AID AND DEVELOPMENT IN BANGLADESH 31
and material resources. But such a balance of political will was simply not there. Moreover, the soft option provided by foreign aid was already being tasted in the reconstruction and rehabilitation phase. Thus, finally, by mid-1974 foreign aid which initially came as a relief activity was allowed to assume a pivotal role in the development process. And that was consummated with an emergency meeting of the consortium of aid donors for Bangladesh in Washington in August 1974, followed b"y its first regular meeting in Paris in October 1974.2 Indeed, the successive governments have carried the process of aid dependence further. And by now foreign aid indeed has a pervasive grip on the economy of the country.
The Nature of the Aid Regime
It is ironical that the grip of foreign aid should be so pervasive in this country. For, although foreign aid commitment to this country has by now increased about three-fold', in nominal terms a^nd about two-fold;- in real terms since the aid option-was adopted, the annual per capita aid receipt i still only about US $ 12-14s, one of the lowest among all aid receiving coun tries. The general run of per capita aid receipt is US $ 25-50, while som< countries receive US $ 100 and more.4 But the reasons are not far to seek. Even though per capita receipt is so low, foreign aid accounts for virtually the whole of the development budget, about two-thirds of the total imports and about 10-15 per cent of the total food supply in Bangladesh.5 It also generates counterpart funds through sale of food an4 other commodity aid, which are used for such purposes as procuring food grain from local market to feed the public food distribution system and contributing to the development budget.
In so far as the development budget is concerned, the practice has been to show the contribution of foreign aid at around 75 per cent of the total proposed expenditure in the Annual Development Plan (ADP), but usually the expected domestic resource mobilization does not materialise and. the contribution of foreign aid goes up substantially ex-post. For example, the 1984-85 ADP has shown foreign aid to contribute 81 per cent of the total budget—up froiyi the proposed 79 per cent in 1983-84 ADP.6 This increase in the proposed foreign aid contribution is itself significant as it implies a depreciation in the capacity of domestic resource mobilization. But that is onlv academic since it is already becoming clear that there is going to be significant shortfall in domestic resource mobilization even in relation to what has been proposed. Then, even the revenue budget is in deep crisis without foreign aid because a substantial part of the revenue receipts comes from custom duties and taxes on account of aid-financed imports, and excise duties collected from enterprises fed by aid-based imported materials.7
It appears thereiore that foreign aid^eeps fne economy afto^l.Tn^grfp of foreign aid on the economy is even more far reaching because of the mentality that has developed among the policy makers, planners and administrators that foreign aid provides the life line and it must therefore be sought and accepted whatever be the terms and conditionalities.