Economists wary of income inequality
Economists yesterday expressed concern over income inequality mounting side by side economic growth, saying this could emerge as a threat for the nation.
As per the latest Household Income and Expenditure Survey (Hies), the country’s Gini coefficient in a worrying development stood at 0.482 in 2016, up from 0.458 in 2010.
Measured on a scale of 0 to 1, the Gini coefficient is an economic measure of equality; the closer it is to 1, the higher the inequality.
“Over 0.5 percent Gini coefficient in any economy is a dangerous position,” said Prof Moinul Islam, former president of Bangladesh Economic Association (BEA). As a keynote speaker, he was addressing a seminar styled “Growing income disparity in Bangladesh: which way is the solution?” organised by the BEA in the capital’s Institution of Engineers, Bangladesh.
Islam said Bangladesh has achieved over 8 percent GDP growth, which was highly praiseworthy, but less than 1 percent of the population was reaping its benefit.
Even 62 percent of lawmakers in parliament have come from the business community, he noted.
He said the number of wealthy persons, or persons having $30 million and above, grew at a rate of 17.3 percent in the past five years, the highest in the world.
Referring to the Hies 2016, Islam said the share of property of 10 percent of the poorest in the country came down to 1.01 percent of the GDP in 2016 from 2 percent in 2010. In contrast, 10 percent of the wealthiest saw their share to increase to 38.16 percent of the GDP in 2016 from 35.85 percent in 2010.
These show the continuous growth of the economic disparity, a clear indication of the wealth to be confined to a specific section of people, he said.
Mohammed Farashuddin, former governor of Bangladesh Bank, emphasised the need for regulatory frameworks to bring capitalists under control and avoid the abuse of their wealth.
He also said the increasing Gini coefficient was also a matter of concern as low-income people were being deprived from the benefits of economic development. The lack of a level playing field for all is the main driver of income inequality, Farashuddin said.
However, he said, Bangladesh achieved the highest progress in the social sector in the South Asian region.
He further said currently the United Nations did not take per capita income as a measure of a country’s development, rather considered human development index as the main criteria. The former governor also stressed the need for bringing reforms in the banking sector.
KAS Murshid, director general of the Bangladesh Institute of Development Studies, said if nepotism exists in job recruitments, the inequality cannot be removed.
He said Bangladesh’s attainment of food security was a success story for the world.
Murshid also gave credit to the readymade garment sector for contributing to the reduction of poverty and in economic empowerment of women.
Prof Abul Barkat, president of the BEA, suggested an increase in the tax-GDP ratio to address income inequality.
He said there were at least 1.25 crore people having an income of $4,000 per annum whereas only 20 lakh people paid their taxes. So, revenue collection should increase dependency on direct tax instead of on indirect tax, he said.
AZM Saleh, vice president of the BEA; Jamaluddin Ahmed, general secretary, and Shafique uz Zaman, chairman of the economics department of the University of Dhaka, also spoke at the programme.
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