In the first two decades of our independence, donor agencies directly supported the government through their budget funding mechanism. However, after that they found irregularities, misappropriation, malpractices and corruption and also administrative limitations, bureaucratic procrastinations in utilisation of foreign aids. Then they started to provide sectoral funding to government. In a very short time, it was found that the sectoral funding also was not properly utilised and it could not change the previous situation.

If we look into our last three decades' development initiatives by government under budget or sectoral funding, we find it not satisfactory in terms of programmes and money investment. In a research study by Dr. Abul Barkat, Secretary General of Bangladesh Economic Association, it is said that in the last three decades governments in Bangladesh have received around one lakh eighty thousand crore taka as foreign aids for poverty reduction and development. However, out of the amount only 25 percent seems to have been actually spent for poverty reduction and development, rest of the amount apparently found way to the pockets of consultants, contractors and allegedly even corrupt officials.

In addition to the corruption and misuse of money, there were administrative and planning limitations and drawbacks with the budget and sectoral funding procedures. These were: (i) Economic growth was considered as single criteria of development; (ii) It denied the society as well as country's historical learning; (iii) It less considered the local values as well as indigenous knowledge and less emphasised these in the context of development; (iv) Universal applicability of models (did not consider that local societal actors which vary from state to state, society to society); (v) Considered development as technical and mechanical issues (more emphasised technological issues); (vi) Used and emphasised income and materials related indicators of progress, ignored human development issues; (vii) Top down decision making and planning process; (viii) Rights issues, social struggle, social mobilisation and mass people's participation were ignored; (ix) Failed to respond to natural and social disasters; (x) High administrative costs; (xi) Urban based planning not focusing rural issues and (xii) Ignoring minorities like indigenous people.

In such circumstances, in the mid eighties, 'project funding' was introduced by the donor agencies in order to properly utilise their funds for poverty reduction as well as overall development. The phenomenal increase of project funding is attributed to two sources. First, limited success of government by itself to implement development activities and respond effectively to the enormous challenge of poverty. This created an opportunity for alternative to penetrate with great speed into what had previously been considered the exclusive domain of government. It was recognised that government initiatives under budget or sectoral funding had a limited success in bringing about the desired development in key sectors such as agriculture, education, health and environment, and in poor people's lives. The second is the emerging concept of minimal state involvement and preference for multilateral and bilateral development partners for channelling foreign assistance through NGOs/private sectors, under project funding, as a result of demonstrated effectiveness of many projects/NGO activities in delivering services to the poor.

In the project funding era, Bangladesh has achieved tremendous successes. First, it has achieved impressive successes in the area of population control. Total fertility rate (TFR) declined from 6.3 in 1975 to 3.3 in 1997-99. Secondly, mortality rate is often considered as the criterion for judging economic success and failure of nations. The infant mortality rate declined from 153 deaths per thousand live births in 1975 to 94 deaths in 1990, dropping further to 66 in 2000. Thirdly, Bangladesh witnessed significant success in disaster preparedness and in overcoming the phenomenon of mass starvation and threat of famine syndrome in the backdrop of endemic vulnerability to natural disasters. At the aggregate level, the country has achieved the desirable objective of near self-sufficiency in rice production even with declining cultivated area. The production of cereals increased at a rate of 2.4 percent per year. Fourthly, the country made impressive gains in reducing child malnutrition rates over last ten years. The rate of stunting for children in the age group of 6-7 months which was 69 percent in 1985/86 dropped to 49 percent in 2000. Fifthly, Bangladesh has achieved considerable success in mainstreaming women into the development process. Bangladeshi women have played an important role in the success of micro-credit, participation in the rural power structure, ready-made garments, reducing population growth, increasing child nutrition, and in spread of primary education.

These successes have come due to channelling foreign aids directly to grassroots people through NGOs and geographical and issue based projects.

Recently, global development practitioners and development partners have started thinking to restart the previous budget funding mechanism in the name of consolidation of success and facing new challenges through developing 'Poverty Reduction Strategy Paper (PRSP)' and in order to attain the 'Millennium Development Goals (MDG)'. However, there is a very strong argument that if it is implemented now, on one hand it will deter the previous success (development works need continuity) and on the other hand it will not cover the yet to be done planned activities. It is not the appropriate mechanism to achieve the objectives of MDG as well as PRSP. Again, due to the changes of funding priority and mechanism the pro-people institutions and organisations which have been developed over the last decades would have to face threats, challenges and financial constraints. The government still do not have such capacity and expertise so that it can implement the programmes in more transparent, accountable and pro-poor way.

Development means following Amartya Sen -- the expansion of capabilities. The secretary general of Bangladesh Economic Association Prof. Abul Barkat stated in his paper 'Power, Politics and Poverty in Bangladesh' that 'the issue of poverty needs to be viewed in relation to deprivation: poor people are caught into deprivation trap, and true human development requires breaking the trap by empowering the excluded -- the poor and deprived, focusing on human freedom in contrast with narrower views of development such as identifying development with the growth of gross national product, or with the rise in personal incomes, or with industrialisation, or with technological advances, or with modernisation. Growth of GNP or of individual incomes can be important as means to expanding freedoms enjoyed by the members of the society. But freedom depends also on other determinants, such as social and economic arrangements as well as political and civil rights'.

The administrative and political criminalisation, politicalisation of national and local public institutions, rampant corruption, administrative irregularities, grabbing of public resources, high level of bureaucratic procrastination, high insecurity of citizens, lack of employment opportunities, poor governance, lack of transparency and accountability, lack of political freedom, lack of participation of the poor and women in the decision making etc. are the unresolved and endemic problems in the country. These cannot be solved by government alone nor only through budget funding mechanism. It needs both GO and NGO joint efforts and continuity of project funding mechanism.

Md. Abdul Kader is Executive Director and Sohel Ibn Ali is Director of Samata