Corona pushes up poverty rate to 42pc

SANEM study finds

Staff Correspondent

24 January, 2021 12:00 AM printer

The country’s upper poverty rate has increased from 21.6 percent in 2018 to 42 percent in 2020 while lower poverty rate has risen from 9.4 percent to 28.5 percent after the pandemic, suggests a new study.

South Asian Network on Economic Modeling (SANEM) conducted a nation-wide household survey during the months of November and December2020.

Upper poverty rates in the rural and urban areas rose to 45.3 percent and 35.4 percent, lower poverty rate spiked to 33.2 percent and 19 percent respectively in rural and urban regions, respectively.

Average per capita household expenditure, on the other hand, fell by 45 percent, 29 percent and 17 percent for the extreme poor (people below LPL), moderate poor (people in between LPL and UPL) and vulnerably poor (people between UPL and 1.25 times UPL) households respectively.

At the same time, it has increased by 6 percent in non-poor and non-vulnerable households, according to the study.

“To ensure sustainable and evidence-based development pathways in the post-COVID scenario, it is crucial to make a sound assessment of the pandemic's multidimensional impacts on the people of Bangladesh,” SANEM executive director Dr Selim Raihan said.

The Gini coefficient, a measurement of inequality, has increased from 0.32 in 2016 to 0.31 in 2018 and 0.33 in 2020.

The ratio of income share between richest 5 percent and poorest 20 percent households increased from 2.05 in February 2020 to 2.45 in November 2020.

Similarly, the ratio of expenditure share in richest 5 percent households to that in poorest 20 percent households increased from 1.34 in 2018 to 2.15 in 2020.

This is because, the expenditure share of the richest 5 percent households increased by 1.02 percent whereas that of the poorest 20 percent declined by 3.13 percent.

As most ultra-rich households were not included in the survey, the real impact on inequality might be much larger than expected, SANEM said.

To measure the pandemic's impact on poverty, SANEM followed Cost of Basic Needs (CBN) approach. SANEM updated the poverty line incomes (both the lower poverty line and the upper poverty line) based on the 2018 Household Survey conducted by SANEM and adjusting it for adequate inflation.

Average per capita education expenditure has fallen for all households between 2018 and 2020, with the decline being the sharpest for extremely poor households (58 percent).

On the other hand, average per capita health expenditure has increased for all households, with the increase being the greatest for moderately poor (97 percent) and non-poor (104 percent) households.

This study also attempted to assess the inequality in access to online (TV, Internet etc.) education for students: the findings suggest that 19 percent students from rural regions and 27 percent students from urban regions participated in some form of online or TV learning.

Among the students who took part in online or TV education, 15 percent belonged to poor households, whereas 26 percent belonged to non-poor households.

The respondents mentioned the unavailability of online classes (49.1 percent), no access to technological devices (6.1 percent), insufficient access to devices (5.3 percent), insufficient access to internet connection (5.4 percent), inability to bear the cost of internet connection (6.5 percent) as the most common reasons behind not being able to participate in online or TV learning.

As a result of the pandemic, households had to confront various employment issues such as losing work, not receiving due wages, workplace closures etc. Only 17.3 percent households claimed that they were involved in economic activities without any disruption.

55.9 percent households claimed that their income declined despite having work, 8.6 percent claimed that they lost work, 7 percent claimed that working hour had reduced while 33.2 percent claimed that their work had stopped for a while during the outbreak.

Between February and October 2020, the main income earners across all employment categories experienced a fall in average income: the decline was 32 percent for self-employed workers, 23 percent for wage-employed workers, 29 percent for day laborers, and 35 percent for other categories.

In reaction to the crisis, households adopted a variety of coping strategies: 48.72 percent resorted to borrowing, 32.4 percent relied on savings, 27.33 percent reduced expenditure on non-food items, 27.02 precent changed their dietary patterns involuntarily while 16.67 percent resorted to donations from friends or relatives.