Saturday, 10 December, 2022

Economic Endeavors of Bangladesh: Inequality Makes Competencies Hard to be Complacent

  • Md. Mujibul Haque Munir
  • 16th November, 2022 05:09:01 PM
  • Print news

It is pretty much obvious that Bangladesh's economy, like those of many other nations, is having some difficulties. There are warnings that the issue will only get worse unless we develop powerful defenses against the devilish state.

A loan from the IMF appears to be the best immediate solution given the intense pressure on the foreign reserve and a negative Balance of Payments. However, the IMF's conditions are causing rifts in Bangladesh's economy. One of the best common criticisms against IMF is about its conditions. Its ‘one shirt fits for all’ approach is also a serious issue of blame.  IMF officials themselves promised to ease the constraints in 2011, but Eurodad finds that they were instead tightened in 2014. According to Eurodad, the IMF approved loans between 2011 and 2013 with an average of more than 20 conditions.

Conditions, if any, must be in the best interests of people. However, a sizable amount of IMF conditions are focused on politically touchy topics, such as private sector reform, cutting back on agricultural sector subsidies, etc. The IMF should make it simpler for countries to request funds. Because studies show that loans with structural requirements often worsen poverty.

We'd like to believe that Bangladesh will be able to weather this crisis with or without the help of the IMF. We must not lose sight of the fact that Bangladesh has made outstanding progress in terms of several socioeconomic indicators despite beginning the journey with a broken economy and a disorganized socioeconomic condition. The GDP of war-torn Bangladesh was barely USD 6.2 billion in 1971, but by 2018, it has grown to USD 286.27 billion, placing the nation at 42 in the global economy. Bangladesh's per capita income today is over USD 2,824, compared to barely USD 135.62 in 1970. Bangladesh, formerly disparagingly portrayed as a "bottomless basket," is now referred to be a "Role Model for Development."

Therefore, we need to wage a fierce battle against two highly guilty parties, corruption and inequalities, in order to maintain the spirit of positive development and to restore the desired speed in economic advancements. The issue of inequality is not receiving the same attention from the appropriate areas, despite the fact that corruption is publicly addressed and frequently in the news.

The economy of Bangladesh is severely hampered by inequality. According to Article 27 of the Bangladeshi Constitution, everyone is entitled to equal protection under the law and equality before the law, and Article 28(1) declares that the State is not allowed to discriminate against anyone based merely on their place of birth, caste, color, or religion. Women have equal access to all aspects of state and public life under Article 28(2). No individual shall be subject to any handicap, liability, limitation, or condition of access to or admittance to any place of public enjoyment or resort on the basis of religion, race, caste, sex, or place of birth, according to Article 28(3).

But despite its economic growth, Bangladesh is clearly experiencing inequality. If we compare the 2010 and 2016 Household Income and Expenditure Survey, the inequality is clear (HIES). In 2010, the Gini coefficient was 0.458, while in 2016, it was 0.482. One of the most often used indicators of economic inequality is the Gini coefficient. A population with a coefficient of 0 has an entirely equal distribution of wealth or income. When one individual in a population receives all of the money, a coefficient of one is used to describe the ideal inequality.

While there is an increase in poverty due to the COVID pandemic, there is also an increase in the number of wealthy people. This is a very clear illustration of economic injustice and inequality. A recent study found that the Covid-19 pandemic's effects led to 24.5 million "new impoverished" people in Bangladesh, or 14.7% of the country's total population. According to the study, which is headed "PPRC-BIGD Rapid Response Research Phase III: Poverty Dynamics and Household Realities Part 1," 44% of the "new poor" live in rural areas, while 59% live in urban slums.

Although there have been rumors of the epidemic having a detrimental influence on the economy, it appears that Covid-19 was unable to stop the rise in multimillionaires. In the first six months of the outbreak, more persons had deposits totaling more than 10 million Bangladeshi taka. 4,865 accounts joined the rally from April to September of 2020 with deposits of Tk 10 million or higher. And at the end of September, there were 87,500 such accounts. According to experts, the coronavirus epidemic has not had an impact on wealthy people's businesses or income. Additionally, the government's decision to permit the whitening of black money contributed to the rise in the number of new millionaires. According to the most recent data from the Bangladesh Bank, the total number of account holders with at least a million taka in deposits rose from 82,625 in March to 86,037 in June.

Bangladesh has seen this tendency before, though. According to a survey released by the US-based research group Wealth X, Bangladesh is the third-fastest-growing millionaire country in the world. According to the research firm's predictions, the number of High Net Worth (HNW) individuals in the nation will increase by 11.04% year over the next five years. The HNW population, according to the study, consists of people whose net worth is between $1 million and $30 million.

Bangladesh must therefore prioritize tackling disparities in addition to upholding the spirit of GDP growth, poverty reduction, and sustainable development in other socioeconomic spheres. Thankfully, we already have resources, but we must make sure they are put to good use. We need both legislation and implementation plans in this area, as well as constructive attitudes.

(The writer is a development activist and Joint Director of COAST Foundation)

Source: Sun Editorial