TWO interconnected phrases, the new poor and reverse migration, which are consequent on the economic fallout of the COVID-19 outbreak, appear to sum up today’s harsh reality that defines the lives of many of the struggling millions.
The number of people falling into the category of ‘the new poor’, people who have fallen below the poverty threshold because of a complete or partial loss of income, varies in different estimates, ranging from 20 to 35 million while the people already living on or below the poverty threshold have found their economic ability a worrying notch down, rendering them extremely vulnerable. One of the consequences of the sudden emergence of an astounding number of the new poor is that thousands of them, most of whom earlier migrated to major cities, are now forced by the situation to leave for their villages as they can no longer afford to live in cities, triggering a reverse migration of a sort.
The new poor
STUDIES and statistics concerning the number and nature of the new poor have come up in the past three months. To begin with, the South Asian Network on Economic Modelling predicted in early May that 20.4 per cent of Bangladesh’s population or about 34 million people might fall into poverty with a negative income shock of even 25 per cent as a repercussion of the COVID-19 outbreak and the economic slowdown. If the negative economic shock, a rapid reduction in financial stability, grows to be more than 25 per cent, which is very likely given that the average income of the urban and the rural poor and many in the informal sector has dropped by up to 80 per cent, more people would fall in the ‘new poor’ category.
The SANEM prediction also says that the overall poverty rate is likely to reach 40.9 per cent with 20.4 per cent coming up as the new poor. If it so happens, poverty rate will be higher than it was 15 years back in 2005 when around 40 per cent of the population was poor. About 3.40 crore or 20.5 per cent of the population was categorised as the poor in Bangladesh before the COVID-19 outbreak, according to the Bangladesh Bureau of Statistics.
Bangladesh Institute of Development Studies researcher Binayak Sen in a paper titled ‘Poverty in the Time of Corona: Short-term Effects and Policy Responses’ has recently come up with a figure that corresponds to SANEM projection. Binayak Sen estimates that the number of the new poor has increased by at least 9 percentage points to 29.4 per cent from 20 per cent, suggesting that about 1.64 crore people have already become new poor by the end of June because of the ongoing COVID-19 outbreak and its consequent economic slowdown and that more people would become new poor if the economic slowdown continues.
Binayak Sen’s reckoning appears to go with what the state minister for disaster management said as early as April that 1 per cent of the country’s population — about 1.6 million people — had been losing purchasing capacity every week since the beginning of the general holiday on March 26 that the government enforced to contain the spread of COVID-19 infection. The result of the general holiday appears not to have been as desired as the country now experiences higher COVID-19 infection and death rates. However, the state minister’s estimate that 1 per cent of the population losing their purchasing power every week since the general holiday suggests that, even if roughly, more that 20 million people have by now lost their purchasing capacity. This estimate sufficiently points to the worrying and worsening poverty situation that has pulled in at least 20–30 million people in its grip within less than a quarter of a year
A DOMINO effect of the COVID-19 outbreak and the consequent economic slowdown is reverse migration which, as the term says, has forced thousands to return to their villages, even though they had to migrate first from these villages as the villages could not sustain them.
In the past few months since the novel coronavirus stalled economy, Bangladesh has experienced both internal and external reverse migration. There is no inclusive estimate of the number of people taking recourse to reverse migration yet because of an absence of adequate data and of the continuity of the phenomenon.
Since January, Bangladesh has had a sharp increase in the number expatriates returning. Most of these people had to return as they lost their job and livelihood in destination countries. A government estimate showed in mid-April that about two lakh Bangladeshi migrant workers had come back home in February 26–March 26 and more than a half of them were jobless.
The volume of internal reverse migration, from urban centres to rural areas, although beginning a bit later, is much higher. People, mostly in the private and informal sector, leaving the capital after losing job and incomes have been making the headlines for quite some time now, triggering speculations about and criticism of the economic growth and city-centric development.
According to different estimates, a few lakh fixed-income people in the private and informal sector have lost their job and income because of COVID-19 fallouts. A recent survey by the Bangladesh Institute of Development Studies shows that about 13 per cent of the people has become unemployed in the country because of the COVID-19 outbreak, and its negative effects on employment, income and expenditures of people, especially of low- and fixed-income groups, are only but increasing. Besides the newly unemployed, a larger group of people has experienced a significant reduction in income. A BRAC survey in May shows that about 95 per cent people across the country have suffered a substantial loss in their income.
This situation has forced about 1–5 lakh people to leave Dhaka in the past few weeks while the number of people leaving other major cities are no less insignificant. The reverse migration, both internal and international, has understandably ended up in rural areas. It is all too evident that reverse migration will usher in a crisis in rural areas. Failures of successive governments to decentralise economic and development activities and to properly incentivise agriculture and farming has for long debilitated the villages, forcing people to move to urban centres in the first place. Now with a large-scale reverse migration, rural areas would become more debilitated. But, at the same time, people who have moved back to rural areas are likely to choose to remain there, because of their recent harsh experience in urban areas. This reverse migration of a large number of people, who migrated earlier from rural to urban areas following economic, environmental and climate-related challenges, places them where they were earlier — at risk.
The new poor and the reverse migration point to and question the worth of the economic growth measured by a high gross domestic product growth, increased per capita income and city-centric development. If a negative economic shock spanning slightly more than three months can pull the poverty rate to what it was 15 years ago, it is not extraneous to doubt the rhetoric of development and growth that we have heard of for years now.
What is worth pondering on is the contrasting economic situation that has prevailed in the country for the past couple years where a few people have amassed a lot of wealth and the rest have become growingly vulnerable. Ultra-wealthy people in Bangladesh, according to the latest report of US-based Wealth-X, increased faster than in any other country in the world in 2010–2019. Recent Bangladesh Bank data also shed light on this contrasting economic situation. According to the data released in June, the number of bank accounts with more than Tk 1 crore in deposit has increased from 19,636 in 2009 to 75,563 in 2018 and that these bank accounts now hold about 44 per cent of the total deposit in the banking sector.
Such an economic state, characterised by huge income inequality, explains how and why so many people suddenly fall into the category of the new poor and why so many people suddenly find themselves on their way home, helpless and empty-handed.
The government certainly comes up and will come up with some relief programmes, inadequate and mismanaged in some cases though, to address the plight of the suffering masses but what it appears to miss is the crux of the problem — a development model that makes the rich richer and the poor poorer.
To deal with the huge number of the new poor and to help the thousands who have taken recourse to reverse migration, the government has to take an elaborate relief and rehabilitation programme, not a one-off distribution of essential goods. A rehabilitation programme that adequately addresses the wrong wheels of growth and development and brings them back on to the right path and a course correction in the development model is what is expected now.
Monwarul Islam is an editorial assistant at New Age.