Income inequality between the rich and the poor has widened in Bangladesh, suggest official statistics that show an increase in per capital income this fiscal despite all signs of a deteriorating poverty situation in recent years.
Terming the trends of income gap alarming, economists said the current growth process would continue to widen the disparity in income and command over national resources, leading to social tensions and deprivation of majority population.
Bangladesh Bureau of Statistics estimates that the country’s per capita income has increased to $690 during the current fiscal year from $608 the previous year although growth in gross domestic product declined to 5.88 per cent and unofficial figures show a rise in poverty incidence due mostly to price-hike.
Between 2007 and 2008, according to research by the Centre for Policy Dialogue, an additional 8.5 per cent people fell below poverty line due to income erosion caused by price-hike while another research organisation Shamunnay found that the number of poor rose 4.34 per cent to 45.86 per cent in 2007-08.
Abul Barakat, a professor of economics department at Dhaka University, challenged the bureau’s method of calculating per capita income increase and poverty incidence and said there were contradictions in its statistics in assessing poverty. ‘Even their data show inequality has increased although it claims that poverty has decreased,’ he added.
While the bureau’s statistics said the top 10 per cent of the population had command over 37 per cent of the household income, ‘the real percentage will be more than 60 per cent in view of their control over black money’, the economist pointed out.
Estimating the Bangladesh population at 14.42 crore, the statistics bureau recently calculated in local currency that average annual income of each Bangladesh national stands at Tk 47,373 this fiscal year compared to Tk 41,728 the previous fiscal.
‘Even if we assume that the BBS data on rising per capita income are realistic, it is a very alarming situation for us because inequality has increased further with a decline in real income of 80 per cent of the population,’ Anu Muhammad, professor of economics at Jahangirnagar University, told New Age.
He explained that even though nominal income had increased, inflation ate into the income of most of the people, making the entire resource distribution system biased towards the richer segment of the population.
‘Whereas real income has fallen due to price-hike in recent years, income inequality has widened further. Inequality is inevitable in the present growth process,’ said Salim Raihan, a teacher of economics at Dhaka University. He cautioned that unless the issue of resource gap was addressed through necessary policy measures, the situation might trigger social disorder.
All the three economists expressed common views that the income inequality could not be addressed by the traditional budgetary means of social safety net programmes as, they argued, such critical issue required major changes in the overall development policy and approach.
The economic growth achieved in recent years has widened resource gap between the country’s eastern and western regions, leaving the people of the western part of the Brahmaputra river in a poorer condition, revealed a World Bank report titled ‘Poverty Assessment for Bangladesh: Creating Opportunities and Bridging the East-West Divide’.
In the current [2008-09] budget, approximately 55 per cent development expenditures are said to have been dedicated to programmes and expenses directly or indirectly related to poverty alleviation and assistance to the poor. About 16 per cent of budgetary resources or 2.6 per cent of gross domestic product have been earmarked for the purpose, said an official of the finance ministry.
‘We should continuously monitor the situation, make adjustments and look for new avenues to address poverty by supporting the poor and creating assets for development,’ said the official.
Salim Raihan suggested that the government should focus on sectors such as agriculture and small and medium enterprises that generate higher employment in order to address growing inequality in the society.
Abul Barakat said that although the official statistics put the number of poor at 4.1 million, their actual number would be ‘no less than 100 million in my estimate’. He pointed out that over 25 million lower middle class people entered poverty in the past seven years due to soaring prices of essential commodities.
‘I understand poverty in its various dimensions, not merely by the definition of income,’ he said referring to the constitutional provision to provide basic needs to all citizens. ‘If anyone is denied basic right, they are, to my understanding, poor,’ he explained.
According to article 15 of the constitution, the state’s fundamental responsibility is to ‘attain, through planned economic growth, a constant increase of productive forces and a steady improvement in the material and cultural standard of living of the people,’ with a view to securing to its citizens the basic necessities of life, include food, clothing, shelter, education and medical care.
About remedial measures, Anu Muhammad said inequality could be addressed only if there were changes in the entire development philosophy of the country.