The government target to narrow the income inequality among the population, measured by Gini coefficient, to 0.45 per cent from 0.48 per cent looks almost bleak against the backdrop of growing unemployment, sluggish wage growth and corruption.
The General Economics Division under the ministry of planning in its seventh five-year plan targeted lowering the dangerous-looking Gini coefficient by 0.03 percentage point by the next year, according to the medium-term macroeconomic policy statement in the proposed budget for the Fiscal Year 2019-20.
But economists see no sign of the inequality decreasing despite the impressive economic growth crossing eight per cent in recent years.
Rather, they have detected many signs of further rise in the inequality amid the new economic policies announced, including the proposed national budget favouring the affluent people and hard-pressing the fixed income groups, the loan-rescheduling scheme and the provision of cash incentive to readymade garment exporters.
Dr. Shahmsul Alam, a GED member, told New Age on Wednesday that no plan in the world was implemented fully.
‘Still, we have to set the target on inequality for the sake of the Sustainable Development Goals’, he said.
A higher Gini coefficient means greater inequality and the threshold of 0.50 per cent is described as the danger level prone to creating social unrest.
The Gini coefficient of the country’s economy, as measured by the Bangladesh Bureau of Statistic, went up to 0.482 in 2016 from its previous count of 0.458 in 2010.
The income share held by the richest 5 per cent of the nation’s households rose to 27.89 per cent in the fiscal year 2016 from 18.85 per cent in the FY 1992 while the income share held by the poorest 5 per cent marked a sharp decline to 0.23 per cent from 1.03 per cent over the same period, according to the BBS.
Shamsul Alam said that many targets of the seventh five-year plan like accelerated growth, poverty reduction, per capita income and macroeconomic stability were right on track.
He said that they would get the actual picture about the targets of the five-year plan in the next month.
According to economists, the economic performances in the terminal fiscal year, 2019-20, of the seventh five–year plan, formulated in 2016, will also be greatly
affected by the proposals for relaxed legalisation of the undisclosed money, raising the surcharge-free asset limit and keeping the tax-free income limit unchanged in the national budget.
The first two proposals will benefit the affluent section while the other proposals are expected to reduce the income of fixed- and low-income group people, said former caretaker government finance adviser Mirza Azizul Islam.
He noted that the budgetary proposals were not equitable at all.
‘Not only the proposed budget,’ Azizul said, ‘But also the previous budgets, given by current finance minister AHM Mustafa Kamal’s predecessor AMA Muhith since 2009-10, could not address the issues of unemployment, falling wage growth rate, capital flight, defaulted loans, narrow income-tax base, low private investment and poor foreign direct investment in checking inequality.’
Every year 21 lakh people join the country’s workforce while only 13 lakh jobs are created for them, implying that around 8 lakh young people are added to the already significant number of the unemployed population, according to the BBS and the World Bank.
‘Besides, the real income of the people is not increasing,’ according to Dr Selim Raihan, executive director of the South Asian Network on Economic Modelling, ‘Rather the scenario is depressing as far as the inequality is concerned.’
He noted that growing number of people, mostly poor, were not getting enough scope for increasing their income ‘despite the much-lauded economic growth that actually benefits few people’.
The Centre for Policy Dialogue that has been slating the country’s economic growth as ‘jobless growth’ calculated that the average real monthly income fell by 2.5 per cent over the 2017-18 fiscal year.
Economists are also critical of the country’s revenue mobilisation system that according to them is not suitable for arresting and reducing the growing inequality.
Policy Research Institute executive director Ahsan H Mansur said that the country’s income tax-GDP ratio was even lower than that of neighbouring Bhutan because of a flawed taxation policy that hardly benefitted the poor.
Economist Rehman Sobhan at a post-budget discussion in the capital on Saturday raised questions about the government initiative for reducing the income inequality and social disparity.
He commented that the government policies were widening the inequality as they helped accumulation of public resources by a handful of people.
According to a US-based research firm, Bangladesh has been ranked as
the fastest growing economy with an increasing number of ultra-rich in the world.
The World Ultra Wealth Report, released by WEALTH-X on September 5, 2018, said that the ultra-high net worth population in Bangladesh was growing at the rate of 17.3 per cent over the five years from 2012 to 2017.
China is in the second position with a 13.4 per cent growth of the ultra-rich population ranking followed by Vietnam (12.7 per cent), Kenya
(11.7 per cent), India (10.7 per cent), Hong Kong (9.3 per cent), Ireland (9.1 per cent), Israel (8.6 per cent), Pakistan (8.4 per cent) and the United States (8.1 per cent).
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