Poverty and inequality in Bangladesh

The achievement of reducing poverty to 25 per cent and 15 per cent by 2013 and 2021 respectively, committed in the election manifesto of the present government, might not be possible under the business as usual scenario, reveals the independent think-tank Unnayan Onneshan (UO) in its report titled "Poverty and Inequality in Bangladesh." The report highlights that continuation of current trend might witness the decline of the incidence of poverty to 27.5 and 17.0 per cent by 2013 and 2021, which is higher by 2.5 and 2.0 per cent respectively than those of the targets set in the government election manifesto. The incidence of poverty in Bangladesh is one of the highest in the world due to inequality. According to the government, about one-third (31.5 per cent) of its population is living below the poverty line. Referring to slower rate of reduction in poverty, the report sates that this is mainly due to the problems associated with the neo-liberal paradigm that the successive governments are pursuing in reducing poverty including those of the poverty reduction strategies (PRS). "The problem arises in its failing to conceptualise that poverty is manifestation of social property relationship. The rate of decline in poverty is accelerated or decelerated, depending upon the social property relations, rather than the neo-liberal articulation that an increase in the size of the "things-basket" reduces poverty. This happens as this "things-basket" operates under particular social relationships. The "things-basket" may reduce poverty up to a point, but it is reproduced due to social property relationship, embedded through institutions, structures, power, and reality and composition of the state, the report reasons. The report also questions the conventional measurement of poverty emphasising income. It illustrates that a person with the less than an earning of US$ 1.25 per day is considered to be poor officially. Considering the present circumstances, a conservative estimate suggests that a minimum spending of about Tk 50 ($ 0.71) is needed to obtain 2,122 kilocalories per day. If a calculation is made based upon expenditure, considering these non-food essentials with food, it is very difficult to survive with the income of $ 1.25 per day per person. The UO report has identified several reasons behind the persistence of poverty and slower rate of reduction in poverty alleviation. These are: l Poverty is a part of social relationship. The poor are remaining poor due to the structural reasons. Even reduction in income poverty has a limit, as it is contingent upon the structure. l Neo-liberal paradigm assumes that a part of the population will plunge into poverty and they will be addressed through social safety nets. The failing of the paradigm is not to take cognisance of the endemic market failures and the need for the state to intervene with strategies, policies and incentives to enhance the productive capacity to ensure full employment, particularly addressing the disguised unemployment. l The growth process in Bangladesh has not been matched with increases in jobs. Moreover, the people have entered into labour market with wages below the poverty line, creating a huge number of people, who can be termed as "working poor." Furthermore, a huge chunk of employed population is under-employed. These have also resulted in augmentation of income inequality. l The report illustrates that the public expenditure in capabilities has always been less than the required level. This is particularly witnessed when the budget deficits soar up. The public expenditure in education, health and housing has a bearing on poverty. l The system of accumulation in Bangladesh is principally primitive in nature. Such accumulation is omnipresent, particularly in case of natural resources, management of common property resources, and management of state resources. The bias created in favour of the rich and powerful could be lessened by regulatory regimes, giving access to and control over, such resources to the poor. Absence of dynamic policies, planning and activities (regulatory problem) of the government might create poverty as well as lowering income. l Poverty may also increase due to the lack of maintaining complementarities in policies and implementation. There are many such examples of lack of complementarities. For example, the tax system of the country is regressive and biased in favour of the rich as the government continues to enhance the tax such as VAT while there is hardly any concerted effort in increasing income tax net and reduction in tax evasion and avoidance of corporate houses. While the inflation is cropping up, there are not adequate policies to offset the income erosion of the poor. l The constitution of the country pledges to ensure basic necessities to its citizens by the state. Since these rights are not legally enforceable, the state as a duty bearer to the rights holders could not be operationalised. The Unnayan Onneshan report further says that the reduction of both depth and severity of poverty has occurred at a slower rate than before due to rising inequality. The decreased rate in the percentage of poverty gap during 2005 to 2010 (5.56 per cent) was lower than that of 2000 to 2005 (5.94 per cent) at national level. Also, the rate of reduction in the percentage of squared poverty gap between 2000 and 2005 was 7.39 per cent, which was higher than the rate of reduction (6.26 per cent) of last five years (i.e. from 2005 to 2010) at national level. In case of rural areas, the percentage of both depth and severity of poverty has reduced at a slower rate during 2005-2010 than that between 2000 and 2005, and has reduced at a higher rate than before in urban areas. The report also states that food expenditure, food inflation and general inflation are positively associated with poverty and inequality. An additional number of people go under the poverty line with the increase of food inflation. In 2000, 55.8 million people were living under poverty line while food inflation was 2.68 per cent (12-month average). Food inflation has increased to 7.91 per cent (12-month average) in 2005 when the number of total population living below the poverty line was 56 million. Under the business as usual scenario, an additional population of 0.04 million might go under the poverty line with 1.0 per cent increase in food inflation. The report of the think-tank illustrates that economic growth has not been shared fairly, and that the current economic crisis further widens the gap between the rich and poor. In Bangladesh, the number of people living in poverty has increased due to rising disparities in the distribution of resources within this country. Unequal accesses in different forms of services hamper the expected level of growth in reducing poverty. Unequal growth pattern has a weaker poverty alleviating effect and has been shown to be harmful to growth. Therefore, reduction of poverty is hard to pin down without addressing inequality. The report further highlighted that gini co-efficient of income has increased from 0.393 in 2000 to 0.430 in 2010 in rural areas with the growth rate of 0.94 per cent, whereas it has decreased from 0.497 to 0.452 at the same time period in urban areas with the growth rate of 0.91 per cent. At national level, gini co-efficient of income has increased slightly from 0.451 to 0.458 with a growth rate of 0.16 per cent during the same period. The Unnayan Onneshan report adds that during the period of 1995-96 to 2010 the monthly household income has increased by 10.86 per cent, while expenditure has increased by 11.58 per cent. Moreover, expenditure on food has increased with the growth rate of 10.64 per cent, 10.63 per cent and 8.32 per cent at national, rural and urban areas respectively during the same period. The growth rate of monthly household income between 2005 and 2010 was 11.87 per cent; expenditure was 16.52 per cent, while expenditure on food was 17.59 per cent. (The writer can be reached at email : rtitumir@unnayan.org)