Losing out in battle to make ends meet

Widening gap between income and expenditure has pushed the back of most commoners against the wall as they are struggling to cope with the soaring cost of living.

People in the low and middle-income brackets see a very little rise in their earning while an ever-increasing expenditure continues making a dent in their purses.

The income rise of officials and employees of government, non-government and private organisations, teachers, bankers, journalists and other professionals mostly depends on increment in their salary, which goes up by 2-3 percent a year.

Their spending, on the other hand, is always on the rise. Apart from rising prices of essential commodities, house-rent, utility bills and transport fares rise at regular intervals resulting in a serious mismatch between people's income and expenditure.

Overall cost of living rose sharply from only 5.42 percent in 2001 to 8.52 percent in 2002 and marked an alarming rise to 10.48 percent last year, according to the Consumers Association of Bangladesh. The trend indicates a further increase this year.

Shariful Alam, 42, a schoolteacher of Mirpur in the capital, earns Tk 8,000 a month, Tk 45,00 of which he spends on house-rent. These days he finds it very difficult to manage the monthly expenses of his four-member family with the rest amount.

"My expenditure is going up every month," Alam said. "I cannot even bear the expenses of my daily needs, then how can I manage tuition fees of my kids which also rise every year? How can I treat if any member of my family falls sick?"

After paying house-rent at the beginning of a month he can run his family hardly for 10 to 12 days. Then he has to take loans from friends and relatives. "Now I have to work hard for some extra money from private tuition."

The government increased electricity bill by 5 percent in August 2002 and 15 percent in September 2003. Gas bill also went up in three installments --6 percent in February 2002, 5 percent in October 2002, and 3.5 percent in July this year.

In the last two years Wasa bill increased three times -- 5 percent in July 2002, 5 percent in January 2003 and further 5 percent in January this year.

Bus fare rose 16 percent in January last year when fuel prices were hiked by 13.75 percent. Launch fare rose 15 percent in November 2002 and 10 percent in February 2003.

House rent also marked a 10 percent rise, on average, in the last two years.

The prices of essential commodities crossed all previous records in the last few months that hit the poor and middle class people hard. Prices of rice, wheat and vegetables have been on a constant rise since August this year.

The rice and vegetable prices further shot up at the beginning of Ramadan. In Dhaka, the price of a kg of aubergine rose to Tk 100 and green chilli to Tk 160 when the fasting month began. The prices are yet to ease to a tolerable level.

The Centre for Policy Dialogue -- an independent think thank -- in a report said the recent price hike is hitting the poor, particularly those who spend relatively more on food.

Abu Yussuf, 34, an officer of Bangladesh Krishi Bank, said his monthly salary has increased Tk 275 as he got an increment this year. "But my monthly expenditure has gone up by more than Tk 1,000 compared to that of last year."

"I cannot keep pace with the rising expenditure. Now I have to look for an alternative source of income," Yussuf added.

"When people desperately look for an alternative source of income, it may not be always a pleasant experience. The hardship pushes many people to corruption and forces them to find illegal sources of income," he observed.

The rate of inflation is on sharp rise and is likely to shoot further on the back of this year's devastating floods. Inflation was 5.88 percent in July this year and the Planning Commission forecast an alarming 6 to 6.5 percent at the end of this fiscal year (FY).

The annual inflation rate on an average basis has risen to 5.83 percent in FY04 from 4.38 percent in FY03 and only 2.79 percent the year before.

"Specially hard hit by high inflation are the fixed income people," Dr Rushidan Islam Rahman, research director of Bangladesh Institute of Development Studies (BIDS) said.

Inflation cannot be totally eliminated because low inflation rate can help economic growth and employment generation, she said noting the evils of inflation can be offset if economic growth induced by inflation is participated by the low-income groups.

"If small producers and workers benefit from economic growth, their income growth could keep pace with the inflation. But unfortunately it is not happening at the expected rate," she added.

The government has announced to implement a new pay scale for public servants from the next year in line with recommendations from the Pay Commission now working to formulate a new scale. The last pay scale was made effective from 1997.

The BIDS researcher said government servants get a new pay scale after every six to seven years but as soon as the pay hike is announced, the essentials market see another round of price hike that affects all consumers.