Pandemic creates 2.45cr new poor

Second wave hits amid significant depletion of household income and fragile recovery from last year’s shock, says PPRC-BIGD survey
A road in the capital’s Karwan Bazar area is crammed with sellers and buyers as they flout health safety rules. Violation of lockdown restrictions continues in the city amid the surge in coronavirus infections. The photo was taken around 7:00am yesterday. Photo: Anisur Rahman

The economic shock induced by the pandemic has pushed 2.45 crore people --  14.75 percent of the country's population -- into poverty in one year, according to a new survey.

The survey found that the pandemic caused a significant depletion of households' income and forced a large number of the population into leaving cities and taking shelter in their village homes.

Those people had to head home as they became jobless. Their situation was worsened by rising living expenses, dwindling savings and mounting debt, said the survey.

The Power and Participation Research Centre (PPRC) and the Brac Institute of Governance and Development (BIGD) came up with the findings at a virtual press conference yesterday.

"It is thought that the 'new poor' is a temporary matter. But one year after the pandemic, we see that a large number of the people, who went below the poverty line [due to the pandemic], are yet to come out of poverty," PPRC Executive Chairman Hossain Zillur Rahman said at the briefing.

It is the third study by the PPRC and the BIGD on the coronavirus' impact on people's income and poverty. For this, Rapid Response Research (RRR) of the two organisations carried out a panel survey in March on over 6,000 people living in rural and urban slums.

In its first survey, on a similar number of households in slums, in April last year, the RRR found that around 3.7 crore people or 22 percent of the population became the "new poor" due to the first wave of the pandemic. It meant that they joined the previous 20.5 percent of the population who had already been poor.

The PPRC and the BIGD said over the last one year, a portion of the new poor was able to come out of poverty. Around 2.45 crore still suffer in poverty, they said.

"People have lost their capacity to face the pandemic and recover from the economic consequences of it. Income of households decreased while their debt kept going up," Zillur said while talking to The Daily Star later in the day.

The findings of the latest survey gives an indication that a large number of people are still struggling to lead their life smoothly, said Zillur, also an adviser to a former interim government.

"In order to protect the lives and livelihoods of people, we must avoid the economic shock we faced last year," he said.

"The impact of the ongoing economic hardship will deepen many folds if the country faces a similar shock this time," he said.

A smart Covid-19 lockdown can help in this case, but the authorities have to make sure that people's lives and livelihoods as well as health protocols are ensured simultaneously, he commented.

Participants at the briefing said the country was currently facing the second wave of the coronavirus pandemic amid incomplete, fragile economic recovery and a significant depletion of household incomes, which ultimately worsened people's capacity to fight Covid-19.

The survey also found that the rate of extreme poverty went up by 4 percent in March this year from February.

The consequence of the pandemic has had an adverse impact on the poor in urban areas as their per capita daily income declined to Tk 107 from Tk 124.

But the income of rural people increased to Tk 108 from Tk 106.

The rural economy has rebounded strongly sidestepping the economic hardship based on the good performance of the farm sector.

The survey also found that 27.3 percent of urban slum dwellers migrated from the major cities to villages after the arrival of the pandemic. Some 9.8 of the people are yet to return, it said.

In addition, the migration has not stopped till date as 6.8 percent of the people left urban areas since June last year.

Imran Matin, executive director of the BIGD, said the savings of the people have decreased largely at a time when they are burdened with huge debts.

Savings of each urban slum household stood at Tk 16,707 in March this year, down 11 percent from February last year, he said.

Reserves by people in rural areas also declined 24 percent in the last one year.

The amount of loans taken out per household in the city areas stood at Tk 42,961 in March this year, up 86 percent from February last year.

The scenario is the same for the rural areas where each household had Tk 58,101 in loans, up 75 percent from February last year.

Employment is also facing sluggishness as some 8 percent people, who were employed in February last year, were yet to manage any job till March this year. They are facing an uncertain situation, Imran said.

Two categories of the jobholders -- skilled labour and salaried jobs -- have struggled with their jobs to a large extent. Housemaids have faced the same consequence, the survey found.

The rise in unemployment compelled people to reduce their expenditure on food, according to the survey.

The food expenditure of each urban household surveyed has declined 17 percent from the pre-Covid stage when it was Tk 66 a day.

The expenditure on food in rural areas, however, increased by Tk 1 to Tk 53.

Against this backdrop, severe food insecurity has been on the rise as 2.3 percent households surveyed in the urban areas faced hunger the whole day at least once in this March when the ratio was 1 percent in rural areas, Imran said.

Females have been in the unemployment zone the most as the survey found 31 percent of the female respondents have lost their jobs in the last one year, he said.

Participation of the female labour force has been stuck in the last couple of years, so the authorities concerned should put emphasis on the issue, the participants said.

Hossain Zillur Rahman said 70 percent of the people surveyed faced a drop in their income just after the first wave of the pandemic.

The recovery of the economic hardship is highly fragile as a large number of people have been unable to get back to their previous jobs, he said.

The increase in health and transport cost is also an indication of regulatory failures of the authorities concerned, he said.

The near absence of social protection is another crisis for the economy. People had to rely on their families and relatives to face their problems during the crisis.

Social protection taken by the government is playing only a "token role" in the Covid response, but it will have a large impact on the vulnerable groups as income capacity of the people declined massively, Hossain said.

The country has to address the second wave taking into account the depleted capacity of the people, he said.

Parallel to existing safety nets, specific new and significant programmes for the poor is highly important, he said.

Effective targeting is highly crucial in reaching out to the poor as there had been huge criticism about last year's measures taken by the government.

Mobile financial services can play a great role in providing the required government support to the vulnerable groups.

Agriculture has played a great role in tackling the first wave. A policy mind-set shift towards strengthening rural regeneration and a holistic approach to supporting agriculture is a key lesson from the Covid crisis, he added.

The participants said that the rural economy has shown resilience significantly, meaning that the country's rural economy is much stronger than that of the urban areas. The income of rural people increased 1.9 percent in March from the pre-Covid-19 level.

Most of the people have been forced into joining unskilled jobs after the first wave.

The government should take an urgent national Cottage Micro Small and Medium Enterprises (CMSME) recovery action plan, which will help small enterprises turn around.

The macro sector (especially large borrowers) has mainly benefitted from the stimulus packages, but the implementation rates of the incentive schemes dedicated to the middle economy (middle income groups) is not satisfactory, Hossain Zillur said.



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