Inequality widens in Bangladesh

Shakahwat Hossain  | Published: 00:07, Dec 19,2020 | Updated: 00:43, Dec 19,2020


The nation celebrated the 50th Victory Day marked by the success of incremental economic growth but with the widening inequality in resource distribution, delivery of education and health services, and a worsening governance situation.

Economists noted that the country’s laudable gain in gross domestic product growth by over 6 per cent in the recent years was not inclusive and it did not help check the rising income inequality since the country’s Independence in 1971.

The outbreak of COVID-19 in the country has further demonstrated the necessity of inclusive economic growth as the 66-day shutdown has pushed 1.64 crore people below the poverty line.

The spread of the novel virus has also exposed the fragility of the country’s health system with even many rich people dying at hospitals just due to lack of oxygen.  

Economists viewed that the people of the country deserved better, which became independent after a nine-month-long bloody war with the Pakistani military and their collaborators and went through the 1974 famine and the spells of military rule spanning more than a decade.

The Gini coefficient, widely used to measure the inequality in the distribution of economic gain among a country’s citizens, increased to 0.483 in Bangladesh in 2016, just 0.02 away from the danger level of 0.50 that indicates impending social unrest.

In 1973–74, the score was 0.36.

A rising Gini coefficient trend means that the rich are becoming richer while the poor poorer and a low ratio refers to a narrow gap between the two classes.   

General Economics Division member Dr Shahmsul Alam on Thursday told New Age that the growing inequality had been a headache for his division.

He said that they were putting special emphasis on the issue in the upcoming eighth five-year plan which was now in the final stage of preparation.

The country, he said, would have graduated from the status of least developed country had there been not the military rule for more than a decade until 1990.  

Economists, however, said that without inclusive growth it should be very difficult to check the income inequality that also created scopes in the country for unequal education and health services and for a worsening governance situation.

The absence of good governance hampers the performance of crucial state organs like judiciary, election commission, anti-corruption commission, central bank and bureaucracy, said Anu Muhammad, a professor of economics at Jahangirnagar University.

In such a situation progress of a knowledge-based society is difficult, he said referring to the country’s lowest position, with the score of 35.9, in South Asia in the recently-released Global Knowledge Index 2020.

Among the South Asian countries, India has ranked 75th, Sri Lanka 87th, Bhutan 94th, Nepal 110th and Pakistan 111th in the index. Bangladesh’s another next-door neighbour Myanmar has ranked 128th.    

Rashed Al Mahmud Titumir, an economics professor at the department of development studies, University of Dhaka, said that the unabated capital flight as well as bank loan scams and a steady rise of the ultra rich hardly reflected the spirit of the War of Independence.

Bangladesh suffered a $5.9 billion, about Tk 50,000 crore, capital flight in 2015 and a total flight of $81.74 billion from 2006 to 2016, according to a January 2019 report of the Washington-based Global Financial Integrity.

The size of wealthy people in Bangladesh with $5 million plus in net worth increased on average by 14.3 per cent per annum, faster than in Vietnam, China, Kenya, Philippines, Thailand, New Zealand, the United States, Pakistan and Ireland, said the report titled A Decade of Wealth, released in May 2020.

The amount of non-performing loans in the country’s banking sector increased by Tk 3,606 crore to Tk 96,116 crore at the end of June this year from Tk 92,510 crore three months earlier meaning that a huge amount of money remained unproductive.

This is one of the major reasons for unemployment, said economists.

The rate of unemployment among the educated youth in the country is very high at 33.2 per cent, a study by the Bangladesh Institute of Development Studies said last year.

Former Bangladesh Bank governor Saleh Uddin Ahmed said that had there been no mismanagement and lack of good governance in the banking sector the achievements in many indices like per capita income, school enrollment, sanitation, child mortality rate and near-term food security could have been much better.

Expatriate Bangladeshis, he went on, send home millions of dollars every year helping the country reduce pressure on the balance of payment and increase demand in rural areas.

But the present government has failed to offer much for the welfare of the returnee migrants in stimulus packages after many came back home from the popular destinations for migrant workers in oil-rich Arab countries.  

Experts noted that there was even inequality in the allocation and disbursement of the Tk 1.21 lakh crore stimulus packages announced by the government for various sectors in phases since April this year to overcome the economic fallout of COVID-19.

Of the fund, the readymade garment sector availed the entire Tk 5,000 crore allocation at two per cent service charge and has also received Tk 5,500 crore from the Tk 40,000 crore fund meant for large industries.

As of November 30, the rate of disbursement from the Tk 40,000 crore package for big industries was 71 per cent while only 41 per cent of the Tk 20,000 crore stimulus fund for the cottage, small and medium entrepreneurs was disbursed although SMEs employ informal sector workers.

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