Widening Income Inequality | daily-sun.com

Widening Income Inequality

A.N.M. Nurul Haque     25th October, 2017 10:12:02 printer

Widening Income Inequality

Bangladesh Bureau of Statistics (BBS) has unveiled the report “Household Income and Expenditure Survey (HIES) 2016”, showing the widening income disparity among the rich and poor people in the country. The survey report released October 17, shows that, the rich 10 per cent of the population is now having more than 38 per cent income share while the poorest 10 per cent is having only one per cent income share.

 

More frustrating fact is that, the rich-poor inequality in terms of wealth accumulation has been widening in the country day by day instead of reducing.

Although, poverty reduction has slowed a down fall of 0.5 per cent over this period, the widening income disparity between the rich and the poor is not a good sign for the economic health of the country.

 

The BBS carries out this exhaustive nationwide survey titled ‘Household Income and Expenditure Survey (HIES)’ usually in every five years or so. This survey revealed the income inequality between the rich and the poor, which has widened significantly with the top 10 per cent of the population and the bottom 10 per cent. The previous Household Income and Expenditure Survey (HIES) was conducted in 2010.  


The income share of rich 10 per cent is now 38.16 per cent, which is 2.32 per cent higher than what it was in 2010. Whereas, the bottom 10 per cent of the population has now 1.01 per cent of the income share, while it was two per cent in the year 2010. This statistics reveals that the rich people in the country are becoming richer and the poor people are becoming poorer day by day, as poor people’s share in the national income eroded further in the past six years with the richer segment of the population having bigger stakes.


The poorest five per cent had 0.78 per cent of the national income in their possession in 2010, and now their share is only 0.23 per cent. On the other hand, the richest five per cent, who had 24.61 per cent of the national income 2010, now has a higher share of 27.89 per cent. According to the HIES 2016, the number of people in the poverty line has dropped to 24.3 per cent from 31.5 per cent in 2010. But the proportion of ultra poor fell to 12.9 per cent from 17.6 per cent in six years. However, the rate of poverty reduction 1.2 per cent a year actually slowed down in 2010-16 compared to that 1.7 per cent a year in the preceding five years.


The severity of income inequality also emerged in another survey conducted by the finance ministry a few years back on national saving certificates. The survey found that the monthly income of 93 per cent of the country’s households was below Tk 20,000 as per the HIES of 2005.
The rest seven per cent households with a monthly income of more than Tk 20,000 were considered as upper class. Only this class was capable of investing in public savings certificates which offers the highest interest rates in the local market.


It is encouraging that the number of population living below poverty line is decreasing. The number of population living below the poverty line increased from 51.6 million in 1991-92 to 56 million in 2005 with an annual average rate of 0.314 per cent at national level. According to the HIES 2016, the number of people in the poverty bracket has dropped to 24.3 per cent from 31.5 per cent in 2010. If the current trend continues, the number of population living below the poverty line will decrease further. However, in rural areas, it might increase slightly as the scope of income generation in the rural areas is very limited.


Inflation, particularly food inflation, is directly associated with the widening income gap between the rich and the poor. An additional number of people go below the poverty line with the increase of food inflation. In 2000, 55.8 million people were living below poverty line while food inflation was 2.68 per cent. After five years, food inflation increased to 7.91 per cent in 2005 when the number of total population living below the poverty line was 56 million. So, the need for accelerating agricultural sector growth that has been somewhat stagnant due floods, is essential for reducing the unusual income disparity between the rich and the poor.


Among other things, the HIES 2016 has revealed that household income, on average, has now increased to Tk 15,945 a month from Tk 11,479 in 2010. There has been an increase in percentage of safety net beneficiaries to 28.7 per cent from 24.6 per cent in 2010. It also showed how some of the livelihood indicators got positive push with more people getting access to pure drinking water and  sanitary latrines. In the last six years, households with electricity increased to 75.9 per cent from 55.3 per cent, while mobile phone users rose to 92.5 per cent from 63.7 per cent. These are the indicators of the urban-based economic development of the country. But pro-poor policies which would involve the government making investments to boost growth in the agricultural sector are also necessary. It would generate jobs for the rural people and would help growth to all segments of the population living in the rural areas. Ultimately, it will help to reduce the widening income disparity between the rich and the poor. Expansion of the social safety net programmes may benefit the ultra poor.


The widening gap of income between the rich and the poor not only means unbridled luxury and extravagance of the super rich and deprivation of millions of the poor, it also speaks a lot about the unhealthy condition of economy of a country. Various measures like proper distribution of income and wealth, trickle-down economics and welfare initiatives by the government are suggested by the economists for reducing this income gap between the rich and the poor. Although, the present scenario of income gap in Bangladesh is not as enormous as in some developed countries, experts have opined that the gap here is already wide and widening at a faster rate. So, appropriate measures must be taken to avoid any full scale social upheaval.


Bangladesh has remained to be a country with substantial income inequality with all its manifestations even 46 years after independence due to wrong policies pursued by successive governments. The policies pursued by successive governments failed to address the problem of growing income disparity. Corruption and weak economic management were also responsible for the failure. Lack of proper support such as land, capital, credit and skills is preventing the poor from participating in productive economic activities compelling them to remain as landless farmers. The agriculture census carried out by Bangladesh Bureau of Statistics in 2008 revealed that, the number of absolute landless farmers in Bangladesh was 4.48 million.


Although the present government has taken several initiatives for alleviating poverty, yet poverty exists. Surely, the rate of decline in poverty has been accelerated by the present government. But there is widespread concern that economic growth has not been shared fairly and this is responsible for further widens of the income gap between the rich and poor. Unequal growth pattern of economy has a weaker poverty alleviating effect and that has been revealed in HIES 2016. So, reduction of poverty will be a hard task to do without addressing the income disparity between the rich and poor.


Income inequality, which emerges from a combination of greatly unequal distribution of physical assets as well as human capital, is a serious problem for the country. There is no denying that economic policies adopted by subsequent governments enabled a small group to make fabulous wealth illegally by plunder, grabbing and corruption. The poor segment of the population was severely disadvantaged in terms of ownership of assets and has inadequate access to institutional finance as well as to basic services, including education and healthcare. So, these things should be addressed with right earnest for reduction of income disparity.

 

The writer is a columnist


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