Nov 22
No Respite In Widening Gap Between Rich And Poor PDF Print E-mail

By Apu Ahmed

 

There is no respite in growing inequality the country has been facing over the past decades.

 

Rich-Poor Gap Widens

The alarming picture has surfaced again with the releases of household income and expenditure survey by Bangladesh Bureau of Statistics. While the income inequality means that the wealth is distributed unevenly among the various population groups the country’s inequality as measured by the Gini co-efficient increased to 0.483 at national level in 2016 from 0.458 in 2010. The outcome of the survey demonstrates that the rich became richer while the poor poorer during the period between two surveys as the Gini coefficient ‘0’ indicates no inequality and ‘1’ indicates the highest degree of inequality.

 

High GDP Growth Benefits Few

The per capita income in the county grew five folds to $1602 in 2016-17 fiscal from $330 in 1994-95, thanks to the inflow of remittance, growing exports at the cost of cheap labour and internal consumption. But only few became the main beneficiaries of the growing income. The top 10 percent of the population now having an income share of 38.16 percent, which is 2.32 percent higher than what it was in 2010. Whereas, the bottom 10 percent of the population has half (1.01 percent) of the income share it had in the year 2010 (2 percent). The growing inequality also eclipses the country’s success in reduction of poverty that dropped to 24.3 per cent in 2016 from 31.5 per cent six years back.

 

Inequality in South Asia

The country’s income inequality is also high compared to its neghbours except India. The Gini Co-efficient in India is estimated to be close to 0.50, which would be an all-time high, after it was 0.48 in 2011. The period 1951 to 1980 saw the poor narrowing the income gap with the well-to-do India, the trend has reversed over the period 1980-2014. The Gini co-efficient was 0.35 in Pakistan that has risen to 0.41 in 2013-14. In the war-torn Sri Lanka, the Gini coefficient has fallen to 0.48 in 2012-13 from 0.49 in 2006-07. The latest estimate of the Gini coefficient in Nepal is 0.33 in 2010-11 which has remained almost unchanged since 1995-96. The Gini index of Bhutan fell gradually from 46.78 in 2003 to 38.81 in 2012. Afghanistan, in spite of considerable economic developments over the last one and half decades, still remains one of the poorest countries where, according to the World Bank report, the Gini index increased from 29.7 in 2007-8 to 31.6 in 2011-12.

 

Reasons

While the trend in income inequality in the neighbouring countries is mixed it is increasing and increasing in Bangladesh as the Gini coefficient was 0.41 between 1991 and 2000 and now reached 0.483. Lack of good governance, corruption, slower growth in employment and real wage are contributing to the widening income gap. The successive governments have been pursuing flawed policies in the name of pro-poor growth. The latest HIES findings exposed the flawed policies which eventually favours the manufacturing sector mainly concentrated in the urban areas. The policies have neglected the farm sector that is still the mainstay of the vast rural areas. With the farm sector still employing the single biggest workforce, the government should bolster farm sector that in turn would help growth in all segments of the population. As the manufacturing sector is mainly based in urban areas the growth in jobs in the rural sector still depends on agriculture. There is no scope to give less priority to agriculture that still employs 42 percent of the labour force. The slowdown in agriculture will have ramifications for income disparity.

 

Experts Views

Former adviser to the caretaker government Mirza Azizul Islam finds the extent of inequality increased in the period insignificant as inequality generally increases along with economic growth. Still, the reason behind the widening inequality is slower growth in agricultural production along with higher growth in manufacturing and services sectors, he said. He noted that wealthier people and skilled manpower get the big portion of income from the sector. World Bank lead economist in Dhaka Zahid Hossain also echoed Mirza Aziz.Zahid said that the poor got small share of income as the share of agriculture in GDP growth declined. Lack of good governance, quality employment, investment and problems in banking sectors and infrastructure also affected income distribution, he noted. Dhaka University professor of economics MA Taslim said that the survey results proved that the economic development during the period was not poor-friendly. The HIES 2016 also exposed the absence of research and development in agriculture to bring about more crop diversity. The mere expansion of safety net programmes is not going to be enough, especially where there is confusion about who ought to be the beneficiaries.Former caretaker government adviser Hossain Zillur Rahman, however, said that it was the proper time for reassessment of the current economic development strategy to check a huge disparity. The present trend of the GDP growth is not ‘inclusive,’ he said. Many oppose major changes in economic policy for continuation of poverty elevation, but everybody admits that the income disparity became a major problem in the country.

 

Impacts

The impacts of inequality on different sectors of the society have become acute as only a small section of people is getting high quality education, while the majority people are being deprived of it. Majority people are also being deprived of good medical treatment, nutrition and entertainment which lead to heightens social tensions and political and social instability. As the inequality in a county increases, the loss in human development also increases, according to the Human Development Report, released jointly by the UNDP and the General Economics Division of the Planning Commission in 2016.

 

Check Corruption

As the economists noted that the present government had failed completely to check corruption in the country’s financial sector the inequality to grow further.  The series of scams from share market debacle to near bankruptcy of the state-owned BASIC Bank and Hallmark loan scandal in Sonali Bank have made general people losers. Only the good governance in the financial sector and other sectors can play a bigger role to check inequality. There is difference of opinions among the economists to address the inequality, but all of them agreed that the unequal distribution of economic gain was hurting the economy and preventing the nation from a sustainable economic growth