistics about 37 million people faced moderate to severe food insecurity in 2023.  The government raised electricity, utility and gas prices thrice within a single year causing much hardship and inflationary burden. Amidst charges of corruption especially in government, inequality was rising. The wealthiest 10 per cent get 41 per cent of the nation’s income, while the bottom 10 per cent receive only 1.3 per cent. 

The conditions of high youth unemployment, out of control inflation, the deteriorating foreign exchange situation causing fuel prices to be raised, and worsening inequality was the recipe for a tinder box. Into this was thrown in the ignition spark provided by reservation which was reinstated by a court, even after it was scrapped back in 2018. And the other element of Islamic radicalisation, extremist ideology tapping into youth discontentment.  

How quickly a country which was coasting along for a decade of strong, export led growth with improvements in poverty as well as human development indicators and social capital, can crumble. But maybe we will see it bounce back and it will show the kind of resilience it demonstrated in its post Covid recovery. Maybe the extremist elements will be overpowered by larger sections of society with deep roots in Bengali and syncretic culture as well as democratic sensibilities. A stable and prospering neighbour that is Bangladesh is also in India’s interest.

(The writer is a noted Indian economist and commentator. Views are personal. By special arrangement with The Billion Press)