Removing income inequalities

Never before in the past had the issue of economic inequality in regions, divisions and districts of Bangladesh been focused more eloquently as it has been these days. It indeed augurs well for future stability and prosperity of the country that the issue has, of late, drawn attention of economists and policy-planners on a wider scale. The just-released Poverty Maps Bangladesh 2010, jointly published by the Bangladesh Bureau of Statistics, the World Bank and the United Nations World Food Programme, has only highlighted the severity of the problem, which has the potential to set off a bigger crisis in the country in future. It is the economic inequality which has been at the root of societal upheavals in many countries. Even Bangladesh had to launch the 1971 war to emerge independent because of glaring disparities perpetrated by the then rulers in Islamabad.   
The Maps showed the Dhaka division having the highest share of the country's poor population, followed by Chittagong. This is because people from impoverished areas migrate to these economic hubs in search of employment. The Poverty Maps also found northern division of Rangpur and southern division of Barisal having the highest level of poverty, whereas Chittagong and Sylhet have the lowest.
The policy-makers have to worry much about inequality as poverty-reducing effect of an increased average income gets weakened by a rise in inequality. According to one of the survey findings, incomes of the poor would rise at a faster rate and hence the impact on poverty reduction efforts would be stronger if the share of the ultra poor in total income increases compared to a situation where opposite is the case. In Bangladesh, for example, if the share of the bottom 40 per cent of the population had reasonably increased during the 1990s and 2000s, their incomes would have risen at a faster rate to help raise their standards of living. Then more people would have been able to come out of extreme poverty even with the same rate of economic growth that was achieved. The study further revealed that if the poor had a higher share of the total income, they would have been able to spend a larger amount on education and health care. This would have then ensured economic empowerment of the members of their workforce on a greater scale. That, in turn, would have made a greater positive contribution to the growth of the economy.
The government appears to be aware of adverse effects of income inequality in the country. It is certainly against this backdrop that district quota in government jobs is still being retained, despite pressure for abolishing it while more and more workers from the poor monga-affected districts are being employed in readymade garment factories at the directive of the Prime Minister. Even the Finance Minister has innovated the idea of formulating district budgets on an experimental basis. Once implemented on a national scale, the district budgets, to be made on the basis of ground realities, will go a long way towards removing inequality as these will set priorities for development on upazila and union parishad basis. Poverty status of the people living there could then be assessed correctly and integrated programmes launched effectively. For this purpose, administrative decentralisation, development devolution, effective empowerment of local government (LG) bodies and building up of their capacity assume a critical importance.    
In view of severity of inequality, it is time for the government to devise realistic ways and means to develop target-oriented plans to upgrade the districts, faced with economic inequalities, to the status of others which are richer in terms of income. One dominant factor in faster alleviation of poverty in more prosperous districts has been found to be steady flow of remittances from abroad. Most of the districts which have seen migration of a large number of people as overseas workers are better-off in terms of income inequality. Even their relatives -- near and distant ones -- have been found to be benefiting from cash transfers from abroad by the workers. The government should consider employing more workers from the least developed areas for overseas jobs under the government-to-government (G-to-G) arrangement. It can choose workers from resource-deficit areas of the country for jobs in Malaysia where the G-to-G system prevails in matters of overseas employment.
 Helene D. Gayle, listed as the 78th most powerful woman in the world by Forbes and who served as chair of the Obama administration's Presidential Advisory Council, has suggested an effective way-out of income inequality. She says, in order to counteract income inequality, it is essential to tackle poverty in an integrated way that has long-term impact. The people in the least developed regions of Bangladesh need to gather the capacity to be resilient, to take on challenges and to learn the skills they need to work towards more prosperous future.
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