The pandemic’s new poor

It is concerning to know that more and more people have fallen below the poverty line due to the Covid-19 fallout. A study conducted by the South Asian Network on Economic Modelling (SANEM), in 2020, found that people living below the poverty line increased to 42 percent during the lockdown period compared to 2018 when it was 21.6 percent. Among them, a whopping 51.2 percent were from the service sector. More shocking is the fact that among those from the service sector who had to face enormous financial crunch during the pandemic, small-business owners comprised the largest portion—28.76 percent. This resonates with another report published by the Centre for Policy Dialogue (CPD) on February 15 of this year, which states that though almost a year has passed since the Covid-19 outbreak, no sign of recovery of micro and small-scale enterprises can be seen yet.

The government had rolled out a stimulus package of Tk 20,000 crore, mostly targeting the cottage industries and the SMEs', soon after the coronavirus had broken out. But a large portion of it remained unutilised as most of the small businesses could not access it due to them being excluded from the formal banking processes. It is a relief for us to find that the government has again decided to roll out two new stimulus packages amounting to Tk 2,700 crore, this time through government and semi-government organisations.

But it has been seen in the past that our social protection programmes are often hampered by corruption and mismanagement during their implementation periods. The government has to ensure that the truly needy and vulnerable people are identified correctly and the support actually reaches them if it wants its latest financial aid initiative to be successful. While in the short run cash and food relief may alleviate some of their hardship, the government must prioritise and devise programmes that will create jobs and other income generating activities for these people who have suddenly found themselves jobless. 

We strongly feel that our own government has a lot to learn from the aforementioned economic model so that it can address the plight of those people who have become the "new poor" during the coronavirus pandemic.